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Amber Pieloor, On Behalf of Herself, and All Others Similarly Situated v. Gate City Bank

October 15, 2012

AMBER PIELOOR, ON BEHALF OF HERSELF, AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
GATE CITY BANK, DEFENDANT.



The opinion of the court was delivered by: Charles S. Miller, Jr. United States Magistrate Judge

MEMORANDUM OPINION AND INITIAL SCHEDULING ORDER

I. BACKGROUND

Plaintiff alleges in the complaint that she was a customer of defendant Gate City Bank (herein "Gate City" or "Bank") within the three years preceding the filing of the complaint. According to the complaint, Gate City is a regional bank with approximately 32 branch locations in North Dakota and Minnesota and is headquartered in Bismarck. (Doc. No. 1, ¶¶ 4-5).

Plaintiff alleges that Gate City unfairly and deceptively "re-sequenced" transactions in her account for the purpose of maximizing the amount of overdraft fees it could charge and that this conduct constituted a breach of contract, unjust enrichment, and a violation of North Dakota's Unlawful Sales and Advertising Act, codified at N.D.C.C. ch. 51-15. Plaintiff sues on her own behalf. She also seeks to sue on behalf of all Gate City's customers who were similarly situated. (Doc. No. 1, ¶¶ 1-3).

This is not the first class action that has been brought against a financial institution for alleged re-sequencing of financial transactions. In most (if not all) of the cases for which classes have been certified, the allegation is that defendant financial institution would accumulate customers' debit card transactions throughout the day and then, at the end of the day, process the transactions from highest to lowest, i.e., re-sequence the transactions from the order in which they actually occurred. See, e.g., In re Checking Account Overdraft Litigation, MDL No. 2036, 281 F.R.D. 667, 682 (S.D. Fla. 2012); Trombley v. National City Bank, 826 F. Supp. 2d 179, 182 (D.D.C. 2011); Schulte v. Fifth Third Bank, No. 09--cv--6655, 2010 WL 8816289, *1 (N.D. Ill. 2010); Gutierrez v. Wells Fargo Bank, N.A., 730 F. Supp. 2d 1080, 1083 (N.D. Cal. 2010).

This case, however, is broader in scope. While the complaint alleges the re-sequencing of debit card transactions similar to the cases cited above, it also alleges that Gate City re-sequenced other transactions in plaintiff's account, including checks and deposits. Consequently, unlike the cases where the certified classes have been limited to customers who have had their debit card transactions re-sequenced from highest to lowest, plaintiff in this case seeks certification of the following class:

All GCB customers in the United States who maintained checking accounts with GCB and were assessed overdraft charges due to the improper re-sequencing of transactions. (Doc. No. 1, ¶ 29).

What is not entirely clear from the complaint, however, is exactly what plaintiff is claiming constituted the allegedly unfair and deceptive re-sequencing for transactions other than debit card transactions. Taking what plaintiff has actually pled, it appears the following is what is being claimed:

C Gate City accumulated throughout the day all transactions - including debit card transactions, checks, and deposits - and then processed the transactions together at the end of the day in a manner so that (1) the debits would be posted first and (2) the debits would be posted in the order from highest to lowest.

C Gated City re-sequenced transactions from different days as if they occurred on the same day. (Doc. No. 1, ¶¶ 8-15, 22-28).*fn1

In its answer, Gate City denies that it re-sequences transactions in the manner alleged. In addition, it details the manner in which it processes the various transactions that plaintiff complains about. Gate City states that it employs an "online, real-time system" that processes transactions throughout the day in the order they are received from third parties. With respect to paper checks, Gate City alleges that it processes image files of checks received from the Federal Reserve Bank and the Bank of North Dakota as they are received and, if more than one check is received at a time, the checks are processed in the order of the numbers on the check. For checks converted to "ACH" (Automated Clearing House transactions), Gate City alleges it processes these transactions when received and that, if more than one customer transaction is in a batch, it processes the transactions from low to high and not high to low as plaintiff claims. Gate City also alleges that ATM/POS transactions authenticated with a PIN, transactions processed over the Bank's teller line, and transactions initiated by the customer via the Bank's online banking site or automated phone system are processed immediately. Also, in the one instance in which plaintiff claims a deposit was improperly sequenced, Gate City explained its policy for processing that deposit as discussed in more detail below. (Doc. No. 6).

Plaintiff pleads in her complaint two examples of where she claims Gate City improperly re-sequenced her transactions. One example is the activity in her account on May 24, 2010. Plaintiff alleges that she had a positive balance in her account of $176.47 at the start of the day and that Gate City thereafter processed a series of ATM/POS withdrawals, checks, and one deposit, which were interspersed with five overdraft charges in the following sequence:

Type of transaction Debit Credit Account balance

$176.47

Not specified $19.44 $157.03 Not specified $6.72 $150.31 Not specified $19.44 $130.87 Deposit $34.76 $165.63 Not specified $175.07 -$9.44 Overdraft charge $30.00 -$39.44 ATM/POS $11.75 -$51.19 Overdraft charge $30.00 -$81.19 ATM/POS $27.66 -$108.85 Overdraft charge $30.00 -$138.85 Check $94.00 -$232.85 Overdraft charge $30.00 -$262.85 Check $32.00 -$294.85 Overdraft charge $30.00 -$324.85 (Doc. No. 1, ¶ 26).*fn2 Plaintiff claims that Gate City re-sequenced the transactions for May 24, 2010, and that, if the transactions had not been re-sequenced, the $175.07 debit transaction would been processed after the debit transactions that followed, i.e., the two ATM/POS transactions of $11.75 and $27.66 and the two checks of $94.00 and $32.00, with the net result being there would only have been one overdraft charge and not five charges. (Doc No. 1, ¶ 27).

However, what is missing from this example are facts indicating when the individual transactions occurred relative to each other and when Gate City received the transactions. Consequently, it is not possible to conclude from what facts have been alleged that the $175.07 debit transaction was re-sequenced relative to the others. Moreover, if plaintiff's allegations are that Gate City batched all of the debits and credits for that day and processed the debits from high to low first, then the fact the $175.07 transaction was not posted before all the debits allegedly processed on that day, the fact that other debit transactions were not posted in strict high to low order, and the fact the credit was interspersed with the debits seem to contradict plaintiff's more general allegations.*fn3

In response, Gate City alleges in its answer that May 24, 2010, was a Monday. It further states that the debits of $19.44, $6.72, $19.44, $175.07, $11.75, and $27.66 were all debit card transactions that were made on Friday, May 21 or Saturday, May 22 and that all were posted to plaintiff's account in the order that they were received. Gate City also states that the $94 and $32 debits were checks numbered 1051 and 1052, that the checks were received by Gate City on May 24, 2010, through the check clearing system, and that the checks were posted to plaintiff's account at 3:08 p.m. in the ascending order of the check numbers. Based on these facts, Gate City states there was no re-sequencing. (Doc. No. 6, ¶ 27).

The other example of alleged re-sequencing claimed by plaintiff are the transactions allegedly posted to her account on May 22, 2009, which she states were processed as follows after she ...


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