In re Checking Account Overdraft Litigation, 830 F. Supp. 2d 1330

Background

The Court granted final approval of a $410 million class settlement with Bank of America related to overdraft practices; notice to 13+ million Settlement Class Members was made and a cy pres component was created.
Settlement Class Members receive direct distributions auto-allocated under a stated formula; cy pres distributions support identified charities for unidentified claimants; no separate injunctive relief was ordered since federal changes already curbed overdraft practices.
Objections were filed by a small fraction of the class but were found unpersuasive and unsupported by affidavit or record evidence.
The Closson settlement posed a substantial threat to class claims; after litigation, the parties negotiated a global settlement that avoided unresolved Supreme Court and preemption defenses.
Class Counsel sought 30% of the net settlement fund as fees plus costs; service awards of $5,000 per representative were requested and approved.
The Court certified the Settlement Class under Rule 23(a), (b)(3), and (e), approved the cy pres plan, and retained jurisdiction to enforce the settlement.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is the Settlement fair, reasonable, and adequate under Rule 23(e)?	King: Settlement is the product of arm's-length negotiations and provides substantial recovery given risks.	Bank: Settlement may not capture full value and could be improved; potential overstatement of class benefit.	Yes; the Court finds the Settlement fair, reasonable, and adequate.
Was the Notice program adequate to satisfy due process?	Yourke/Gilbert: Notice to 13M+ members via mail, press, websites, and phone was best practicable and informative.	BofA: Notice sufficiently described terms and rights; some objections lack merit.	Yes; notice satisfied due process and Rule 23 requirements.
Is the cy pres distribution reasonable and appropriate?	Cy pres funds address unidentifiable claimants and align with the lawsuit’s objectives.	Critics questioned cy pres scope; concern about fund allocation away from identifiable class members.	Yes; cy pres plan is reasonable and narrowly tailored to purpose of the action.
Are the release terms proper and not overly broad?	Release covers claims related to the challenged overdraft practices; narrowly tailored to the conduct at issue.	Release could sweep broadly, potentially foreclosing related actions.	Yes; the release is proper and appropriately limited.
Is Class Counsel's 30% fee reasonable under Camden I factors?	High risks, extraordinary result, and megafund size justify a 30% fee per Camden I and related authorities.	Objectors argued for lower fees aligned with benchmark or lodestar; seeks cross-check, etc.	Yes; 30% of the net settlement fund is approved as reasonable.

Key Cases Cited

Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) (no evidence by objectors supports claims; approves settlement)
Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950) (due process requiring adequate notice)
Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) (due process notice standard for class actions)
In re Chicken Antitrust Litig. Am. Poultry, 669 F.2d 228 (5th Cir. Unit B 1982) (factors favoring settlement approvals in complex actions)
Camden I Condominium Ass'n v. Dunkle, 946 F.2d 774 (11th Cir. 1991) (percent-of-fund method for attorney fees in common fund cases)
In re Nissan Motor Corp. Antitrust Litig., 552 F.2d 1088 (5th Cir. 1977) (factors for evaluating settlements and notices)
Lipuma v. American Express Co., 406 F. Supp. 2d 1298 (S.D. Fla. 2005) (settlement notices and adequacy considerations)
Behrens v. Wometco Enters., Inc., 118 F.R.D. 534 (S.D. Fla. 1988) (reasonableness of settlement ranges; adequacy of recovery)
In re Sunbeam Sec. Litig., 176 F. Supp. 2d 1323 (S.D. Fla. 2001) (common fund fee considerations; percentage approach preferred)