Branch Banking & Trust Wins Overdraft Fees Ruling

BB&T Corp.’s Branch Banking & Trust unit won reversal of a lower-court decision, allowing it to require arbitration in a consumer lawsuit claiming the bank charged excessive overdraft fees.

The U.S. Court of Appeals in Atlanta today ordered U.S. District Judge James Lawrence King in Miami to send the case of a South Carolina customer of the bank to arbitration.

The panel’s ruling prevents customers of the Winston-Salem, North Carolina bank from suing as a group. A class action allows plaintiffs to share the costs of gathering evidence and pursuing claims. When cases are bundled together, plaintiffs may have greater leverage in trying to persuade defendants to settle.

The appellate court agreed with the judge that a portion of the bank’s customer agreement was “unconscionable.”

The court said that portion, which requires the customer to pay for any dispute, even if the consumer wins, could be eliminated while the rest of the agreement is enforced.

“We are pleased that the 11th Circuit Court of Appeals has agreed with our position and recognized that arbitration is a proper and reasonable means to resolve a dispute of this nature,” Merrie Tolbert, a spokeswoman for the bank, said in an e-mail statement.

‘Basic Unfairness’

More than 30 banks have been sued over overdraft fee policies and more than a dozen have settled the cases including PNC Bank, a unit of PNC Financial Services Group Inc., which agreed last week to pay more than $90 million. The cases have been consolidated in Miami before King for pre-trial proceedings.

“We are pleased that the court ruled that BB&T’s bank services agreement contained unconscionable provisions and we were disappointed that merely by severing them, the customer can be forced into arbitration,” said Bruce Rogow, one of the lead attorneys for the plaintiffs in the Branch Banking case. “This case underscores the basic unfairness of these consumer contracts that overwhelmingly favor the banks’ interests to the detriment of the customer.”

Rogow said today’s ruling didn’t necessarily affect other pending cases. Not all the banks have arbitration clauses in customer service agreements and some decided not to bring up the arbitration issue at all, he said.

Supreme Court

The U.S. Supreme Court, in a decision last year in ATT Mobility v. Concepcion, ruled companies can use arbitration clauses to block class action claims.

“There’s no question that Concepcion tilts the field decidedly toward arbitration,” Rogow said. “It is still an individual, case by case analysis. If there had been no severability clause in this contract, we would have won.”

The appellate ruling is Barras v. Branch Banking and Trust Co., 11-14318, U.S. Court of Appeals for the 11th Circuit (Atlanta). The lower-court case is In Re Checking Account Overdraft Litigation, 09-cv-02036, U.S. District Court, Southern District of Florida (Miami).

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