First Tranche ActionsTomes v. Bank of America, N.A. (In re Checking Account Overdraft Litig.)

• Decision Date: 22 November 2011
• Docket Number: Case No. 09–MD–02036–JLK.
• Citation: 830 F.Supp.2d 1330
• Parties: In re CHECKING ACCOUNT OVERDRAFT LITIGATION.This Document Relates to: First Tranche ActionsTomes, et al. v. Bank of America, N.A. S.D. Fla. Case No. 1:08–cv–23323–JLKYourke, et al. v. Bank of America, N.A. S.D. Fla. Case No. 1:09–cv–21963–JLK, N.D. Cal. Case No. 3:09–2186Phillips, et al. v. Bank of America, N.A., S.D. Fla. Case No. 1:10–cv–24316–JLK, W.D. Okla. Case No. 5:10–cv–01185–R.
• Court: U.S. District Court — Southern District of Florida

830 F.Supp.2d 1330

In re CHECKING ACCOUNT OVERDRAFT LITIGATION.This Document Relates to: First Tranche ActionsTomes, et al.

v.Bank of America, N.A. S.D. Fla. Case No. 1:08–cv–23323–JLKYourke, et al.

v.Bank of America, N.A. S.D. Fla. Case No. 1:09–cv–21963–JLK, N.D. Cal. Case No. 3:09–2186Phillips, et al.

v.Bank of America, N.A., S.D. Fla. Case No. 1:10–cv–24316–JLK, W.D. Okla. Case No. 5:10–cv–01185–R.

Case No. 09–MD–02036–JLK.

United States District Court, S.D. Florida,Miami Division.

Nov. 22, 2011.

Aaron S. Podhurst, Robert C. Josefsberg, Steven C. Marks, Peter Prieto, Stephen F. Rosenthal, John Gravante III, Podhurst Orseck, P.A., Miami, FL, for Plaintiffs.

ORDER OF FINAL APPROVAL OF SETTLEMENT, AUTHORIZING SERVICE AWARDS, GRANTING APPLICATION FOR ATTORNEYS' FEES, AND OVERRULING OBJECTIONS TO SETTLEMENT

JAMES LAWRENCE KING, District Judge.

On September 16, 2011, Plaintiffs filed their Motion for Final Approval of Settlement, Application for Service Awards, Class Counsel's Application for Attorneys' Fees, and Incorporated Memorandum of Law [DE # 1885] (“Motion”), seeking final approval of their Settlement ¹ with Bank of America (“BofA”) for $410 million. In support, Plaintiffs filed six affidavits from local and national experts in class action law, as well as several affidavits supplementing the factual record to enable the Court to evaluate the fairness and adequacy of this Settlement. A number of Settlement Class Members filed timely objections to the Settlement (collectively “Objectors”), raising issues related generally to the sufficiency of the evidence supporting the Settlement, the amount of the Settlement, the manner in which the Settlement was negotiated, the methods used to notify Settlement Class Members and the information provided to them in the Notices, the scope of the proposed release to be given by Settlement Class Members to BofA, the cy pres provision of the Settlement, the absence of injunctive relief, and the amount of the fee award sought by Settlement Class Counsel.

This matter came before the Court on November 7, 2011, pursuant to the Court's Preliminary Approval Order dated May 24, 2011, for a hearing on Plaintiffs' Motion for Final Approval of the Settlement (“Final Approval Hearing”). The Court carefully reviewed all of the filings related to the Settlement, including those discussed above, as well as responses to the Objectors filed by Class Counsel and by BofA respectively. See Plaintiffs' Response to Objections to Motion for Final Approval of Settlement and Class Counsel's Application for Service Awards and Attorneys' Fees [DE # 2030]; Defendant's Memorandum in Response to Objections Regarding Final Approval of Class Action Settlement [DE # 2029] [“Defendant's Memorandum”]. The Court also heard a full day of oral argument on the Motion. After full consideration of the presentations of the Parties and the Objectors, the Court concludes that there can be no doubt that this Settlement provides a substantial recovery for the Settlement Class Members, and is an excellent result for the Settlement Class under all of the circumstances and challenges presented by this case. The Court specifically finds that the Settlement is fair, reasonable and adequate, and a more than acceptable compromise of the Settlement Class' claims. The Settlement complies with Fed.R.Civ.P. 23(e), and thus the Court grants final approval to the Settlement, and will certify the Settlement Class.

