Moore v. MB Financial Bank, N.A.
1:17-cv-04716
N.D. Ill.Nov 16, 2017Background
- Plaintiff LaTanya Moore sued MB Financial under the National Bank Act (NBA), alleging MB charged unlawful usurious "continuous daily overdraft fees" (CDOFs) for maintaining negative balances.
- MB's CDOF: $6.50 per day, charged beginning the second consecutive calendar day through the sixteenth; Moore alleged five CDOFs in May 2017 totaling $32.50.
- MB moved to dismiss under Rule 12(b)(6), arguing the CDOF is a service/penalty fee, not "interest" under the NBA.
- The OCC regulations and interpretive guidance distinguish between "interest" and certain non-interest bank fees, and the OCC has characterized overdraft fees as non-interest charges.
- The court evaluated whether CDOFs fit the ordinary and regulatory definitions of "interest," considered authority from other federal courts and the OCC, and also assessed—if treated as interest—whether Illinois law would bar the charge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CDOF qualifies as "interest" under the NBA | CDOF is effectively usurious interest charged for overdraft balances | CDOF is a predetermined service/penalty fee for failing to cure an overdrawn account, not interest | CDOF is a non-interest charge under OCC rules and the NBA; dismiss claim |
| Whether extended overdraft charges are payments for use of money | Moore asserts fees are compensation related to her overdrawn balance | MB says fees are flat, contingent penalties unrelated to credit extension | Court: fees are flat, contingent, not payment for use of money; not interest |
| Whether OCC regulatory interpretation controls characterization | Moore challenges characterization as interest, emphasizing consumer protection | MB relies on OCC definitions and interpretive letter treating overdraft fees as non-interest | Court gives deference to OCC and follows its regulations/interpretation; treats CDOF as non-interest |
| Even if CDOF were interest, whether Illinois law prohibits it | Moore contends lack of explicit labeling prevented agreement to an interest rate | MB points to account agreement and fee schedule that the customer accepted | Court: Illinois Interest Act permits agreed rates/charges; account terms suffice; no claim |
Key Cases Cited
- McReynolds v. Merrill Lynch & Co., 694 F.3d 873 (7th Cir.) (pleading standard for Rule 12(b)(6))
- Cochran v. Illinois State Toll Highway Auth., 828 F.3d 597 (7th Cir.) (standards for plausible pleading and inferences)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not accepted as true on a motion to dismiss)
- Smiley v. Citibank, N.A., 517 U.S. 735 (1996) (deference to OCC interpretations of bank regulations)