The Minnesota Bankers Association is appealing a judge's dismissal of
The Eden Prairie, Minnesota, trade group and its co-plaintiff, Lake Central Bank in Annandale, Minnesota, filed a notice of appeal Wednesday with the Eighth Circuit Court of Appeals.
The filing comes two months after a Minnesota federal district court judge granted the FDIC's motion to dismiss the lawsuit. The plaintiffs sued the regulator last year for issuing supervisory guidance to banks on NSF fees without engaging in the formal notice-and-comment rulemaking process.
The suit was dismissed in April on the grounds that the plaintiffs did not have standing to sue.
The Minnesota Bankers Association decided to appeal because it is "confident" in its ability to prove that it does meet the standing requirements and because it has "strong arguments that will allow [us] to prevail on the merits of the case," Joe Witt, president and CEO of the trade group, said Thursday in an email.
"Congress passed the Administrative Procedure Act to ensure that federal agencies treat their regulated entities fairly," Witt said in the email. "Sadly, there are too many recent examples where the banking agencies have acted in an unlawful and unfair manner."
The FDIC declined to comment Thursday on the plaintiffs' plans to appeal and on Witt's statement.
The lawsuit, filed last July, took issue with
NSF fees came into the spotlight in 2021 and 2022 as part of industrywide discourse about — and eventual decreased reliance on — overdraft fees and related charges. NSF fees, which are also called returned-item fees, can be charged when a check bounces or when a debit card purchase is declined.
Many large and regional banks have moved to stop charging such fees. In an August 2022 analysis conducted by American Banker,
In its lawsuit, the Minnesota Bankers Association argued that the FDIC's initial guidance, and subsequent revisions, are "a legislative rule that imposes new legal obligations on regulated financial institutions and commits the FDIC to take enforcement actions under specific circumstances related to the new obligations."
But "the FDIC violated the Administrative Procedure Act by failing to observe procedures required by law," including the notice-and-comment period, the suit said.
The Minnesota Bankers Association and Lake Central Bank jointly filed a lawsuit against the Federal Deposit Insurance Corp. over its nonsufficient funds fee rules' inclusion of "unfair or deceptive acts or practices" violations in its policy.
Last fall, the FDIC and Chair Martin Gruenberg filed a motion to dismiss the complaint, arguing that it was "fatally deficient because the supervisory guidance is exactly what it appears to be — guidance."
The guidance "advises the banking industry about the risks associated with this practice, focusing on how it may, in certain circumstances, run afoul of existing laws banning unfair or deceptive acts or practices," the FDIC said in its motion to dismiss.
"It does not ban this practice, it does not create new obligations or independent legal consequences, and it does not serve as a basis for future enforcement actions."
In granting the agency's motion to dismiss the case, the court said there are "no legal consequences that flow" from the guidance, and that the Minnesota Bankers Association had not "demonstrated that the FDIC applies [the guidance] in a way to indicate that it is binding."
The plaintiffs' opening brief is due July 25, and the FDIC's reply is due on Aug. 26.
