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In re TD Bank, N.A.

United States District Court, D. South Carolina, Greenville Division

February 28, 2018

IN RE TD BANK, N.A. DEBIT CARD OVERDRAFT FEE LITIGATION This order relates only to: Dorsey
TD Bank, N.A. D.N.J. Case Nos. 1:17-cv-00074, 6:17-cv-01432 MDL No. 2613



         This matter is before the Court on Defendant TD Bank, N.A.'s (“Defendant, ” “TD, ” or “the Bank”) Motion to Dismiss Plaintiff Shaina Dorsey's (“Plaintiff” or “Dorsey”) Class Action Complaint (“Dorsey Complaint”) for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dorsey v. TD Bank, N.A., D.S.C. Case No. 6:17-cv-01432, ECF No. 15.)[1] For the reasons set forth in this order, Defendant's motion is granted and the Dorsey Complaint is dismissed.


         In this litigation, a collective group of Plaintiffs challenge the manner in which Defendant, TD Bank, N.A., assessed overdraft fees, posted debit transactions, and assessed “sustained” overdraft fees. Eight putative class actions were filed against TD in various federal district courts. On April 2, 2015, the Judicial Panel on Multidistrict Litigation (“MDL Panel”) centralized these actions and assigned them to this Court. On April 15, 2015, the MDL Panel transferred an additional putative class action, Robinson v. TD Bank, N.A., S.D. Fla. C.A. No. 15-cv-60469 (“Robinson I”), to this Court for inclusion in this litigation, MDL 2613. The MDL Panel also conditionally transferred a second additional suit, Robinson v. TD Bank, N.A., S.D. Fla. C.A. No. 15-cv-60476 (“Robinson II”), which transfer Plaintiff Robinson opposed at that time. The sole theory in Robinson II involved a usury claim under the National Bank Act (“NBA”). On August 7, 2015, the MDL Panel resolved Plaintiff Robinson's motion to vacate the Panel's conditional transfer of Robinson II, and transferred the case to this Court for inclusion within MDL 2613. (ECF No. 55.)

         Plaintiffs' Consolidated Amended Class Action Complaint (“CAC”) was filed on June 19, 2015. (ECF No. 37.) Though it was filed prior to final transfer of Robinson II into this litigation, the CAC asserted the same usury claim under the NBA that Robinson II asserted, on behalf of the same putative nationwide class of TD Bank customers. (Compare ECF No. 37 ¶ 182, 242-56, with Robinson II, D.S.C. C.A. No. 6:15-cv-3538, ECF No. 1 ¶ 16, 27-41.) TD Bank filed a Motion to Dismiss Plaintiffs' CAC for failure to state a claim on August 3, 2015. (ECF No. 53.) After subsequent briefing and a hearing, the Court issued an Order on December 10, 2015, granting the Motion to Dismiss in part. Inter alia, the Court found that TD Bank's sustained overdraft fee (see Personal Deposit Account Agreement (“PDAA”), ECF No. 37-1 at 10) is not “interest” within the meaning of 12 U.S.C. § 85 and 12 C.F.R. § 7.4001. (ECF No. 68 at 80.) As a result, the Court held that Count VIII of the CAC failed to state a plausible claim for relief from violation of the NBA's prohibition on the taking of usurious interest, and dismissed Count VIII with prejudice. (Id. at 80, 84, 86.)

         On January 22, 2016, Plaintiff Robinson filed a Motion to Certify Order in Multiple Claims Case. (ECF No. 72.) Pursuant to Federal Rule of Civil Procedure 54(b), Plaintiff Robinson asserted that dismissal of her usury claim concluded all judicial labor with respect to the disposition of Robinson II, and that there was therefore no just reason to delay her appeal. Alternatively, Plaintiff Robinson sought permission to appeal pursuant to 28 U.S.C. § 1292(b), averring that immediate appellate review was necessary to resolve controlling issues of law, and resolution of those issues would significantly advance the resolution of the case as a whole. (See ECF No. 72.) The Court denied Plaintiff Robinson's Motion to Certify on July 18, 2016. (ECF No. 115.)

         Plaintiff Robinson filed a Motion for Relief from Order of Dismissal (“Motion to Reconsider”) on January 18, 2017 (ECF No. 139), citing Farrell v. Bank of Am., N.A., 224 F.Supp.3d 1016, 1018 (S.D. Cal. 2016), motion to certify appeal granted, No. 3:16-CV-00492-L-WVG, 2017 WL 1325572 (S.D. Cal. Apr. 11, 2017), [2] as new authority for her theory that TD's sustained overdraft fees constitute usurious interest under the NBA. The Court denied Plaintiff Robinson's Motion to Reconsider on January 20, 2017, finding the Farrell decision unpersuasive to disturb the Court's prior conclusions regarding the nature of the sustained overdraft fees in question. (ECF No. 141.)

