280 F. Supp. 3d 1069
N.D. Ill.2017Background
- Plaintiff LaTanya Moore sued MB Financial under the National Bank Act (NBA), alleging charging a continuous daily overdraft fee (CDOF) in May 2017 totaling $32.50 violated the NBA as usurious interest.
- MB Financial’s CDOF is a flat $6.50 per day charged starting on the second consecutive calendar day through the sixteenth consecutive calendar day for negative checking-account balances.
- MB moved to dismiss under Fed. R. Civ. P. 12(b)(6), arguing the CDOF is a service/maintenance fee, not "interest" under the NBA or OCC rules.
- The OCC regulations (12 C.F.R. § 7.4001–7.4002) define "interest" to include many credit-related fees but treat many deposit-related overdraft charges as non-interest under § 7.4002(a); OCC interpretive guidance describes overdraft fees as non-interest.
- The district court followed the majority of federal courts (and the Eleventh Circuit) holding that CDOFs are non-interest charges incidental to deposit accounts and not usurious interest under the NBA.
- The court also held that even if the CDOF were interest, Illinois law would permit the charge because Moore agreed to the account terms and fee schedule when opening the account.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CDOF is "interest" under the NBA/OCC regulations | CDOF is effectively a usurious interest charge for maintaining a negative balance | CDOF is a flat service/deposit maintenance fee, not compensation for use of money, thus non-interest under OCC regs | CDOF is non-interest under § 7.4002 and not usurious interest; claim dismissed |
| If CDOF were "interest," whether Illinois law bars the charge | Moore contended bank failed to identify CDOF as an interest rate, so no agreement | MB argued account agreement and fee schedule constitute agreement to the charge | Even if interest, Illinois law allows state-authorized rates; Moore agreed to fees — claim fails |
Key Cases Cited
- McReynolds v. Merrill Lynch & Co., 694 F.3d 873 (7th Cir. 2012) (Rule 12(b)(6) pleading standard)
- Cochran v. Illinois State Toll Highway Authority, 828 F.3d 597 (7th Cir. 2016) (pleading plausibility standard discussion)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (legal conclusions not entitled to factual presumption)
- McGee v. Bank of Am., N.A., [citation="674 F. App'x 958"] (11th Cir.) (CDOFs are non-interest charges)
- Giannangeli v. Target Nat'l Bank, N.A., [citation="543 F. App'x 785"] (10th Cir.) (NBA/state-rate preemption discussion)
- Smiley v. Citibank, N.A., 517 U.S. 735 (U.S. 1996) (deference to OCC interpretations of NBA regulations)