Case Studies

AP&S Prevents Certification of Class Action Against Charter One Bank

The Challenge:

Charter One Bank was sued by a Vermont customer, who sought to represent a class of plaintiffs aggrieved by the banks advertising and debit posting practices. This customer claimed that he had been misled into opening two checking accounts by the bank’s “Totally Free” checking account promotion. He alleged that the accounts were not actually free, and Charter One’s debit posting practices were purposely designed to increase the number of overdraft charges to customers’ accounts. Relying on an arbitration provision in its account agreement, Charter One forced the claims to arbitration. The arbitrator made a preliminary determination that the case was amenable to treatment as a class action.

In the event a class was certified and the case permitted to proceed, Charter One faced significant exposure in terms of both an adverse verdict and public relations. This exposure was increased significantly by the fact that the case was in arbitration, rather than in court. If the arbitrator certified the class, Charter One would have no meaningful ability to challenge the ruling and would be forced to defend a high exposure case without the benefit of binding precedent, or the other protections typically afforded a class action defendant in court.

The Solution:

After the arbitrator made his initial class determination decision, Charter One requested that AP&S step in and defend the case. We immediately recognized that the issue of class arbitration was presently before the United States Supreme Court and that class arbitration had been significantly restricted in recent years. AP&S also realized that several federal statutes, such as the National Bank Act and Truth in Savings Act impacted the plaintiff in ways that may not be common to the class he sought to certify. Based on these and other factors, we opposed class certification in the arbitration and the Vermont Superior Court.

The Result:

Ultimately, AP&S convinced both the Vermont Superior Court and the arbitrator that the class should not be certified. Following this ruling, AP&S successfully moved to dismiss the plaintiff’s case. These decisions were affirmed on appeal to both the Vermont Superior Court and the Vermont Supreme Court.

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