Grenier v. Granite State Credit Union

1

Rita Grenier and Edwin Grenier, Individually and on Behalf of All Others Similarly Situated v. Granite State Credit Union, Does 1 through 5

CIVIL Nos. 21-cv-534-LM

Opinion No. 2023 DNH 090 P

United States District Court, D. New Hampshire

August 2, 2023

ORDER

Landya McCafferty, United States District Judge

Plaintiffs Rita and Edwin Grenier bring this putative class action against Granite State Credit Union (“Granite”) and “Does 1 through 5,” alleging injuries arising from Granite's overdraft fees and policies. Plaintiffs argue that Granite's overdraft policies-specifically Granite's failure to adequately explain to consumers how it assesses overdrafts-violate the Electronic Funds Transfer Act's, 15 U.S.C. § 1693 (“EFTA”) implementing regulations, 12 C.F.R. § 1005 et seq. (“Regulation E”).

Granite filed a motion to dismiss (doc. no. 9) which the court denied (doc. no. 20). The parties now report that they have reached a negotiated settlement of their dispute. Before the court is plaintiffs' unopposed motion (doc. no. 40) for preliminary approval of the parties' settlement. The court has carefully reviewed the parties' proposed Class Action Settlement Agreement (the “Agreement”) and its supporting exhibits. For the following reasons, the court: (1) preliminarily approves the Agreement; (2) preliminarily certifies the proposed class for settlement purposes; (3) appoints KCC LLC to administer the settlement and provisionally appoints plaintiffs' counsel of record as settlement class counsel and plaintiffs as settlement class representatives; (4) approves the opt-out and objection procedures outlined by the parties, subject to one change and (5) directs the parties to submit updated proposed notice forms to bring them into conformity with Fed.R.Civ.P. 23(c)(2)(B). The court declines to set a schedule for the fairness hearing and related deadlines until the notices are approved.

BACKGROUND

Regulation E requires financial institutions to secure “affirmative consent” from customers before assessing overdraft fees on customers' ATM and one-time debit card transactions. 12 C.F.R. § 1005.17(b)(1)(iii). It requires institutions to obtain such consent utilizing an opt-in notice that “describe[s] the institution's overdraft service,” id. § 1005.17(b)(1)(i), in a way that is “clear and readily understandable,” id. § 1005.4(a)(1).

Plaintiffs allege that Granite violated Regulation E by charging them overdraft fees without adequately explaining how Granite determines what constitutes an overdraft. Granite's opt-in notice (the “Opt-in Disclosure”) states that an overdraft “occurs when you do not have enough money in your account to cover a transaction, but we pay it anyway.” It does not disclose how it determines whether an account has “enough money.”

There are two different methods by which financial institutions can calculate an account's balance to determine whether it has “enough money” to cover a transaction at any given time. One such method, referred to as the “available balance,” is calculated by subtracting from the amount of money in the account any “holds” on deposits and pending debits that have not yet posted. The other method, known as the “actual balance,” is the actual amount of money in the account at any particular time, irrespective of any holds. Calculating overdrafts based on the available balance tends to result in more frequent overdrafts. Tims v. LGE Cmty. Credit Union, No. 1:15-CV-4279-TWT, 2017 WL 5133230, at *1 (N.D.Ga. Nov. 6, 2017), rev'd and remanded, 935 F.3d 1228 (11th Cir. 2019).

Granite uses the available balance method. Granite's failure to inform accountholders of the difference between the two methods of calculating overdrafts, and of which method Granite employs, forms the basis of this suit.

After the court denied Granite's motion to dismiss (doc. no. 20), the parties engaged in discovery. Plaintiffs served document requests and interrogatories on Granite, and Granite provided written responses, including transactional data. Both parties conducted depositions, and plaintiffs' data expert completed an extensive analysis of the transactional data provided by Granite.

Based on the data, plaintiffs' data expert concluded that between June 22, 2020, and April 30, 2022,^[1] Granite assessed 35,053 overdraft fees on 1,229 customers for transactions that constituted overdrafts under the available balance calculation, but not under the actual balance calculation. Those fees totaled $1,051,410. The expert extrapolated those results to estimate the fees assessed through March 28, 2023^[2]. In total, the expert estimated that Granite assessed $1,587,963 in fees between June 22, 2020, and March 28, 2023.