         On May 31, 2017, the MDL Panel transferred Dorsey v. TD Bank, N.A., D.N.J. C.A. No. 1:17-cv-00074, into MDL 2613. (ECF No. 157.) The sole count in the Dorsey Complaint asserts a usury claim materially identical to the usury claim included as Count VIII of the CAC, and previously dismissed by the Court. (Compare ECF No. 37 ¶¶ 160-62, 182, 242-56, with Dorsey ECF No. 1 ¶¶ 12-14, 17, 28-44.) The substance of the usury claim alleges: (1) that TD assesses a $20 sustained overdraft fee if an account is overdrawn and is not brought back into a positive balance within ten business days, and (2) that this fee is an interest charge on an extension of credit, which interest rate exceeds the usury limit under 12 U.S.C. §§ 85-86. (See id.) Defendant filed its Motion to Dismiss on July 11, 2017. (Dorsey ECF No. 15.) Plaintiff Dorsey responded on August 10, 2017, and the Bank replied on August 22, 2017. (Dorsey ECF Nos. 23 & 24.) Additionally, the Bank filed a notice of supplemental authority on November 27, 2017, to which Dorsey replied on November 30, 2017. (Dorsey ECF Nos. 27 & 29.) The matter is ripe for consideration and the Court now makes the following ruling.


         A plaintiff's complaint should set forth “a short and plain statement . . . showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (quoting Twombly, 550 U.S. at 556)). In considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court “accepts all well-pled facts as true and construes these facts in the light most favorable to the plaintiff . . . .” Nemet Chevrolet, Ltd. v., Inc., 591 F.3d 250, 255 (4th Cir. 2009). However, a court “‘need not accept the [plaintiff's] legal conclusions drawn from the facts, ' nor need it ‘accept as true unwarranted inferences, unreasonable conclusions, or arguments.'” Philips v. Pitt Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (quoting Kloth v. Microsoft Corp., 444 F.3d 312, 319 (4th Cir.2006)) (modification in original). A court should grant a Rule 12(b)(6) motion if, “after accepting all well-pleaded allegations in the plaintiff's complaint as true and drawing all reasonable factual inferences from those facts in the plaintiff's favor, it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief.” Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).


         The Dorsey Complaint is subject to dismissal for two reasons. First, the Court's Order dismissing the materially identical usury claim in Count VIII of the CAC is the law of the case. Second, apart from the Court's prior rulings in the case sub judice, the law is still clear that sustained overdraft fees are not interest, and that assessing such fees cannot violate the usury provision of the NBA.

         A. The Court's Prior Ruling on the Usury Claim is the Law of the Case

         “The law-of-the-case doctrine provides that in the interest of finality, ‘when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.'” Carlson v. Boston Sci. Corp., 856 F.3d 320, 325 (4th Cir. 2017) (quoting TFWS, Inc. v. Franchot, 572 F.3d 186, 191 (4th Cir. 2009)). This principle is particularly important in the multidistrict litigation context, “where there is a need for consistent treatment of consolidated cases.” Pinney v. Nokia, Inc., 402 F.3d 430, 452-453 (4th Cir. 2005) (holding that the transferee court has the power to modify or rescind orders in a transferred case which it concludes are incorrect in order to preserve consistent treatment of consolidated cases); (see also ECF No. 68 at 11 n.1 (finding Pinney instructive in reaching, on the preemption issue, a different result than a prior ruling in one of the transferred cases)).[3] “Although the court remains free to deviate from its prior decisions, as the doctrine is discretionary . . . courts should be loath to revisit prior decisions in the absence of extraordinary circumstances.” Epstein v. World Acceptance Corp., 203 F.Supp.3d 655, 664 (D.S.C. 2016) (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817 (1988)) (internal modifications and quotation marks omitted). The Fourth Circuit has ruled that the law of the case doctrine ought to be followed unless: (1) a subsequent proceeding produces substantially different evidence, (2) controlling authority has since made a contrary decision of law applicable to the issue, or (3) the prior decision was clearly erroneous and would work manifest injustice. See United States v. Aramony, 166 F.3d 655, 661 (4th Cir. 1999).[4]The application of this principle invokes important concerns of finality and judicial economy, and the Fourth Circuit has stated that the third exception is not satisfied if the prior decision is “just maybe or probably wrong;” rather, it “must strike [the court] as wrong with the force of a five-week-old, unrefrigerated dead fish.” TFWS 572 F.3d at 194 (internal modifications and quotation marks omitted).

