(CN) – E*Trade Securities is not liable for charging inactivity fees, a federal judge ruled, rejecting the claims of a class action.
Lead plaintiffs Joseph Roling and Alexander Landvater had claimed that the online stock brokerage charged and collected surprise quarterly fees, also called account-maintenance or account-service fees. The investors apparently did not meet the exemption criteria for customers who maintained a “certain minimum balance” or “executed a certain number of trades.”
E*Trade discontinued the fees, which ranged from $25 to $40, in 2010.
Roling was charged inactivity fees beginning in 2004, Landvater incurred the charges in 2006. Both men argued, however, that E*Trade could not charge such fees because they were not properly laid out in their “brokerage customer agreements.”
“Even if the BCAs allowed E*Trade to charge an inactivity fee, a document available on E*Trade’s website – known in this litigation as the Brown Co. Addendum – actually stated that no inactivity fees would be charged,” according to the San Francisco court’s summary of the claims.
E*Trade countered that the brokerage customer agreements did include reference to the fees, “stating that, if the account is inactive, then E*Trade ‘may charge additional fees’ and that ‘[a]ccount maintenance fees are described in the schedule of fees on the E*Trade Securities website,” the 19-page ruling states.
In a motion for summary judgment, the company said Roling and Landvater had waived their right to challenge the fees by continuing to perform under the brokerage customer agreements.
U.S. District Judge Edward Chen sided with E*Trade on Tuesday. “There seems to be no dispute that waiver is an affirmative defense,” he wrote.
“Because the court has granted summary judgment to E*Trade based on waiver, plaintiffs’ individual claims have been disposed of in their entirety,” he added. “There are no other individual plaintiffs in this case; thus, there is no one who can proceed with the class claim.”
The parties must still attend a status conference on April 13 to discuss future litigation, however, because E*Trade may have charged inactivity fees without first posting a schedule on its website in 2005, the court found.