Challenge of SunTrust’s overdraft fees back on, says supreme court

The Georgia Supreme Court gave new life to a class action lawsuit challenging SunTrust Banks’ overdraft fees in a decision that also could chip away at companies’ efforts to block lawsuits with arbitration clauses.

In a unanimous decision siding with consumers rather than the Atlanta bank, the state's highest court overturned earlier decisions by the Georgia Court of Appeals and the Fulton County State Court. The case now goes back to the trial court for another look at whether it should be certified as a class action.

The decision could affect roughly 400,000 Georgians that the lawsuit alleges have been overcharged for small loans by the bank when they write checks or make debit card charges that exceed their account balance.

SunTrust customer Jeff Bickerstaff Jr., of Columbus, had sued the bank in 2010, claiming that a $36 overdraft fee it had charged him was exorbitant and violated Georgia’s usury law against excessive interest rates on loans.

The lawsuit claims that the fees amount to interest rates of up to 1,000 percent for small overdraft loans.

A SunTrust spokesman declined to comment on the lawsuit.

According to the bank’s web site, it continues to charge $36 for each overdraft due to a check or automatic bill pay, for up to six overdrafts per day. The bank does not charge overdraft fees on debit card or ATM transactions, instead blocking those transactions from taking place if they result in an overdraft.

Bickerstaff’s mother stepped in as her son’s representative and executor of his estate after he died last year.

SunTrust’s lawyers tried to have the lawsuit thrown out in the lower court, arguing that he had failed when he had a chance in 2010 to opt out of a clause requiring disputes to be decided by an arbitrator rather than in court.

But the trial judge ruled that lawsuit, filed before the opt-out window expired in 2010, was in effect a decision to reject the arbitration requirement.

However, after Bickerstaff sought in 2013 to get the lawsuit certified as a class action, both the trial and appeals courts denied his motion. They agreed with SunTrust’s argument that the broader action wasn’t possible because he couldn’t opt out on behalf of other customers, and they were still bound by the arbitration clause.

That’s where the Supreme Court, in its decision issued late last week, disagreed.

Citing two of its own decisions involving lawsuits against Countrywide Home Loans in 2010 and the City of Atlanta in 2006, the Supreme Court said someone can represent a large group of potential plaintiffs until a lawsuit is ruled a class action.

Moreover, the court decided, Bickerstaff’s lawsuit in effect suspended SunTrust’s opt out deadline from being used as a way to block people from joining the lawsuit if it is ruled a class action.

“A class member’s decision to remain in the class after class certification and notification is what will serve as his or her own election to reject the arbitration clause,” said Justice Robert Benham in the court’s opinion.