This week’s case, Hughes v. Kore of Indiana Ent., Inc., No. 1:11-cv-1329-JMS-MJD, 2013 U.S. Dist. LEXIS 95849 (S.D. Ind. Jul. 10, 2013), involved a certified class alleging violations of the Electronic Funds Transfer Act. (EFTA–which requires banks to post fee notices physically on their ATMS–is one of those statutes that, at least on its surface, lends itself to certification, because it requires only a technical violation, not a finding of actual damages.)
But a funny thing happened on the way to the class trial.
A few weeks before trial, the Court recognized sua sponte that Mr. Hughes never provided notice to the members of the class.
Not notifying the class is a serious error. The Court postponed the trial while the plaintiff prepared a notice plan. The one the plaintiff ultimately proposed (posting notice on the ATM, in the local paper, and on a website) was not adequate to a class that allegedly included members from across the country. It was at this point that the Court decided that decertification was warranted. In making that decision, it observed that:
In adjudicating alleged ATM notice violations under the EFTA, many of the courts that deny certification or subsequently vacate it do so because a class action is not a superior method of litigating those claims.
So what makes an EFTA class inferior to individual litigation?
Damages. An individual EFTA lawsuit can yield $100 to $1000 for the plaintiff, plus attorneys’ fees. An EFTA class action is capped at $500,000. So if more than 500 people have used the ATM in question, there is more upside to an individual lawsuit than a class action.
Manageability. There are more individualized issues than one might think in an EFTA class action. EFTA only applies to consumer transactions, so a court must undergo a separate inquiry to determine whether each class member got out money for consumer spending, or for a business expense. But wait, it gets more complicated. For ATMs in touristy areas (like Washington DC) or even just a college town (like the Broad Ripple area of Indianapolis), users might come from all around the country, requiring the plaintiff to contact hundreds of banks to figure out who is in the class. (This might also be characterized as an ascertainability issue.)
So what’s the takeaway for defendants? Dig deep into those statutory violations. They’re usually not as uniform as they first appear.