Numerous banks have been hit with class action lawsuits challenging their overdraft policies and procedures. Ballard Spahr lawyers have won the dismissal of a class action filed against the firm's client, a federal savings bank, challenging the bank's policy of generally processing customer debit transactions in descending order of dollar amount and claiming that such policy resulted in excessive overdraft fees.

On June 12, 2009, in Hassler v. Sovereign Bank, the New Jersey federal district court ruled that the plaintiff had failed to state a claim under New Jersey law, thus making it unnecessary for the court to reach the bank’s argument that the plaintiff’s state law claims were preempted under federal law.

The complaint alleged that the bank's policy violated New Jersey's Consumer Fraud Act, breached the bank's contractual duty of good faith and fair dealing, and unjustly enriched the bank. According to the court, the plaintiff's CFA claim that the bank's deposit agreement was misleading or deceptive was "unequivocally belied by the plain terms" of the agreement, which specifically disclosed that the bank generally posts customer payment transactions each day in descending order and that this order of processing may affect the imposition of overdraft fees.

Because the bank's actions were fully consistent with the terms of the agreement, the court also rejected the plaintiff's breach of contract and unjust enrichment claims. The court further found that in the face of the agreement's "unambiguous provisions," the deficiencies in the plaintiff's complaint could not be cured through an amendment and dismissed all of the plaintiff's claims with prejudice.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its skill in defending banks and other consumer financial services providers in class actions filed in state and federal courts throughout the country. For more information, please contact Alan S. Kaplinsky, CFS group chair, 215.864.8544 or


Copyright © 2009 by Ballard Spahr LLP.
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This newsletter is a periodic publication of Ballard Spahr LLP and is intended to alert the recipients to new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and specific legal questions you have.