line of bank and credit union customers who have challenged improper overdraft fees over the last decade or so and let's be clear she has no beef with overdraft fees in general just the small fraction of overdraft fees that result from financial manipulations by l g that do not comply with the agreements between  having some trouble for you can get to the legal issues your complaint is very sparse on facts it's a very high level of abstraction some trying to figure out what you're conveying really happened to her hypothetical be less the same she has one hundred dollars in the bank she goes to shell gas station and she gets charges forty dollars worth of gas she sticks the debit card and then that's forty dollars is gone she then the next day let's say does another electronic charge for seventy dollars or a check comes through for seventy she's now of are drafted what i'm having trouble understanding is that the scenario you're describing i'm trying to figure out what you're talking exactly yes thank you your honor that is very important thing to understand exactly what's going on here that is a good scenario you raise let me just add a little bit of detail to that if you have a hundred dollars in your account as you said and then you go and use your debit card wal mart shell whatever it is you have an approval for that transaction that does not take money out of your account let's be clear let's it doesn't take in afghanistan you're saying that it may actually post a day or two later some other time may post quickly who knows i guess my my question is what we're talking about here in terms of a contract interpretation is what the parties agreed to a reasonably understood in terms of this re what the consumer was notified and i guess my thought would be i don't know if i'm the reasonable man least sophisticated the most sophisticated i don't use debit cards but i would think that when i put a debit card in and it's for forty dollars and i know i've only got one hundred dollars and the next day i do a debit for seventy my commonsense reaction be dang that forty dollars is gone you know i got the gas it says it's electronic it's gone and next day the seventies gone and my expectation would be i'm overdrawn but that obviously is not what you think is what a reasonable consumer would would think or a person would believe so explain to me why my perception is not accurate you're absolutely right honor this is a this is primarily a breach of contract case so look at the contract there are two varieties of these contracts that are out there there are those that say we assess overdraft fees based on the money in your account based on the actual funds in your account gone the second i put that debit card and the wording that is used by l g in the contract that's attached to the complaint name and a complaint is exactly the wording you would use if you use a assessment of overdraft fee system that i am talking about the ledger balance the actual balance of funds is exactly and precisely what is used by saying that a person the customer could understand contrary to what my understanding would be your customer could understand actually are customers a little bit of a cot or so your customer saying well cap got that forty dollars but it's not going to really come out to maybe tomorrow and then i'll do something else and maybe that'll be the next day illegal kreider and you person is a little more sophisticated they're kind of plying the timing out and that's what you're saying a customer who could be engaged in that sort of thinking would understand it to be it's actually just the opposite in the sense that you're suggesting that the bank is covering some funds that exactly what we're saying does not occur there is never an overdraft as you and i think of it in this case miss temp doesn't want to single dime back when she actually overdraft it when they covered some funds for her when there was a negative balance in her account she doesn't want to single one of those overdraft fees back about fifteen percent of overdraft fees are caused if a bank or a credit union assumes and adopt before they adopted the vailable balance policy some credit unions and you've seen the cases there's over a dozen cases we put in front of you with very similar scenarios some of those have language where it says we will assess an overdraft fee based on your of vailable balance and it describes you're saying they haven't paid but they're on the hook are thank you so the credit card and the credit unions on the hook for the forty and i see when that the next day the seventy dollars comes through i think we're on the hook for the forty but you're saying they still can't overdraft until even though they're on the hook like have to ignore that wipe that out of their minds we're only talking about when there's an actual negative balance we don't want anything trust me your honor most times that transaction goes through in two or three days the money's not there and the overdraft occurs that's not this claim in this case we're talking about when that happens on let's say a thursday your paycheck comes in on friday you have hundreds of dollars in your account before shell comes in on monday and says we'd like our forty dollars you have hundreds of dollars there they have never covered a dime of your negative balance there is no overdraft  times but this case wouldn't exist if they had described it the way they actually do it and missed him set agreed to it just as your honor has said that's not what they did they used the old language and if you look at why this court at the district court excuse me reached the decision it reached its because it doesn't actually look at the contracts at issue this week this contract has the funds availability policy and i want to know how you answer the argument that if we interpret agreements together as i think we all agree with the your interpretation interpretation would render that funds availability policy meaningless once again that is taking a very narrow focus of this contract we encourage the court to review the contract it's attached that's we all agree but if we construe the contract that way where does that get loans availability has nothing to do with this your honor funds availability is a under a different federal statute requires every bank to put