You know a company may have a bit of a customer service problem when its patrons start leveling lawsuits at them. Such is the plight of San Francisco-based UnionBanCal Corp., whose customers raised their figurative torches and pitchforks in revolt against the group of 30 banks because of their allegedly excessive overdraft fees. And just in time for Bastille Day.
In the spirit of the revolutionary season, U.S. District Judge James Lawrence King yesterday certified the first class-action case against the banks. However, he said that customers would not be able to pursue a racketeering claim against Union Bank.
The case, In Re Checking Account Overdraft Litigation, 09-cv-02036, U.S. District Court, Southern District of Florida (Miami), is yet another in the recent litany of suits against major banking institutions in the wake of the financial crisis. Two weeks ago, Bank of America settled an $8.5 billion suit brought by investors seeking restitution on mortgage-backed securities losses.
Under the terms of the proposed settlement, BofA would turn over $8.5 billion in cash to Bank of New York Mellon Corp., which acted as the trustee for the bondholders and would distribute funds to the investors. BofA would then take a corresponding pre-tax charge against earnings for the second quarter, which is expected to result in about $5 billion in after-tax costs to the bank.