## Facts

- Multiple putative class actions by checking-account customers against several large banks were centralized for coordinated pretrial proceedings in an MDL in the Southern District of Florida.
- Plaintiffs alleged banks maximized overdraft fees by posting debit-card and other electronic transactions from highest to lowest, increasing the number of overdrafts and fees.
- Plaintiffs alleged inadequate disclosure of the posting method and its effect, and that customers were led to believe transactions would post chronologically or neutrally.
- Plaintiffs alleged overdraft fees were assessed even when sufficient funds existed at authorization, and that customers lacked a meaningful ability to opt out of overdraft coverage.
- Claims varied by bank and state but commonly included breach of contract, breach of the implied covenant of good faith and fair dealing, unconscionability (seeking equitable relief), conversion, unjust enrichment, and state consumer-protection/unfair-trade-practice violations.
- Defendant banks moved to dismiss under Rules 12(b)(6) and 12(c), arguing (among other grounds) National Bank Act preemption and failure to state claims based on the account agreements.

## Issues

1. Whether the National Bank Act and related regulations preempted state-law claims challenging overdraft posting-order and fee practices.
2. Whether plaintiffs plausibly stated contract-based claims, including breach of the implied covenant of good faith and fair dealing, when agreements gave banks discretion over posting.
3. Whether unconscionability could be asserted as an affirmative claim for equitable relief and, if so, whether procedural and substantive unconscionability were adequately pleaded.
4. Whether alternative and tort/statutory theories (including unjust enrichment, conversion, and state consumer-protection claims) were sufficiently pleaded to survive dismissal.

## Decision

- The court granted the omnibus motions in part and denied them in part, allowing core theories to proceed while dismissing or narrowing some claims depending on state law and pleading specifics.
- The court rejected broad National Bank Act preemption, permitting generally applicable state-law claims that only incidentally affected deposit-taking powers and did not significantly interfere with federal banking authority.
- The court allowed implied covenant of good faith and fair dealing claims to proceed where plaintiffs alleged banks abused contractual discretion (including posting order) to generate additional fees, presenting fact questions not suitable for resolution at the pleading stage.
- The court permitted unconscionability to be pleaded affirmatively where equitable relief could be fashioned and held the allegations plausibly supported both procedural and substantive unconscionability.
- The court generally permitted unjust enrichment to proceed in the alternative in appropriate jurisdictions; it scrutinized conversion and statutory consumer claims and dismissed or limited certain iterations where elements were not adequately alleged under applicable state law.

## Legal Principles

- Federal banking law does not preempt state laws of general application (contract, tort, and consumer-protection norms) when they are not regulatory in nature and only incidentally affect a national bank’s deposit-taking powers.
- A covenant of good faith and fair dealing claim may be maintained when it seeks performance of express contract terms in good faith and alleges bad-faith exercise of contractual discretion, rather than rewriting the contract.
- Unconscionability may be entertained as an affirmative theory when a court is asked to exercise equitable powers to reform or invalidate unconscionable contract terms.
- At the pleading stage, allegations supporting both procedural unconscionability (e.g., adhesion contracting, limited choice, opaque disclosures) and substantive unconscionability (e.g., harsh terms and fee practices allegedly designed to multiply charges) are sufficient to avoid dismissal.
- Unjust enrichment may be pleaded in the alternative pending resolution of the contract’s scope or enforceability; conversion and statutory consumer claims require state-law-specific elements that may warrant dismissal if not adequately pleaded.

## Conclusion

The court’s MDL pleading-stage order largely allowed overdraft-fee challenges to proceed, holding that the National Bank Act did not broadly preempt generally applicable state-law claims and that allegations of bad-faith use of posting discretion and unconscionable account terms plausibly stated claims warranting further factual development.


In re Checking Account Overdraft Litig., 694 F. Supp. 2d 1302 (S.D. Fla. 2010)