A bank accused of charging multiple fees over the same bounced payment is not off the hook after refunding one of its customers, according to a judicial ruling that has implications for the broader industry.
MountainOne Bank in North Adams, Massachusetts, is facing a class action lawsuit led by a plaintiff named Kimberly Wirtes, who claims the bank repeatedly hit her with overdraft and non-sufficient funds fees for overdrawing her account a single time. She and her lawyers say there are many others like her.
In September 2024, MountainOne moved to dismiss the case on the grounds that it refunded Wirtes' money — $12,192 in all, though the bank does not admit that this amount was charged in error. With the alleged damage already undone, the bank argued, Wirtes had no standing.
The judge disagreed. On Dec. 30, Suffolk County Superior Court Justice Hélène Kazanjian denied MountainOne's motion to dismiss the case, as reported earlier by the legal news website
"The refunds did not eliminate this controversy between the parties," Kazanjian wrote. "On the contrary, the Reply Letter expressly denies liability. A dispute therefore remains about whether Defendant's fee practices were unlawful, and continue to be unlawful."
The case may have wider implications for the banking industry. Overdraft and non-sufficient funds fees are still a significant source of revenue for U.S. banks, although
For any bank facing legal trouble over such fees, Kazanjian's decision could be seen as a warning. In particular, the judge made it abundantly clear that one tactic — trying to defuse a class action lawsuit by placating a single client — cannot be relied upon to work. In fact, she said this practice has been widely rejected by other courts.
"Second, Defendants' unsolicited refunds into Wirtes' account, an apparent attempt to 'pick off' the named plaintiff, do not defeat standing in a purported class action," Kazanjian wrote. "Indeed, most federal courts facing the issue have determined that 'tender of full payment to a named plaintiff does not moot a putative class action.'"
How did Wirtes and MountainOne get here? Wirtes' lawyers allege that on at least three occasions — in July 2018, May 2019 and July 2020 — the Massachusetts woman overdrew her bank account but was not just punished once for her mistake. Each time her purchase was electronically processed, her attorneys say, she was charged another overdraft or non-sufficient funds fee.
When reached by American Banker, MountainOne said it would not comment on the case because the litigation is ongoing. But in its motion to dismiss, the $985 million-asset bank laid out an argument for why it felt the case was meritless.
"Plaintiff's claims fail as a matter of law…" wrote Alyssa Sussman, MountainOne's counsel, "because MountainOne refunded to Plaintiff, in full, all of the fees that she challenges (plus additional fees that she does not challenge and agrees were properly charged to her), she lacks any credible allegation of damages required to support her claims and lacks standing to sue."
In a memo opposing the motion, Wirtes' lawyers rejected this reasoning. "MountainOne's refund attempt was a blatant 'pick-off' attempt meant to moot her case and prevent class claims from seeing the light of day," Patrick Sheehan, Sophia Gold and Christopher Jennings wrote. "Courts routinely reject 'pick-off' attempts and see them for the bald-faced manipulation of the judiciary that they are; this Court should, too."
Placating a single plaintiff, even if that plaintiff is the one whose name is on the lawsuit, does not solve the broader problem, the lawyers wrote.
Kazanjian later echoed this language. She also said the timing of the refund did not matter — whether the bank repaid Wirtes before or after she filed her lawsuit, the judge said, it was clearly "a strategic response to forthcoming litigation."
"Either way, the strategy — paying off the named plaintiff to evade a class action suit — is the same, and will not be permitted," Kazanjian wrote.
Wirtes' attorneys did not immediately respond to a request for comment.
