Spangenberg Shibley & Liber attorneys Stuart E. Scott and Dennis Lansdowne helped lead the efforts in gaining a favorable ruling on class certification in one of the firm's largest class action cases.
The case against Fifth Third Bank involved a breach of contract and TILA (Truth in Lending) violations over the Bank’s short-term lending product known as Early Access. The loans were made to Bank customers who had a checking account with a recurring direct deposit. The loans were repaid directly from the checking accounts when a direct deposit was received.
The loan contract promised an interest charge with an annual percentage rate of 120 percent, which would have permitted a 30-day loan term with a separate promise of a $10 charge for every $100 borrowed. However, the loan terms and conditions also contained a definition of APR that was not aligned with the 120 percent annualized percentage rate term.
The Bank relied on its deceptive and misleading definition of APR to repay itself the loans as soon as the customer’s direct deposit hit their account, even if the direct deposit fell one day after the loan was made. The actual annualized interest rate charged by the Bank, on average, was over 300 percent with the highest rates over 3000 percent.
Attorneys Scott and Lansdowne faced an uphill battle on the path to class certification. The lawsuit’s breach of contract claim was initially dismissed by the trial court, but the contract claim was reinstated by the Sixth Circuit Court of Appeals on the basis that the loan contract’s APR term was ambiguous.
After the successful appeal, the case was certified as a class action for both the breach of contract and TILA claims in March of 2021. The class members consist of just under 450,000 current and former Bank customers who had taken out one or more loans and were charged more than 120 percent APR.
The damages presented to the court as part of the class certification motion papers, based on the Plaintiffs expert’s damage model and calculation, are approximately 650 million dollars. That money represents the total amount of excess interest charged to customers over and above the 120 percent APR. In addition to the breach of contract damages, the Plaintiffs and Class are pursuing attorney fees and statutory damages under TILA.
Scott and Lansdowne are working with a team of lawyers from Washington DC and Florida to advance the case towards trial to recover the monetary damages owed to the Class.