MDL Lawyers Upset With Alleged HSBC Undermining Of Federal Case
Lawyers representing the federal class of plaintiffs in multidistrict litigation dealing with improper overdraft fees charged by HSBC are upset with the bank's preliminary settlement agreement with plaintiffs in a New York state court.
Tuesday, March 10, 2015 - Lawyers representing customers of the British bank HSBC in multidistrict litigation have announced that a secret settlement has been reached in a New York state court ruling related to the same complaint. The New York state plaintiffs, bringing allegations against the bank of imposing improper overdraft charges, filed a motion to gain preliminary approval of a $30 million settlement on March 2.
Lawyers representing plaintiffs that are a part of the nationwide litigation against the bank wrote to New York Supreme Court Judge Judge Eileen Bransten on March 6 presiding over the New York settlement imploring her to dismiss the settlement on behalf of the punitive class they are representing. The lawyers who drafted the letter claim that HSBC agreed to the secret settlement as a way to undermine current negotiations that are underway in the MDL.
The letter claims that HSBC intends to "prematurely and improperly terminate the Federal MDL" based on the actions taken to secure the settlements in the New York case. If the settlement for the case if reached in the New York state court, it would compromise any progress already made in the multidistrict litigation and essentially stymie the lawsuits at the federal level.
The consolidated lawsuits focus on the business practices employed by HSBC that reordered customers financial statements in order to maximize overdraft fees. The suit is not unique to HSBC as many banks have already been hit with similar allegations which have progressed to multidistrict litigation. HSBC would re-list the transactions of customers from highest to lowest, resulting in overdrafts at the earliest possible instance.
Once the customer was past their limit, every one of the the smaller fees would each elicit a $35 fine whether or not they were originally made before the account had been overdrawn. The dates of interest for those affected by the lawsuits fall between December 2004 and July 2010. HSBC abandoned this practice in 2010 for individuals and 2011 for businesses. Both individuals and customers would be covered in the proposed settlement.
The letter written by the plaintiff‘s lawyers in the MDL claim that HSBC was instructed to dismiss the lawsuits pending in New York by U.S. District Court Judge Arthur D. Scott, and instead of doing so pursued the settlement without alerting those involved in the consolidated lawsuits. The settlement was allegedly agreed to after a meditation session went awry during the MDL proceedings. The settlement‘s value of $30 million will reportedly cover around half of what the thousands of plaintiffs originally lost in the overdraft fee manipulation. Lawyers from the MDL claim that the mediation session that prompted the state settlement was far more lucrative than the $30 million preliminary proposal put forth by the state plaintiffs.
The federal plaintiffs claim that the lawsuits pursuing the settlement in New York state court were consolidated into the MDL in accordance with a July 22, 2013 order decreed by Federal Judge Scott. HSBC‘s current attempts to stay the MDL in light of the New York settlement are being met with allegations from the federal plaintiffs that HSBC simply circumnavigated the federal order in pursing the state litigation. Both sides await a reaction to the letter and a ruling on the settlement from Judge Bransten.
