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By Matthew Russell Lee, Patreon

SDNY COURTHOUSE, July 23 – Three years after Capital One Bank was sued for its overdraft fees on debit card transactions for which there were sufficient funds available in the customers' accounts, on June 25 the bank's motion for summary judgment was denied by U.S. District Court for the Southern District of New York Judge Lorna G. Schofield.   

   Judge Schofield after her ruling joked that it felt like the case began in last century. She gave the lawyers for named plaintiff Tawanna M. Roberts two weeks to file a letter presaging their motion for class certification.

 Now on July 23, Capital One through its Morrison Foerster lawyers have submitted this, which we dub an attack "ad feminem" - "Defendant Capital One, N.A. (“Capital One”) submits this response to Plaintiff’s letter regarding her proposed certification motion. The arguments in Plaintiff’s letter are conclusory, and show that she cannot meet Rule 23’s requirements for either of her claims.  First, Plaintiff is patently inadequate and her claims are not typical because she is subject to unique defenses. Pagan v. Abbott Labs., Inc., 287 F.R.D. 139, 150 (E.D.N.Y. 2012) (finding plaintiffs inadequate representatives where the “action involve[d] a host of legal and factual issues unique to them and that are likely to distract from their representation of the class”) (citation omitted); (June 25, 2019 Tr. at 33:24-25) (Capital One has “some serious adequacy of representation arguments.”) For example:

 In a recorded conversation with Capital One, Plaintiff acknowledged that she has known for a long time—contrary to her allegations in the Complaint—that debit card transactions are not paid instantly and that they would be assessed overdraft fees if she did not wait from them to clear before overdrawing her account.

 Plaintiff also admitted that she checked her balances via the Capital One mobile app before transacting and then regularly and intentionally overdrew her account. When transactions were pending, such conduct was a breach of the express promise in the EFT Agreement not to spend or withdraw funds needed to pay pending items. Her breaches of this promise caused the fees at issue and bar her claims.

Plaintiff regularly took advantage of Capital One’s assessment of overdraft fees at payment, not authorization. Plaintiff would have incurred significantly more fees under her “authorization” definition than she incurred due to Capital One’s use of the “settlement” definition.

 Plaintiff failed to repay $561.20—more than her claimed damages—for her overdrafts. These admissions and conduct—all of which could independently bar her claims—distinguish her from putative class members, who inadvertently overdrew, did not regularly take advantage of “the float” between authorization and payment, and repaid Capital One for their overdrafts." We'll have more on this.  

   The case has already seen one appeal to the Second Circuit Court of Appeals, which partially reversed Judge Schofield's granting of Capital One's motion to dismiss Roberts' causes of action for breach of contract and violation of New York General Business Law § 349.     

   The case has attracted interest as an example, consumer advocates say, of predatory practice, citing a Capital One account agreement which states that an overdraft occurs when it “elects to pay” a transaction that exceeds a customer’s available balance. 

  The advocates say that by charging overdraft fees on transactions that the bank elected to pay when the available balance was sufficient, but that later settled against negative funds, Capital One led consumers to believe it would do one thing while doing the opposite, inflicting significant financial hardship - that is, overdraft fees - on affected customers in the process.    

  In the run-up to the June 25 oral arguments, Judge Schofield informed the parties that she would only grant argument to lawyers graduating in 2014 or more recently. Capital One's law firm Morrison Foerster proposed a 2013 graduate, Tiffani B. Figueroa. Judge Schofield approved it, and the argument took place with Sophia Goren Gold representing Tawanna Roberts. Now she seeks class certification. The case is Roberts v. Capital One Financial Corporation, 16-cv-4841 (Schofield).

   After her June 25 ruling, Judge Schofield said that there might be material even in the transcript of the oral argument, which took place in open court, which should be redacted. This follows an entirely sealed criminal sentencing Judge Schofield held on June 17, without disclosing even the name of the case or defendant, much less the reason(s) for sealing.

     In this case, both sides quickly said no, there was nothing to redact. Like the sentencing, it is a matter of public interest. Inner City Press, which has not been told what sentencing was moved out of its view on June 17 (and which was the only media in Judge Schofield's courtroom for the Capital One oral arguments on June 25) will stay on these cases. More on Patreon, here.

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