Hughes v. TD Bank, N.A.
856 F. Supp. 2d 673
D.N.J.2012Background
- Hughes and Cressman opened TD Bank checking accounts with debit cards.
- Accounts were automatically enrolled in TD Bank's overdraft protection without affirmative opt-in.
- Overdraft program allowed withdrawals beyond balance up to a limit, with per-item fees.
- TD Bank's PDAA terms permit order-of-posting discretion and potential higher fees; large-to-small posting is alleged.
- 2011 PDAA allowed some reordering but not for undocumented merchants; pending debits may post after authorization.
- TD Bank's posting order and fees allegedly maximize charges; complaint filed December 14, 2011; motion to dismiss February 27, 2012; case related to MDL transfer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| CFA claim viability | TD Bank's reordering and opt-out failures are unconscionable or misleading. | Terms and disclosures were not unlawful or misleading under Hassler. | CFA claim survives; motion to dismiss denied on this issue. |
| Unconscionability (declaratory relief and contract terms) | Procedural and substantive unconscionability due to bargaining disparity and gouging. | Terms not unconscionable under contract and PDAA discretion acceptable. | Affirmative relief allowed; motion denied on unconscionability. |
| Breach of implied covenant of good faith and fair dealing | Bank exercised discretion unreasonably to maximize fees contrary to fair dealing. | No bad faith under express contract terms; discretion must be exercised reasonably. | Claim survives; motion denied. |
| Unjust enrichment | Bank benefitted from in bad faith reordering and overdraft fees not aligned with costs. | Enrichment not unjust if within contractual rights. | Claim survives; motion denied. |
| Conversion | Plaintiffs had right to possess funds; bank misappropriated funds through fees. | Relationship is debtor/creditor; no conversion. | Claim survives; motion denied. |
Key Cases Cited
- Hassler v. Sovereign Bank, 374 Fed.Appx. 341 (3d Cir. 2010) (unconscionability and CFA relevance in overdraft context)
- Hassler v. Sovereign Bank, 644 F.Supp.2d 509 (D.N.J. 2009) (CFA analysis; contract terms not inherently unlawful)
- In re Checking Account Overdraft Litigation, 694 F.Supp.2d 1302 (S.D. Fla. 2010) (MDL denial of motion to dismiss on unconscionability and related claims)
- Turf Lawnmower Repair, Inc. v. Bergen Record Corp., 139 N.J. 392 (1995) (unconscionability standard; unfair practices outside norm)
- VRG Corp. v. GKN Realty Corp., 135 N.J. 539 (1994) (unjust enrichment framework in New Jersey law)
- White v. Wachovia Bank, N.A., 563 F.Supp.2d 1358 (N.D. Ga. 2008) (rights to possess funds; conversion concepts in banking context)
- Amoco Prod. Co. v. Heimann, 904 F.2d 1405 (10th Cir. 1990) (contractual discretion and good faith interpretation)
- Barnett Bank of Marion, N.A. v. Nelson, 517 U.S. 25 (U.S. 1996) (federal preemption/overlap considerations)
- Bosland v. Warnock Dodge, Inc., 197 N.J. 543 (2009) (New Jersey CFA guidance on unlawful practices)
- Wilson v. Amerada Hess Corp., 168 N.J. 236 (2001) (implied covenant and reasonable exercise of discretion)