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Public Victories Hide Private Feuds in Overdraft Fee Case

The ruling was a serious defeat for the plaintiffs' bar, but many banks weren't equipped to take advantage. Some hadn't drafted such customers agreements. Others failed to initially seek enforcement and weakened their ability to assert such a defense now. Still more require consumers to jump through hoops that risk being deemed unconscionable.

Aaron Podhurst notes the case's progress and dismisses the Alters and Himmelstein matters as unrelated to the litigation. The firms on the executive committee have "a fine relationship," he says.

"It doesn't mean we don't argue over direction, but we have a very cordial relationship, and I intend to keep it that way," says Podhurst.

While perhaps unavoidable, there are also tensions with attorneys outside the plaintiffs' executive committee.

"There are a number of lawyers within the group who would appreciate a little more transparency and input," one says, asking for anonymity so as not to damage relationships.

Podhurst said that many non-executive committee attorneys are actively involved in the cases they brought, and in court there has been no dissent.

"None of [the friction] to my knowledge has surfaced in the litigation itself," said defense lawyer Kaplinsky last week. "I don't think any of it has gotten to be an issue in front of Judge King."

Miami corporate defense attorney Alvin Davis of Squire Sanders agreed. In legal circles, Alters has been "kind of a lightning rod for years," he said, though he added that he's seen far more contention than in the overdraft case.

"I've been involved in cases where the three plaintiffs firms were suing each other," he said.

Rogow's participation in the overdraft case also helps.

"You get Bruce on board, you get a prima facie appearance of legitimacy," Davis said. "He's up there in the pantheon."

The objection filed by Himmelstein to the Bank of America settlement marks the first possible intrusion of behind-the-scenes issues into the case, though its import is hard to gauge.

What is clear is that an attorney with a formidable understanding of the overdraft litigation is now representing two members of the proposed settlement class, and that he has put a significant effort into arguing that the Bank of America settlement is insufficient.

"The proposed $410 million settlement [$29.71 per class participant] with Bank of America, while large in the abstract, is only 9% of the over $4.5 billion in damages sustained by the class," Himmelstein wrote, noting that the plaintiffs executive committee had objected to settlements for similar portions of alleged damages in other jurisdictions. (Himelstein played a lead role in writing some of those objections on behalf of the plaintiffs executive committee.)

"The Plaintiffs' Executive Committee has itself formally objected to two separate settlements of overlapping claims-one with Fifth Third Bank, for 10% of class members' estimated damages, and another with National City Bank, for between 10% and 26% of class members' estimated damages — as grossly insufficient," the brief states. "Yet Class Counsel ask this Court to approve a lesser settlement, for a mere 9% of class members' damages, as "fair, reasonable and adequate."

There are arguments for why the Bank of America settlement made sense, not least of which is that a rival class action suit in California threatened to settle the claims of 80% of the class members for a much smaller amount.

But Himmelstein argues that his former colleagues have tried to hide from consumers that average recovery would be "less than the amount of a single overdraft charge," as he puts it.

"Instead of being told that they will receive a refund of less than one illegitimate overdraft charge for every ten they paid, class members were told — falsely — that the amount of their anticipated refund "cannot be determined at this time," he wrote.

Podhurst told American Banker that the plaintiffs' executive committee would respond to Himmelstein's brief in court.

A lot is at stake for the attorneys themselves. The Bank of America settlement alone is expected to yield as much as $120 million in fees, roughly standard given the size of the deal.


(1) Comment



Comments (1)
This says it all

Instead of being told that they will receive a refund of less than one illegitimate overdraft charge for every ten they paid, class members were told -- falsely -- that the amount of their anticipated refund "cannot be determined at this time," he wrote.

Who let the Foxes gaurd the hen house?
Posted by atlas115 | Tuesday, October 04 2011 at 12:57PM ET
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