in a credit union to put in its agreement it says when you come in with an out of state check or business check or a government check when is the funds going to be available how is that how is that different from what your are we are only talking about a funds being deducted from the account for a t m and debit card transactions that are approved and not paid that is not mentioned in the policy only deals with deposits that's what you're concerned about are debits that's all that's in there and if you go on and look at the specific language about the program that's an issue in this case it's called courtesy pay the judge didn't even cite this language even though we have it in the complaint paragraph seventeen of the complaint even though it was much briefed it says on page ten of the contract quote you are not charged for using courtesy pay unless you present and item against insufficient funds present and i don't know against insufficient we're only saying in that language go either way though it depends what you mean by insufficient funds if you look at for a course of all that language is not mentioned in the court's order if you look at it in toto then you cannot go the other way because it says present and item usefully the district court cut that language out of the first quote that it used presentation is when the merchant is asking for the yesterday in the courtesy pay section is very clear what it should be also in the general section it's set in the court cuts this language out it says we pay the item creating an overdraft that's one overdraft you can be that's on page two of the contract when they pay the item which they don't do in this case we don't want any money back when they pay anything it's only the money back when they concocted in the balance and said  went below the fake bound not your real balance of funds so when it says we pay an item creating an overdraft we all know what overdraft me that means you're in the negative that never happened on any of the claims any of the refund refunds being claimed in this case so you're saying we pay the i am means the item is actually sent as opposed to authorized yes that's what it has to mean the court exempted that language from its analysis and therefore didn't have to get into that climates up or down you know we will grow with you we won't rule with the on whether or not the contract covers the regulation equine how does that differ from the breach of contract line in the sense that if you saying that the consent form has similar wording to the contract language might be a dozen here saying that it does i mean it doesn't the regulation equine rise or fall on the breach of contract climat how is it any different is it any different  yes it is different because what is required in that is that you must disclose to somebody before they sign the opt in what you're going to do and how if you are going to be assessed so it has a different standard it has to be full disclosure let's say in the breach of convalesce assume the wording is very similar on the contract itself and then on the consent form and let's assume that you get past summary judgment but the jury rules against you they don't find a breach of contract suddenly because you're ready klein disappeared too because it is a breach or not a breach of contract is a little different than saying you comply with federal law by putting in this one page full disclosure when you're going to assess overdraft fees which unquestionably does not occur in this document i guess  sometimes my it just seems odd to me we have a federal reg says you need to disclose yet something you need to disclose what your policy is and so always with lawyers and bob you're going to have this consent form and some people are going to say gosh that's just a c plus disclosure i'd really like an a plus disclosure and just thrash says it's ok maybe we'll say we're different judges and it's not ok have you violated the federal read ask for disclosure just because when we're grading your paper we say  wish you'd added a few more words that seems to me an odd way for a federal regulation to work help me with that please understand most banks and financial institution use the ledger balance to assess overdrafts that i'm just tell me help me with that i  the form that has been published and that's the form that l g used it has chosen however to make an extra fifteen percent on overdraft fees by changing its program it has to therefore which is not so much a western of what i did what we do when we see a consent form that we all say and we all would say this when we don't understand all these contract aces why people just don't say things in plain english and why we have these cases but they don't always do that so we'd be a little critical of that but does our sick think thoughts there could be a bit more persistent translight to the fact that that the bank has now violated the regulation and says you've got to disclose your practice because we think we can improve the wording how do we deal with that well i would deal with that the way the federal regulators have you look at paragraph twenty seven of our amended complaint it goes through the exact analysis where banks have switched clairette units have switched from using one method of balance assessment to another and they have not changed their disclosures to paragraph twenty seven of our complaint and that therefore is in accurate description of what they're doing and that causes people real losses fifteen percent more overdraft the second be hundreds of dollars a year to the most vulnerable population amongst us and that is not allowed so when your honor asks can they use this form that we could differ about the answer is no when they fundamentally change their program as the federal regulators have looked at they must change that form to catch up with and give good notice to the people who are suffering under the yoke of that thank you i have just have a follow  climb and you can answer it now or when you get back but it seemed to me that the judge thrashed out that one ride on the electronic funds transfer act that mean they use the forms of the federal reserve publish and so don't think come within the site harbor of the act by doing that if you had it kept their policy the same and it adopted overdraft fees based only