DISCUSSION

“The claims, issues, or defenses of a certified class-or a class proposed to be certified for purposes of settlement-may be settled, voluntarily dismissed, or compromised only with the court's approval.” Fed. R. Civ. P. 23(e). Courts approve class action settlements in stages. See Rapuano v. Trs. of Dartmouth Coll., 334 F.R.D. 637, 642 (D.N.H. Jan. 29, 2020); see also 4 William B. Rubenstein, Newberg on Class Actions § 13.10 (6th ed. 2022).

First the court must preliminarily approve the proposed settlement. To do so, it must find that it “will likely be able to” (1) certify the class for settlement purposes and (2) approve the settlement proposal under Rule 23(e)(2). Fed.R.Civ.P. 23(e)(1)(B). Rule 23(e)(1)(B) requires courts to conduct a “searching,” “careful,” and “rigorous” inquiry before preliminarily approving a settlement.^[3] Id.; see also Wright v. S. New Hampshire Univ., 565 F.Supp.3d 193, 200 (D.N.H. 2021). If the court grants preliminary approval, it then must “direct notice in a reasonable manner to all class members who would be bound” by the proposed settlement. Fed.R.Civ.P. 23(e)(1)(B). After notice to the class, the court must hold a fairness hearing at which class members may appear to support or object to the proposed settlement. See Rubenstein, supra, § 13.10. Finally, the court must determine whether to grant final approval of the proposed settlement. See id. Under Rule 23(e)(2), the court may grant final approval of a class action settlement if it can certify the proposed class, see Amchem Products, Inc. v. Windsor, 521 U.S. 591, 621 (1997), and finds that the proposed agreement is “fair, reasonable, and adequate.” Fed.R.Civ.P. 23(e)(2).

This case is at the preliminary approval stage. The First Circuit has recognized the importance of encouraging and facilitating class action settlements where appropriate under Rule 23(e). Howe v. Townsend, 588 F.3d 24, 36 (1st Cir. 2009) (citing Durrett v. Hous. Auth., 896 F.2d 600, 604 (1st Cir. 1990)). Nonetheless, the court's determination at this stage is “preliminary in the sense that it is subject to modification based on additional information-including further factual development or objections by class members-that may come to light prior to or during the fairness hearing.” Rapuano, 334 F.R.D. at 643 (citations omitted).

I. Preliminary Certification of the Proposed Class for Settlement Purposes

To certify a class, the court must find that the class meets the four requirements of Rule 23(a) and that the action falls into one of the categories outlined in Rule 23(b). See Amchem, 521 U.S. at 613-14.

Here, plaintiffs seek preliminary certification of the settlement class for purposes of settlement. The settlement class is defined as “all current and former members of Defendant with consumer accounts, who were charged [an overdraft fee] during the Class Period.” The class excludes “Granite State Credit Union, its parents, subsidiaries, affiliates, officers, and directors; DOES 1 through 5; all Settlement Class members who make a timely election to be excluded; and all judges assigned to this litigation and their immediate family members.” All eligible impacted individuals will be included in the settlement unless they opt out.

A. Fed. R. Civ. P. 23(a)

Rule 23(a) has four requirements: numerosity, commonality, typicality, and adequacy. Fed.R.Civ.P. 23(a).

1. Numerosity

Rule 23(a)(1) requires that the putative class be “so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). “No minimum number of plaintiffs is required to maintain a suit as a class action, but generally if the named plaintiff demonstrates that the potential number of plaintiffs exceeds 40, the first prong of Rule 23(a) has been met.” Clough v. Revenue Frontier, LLC, No. 17-CV-411-PB, 2019 WL 2527300, at *3 (D.N.H. June 19, 2019) (quoting Garcia-Rubiera v. Calderon, 570 F.3d 443, 460 (1st Cir. 2009)). Here, the record establishes that the settlement class includes at least 1,229 members. Because joinder of 1,229 members is impracticable, numerosity is likely satisfied.

2. Commonality

Rule 23(a)(2) requires the existence of “questions of law or fact common to the class.” Fed.R.Civ.P. 23(a)(2). To establish commonality, a plaintiff must show that all putative class members “have suffered the same injury.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011) (citation, internal quotation marks omitted). This means that the putative class members' “claims must depend upon a common contention . . . of such a nature that it is capable of classwide resolution-which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. Commonality is a “low bar.” In re New Motor Vehicles Canadian Exp. Antitrust Litig., 522 F.3d 6, 19 (1st Cir. 2008).

In this case, all class members allege the same injury, which is that they were charged overdraft fees in violation of Regulation E. Resolution of each class member's allegation depends on whether...