By Dan Levine
SAN FRANCISCO Dec 26 A U.S. appeals court
vacated an injunction and a $203 million restitution order
against Wells Fargo & Co in consumer litigation over the
bank's overdraft policies, according to a ruling issued on
But the 9th U.S. Circuit Court of Appeals in San Francisco
also found Wells had violated part of California's unfair
competition law, and sent the case back to trial court in San
Francisco to determine what relief is appropriate.
A spokesman for the bank, Ancel Martinez, said Wells was
pleased with the decision. Plaintiff attorney Michael Sobol said
he was confident the damages could be reinstated by the lower
"The misrepresentations found by the district court have
been affirmed," Sobol said.
Wells Fargo, prior to April 2001, posted customer debit card
purchases to their bank accounts in order of lowest charge to
highest, which minimized the number of overdrafts, according to
But beginning in April 2001, the bank began posting debit
card purchase from highest to lowest, which maximized the number
of overdrafts, the 9th Circuit wrote.
A San Francisco federal judge certified a class action on
behalf of Wells Fargo customers, who incurred overdraft fees
because of high-to-low sequencing. The judge then issued an
injunction ordering the bank to cease the practice, as well as a
$203 million restitution award.
In its ruling, the 9th Circuit found that federal law
preempted part of the California statute on which the injunction
"Federal law does not, however, preempt California consumer
law with respect to fraudulent or misleading representations
concerning posting," the court wrote.
The case in the 9th Circuit is Gutierrez vs. Wells Fargo,