Weber's dismissal of $5 check fee class action upheld by appellate court

Steve Gonzalez Apr. 24, 2008, 7:21am

Don Weber

MOUNT VERNON-In a unanimous Rule 23 order, the Fifth District Appellate Court affirmed former Madison County Circuit Judge Don Weber's ruling to dismiss a class action complaint against First Banks.

Justices James Wexstten, James Donovan and Stephen Spomer concurred with the dismissal.

The Lakin Law Firm filed suit March 9, 2004, on behalf of Darryl Johnson of Collinsville alleging that Johnson paid $5 each time he cashed a check drawn on First Banks because he had no account there.

For First Banks, attorney Troy Bozarth of the Hepler Broom law firm of Edwardsville moved to dismiss the complaint on May 21, 2004, arguing that Johnson lacked standing to sue because he was not a customer.

Weber reluctantly dismissed the class action complaint on Nov. 14, 2006.

"It seems to be unwise policy to allow a bank to charge a fee to cash a check drawn on the bank," Weber wrote. "However unwise this policy seems, it appears to be the law."

"Although the court is of the opinion that there should be a cause of action when a bank charges a fee for cashing a check drawn on the bank, that is, apparently not the law," he wrote.

Johnson claimed that by charging a fee the bank wrongfully dishonored the check and moved to certify a class action, with him representing thousands who had paid the fee in the United States.

Bozarth objected arguing that Johnson had no claim because he paid the $5 voluntarily.

Bozarth also argued Johnson did not have standing to assert a cause of action for wrongful dishonor under Section 4-402 of the Code of Civil Procedure and that his claims were preempted by the National Bank Act and the regulations and regulatory interpretations issued by the Office of the Comptroller of the Currency (OCC).

Weber ruled that the voluntary payment doctrine does not apply because the act to refuse to honor a check drawn on the bank under these circumstances is coercive.

"A reasonable consumer should be able to cash a check drawn on First Bank at First Bank without a fee," Weber wrote.

Weber said that the holder of the check is a third party beneficiary to the contract between the bank and the payor of the check.

As to whether Johnson was a "customer" Weber relied on the appellate court case Kronemeyer v. U.S. Bank, a case in which Johnson was also a named plaintiff and which the justices unanimously ruled the word "customer" has two opposite meanings in this context.

"This is not a nut easily cracked," Weber wrote.

In the other case, Kenneth Kronemeyer of New Memphis along with Johnson, also represented by the Lakin Law Firm, sought to establish a nationwide class of individuals who paid US Bank a fee when presenting for payment a check drawn on a US Bank account

They claimed that US Bank charged $10 to cash checks drawn by the bank's depositors and payable to them. They charged consumer fraud, wrongful dishonor and unjust enrichment.

The Illinois Appellate Court reversed Madison County Circuit Court Judge Nicholas Byron's decision to deny US Bank's motion to dismiss the 2003 class action lawsuit. The July 7, 2007 decision, which effectively dissolves the case, asserted the plaintiffs "do not have standing."

Weber said the Kronemeyer case held that the payee of a check lacks standing to bring a claim for wrongful dishonor when a bank charges a fee and also points out federal regulations authorize the fee and therefore federal preemption precludes this suit based on the check cashing fee.

"We reaffirm the holding in Kronemeyer," the Rule 23 order states.

"We cannot say that the OCC's interpretation is plainly erroneous or inconsistent with the regulation, and we therefore find it controlling.

"Accordingly, because federal law expressly authorizes banks to charge non-account holding payees a check-cashing fee, any claim under a state statutory provision that would prohibit such a fee from being charged or otherwise invalidate the procedure by which such a fee is charged irreconcilably conflicts with the federal regulatory scheme and is preempted by operation of the supremacy clause.

"In conclusion, we hold that the plaintiff does not have standing to bring a claim for wrongful dishonor under Section 4-402 and that the plaintiff's remaining claims are preempted under the National Bank Act and the regulations and regulatory interpretations of the OCC."

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