Schulte v. Fifth Third Bank, Case No. 09–cv–6655.
| Decision Date | 29 July 2011 |
| Docket Number | Case No. 09–cv–6655. |
| Citation | 805 F.Supp.2d 560 |
| Parties | Shannon SCHULTE, on behalf of herself and all others similarly situated, Plaintiff, v. FIFTH THIRD BANK, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
OPINION TEXT STARTS HERE
Ben Barnow, Sharon Harris, Barnow and Associates, P.C., Chicago, IL, Burton H. Finkelstein, Finkelstein Thompson LLP, Washington, DC, for Plaintiff.
Drew M. Hicks, James E. Burke, Keating Muething & Klekamp PLL, Cincinnati, OH, Roger Andrew Lewis, Steven A. Levy, Goldberg Kohn Ltd., Chicago, IL, for Defendant.
Before the Court is the settling parties' motion for final approval of the settlement and Class Counsel's motion for approval of attorneys' fees, costs, and expenses, and for approval of incentive awards for the Class Representatives [103]. For the reasons explained below, the motion is granted in part and denied in part. Specifically, the Court (1) grants final approval of the settlement, finding that the settlement is fair, reasonable, and adequate; (2) approves Class Counsel's request for attorneys' fees of $3,166,666; (3) denies Class Counsel's request for cost and expense reimbursement without prejudice; and (4) approves an incentive award of $1,000 each for the Class Representatives, Shannon Schulte and Marlene Willard.
I. Factual BackgroundA. History of the Litigation
Plaintiff filed her class action complaint in this case [1] 1 on November 21, 2009. In their complaints, Plaintiffs allege that they were Fifth Third 2 accountholders and had used a debit card in connection with their accounts. Plaintiffs further allege that Fifth Third improperly assessed them (and other Fifth Third customers) overdraft fees for insufficient funds on debit card purchases and ATM withdrawals by “re-sequencing” transactions in order to maximize the number of overdraft fees. To explain, Fifth Third did not process debit card and ATM transactions in strict chronological order; rather, within a given posting period, the bank processed the transactions in high-to-low order. If a customer overdrew his account, posting transactions in a high-to-low order sometimes resulted in Fifth Third charging the customer a higher number of overdraft fees than it would have charged had it posted the transactions chronologically. Plaintiffs allege that Fifth Third's practice was unlawful and caused them and others similarly situated to suffer financial injury.
On February 16, 2010, Defendant filed a motion to dismiss the Schulte case [17].
On March 2, 2010, the United States Judicial Panel on Multidistrict Litigation (“JPML”), entered a Conditional Transfer Order (“CTO 13”) conditionally transferring the Actions to the Southern District of Florida, where the Multidistrict Litigation, In re Checking Account Overdraft Litigation, MDL No. 2036 (the “Overdraft MDL”), was and remains pending. Shortly thereafter, Plaintiffs and Defendant filed oppositions to CTO 13 and, on April 2, 2010, Fifth Third filed a motion with the JPML requesting that the Actions be transferred to this Court for coordinated or consolidated pretrial proceedings.
That same day, Objector Michelle Keyes, who is represented, inter alia, by various counsel from the Overdraft MDL, filed a complaint against Fifth Third in the United States District Court for the Southern District of Florida. See Keyes v. Fifth Third Bank, Case No. 10–cv–21283 (S.D.Fla.). Less than a week later, on April 7, 2010, Objector Keyes requested that her case be consolidated into the Overdraft MDL; that request was granted on April 19, 2010. On April 19, 2010, an attorney representing Objector Keyes sent a letter to the JPML arguing that Defendant's motion to transfer the Actions was inappropriate, because it would create a new MDL and Objector Keyes' case had already been consolidated into the Overdraft MDL.
On May 27, 2010, the parties entered into the Settlement Agreement, the terms of which are discussed below. That day, the parties filed a motion for preliminary approval of the settlement [35].3
Later that day, counsel for the settling parties notified the JPML that the parties had entered into the Settlement Agreement and, on June 3, 2010, the JPML vacated CTO 13. The JPML reasoned that in light of the settlement reached between Plaintiffs and Defendant, the Schulte and Willard cases should not be transferred into the Overdraft MDL. The Panel further ruled that the Schulte and Willard cases should not be centralized as a separate and new MDL in this district. The Panel noted that its ruling does not bar either the creation of a new MDL, or the transfer of the Actions to the Overdraft MDL, in the event that the settlement here was not approved or did not fully resolve those actions.
