A judicial panel denied a request to consolidate 11 class action overdraft lawsuits filed against credit unions over their overdraft practices, meaning courts will likely have to weigh the merits of each case individually.

Since September, at least 15 credit unions in 10 states have been hit with class action suits over their overdraft practices, according to court documents. Often, the dispute was over how credit unions disclose the methods under which they apply overdraft fees. Two firms – the Redlands, Calif.-based McCune Wright and the Santa Monica, Calif.-based The Kick Law Firm – represent all the plaintiffs. Law firms in the plaintiffs' home states are also involved, according to the complaints.

On Nov. 30, 2015, McCune Wright, The Kick Law Firm and the Edwardsville, Ill.-based Brandt Law filed a request to have 11 of the class action suits consolidated and heard in an Illinois District Court. But according to an order filed this week by the United States Judicial Panel on Multidistrict Litigation, the plaintiffs in the 11 suits aren't enough alike to warrant combining the cases.

“There is no overlap among the plaintiffs, the defendants or the putative classes,” the panel wrote in an order denying the transfer of the cases to the Southern District of Illinois. “Discovery in each action will be chiefly, and perhaps even entirely, unique to that action. Furthermore, the actions, which moving plaintiff describes as essentially breach of contract cases, are brought under the laws of at least nine states.”

The panel also said that the possibility that the litigation could expand substantially required caution, given that there are about 6,000 credit unions in the United States.

“Because it is unclear how many of them utilize an overdraft program like those allegedly used by the 11 defendants named in these actions, the possibility that the scope and complexity of this proposed MDL could expand beyond the bounds of manageability also influences our decision against centralization,” it said.

“What this means is that each credit union will be defending the claims in the jurisdictions where they each operate,” explained Stuart Richter, a Los Angeles-based partner at Katten Muchin Rosenman, which represents several of the defendants. “The cases are fact-specific, so it is too early to tell whether this ruling will make it harder or easier for the plaintiffs. I know the defendants are pleased because their strong preference is to defend these cases in the communities where they operate.”

However, Richard McCune of McCune Wright expects little to change.

“Our view on this is that it will not significantly impact the clients,” he told CU Times. “Their cases will go forward. For counsel for both parties, I think it might add a little more time and expense in travel, but it will not greatly affect the counsel. The greatest impact of the decision will be on the courts, with numerous judges now needing to rule on the issues.”

Many of the allegations against the credit unions are similar to those made against the Lakeland, Fla.-based MidFlorida Credit Union, which has $2.4 billion in assets and 225,000 members. In that case, which was filed on Nov. 24, plaintiff Tracy Fry alleged that the credit union charged overdraft fees based on members' available balances rather than their actual balances. Fry claimed the practice breached MidFlorida's opt-in agreement and was inconsistent with its disclosure materials.

MidFlorida has not responded to CU Times' requests for comment.

Instant Insights /

Credit Union Overdraft Suits Won&rsquo;t Be Consolidated

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Credit Union Overdraft Suits Won’t Be Consolidated