Federal Judge Approves $2M Settlement Of Overdraft Fees Suits

by Tara Arick on September 9, 2013 · 0 comments

in Banking

A federal judge in Michigan on Sept. 5 granted preliminary approval of a $ 2 million settlement that would end consolidated class action suits against Citizens Bank and Citizens Republic Bancorp Inc. (collectively, Citizens Bank) alleging that the banks reordered customers’ debit and credit card transactions to maximize overdraft fees (Jane Simpson v. Citizens Bank, No. 12-10267, Shirley D. Liddell v. Citizens Bank, et al., No. 12-11604, E.D. Mich.).

U.S. Judge Denise Page Hood of the Eastern District of Michigan issued the order in the suits Jane Simpson and Shirley D. Liddell filed against Citizens Bank.

Overdraft Fees Complaints

Simpson filed her complaint on Jan. 20, 2012, alleging that Citizen Bank conducted “unfair and unconscionable assessment and collection of excessive overdraft fees.”

“Instead of simply declining debit transactions when there are insufficient funds, or warning its customers that an overdraft fee will be assessed if they proceed with the transaction, Citizens Bank routinely processes such transactions and then charges its customers an overdraft fee of $ 36 – even when the transaction is for only a few dollars,” Simpson said. “This automatic, fee-based overdraft scheme is intentionally designed to maximize overdraft fee revenue for Citizens Bank. Additionally, as part of its inequitable motive to generate obscene profits gained through the imposition of unconscionable overdraft fees, Citizens Bank failed to adequately disclose to its customers that they could elect to opt out of overdraft protection.”

Liddell filed a similar complaint on April 9, 2012, and on July 12, 2012, the District Court consolidated the cases.


On July 15, 2013, the plaintiffs filed a motion for preliminary approval of a settlement. The plaintiffs defined the settlement class as: “All Citizens Bank customers in the United States who had one or more Accounts (whether held individually or jointly) and who, during the Class Period, incurred an Overdraft Fee as a result of Citizens Bank’s Debit Re-sequencing. Excluded from the Settlement Class are all current Citizens Bank employees, officers and directors, and the Judge presiding over this Action.”

The settlement calls for a $ 2 million settlement fund to be distributed to identifiable settlement class members who do not opt out of the settlement, as well as a separate payment of $ 200,000 toward the costs of providing notice to the settlement class and administration of the settlement.

Judge Hood found that “the Settlement is the result of informed, good-faith, arm’s-length negotiations between the Parties and their capable and experienced counsel and is not the result of collusion.” She set a Jan. 15, 2014, final approval hearing.

The plaintiffs are represented by Jeffrey M. Ostrow and Jason H. Alperstein of Kopelowitz Ostrow in Fort Lauderdale, Fla.; E. Powell Miller and Ann L. Miller of The Miller Law Firm in Rochester, Mich.; Hassan A. Zavareei and Jeffrey D. Kaliel of Tycko & Zavareei in Washington, D.C.; Robert Gittleman of Robert Gittleman Law Firm in Farmington Hills, Mich.; Patrick E. Cafferty of Cafferty Faucher in Ann Arbor, Mich.; Allen Carney and Randall K. Pulliam of Carney Williams Bates Pulliam & Bowman in Little Rock, Ark.; and Ruben Honik, Richard M. Golomb and Kenneth J. Grunfeld of Golomb & Honik in Philadelphia. Citizens Bank is represented by Matthew Mitchell of Dykema Gossett in Bloomfiled Hills, Mich.

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