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Judge reverses ATM fee class decertification; suggests any award go to charity

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The 7th Circuit Court of Appeals court didn’t exactly call an Indiana appeal a small-change case, but it suggested the few dollars each member of a class might receive could be more usefully given to charity.

David Hughes is the lead plaintiff in a class-action lawsuit over automated teller machines in two Indianapolis bars that he alleged failed to comply with a now-repealed federal law that required ATMs to carry a disclosure of fees both onscreen and on a sticker affixed to the machine. The sticker is no longer required, and the machines he used carried the onscreen disclosure of a $3 transaction fee.

Judge Jane Magnus-Stinson decertified the class in the U.S. District Court for the Southern District of Indiana, and Hughes appealed, winning a reversal Wednesday that at most could win for the class $10,000 under penalties for violation of the Electronic Funds Transfer Act, 15 U.S.C. § 1693b(d)(3). There are at least 2,700 people in the class in David Hughes v. Kore of Indiana Enterprise Inc., et al., 13-8018.

In reversing the District Court, Circuit Judge Richard Posner concluded for the panel, “We hold only that the judge’s opinion decertifying the class does not provide adequate grounds for her ruling. There may be such grounds. And our extended discussion of
how to distribute damages was not meant to imply that Kore must be liable in this case. For all we know, it has good defenses.”

But Posner wrote that the prospect of thousands of plaintiffs getting perhaps $3 raises questions about the process and remedies. “Since distribution of damages to the class members would provide no meaningful relief, the best solution may be what is called (with some imprecision) a “cy pres” decree. Such a decree awards to a charity the money that would otherwise go to the members of the class as damages, if distribution to the class members is infeasible.

“A foundation that receives $10,000 can use the money to do something to minimize violations of the Electronic Funds Transfer Act; as a practical matter, class members each given $3.57 cannot,” the court reasoned.

Kore, which owned and operated ATMs in bars including Average Joe’s in Broad Ripple and another establishment the court described as “said to be popular with college students” did not file a brief on appeal to the 7th Circuit, the opinion noted, and the court opined that perhaps that meant the defendants favored class status against the potential risk of individual suits.

But Posner mused that didn’t seem likely, noting no apparent individual claims had been filed. “Although one reason for the paucity of litigation may be unfamiliarity with the law, another may be the difficulty of finding a lawyer willing to handle an individual suit in which the stakes are $100 or an improbable maximum of $1000,” he wrote.

“But what is a reasonable attorney’s fee for obtaining a $100 judgment? More than one might think, if the judge thought that the suit had broadcast a needed warning about compliance with the Electronic Funds Transfer Act (albeit the specific provision that Kore is charged with violating has been repealed); but enough to interest a competent lawyer? The paucity of litigation suggests not.”


 

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  1. He TIL team,please zap this comment too since it was merely marking a scammer and not reflecting on the story. Thanks, happy Monday, keep up the fine work.

  2. You just need my social security number sent to your Gmail account to process then loan, right? Beware scammers indeed.

  3. The appellate court just said doctors can be sued for reporting child abuse. The most dangerous form of child abuse with the highest mortality rate of any form of child abuse (between 6% and 9% according to the below listed studies). Now doctors will be far less likely to report this form of dangerous child abuse in Indiana. If you want to know what this is, google the names Lacey Spears, Julie Conley (and look at what happened when uninformed judges returned that child against medical advice), Hope Ybarra, and Dixie Blanchard. Here is some really good reporting on what this allegation was: http://media.star-telegram.com/Munchausenmoms/ Here are the two research papers: http://www.sciencedirect.com/science/article/pii/0145213487900810 http://www.sciencedirect.com/science/article/pii/S0145213403000309 25% of sibling are dead in that second study. 25%!!! Unbelievable ruling. Chilling. Wrong.

  4. Mr. Levin says that the BMV engaged in misconduct--that the BMV (or, rather, someone in the BMV) knew Indiana motorists were being overcharged fees but did nothing to correct the situation. Such misconduct, whether engaged in by one individual or by a group, is called theft (defined as knowingly or intentionally exerting unauthorized control over the property of another person with the intent to deprive the other person of the property's value or use). Theft is a crime in Indiana (as it still is in most of the civilized world). One wonders, then, why there have been no criminal prosecutions of BMV officials for this theft? Government misconduct doesn't occur in a vacuum. An individual who works for or oversees a government agency is responsible for the misconduct. In this instance, somebody (or somebodies) with the BMV, at some time, knew Indiana motorists were being overcharged. What's more, this person (or these people), even after having the error of their ways pointed out to them, did nothing to fix the problem. Instead, the overcharges continued. Thus, the taxpayers of Indiana are also on the hook for the millions of dollars in attorneys fees (for both sides; the BMV didn't see fit to avail itself of the services of a lawyer employed by the state government) that had to be spent in order to finally convince the BMV that stealing money from Indiana motorists was a bad thing. Given that the BMV official(s) responsible for this crime continued their misconduct, covered it up, and never did anything until the agency reached an agreeable settlement, it seems the statute of limitations for prosecuting these folks has not yet run. I hope our Attorney General is paying attention to this fiasco and is seriously considering prosecution. Indiana, the state that works . . . for thieves.

  5. I'm glad that attorney Carl Hayes, who represented the BMV in this case, is able to say that his client "is pleased to have resolved the issue". Everyone makes mistakes, even bureaucratic behemoths like Indiana's BMV. So to some extent we need to be forgiving of such mistakes. But when those mistakes are going to cost Indiana taxpayers millions of dollars to rectify (because neither plaintiff's counsel nor Mr. Hayes gave freely of their services, and the BMV, being a state-funded agency, relies on taxpayer dollars to pay these attorneys their fees), the agency doesn't have a right to feel "pleased to have resolved the issue". One is left wondering why the BMV feels so pleased with this resolution? The magnitude of the agency's overcharges might suggest to some that, perhaps, these errors were more than mere oversight. Could this be why the agency is so "pleased" with this resolution? Will Indiana motorists ever be assured that the culture of incompetence (if not worse) that the BMV seems to have fostered is no longer the status quo? Or will even more "overcharges" and lawsuits result? It's fairly obvious who is really "pleased to have resolved the issue", and it's not Indiana's taxpayers who are on the hook for the legal fees generated in these cases.

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