The Court denies the objections and rejects the arguments of Objectors in all respects, and finds that they are both completely unsupported in the record (no Objector having submitted even a single affidavit to provide facts or expert opinions supporting their positions) and unpersuasive as to the substance of their complaints.² See Hanlon v. Chrysler Corp., 150 F.3d 1011, 1021 (9th Cir.1998) (affirming final approval of nationwide class action settlement where “[t]he objectors presented no evidence” to support their arguments). Significantly, of the approximately 13 million Settlement Class Members, only 49 timely filed objections—0.0004 percent.³ Botzet Supp. Aff. [DE # 2030–2] at 3. This extraordinarily “low percentage of objections points to the reasonableness of a proposed settlement and supports its approval.” ⁴ Lipuma v. American Express Co., 406 F.Supp.2d 1298, 1324 (S.D.Fla.2005). Therefore, as discussed more fully below, the Court grants the Motion in its entirety, approves the Settlement, and awards the fee requested by Settlement Class Counsel and the service awards for the representative Plaintiffs.⁵

BACKGROUND

The procedural and factual history of this Action is set forth in considerable detail in the Motion, and thus the Court will only briefly summarize the most important aspects of that history here. Further, this Court previously set forth the factual allegations and described the causes of action asserted against BofA (and a host of other defendant banks) in this multidistrict litigation. See In re Checking Account Overdraft Litig., 694 F.Supp.2d 1302 (S.D.Fla.2010). No party or Objector has offered contrary facts. The Court is quite familiar with this history, having presided over this case for the better part of the last two years. In that time, the Court has had the opportunity to observe both Settlement Class Counsel and BofA's counsel, and the work that both have done. These attorneys, several of whom have practiced before this Court for many years, are extremely skilled advocates, and all of them vigorously litigated this case up to and even after agreeing to the Settlement. The Settlement is quite obviously the result of arms-length negotiations, and the Court so finds.⁶

In addition, the evidentiary record is more than adequate for the Court to consider the fairness, reasonableness and adequacy of the Settlement. The fundamental question is whether the district judge has sufficient facts before him to evaluate and intelligently and knowledgeably to approve or disapprove the settlement. In re General Tire & Rubber Co. Sec. Litig., 726 F.2d 1075, 1084 n. 6 (6th Cir.1984) (citing Detroit v. Grinnell, 495 F.2d 448, 463–68 (2d Cir.1974)). In this case, the Court clearly had such facts before it in considering the Motion, including the evidence and opinions of Class Counsel and their experts, and the sheer magnitude of the settlement sum, $410 million, making this one of the largest settlements of a consumer case ever. The record is both complete and sufficient, and the Court so finds.

1. Procedural History

Plaintiffs alleged a variety of business practices in the operative pleadings, including principally that BofA systemically re-sequenced Settlement Class Members' debit card transactions for the sole purpose of maximizing its overdraft fee revenue. According to the allegations in the operative complaints, BofA's practices violated the bank's contractual and good faith duties owed to its customers; BofA's acts resulted in unlawful conversion of depositor property; BofA's contractual provisions and practices were substantively and procedurally unconscionable; and BofA's conduct violated certain state unfair trade practices statutes, and resulted in its being unjustly enriched.

BofA, in turn, hotly contested each of these points, and raised arguments and defenses that went right to the core of Plaintiffs' case. These arguments and defenses posed a potentially mortal threat to Plaintiffs' claims. BofA argued that Plaintiffs' claims were preempted by the National Bank Act (“NBA”) and regulations promulgated thereunder by the Office of the Comptroller of the Currency; that its posting order and related practices were permissible under governing federal law and policy; that its account agreements expressly authorized the very re-sequencing and overdraft practices Plaintiffs challenged; that it fully disclosed its practices to its customers; that BofA had other reasons for instituting its posting order and overdraft practices; that no unconscionability cause of action exists for damages; that no plausible conversion claim existed because Plaintiffs did not own the funds in their deposit accounts; that Plaintiffs could not maintain unjust enrichment claims because of the existence of an express agreement between the bank and its customers; that the consumer protection claims were defective; and that, moreover, the vast majority of the claims brought against it were extinguished based on a prior nationwide settlement of a class-action suit in California state court ( Closson ).

Plaintiffs sought monetary damages, restitution and declaratory relief. See generally Tornes Third Amended Consolidated Class Action Complaint (“TAC”) [DE # 344]; Yourke Amended Class Action Complaint [DE # 345]. The Action began on December 1, 2008, when Plaintiff Ralph Tornes filed a complaint against BofA in this Court. See Tornes v. Bank of America, N.A., S.D.Fla. Case No. 08–23323. On April 9, 2009, Plaintiffs Steve Yourke and Kristin Richards filed a complaint against BofA in San Francisco County Superior Court, which was removed to the United States District Court for the Northern District of California. See Yourke v. Bank of America, N.A., N.D.Cal. Case No. 09–cv–02186. These cases were transferred to this Court as part of MDL 2036, by order of the Judicial Panel for Multidistrict Litigation dated June 10, 2009, 626 F.Supp.2d 1333 (U.S.Jud.Pan.Mult.Lit.2009).

Following transfer, Class Counsel interviewed over 100 BofA customers and potential plaintiffs to gather information about BofA's conduct and its impact upon consumers. See Joint Declaration of Robert C. Gilbert and Michael W. Sobol [DE # 1885–3], ¶ 11 (“Joint Decl.”). Class Counsel also expended significant resources researching and developing the legal claims at issue. Id. Soon after the filing of the Yourke and Tornes complaints, BofA, joined by the other First Tranche defendants at the time (Citibank, N.A.; JPMorgan Chase Bank, N.A.; Union...