on the ledger balance then absolutely but they changed they made a material change from what the banks that are allowed to use that model for program use and you can't start assessing fifteen percent more overdraft fees because of a new policy and make no change to this form that is supposed to be fully disclosing to the public that's all we're saying they had does everything the federal reserve put out there for them they say it must be accurate description and that was an accurate description of how most financial institutions assess those fees they do it based on the cash in the account they don't l g e and so they had to make a minor change to it explain that to the customers that's all we're saying they did not do that so it does violate efta it would be a simple change and they could do it in a very common sense way many banks and credit unions have done so in tell they do so they are violating after if they charge overdraft fees based on a fictional balance not the balance of actual money which is what it says on the first line of their after disclosure  my name's brandon wilson and i represent l g community credit union i want to just cut to the chase if i can i hope the court appreciates it i want to piggyback off of the questions you asked my friend first and foremost this is not a switching case this is not a case which involves a situation where the credit union changed balance calculation methods midstream there is an example in one of the c f p b white papers that my friend cited too and judge thrashed dealt with that issue i think very adequately in his opinion but factually speaking there is no allegation in the complaint that this is a switching issue the issue here and the issue that has been raised in many of these cases is that the plaintiffs contends that the credit unions account agreement does not actually describe the available balance method judge currency or question with the example and forgive me if i'm getting it wrong but i believe you are talking about a forty dollars debit card transaction the important thing to keep in mind here when you make that forty dollars debit card transaction it may take a day or two to post to the account but importantly the credit union by authorizing it with the merchant becomes immediately responsible for paying it and so this is not the the available balance method is not some crazy scheme by the credit union to drive up overdraft fees in fact the available balance method is basically the same concept is as those of us that we still have a checkbook are used to you write a check the check goes out it may take some time for it to hit the account but you know you've written that check and so you don't have the funds to spend well i think his argument is that most of the time and i don't know how big a class this would be most of the time this person's going to overdraft eventually anyway but i think what opposing counsel saying is you've got that forty dollars that you may i think it's gone but it you think it's gone and so the next let's say a day you you also seventy dollars debit and so the person might think oh the credit you might think they're done except the fact is before the credit union actually has to pay that day too we have a paycheck that comes through that's such a credit it immediately so the truth and the reality of the situation is while for that first day the credit union should be a little anxious you know they're going to overdraft the truth the matter is the credit union never had to pay that money and they were never out anything and they charged a fee that really i think i've got plenty of sargant right that really they were on the hook but they actually as it turned out do that to the compliance of events didn't have to pay any any overdraft even if we subscribed to that idea one of the questions from the panel this morning to my friend was what about the funds availability disclosure i would submit to you that that disclosure is dispositive in its fatal to the point of scam in this case the  it does deal directly with deposits but it makes clear more importantly that not every dollar in the account is available for use and it gives multiple examples of when money is not available for use by the members but i don't see i mean just to give you a chance to respond i don't see how your consumer your customer would possibly get from from this group of documents that your method for deboning from their account so judge martin first to yours to respond to that question issue in this case we're here after a twelve b six ruling is whether the plaintiffs interpretation proposed interpretation is plausible and i would submit to you that it's not if we go to the funds availability disclosure it gives several examples of when money is not going to be available one of those scenarios is when the member deposits and out of state check if you look in the funds availability disclosure it would say that two hundred dollars of your deposit is immediately available and the balance there will be on hold for one or two days in the dome and case that would that's about deposits it is about deposits but the plaintiff in this case is attempting to show that her interpretation is the correct one and i would submit to you that the absence of a similar provision or disclosure regarding see that have found a contract similar to this without a specific explanation of how debits relate to fund availability are ambiguous so so two points are entered first george's canons of contract construction are unique in fact i have all the overdraft cases that are in the papers not one of those states has similar canons of construction i understand that but the words that those courts focus on either are or are not in this contract sure and it seems to me they don't the chamber's case does go your way but in that case the contract used the phrase available balance which does not appear in this contract there was a more detail there was an explanation of funds availability and there were also examples of when overdraft would occur and none of that is present in this contract isn't that right no not exactly i am i wrong i would agree with you that there are not specific examples like we see in the funds availability disclosure but there are other places where this is is described there are two places i would direct