         The Court's December 10, 2015 Order finding, inter alia, that sustained overdraft fees are not interest, and therefore cannot form the basis of a usury claim is the law of the case. (See ECF No. 68 at 77-86.) It is undisputed that no different evidence has been produced, as the usury claims in the CAC and the Dorsey Complaint are materially indistinguishable and rely on the same evidentiary foundation. No controlling authority has made a contrary decision on the legal determination at issue. Moreover, the Court is “of the firm opinion that its previous order [on this issue] is free from any factual or legal error.” See Epstein, 203 F.Supp.3d at 665 (emphasis added).

         Plaintiff's argument that the law of the case doctrine only applies in the instance of an appellate ruling binding a trial court on the same issue in the same case is unavailing. It ignores the obvious import of the Court reaching consistent results on identical issues in multidistrict litigation, and asks the Court to turn a blind eye to one of the fundamental purposes of a consolidated proceeding. See In re: TD Bank, N.A., Debit Card Overdraft Fee Litig., 96 F.Supp.3d 1378, 1379 (U.S. Jud. Pan. Mult. Lit. 2015) (citing the prevention of inconsistent pretrial rulings as a basis for establishing MDL 2613); (Transfer Order, ECF No. 157 at 1 (transferring Dorsey to MDL 2613 for the purpose of “prevent[ing] inconsistent pretrial rulings”)). Application of the doctrine by a trial court to its own interlocutory rulings is discretionary, and the Court exercises its discretion to reach the only rational conclusion here. Accordingly, the Dorsey Complaint is subject to dismissal by application of the law of the case.

         B. Sustained Overdraft Fees Are Not Interest Under Applicable Law

         Plaintiff Dorsey insists that the Court revisit the viability of the usury claim for the third time in this litigation, [5] thereby inviting the Court to create inconsistent outcomes among the cases consolidated in MDL 2613. Plaintiff has alleged a violation of the NBA's prohibition on the taking of usurious interest. Her claim is premised on the assertion that an extended overdraft balance charge, or what is referred to in the PDAA as a “SUSTAINED FEE FOR OVERDRAWN ACCOUNTS” (see ECF No. 37-1 at 10) (“sustained overdraft fee”), amounts to an interest charge by TD Bank on the funds it advances when an account is overdrawn. The sustained overdraft fee is a one-time $20.00 charge levied on a customer whose checking account remains in an overdrawn status for ten consecutive business days. (See id.) Plaintiff alleges that “[u]nlike an initial overdraft fee, the [sustained overdraft fee] is an additional charge to a customer for which the bank has provided nothing new in the way of services. The charge is based solely on the alleged indebtedness to the bank remaining unpaid by the customer for a period of time.” (Dorsey Complaint ¶ 9, ECF No. 1 at 4 (emphasis in original).) Moreover, Plaintiff avers that “TD Bank renders no additional service to its customers in exchange for charging this extra fee other than advancing the original money to a customer's account in an amount to cover the overdraft, ” and “TD Bank uses the fact that it has loaned funds to its customer as a pretext to justify charging that customer a secondary service charge that exceeds lawful limits.” (Id. ¶ 12.) Plaintiff further states, “There is nothing in TD Bank's written materials disclosing that this additional ‘fee' is, in reality, a charge of interest on extended credit.” (Id. ¶ 14.) Finally, Plaintiff extrapolates an effective annualized interest rate far in excess of the permissible limit by relating the $20.00 charge, which corresponds to a 10-day period, to the actual negative balance on the account (e.g., Dorsey's negative balance peaked at $208.66 during the relevant period, leading to an effective annualized interest rate putatively more than fifty-one (51) times the legal limit). (See Id. ¶¶ 15, 29-38.) The question of whether Plaintiff's complaint states a plausible claim for relief turns entirely upon whether or not the $20.00 sustained overdraft fee is properly characterized as interest.

         TD Bank correctly argues that the sustained overdraft fee is not “interest” within the meaning of 12 U.S.C. § 85. The Bank points to Office of the Comptroller of the Currency (“OCC”) regulations, which differentiate between bank charges of interest, governed by 12 C.F.R. § 7.4001, and non-interest charges and fees, governed by 12 C.F.R. § 7.4002. The ...

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