Two recent cases addressed the ability of financial institutions to “pick off” a class representative by unilaterally refunding account fees after the filing of a class action complaint but before attempted class certification.
In Blus v. Civista Bank, Erie C.P. No. 2022-CV-0094 (Aug. 23, 2022), the court addressed a case in which the plaintiff brought claims for breach of contract and unjust enrichment claiming that the defendant bank had charged her improper overdraft fees. On the same day she filed her class action complaint, the plaintiff also filed a motion for class certification with a request to supplement the motion after completion of class discovery. The bank responded by attempting to “pick off” the plaintiff: the bank refunded the fees to her account and moved to dismiss the case on the grounds that absent an injury in fact, the court lacked jurisdiction and the plaintiff could not proceed as a possible class representative. The court denied the motion to dismiss.
In the subsequent Wilson v. Directions Credit Union, Lucas C.P. No. CI22-1844 (Sept. 29, 2022), however, another court accepted a pick-off as divesting the court of subject matter jurisdiction. In that case, the plaintiff brought claims for breach of contract and unjust enrichment claiming that the defendant credit union had charged her improper overdraft fees. After she filed her complaint, the credit union refunded the fees to her account and moved to dismiss the case. The court held that because the plaintiff had not complied or attempted to comply with the requirements of Civ.R. 23 to establish class certification, “[c]ertification has not been pursued with reasonable diligence.” Finding no injury in fact, the court dismissed the class action complaint.
The takeaway for practitioners is that best practices dictates filing a complaint and a placeholder motion for class certification prior to a defendant financial institution being aware of the lawsuit and engaging in an attempted pick off to avoid a class action.
