A federal judge in San Francisco, following a two-week trial, issued a lengthy opinion in an “order-of-posting” class action finding that Wells Fargo Bank is liable for approximately $203 million in overdraft fees imposed on California depositors. Gutierrez, et al. v. Wells Fargo Bank, N.A.,—F. Supp. 2d—, 2010 WL 3155934 (N.D. Cal. Aug. 10, 2010). Similar order-of-payment challenges are pending against 32 banks in Miami.  

According to Judge Alsup, the bank engaged in a bookkeeping practice (“high to low sequencing”) that was intended to turn one overdraft into as many as ten, and that this was not adequately disclosed in the customer account agreements or the marketing materials. The court enjoined the practice of “high-to-low posting” as of November 30, 2010, and ordered restitution measured by the difference between the overdraft fees that were actually imposed and those that would have been imposed using a different posting scenario, i.e., one of the alternative scenarios advanced by plaintiff’s expert. The court noted that this amount will be close to $203 million.