Rebney v. Wells Fargo Bank
| Decision Date | 25 May 1990 |
| Docket Number | A043070,Nos. A039437,s. A039437 |
| Citation | 269 Cal.Rptr. 844,220 Cal.App.3d 1117 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Marsha R. REBNEY, et al., Plaintiffs and Respondents, v. WELLS FARGO BANK, N.A., Defendant and Respondent, Ralph Santiago Abascal, Dorothy De Oliveira, Dee Filichia, David Bobiak and Carolyn Wood, Objectors and Appellants. Peter G. RUDOLFI, et al., Plaintiffs and Respondents, v. BANK OF AMERICA, etc., et al., Defendant and Respondent, California Grocers Association, Inc., Jeanne Louise Shull and Nicole Lastreto, Objectors and Appellants. |
Brad Seligman, Saperstein & Seligman, Ernest M. Thayer, Oakland, for objectors/appellants in No. A039437.
Ralph Santiago Abascal, Berkeley, in pro. per.
Manuel Glenn Abascal, Kathy Shull Abascal, Law Office of Manuel Glenn Abascal, Berkeley, for objectors/appellants in Nos. A039437 & A043070.
Gary J. Near, Stephen Kaus, Kaus, Kerr & Wagstaffe, San Francisco, for objectors/appellants in No. A043070.
Weyman I. Lundquist, Richard L. Goff, Ida O. Abbott, Brian P. Brosnahan, Heller, Ehrman, White & McAuliffe, San Francisco, for defendant/respondent in No. A039437.
James J. Brosnahan, Kathleen V. Fisher, James F. McCabe, Carla B. Oakley, Morrison & Foerster, San Francisco, George W. Coombe, Jr., Winslow Christian, Arne D. Wagner, Bank of America NT&SA, Office of Gen. Counsel, San Francisco, for defendants/respondents in No. A043070.
David B. Baum, Sidney M. Wolinsky, Sanford J. Rosen, Rosen & Phillips, San Francisco, for plaintiffs/respondents in Nos. A039437 and A043070.
Benjamin R. Civiletti, Kathleen A. Calder, Venable, Baetjer & Howard, Baltimore, Md., for amici curiae plaintiffs/respondents defendants/respondents in No. A039437.
These appeals challenge the settlement of class action litigation arising from the assessment of various bank checking account fees.
According to the parties, the appeals are about either collusion or fantasy. Appellants contend the settlements were the product of a collusive sellout between class counsel and the banks. Respondents claim the appeals are attributable to appellants' fantasy vision of wondrously large money judgments.
From our perspective, at least, the parties are each wrong. To us, these appeals are about appellate standing, the lack of which precludes nearly all the claims asserted by appellants.
The litigation began in 1977 as three separate class actions against Wells Fargo Bank, Crocker National Bank and the Bank of America. The Wells Fargo and Crocker lawsuits were consolidated after Wells Fargo's 1986 acquisition of Crocker, and will be referred to collectively as the Wells Fargo action.
In each case the plaintiffs challenged the banks' assessment of fees against customers who wrote "NSF" checks, that is, checks for which there are not sufficient funds on deposit. Two types of NSF fees may be charged to a check writer: a returned item fee, which is charged if the bank dishonors (i.e., "bounces") a bad check, and an overdraft fee, which is charged if the bank honors the bad check.
The litigation consumed ten years from commencement to pretrial settlement, and it occupied dozens of attorneys. The combined appellate records, which include nearly 20,000 pages of pleadings, memoranda and declarations, are incredibly lengthy, given the fact they are exclusively pretrial. Most of the procedural morass, however, need not be described here, as we are concerned only with what is essential to the resolution of the appeals.
In 1986, counsel for Wells Fargo and the class representatives moved for approval of a proposed settlement, which called for expansion of the existing class certification. The class had been certified in 1981 to include all present checking account holders who were subject to fees for writing NSF checks, and all present and former customers who had paid such fees. The proposed expansion implicated not only the two fees assessed against writers of NSF checks, but also 19 other fees, generally referred to as "non-NSF" fees, charged to customers with various types of checking and savings accounts. After a hearing on the fairness of the proposed settlement, the judge refused to approve it, stating she was not convinced that all the non-NSF fees had received adequate analysis by class counsel. Counsel then whittled down the expansion to include only the two NSF fees and six non-NSF fees. On June 2, 1987, the court concluded the six non-NSF fees had received adequate analysis and rendered judgment approving the settlement in that form.
