The banking industry, particularly community banks, have been plagued over the past three years with lawsuits alleging that an exterior fee notice was not present on their automatic teller machines. The suits seek to certify a class of customers purportedly injured by the lack of notice. In almost all such cases, the customer was provided an onscreen notice of ATM fees and could not have proceeded with the transaction without acknowledging the notice.
Lisa Mabary sued Hometown Bank on October 19, 2010 on behalf of herself and all others similarly situated, alleging that Hometown Bank violated the Electronic Fund Transfer Act and its implementing regulation, Regulation E, which required any automated teller machine (“ATM”) operator who imposes fees on consumers to provide notice that a fee is being imposed and the amount of the fee. In its original format the statute required the notice to be posted in two places: “on or at” the ATM and on the screen of the ATM or, alternatively, on a paper notice issued before the transaction is completed. Ms. Mabary alleged that she was charged a $2.00 fee in connection with using one of Hometown Bank’s ATMs, after receiving and accepting an actual on-screen notice, but not a secondary notice on the exterior of the ATM. Hometown Bank filed a Motion to Dismiss and Opposition to Class Certification, asserting that Ms. Mabary did not suffer actual damages and therefore lacked standing. In late 2012, Congress unanimously repealed the portion of the statute requiring the “on or at” exterior notice, after noting in the House Committee Report that the redundant second notice was “unnecessary” and fueled “frivolous lawsuits related to this fee notice requirement.” The President signed H.R. 4367 into law on December 20, 2012.
On March 18, 2013, the District Court denied class certification and dismissed the suit. The Court explained that after the passage of H.R. 4367, a class could not be certified. The Court held that class members are not parties to the litigation until after the class has been certified, and after H.R. 4367, the basis of any class claim ceased before certification. The Court further examined the issue of whether Ms. Mabary’s individual claim survived the passage of H.R. 4367. Relying on the Supreme Court’s opinion in Landgraf v. USI Film Prods, the Court reviewed the framework by which courts are to determine the applicability of amended federal statutes to pre-existing claims. Because the newly enacted statute did not explicitly indicate that it applied to existing lawsuits, the Court analyzed “whether it would impair rights a party possessed when he acted, increase a party’s liability for past conduct, or impose new duties with respect to transactions already completed.” Ms. Mabary’s “only plausible argument” was that the repeal of the secondary ATM notice impaired her vested rights. The Court concluded that Ms. Mabary had no vested rights in this case, as there are no vested rights where a cause of action is based solely on a statutory right, instead of an independent contract or property right, and that statute is repealed. Because Ms. Mabary did not have a vested right, the Landgraf presumption against statutory retroactivity did not apply, and Ms. Mabary’s suit was properly dismissed.
The Mabary holding should bring an end to these types of lawsuits, which provide no benefit to consumers, increase the costs of financial services, and clog the judicial system with lawsuits described as “frivolous” by Congress.
Hometown Bank was represented by William Frank Carroll of Cox Smith Matthews, Incorporated, Dallas, Texas. He may be contacted at email@example.com.