On June 9, 2010, Objectors Michelle Keyes, Amanda Ratliff and Verdel Ratliff appeared and filed objections to the motion for preliminary approval of the proposed settlement [39]. The Court postponed ruling on the motion for preliminary approval to allow the parties time to respond in writing to the objections. See [45, 46]. Objectors Keyes and the Ratliffs subsequently filed a copy of the Findings of Fact and Conclusions of Law After Bench Trial issued in Gutierrez v. Wells Fargo Bank, 730 F.Supp.2d 1080 (N.D.Cal.2010)[53], another case involving overdraft fees resulting from debit reordering, which the Objectors argued supported their position that the settlement here should not be preliminarily approved. The parties each responded to that filing [54, 57].
After considering the arguments from the parties and from the Keyes and Ratliff Objectors, on September 10, 2010, the Court entered an order addressing the various objections and (1) preliminarily approving the settlement; (2) approving the notice plan; (3) appointing a notice specialist and claims administrator; (4) certifying the Settlement Class for settlement purposes only; (5) appointing Class Counsel; and (6) scheduling a final fairness hearing to consider final approval of the settlement [59]. The Court subsequently reset the final fairness hearing to March 3, 2011[70].4
Beginning in January, 2010, a number of Class Members submitted objections to the settlement.5 On March 7, the parties each filed their memoranda in support of final approval [102, 103], which, inter alia, responded to the various objections. After denying a request by the parties to conduct discovery on some of the objectors (see [111] ), the Court held a fairness hearing on March 16, 2011[112], at which time the Court heard argument from counsel for the parties and from a number of objectors. Subsequently, the Court requested additional briefing on one issue raised at the fairness hearing [117], and the parties provided that briefing shortly thereafter [118]. Finally, on June 3, 2011, the Keyes and Ratliff Objectors filed a Notice of Recent Developments in Support of Objections, in which they notified the Court of an order preliminarily approving a settlement in MDL 2036.
B. Terms of the Settlement 6
The Court here briefly summarizes the more important provisions of the Settlement Agreement. The Agreement and Preliminary Approval Order define the relevant class as follows:
All persons in the United States who hold or held a Fifth Third Account who at any time during the Class Period incurred at least one Overdraft Fee (as defined in the Settlement Agreement) associated with at least one Fifth Third Debit Card Transaction.
Excluded from the Settlement Class are Fifth Third Bank, any parent, subsidiary, affiliate or sister company of Fifth Third Bank, and all officers or directors of Fifth Third Bank, or any parent, subsidiary, affiliate or sister company at any time during the Class Period, and the legal representatives, heirs, successors, and assigns of any of the foregoing. The Court presiding over any motion to approve the Settlement Agreement is excluded from the Settlement Class. Also excluded from the Settlement Class is any person who timely submits a valid request to be excluded from this Settlement.
¶ 7; Preliminary Approval Order [59] at 10. The class period is from October 21, 2004 through July 1, 2010. ¶ 1(d). The term “Overdraft Fee” means an “insufficient funds fee, overdraft fee, or other similar fee, incurred as a result of the ‘re-sequencing’ of a Fifth Third Debit Card Transaction in non-chronological order that was not previously reversed, refunded, or returned to the Settlement Class Member by Defendant.” ¶ 1(s). The term “re-sequencing” is not defined in the Agreement or elsewhere. A “Fifth Third Debit Card Transaction” is a transaction that is “effectuated with or relating to such Fifth Third Debit Card(s), including but not limited to automatic teller machine (“ATM”) transactions and point of sale (“POS”) transactions.” ¶ 1( l ). Accordingly, the settlement covers overdraft fees that result from debit card purchases and ATM transactions, but not fees that are the result of the payment of checks or other transfers.
The settlement provides for the creation of a $9,500,000 settlement fund from which Class Members may receive reimbursement for overdraft charges incurred during any one continuous forty-five day period within the Class Period. ¶¶ 9, 23–24. There is no cap on the amount that an individual Class Member may recover. If, after fees, costs, expenses, and incentive awards are paid, the amount claimed by Class Members is less than the remaining amount, the remainder will be distributed to claimants on a pro rata basis, with each such Class Member receiving up to (but not exceeding) three times the amount claimed on his or her claim form. After that, any remaining amounts will be distributed under the cy pres doctrine to one nonprofit credit counseling organization in each of the twelve states in which Fifth Third has branches. See ¶¶ 30, 31.
In order to obtain these benefits, Class Members are required to fill out a claim form. Dissatisfaction with the...
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