The settlement applied not only to checking accounts but also to market rate accounts, on which interest is paid and only a limited number of checks may be written. The expanded class included all present or former account holders since March 17, 1973, and all customers who paid or were subject to any of the following fees since that date:
1. Returned item fees.
2. Overdraft fees.
3. Account maintenance fees, which are charged monthly but may be waived for certain accounts if the customer maintains a minimum balance.
4. Stop payment fees, which are charged when a customer orders the bank to stop payment on a check.
5. Deposited item returned (DIR) fees, which are charged to the depositor of someone else's bounced NSF check.
6. Savings account overdraft protection transfer fees, which are charged when funds are automatically transferred from a savings account by preexisting agreement to prevent an overdraft.
7. Credit card overdraft protection transfer fees, which are charged when funds are automatically transferred from a credit card account to prevent an overdraft.
8. Market rate account excess activity fees, which are charged when a customer exceeds the number of permissible transfers from a market rate account. 1
The 45-page settlement agreement provided, in excruciating detail, for monetary relief to some customers and injunctive relief to the rest. Former customers, as well as present customers who already had overdraft protection, received 30 percent cash refunds of previously paid overdraft and returned item fees upon submission of valid claims. Former customers also received 30 percent cash refunds of stop payment fees upon submission of valid claims. There were no refunds of any other fees, and no other direct monetary recovery was made available to present customers. Instead, present customers benefitted from 17 categories of injunctive relief, consisting primarily of various check processing policies and procedures established by the settlement agreement.
These policies and procedures were intended to reduce the overall number of future NSF checks and related fees. They included, for example, nonassessment of NSF fees for overdrafts under $10; nonreturn of checks for overdrafts under $100; no holds on deposited checks of less than $500 (on the theory that holds may cause NSF activity); provision of incentives (through fee credits and waivers) to obtain overdraft protection; payment of smaller checks first when multiple checks cause an overdraft (in order to minimize the number of returned items); and prompt notice whenever an NSF fee is imposed. A $1 million consumer education fund was created. No fees were eliminated, but some of their amounts were restricted. Also, the agreement eliminated the provision of automatic NSF fee waivers to customers who had accounts with high average balances.
The settlement agreement was effective for two years and was not stayed during appeal. It expired on October 1, 1989, evidently fully performed, and thus its injunctive provisions are no longer binding.
The appellants are Ralph Abascal (who is the named class representative in the Crocker action), Dorothy De Oliveira, Dee Filichia, David Bobiak and Carolyn Wood. Each objected to the court's approval of the settlement, appeared at the fairness hearing, and is appealing as an objector. Wood's appeal is independent of the other appellants, who are proceeding as a group and will be referred to collectively as the Abascal appellants.
The Bank of America settlement was similar but not identical to the Wells Fargo settlement. Counsel for the class and the bank moved for settlement approval in 1987. As in the Wells Fargo case, the settlement agreement called for expansion of the existing class certification, which had been limited to the two NSF fees. The expanded certification included only five of the eight fees involved in the Wells Fargo settlement: returned item, overdraft, account maintenance, DIR, and savings account overdraft protection transfer fees. Also included within the scope of the settlement were customers who had high-volume business accounts for which account maintenance charges are assessed "on analysis," based on the total number of transactions of all types and the average balance in the account, rather than on a flat fee basis. (On-analysis accounts were excluded from the Wells Fargo settlement.)
The settlement did not provide for any cash refunds. Former customers were entitled to receive a coupon for credit of up to $25 for use in purchasing various services from the bank. Present customers were entitled to receive monetary credits upon obtaining overdraft protection, and also received essentially the same injunctive benefits as those provided in the Wells Fargo settlement. A $2.5 million consumer education fund was created, and the bank also established a $10 million zero-interest loan fund for construction or rehabilitation of low-income housing.
On May 26, 1988, after a fairness hearing, the court rendered judgment approving the settlement. The settlement was made effective for two years and was not stayed on appeal. It is scheduled to expire on July 1, 1990.
The appellants are the California...
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