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Class Arbitration Not Likely in Overdraft Case

Friday, September, 30, 2011

Class arbitration has been a contentious issue ever since the United States Supreme Court issued its decision in AT&T vs. Concepcion, which held that consumer services agreements that insist on individual arbitration are enforceable even in the face of state laws that would appear to bar the practice.  Such agreements bar plaintiffs from filing suit in court and in addition, usually bar them from arbitrating as a class.  Instead, each individual must arbitrate separately.


Now, a U.S. district judge has apparently disregarded that ruling in his decision regarding a lawsuit against more than two dozen banks.  The case involves overdraft fees, with plaintiffs maintaining that banks are calculating debit card transactions in such a way as to deliberately create overdrafts when none in fact actually existed.  It is possible to do this by ordering transactions by dollar amount rather than in chronological order. 


Plaintiffs look to the Courts rather than Class Arbitration


The ruling states that the customers so affected will be permitted to use the federal court system to gain compensation for their damages.  David White, speaking for BB&T, one of the defendant banks in the lawsuit, announced his firm's objection to the ruling: "We disagree with the decision and are planning to file an appeal”.

Judge Lawrence King, who issued the decision, however, insists that the Concepcion case doesn't necessarily require arbitration to be used in every situation and that in this particular one, he finds the banks' arbitration clauses "unconscionable”.


The case is not expected to include any issues that could be resolved through tax arbitration.