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In re HSBC Bank, USA, N.A., Debit Card Overdraft Fee Litigation

United States District Court, E.D. New York

April 21, 2014

In Re: HSBC BANK, USA, N.A., Debit Card Overdraft Fee Litigation

For Co-Interim Class Jonathan W. Cuneo, Esq., Sandra W. Cuneo, Esq., Of Counsel, Cuneo, Gilbert & LaDuca LLP, Washington, DC; Nancy L. Fineman, Esq., Aron K. Liang, Esq., Of Counsel, Cotchett Pitre & McCarthy, LLP, Burlingame, CA; Seth Rigrodsky, Esq., Timothy J. MacFall, Esq., Of Counsel, Rigrodsky & Long, P.A., Garden City, NY; Brian S. Cohen, Esq., Clifford J. Bond, Esq., Of Counsel, Cohen Law Group, P.C., New York, NY.

For the Defendants: Joseph E. Strauss, Esq., Julia B Strickland, Esq., Wesley M. Griffith, Esq., Lisa M. Simonetti, Esq., Of Counsel, Stroock & Stroock & Lavan LLP, New York, NY.

For Proposed Amici: Adam S. Turk, Esq., Of Counsel, Turk & Davidoff PLLC, New York, NY.

For Proposed Amici: Barry Himmelstein, Esq., Of Counsel, Himmelstein Law Network, Emeryville, CA.

OPINION

Page 100

MEMORANDUM OF DECISION AND ORDER

ARTHUR D. SPATT, United States District Judge.

This litigation encompasses allegations relating to the imposition of overdraft charges on certain debit card transactions by HSBC Bank USA, N.A. (" HSBC" ). Specifically, the Plaintiffs allege that HSBC provides debit cards and/or ATM cards to its checking account customers. If there are insufficient funds for a given debit card transaction, it is considered an " overdraft." HSBC may allow such transactions

Page 101

for a given debit card transaction to proceed, but the account is charged an " overdraft fee" of $35. The Plaintiffs allege that, in order to maximize revenue from overdraft fees, HSBC posts debits to customer accounts in a non-chronological order and/or " largest to smallest" order, causing customers to incur multiple overdraft fees that would not have been imposed had the transactions been posted chronologically or in a " smallest to largest" order. The Plaintiffs also allege that HSBC fails to clearly disclose the posting order to its customers; does not advise them that they may opt out of HSBC's overdraft program; and fails to post deposited funds to their accounts in a timely manner, resulting in additional overdraft fees.

Three putative class actions, Ofra Levin et al. v. HSBC Bank USA, N.A. et al., E.D.N.Y. 12-CV-5696 (ADS); Darek Jura v. HSBC Bank USA, N.A. et al., E.D.N.Y. 12-CV-6224 (ADS); and Hanes v. HSBC Bank USA, N.A., E.D. Va. 13-CV-00229 were filed against HSBC in federal court.

On June 5, 2013, the Judicial Panel on Multidistrict Litigation (" MDL" ) centralized all three actions and assigned them to this Court. On July 22, 2013, this Court (1) consolidated the three actions for all pretrial purposes; (2) appointed co-interim class counsel; and (3) directed co-interim class counsel to file a consolidated class action complaint within thirty days of the date of that order. In particular, the Court appointed the law firms of Rigrodsky & Long, P.A., Cohen Law Group P.C., Cuneo Gilbert & LaDuca, LLP and Cotchett, Pitre & McCarthy, LLP as co-interim class counsel. The Court declined to appoint as co-interim class counsel Turk & Davidoff PLLC and the Himmelstein Law Network, attorneys for the plaintiffs in the Levin matter, Ofra Levin, 33 Seminary LLC, Binghousing Inc., and Rock View Ventures LL (the " Levin Plaintiffs" ).

On September 30, 2013, the amended consolidated class action complaint was filed. On November 1, 2013, the Defendants moved, pursuant to Federal Rule of Civil Procedure (" Fed. R. Civ. P." ) 12(b)(6), to dismiss the amended consolidated class action complaint.

On March 5, 2014, the Court granted in part and denied in part HSBC's motion to dismiss. Of relevance here, the Court dismissed the Plaintiffs' breach of contract claims and New York General Business Law Section 349 claim.

On March 12, 2014, without notice to or authorization from co-interim class counsel, the former Levin Plaintiffs filed a document on the MDL docket styled as a " motion for reconsideration" of the March 5, 2014 order to the extent it dismissed the breach of contract claims.

On March 17, 2014, the Plaintiffs in the amended consolidated class actions, Jura and Hanes (the " Plaintiffs" ), represented by co-interim class counsel, filed a motion for reconsideration of the March 5, 2014 order. Co-interim class counsel asks the Court to (1) reconsider its rulings on and reinstate Plaintiffs' breach of contract claim and their claim under New York General Business Law § 349; and (2) modify that order to state that the Plaintiff Hanes is a resident of California rather than New York.

Also, on March 17, 2014, co-interim class counsel cross-moved to strike the motion for " reconsideration" filed by the Levin Plaintiffs as procedurally improper.

On March 31, 2014, HSBC opposed both motions for reconsideration and further ask this Court to strike the motion by the Levin Plaintiffs.

Page 102

I. DISCUSSION

A. As to the Motion to Strike

Ultimately, " [w]hether to grant or deny a motion to strike is vested in the trial court's sound discretion." Pharmacy, Inc. v. Amer. Pharm. Partners, Inc., No. 05-CV-776 (DRH)(AKT), 2007 WL 2728898, at *1 (E.D.N.Y. Sept. 14, 2007).

Before the Court considers co-interim class counsel's motion to strike the motion to " reconsider" filed by the Levin Plaintiffs, the Court finds it necessary to clarify the status of the Levin Plaintiffs in these consolidated class actions.

In the July 22, 2013 order, the Court consolidated the Levin, Jura, and Hanes actions for " pretrial purposes." However, by denying Jura's motion " to the extent Jura s[ought to] have all future filings filed under his index number," the Court made clear that the cases would continue to ...


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