Judge Allows Overdraft Lawsuit Against Umpqua Bank in California to Proceed

November 7, 2013
Oregon Live  
overdraft news

U.S. District Court Judge Jon Tigar in California has allowed a class-action lawsuit over Umpqua Bank's overdraft fee practices to proceed to trial, but only after tossing out many of the plaintiffs' legal claims. Amber Hawthorne filed suit in 2011 that claimed Portland-based Umpqua Bank violated her contract in how it charged overdraft fees to her account.

The lawsuit sought to recover at least $5 million in damages and fees for Umpqua customers who incurred overdraft fees after the bank reordered debit-card transactions from highest amount to lowest instead of processing them in chronological order. Umpqua Bank asked the court to dismiss the suit. Tigar's Oct. 25 order dismissed the breach of contract claim because the bank's "Overdraft Disclosure" in customer checking-account agreements warned of the practice. Tigar also dismissed claims of unjust enrichment, breach of implied covenant of good faith, and fair dealing and violation of California's consumer protection act.

Claims that were allowed to proceed to trial include allegations that the bank's overdraft practices were fraudulent and unlawful under California's Unfair Competition Law. According to the lawsuit, the bank misled customers into believing that debit transactions would post to their checking accounts in chronological order; but the bank reordered debit transactions to maximize overdraft fee revenue. The case is not yet certified as a class action; a ruling on that matter is expected in mid-2014.

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