SAN FRANCISCO (CN) - A federal judge approved a $750,000 class action settlement over accusations that EverBank broke the law by closing CDs without members' consent, pending a final fairness hearing this summer.
Lead plaintiff Ek Vathana sued EverBank in 2009, representing customers who held EverBank WorldCurrency certificates of deposit, or CDs, denominated in Icelandic króna.
The lawsuit alleges breach of contract against EverBank for closing the CDs without class members' consent and for using a low conversion rate to U.S. dollars.
Vathana claims that the terms controlling the CDs required EverBank to renew them automatically, and that the bank violated the Truth in Savings Act by not notifying customers of the change in status. He also alleges there was no specified conversion rate for when the CDs were closed.
A judge from the Northern California Federal Court granted EverBank's motion for summary judgment and dismissed the case in 2012.
Vathana appealed to the Ninth Circuit, which ruled in 2014 that EverBank did not breach the terms controlling the accounts when the bank closed the CDs. But the San Francisco-based appeals court also found that an issue of material fact existed regarding the conversion rate EverBank utilized when the CDs were closed.
"EverBank may have breached its agreement with the class members by returning the value of their WorldCurrency CDs using a currency conversion rate within 1 percent of the wholesale spot price," Judge Mary Murguia wrote for a three-judge panel.
The Ninth Circuit remanded the case, but both parties ultimately inked out a $750,000 settlement.
"The court preliminarily finds that the proposed settlement should be approved as: (i) the result of serious, extensive arm's-length and non-collusive negotiations; (ii) falling within the range of reasonableness warranting final approval; (iii) having no obvious deficiencies; (iv) not improperly granting preferential treatment to the lead plaintiff or segments of the class; and (v) warranting notice of the proposed settlement to class members and further consideration of the settlement at the fairness hearing," U.S. District Judge Richard Seeborg wrote in a 7-page order filed Friday.
Under the proposed settlement, attorneys for the class are asking for up to $250,000 in fees and another $40,000 in expenses. The settlement agreement also asks for a $12,500 incentive award for Vathana, as lead plaintiff.
That leaves $441,500 for the overall settlement fund. Class members would receive differing amounts of money based on their proportional loss upon conversion, according to the proposal.
"Pursuant to lead plaintiff's calculations, the class as a whole had approximately $3,206,185.45 in losses in the form of 'conversion losses,'" the proposed settlement states. "This figure is the sum of all conversion losses ... for every CD that matured during the 13 week period between Oct. 8 and Dec. 31, 2008. The dollar amount of the settlement fund given to a class member for a particular CD will be the conversion loss, divided by $3,206,185.45, multiplied by the net settlement fund."
Under the formula, for example, Vathana, whom EverBank paid $2,958.03 to when his WorldCurrency Icelandic króna CD matured on Oct. 22, 2008, would receive $471.96 of the $441,500 settlement amount.
Seeborg scheduled a final fairness hearing for July 7 in San Francisco.
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