your attention to the first is and it's in the section heman order of your  transactions it says that mr you can let me let me get to you where in the contract is that so i'm starting i believe it's on the bottom of page one of the account agreement your honor and going into it so if we're there in succession a judge thrashed pointed this out in his opinion but in one sense it refers to having enough money in the account and then the next sentence refers to it says you will overdraft your account or you'll be liable for overdraft fees if funds are not available to pay all the items and then in the next sentence it says you'll overdraft if if an item is presented without sufficient funds which i just read the senate side contrac why this is important to you as a regular on her so beginning there the order in which items are paid is important if there is not enough money in your account to pay all of the items that are presented ok let me stop you right there if there is not enough money in your account it sounds to me like the plaintiff's interview it well i would say i would submit to you that it doesn't support the plaintiff's interpretation because for example it's not just saying if you don't have money it's clearly there's an adjective in front of the word money that is modifying that term right so it has enough money and that's the whole question here what we believe it means the available balance method and we get that not from reading that sentence in isolation but looking at the funds availability disclosure and if i could just give the corn example and then i think it will demonstrate why this document must be read it's because using the a bit will bounce method in the dome in case they gave an example with the out of state check again and when the check is deposited there's the two hundred dollar amount of it that becomes immediately available so when the deposit is made her a vailable balance is two hundred dollars however her ledger balance is five thousand dollars that's all the money that's the amount of the check that was deposited so what miss toombs wants to argue is that she could then go and spend that five thousand dollars that's her ledger balance even though forty dollars that's on a sunday and the next day monday she does seventy dollars and at that point you all would say we are over drafting that seventy dollars correct you know we're taking into account the actual purchases that the member makes and for which we become liable and their argument of be though on tuesday the next day or after you charge for this money or paycheck comes and that would be the kind of paycheck you'd automatically cal and none of the first to have posted so really you weren't out any money you thought you might be but you really weren't and i guess there are ground that is she did have enough money in her account to pay when you look at all and agreeing asked this got to be a small group of people for these kinds of things to happen but yeah i mean to me i would see your example there your honour's just electronic check kiting you were writing the float it is but but maybe under the contract the e can you know they'll die she could cut your checks to as long as things went in the right order poet argue no it's awfully but you may get away with it but again going back to this funds availability to school the problem with this is is missed him as coming before the court and saying this agreement that i have with my credit union it says that they use ledger balance and that simply cannot be true unless the court is going to make or take the step to read different portions i think what she said as i read it to  say they're going to use the ledger balance i mean you know that language you say there's not enough money in her account series she says well there is enough money in my account and so  on it may or may not i mean some of these accounts are set up such that you will see the debits in real time but it's just a contract question is you know what does that term mean is it ambiguous well if it was in big us what the district court did was it went to step two and it said we need to attempt to harmonize this entire contract is one and again the court i think correctly reached the result it did because it acknowledged that the ledger balance and the funds availability disclosure are simply in concert they don't jive and so you can't read this agreement in that fashion the other part of this agreement that also i would direct your attention overriding theme of this agreement is that not every dollar in the account is available for use and converse an overriding theme is a little different from what the contract actually says poor poor choice of words what the words actually say is that not every dollar remember the fact that she's encouraged to make careful records and practice going to count management that doesn't say anything about how the accounting is done it does say however your honor that when she has money in her account she needs to keep track of for example deposits hold on deposits and debit transactions what l g is saying is you need to take that those things into account because we do and so again the overall question in this case is not whether l g and missed him should have a better agreement it's not whether this is a good agreement or a bad one before  the actual f t a language says is that if the credit union uses the model for it is immune from civil liability i don't know how the drafters of that language could have been any more clear and his response to that is well yeah that those forms were good until the credit union changed their policy in your response to that in this is not a change of policy case that example appears again in a sea of p p white paper it's addressed in judge thrashes opinion well what if i know this is a hypothetical but what if the credit union decided that instead of charging individual overcharge fees it was just going to to read the opt and form together with whatever account agreement they have to make that decision and without knowing what the language is i can tell you yes or no well my sent my point is simply that the form does not create a safe harbor for any policy you could conceivably adopt about overdraft fees right well that what the commentaries to the regulations says is that your overdraft form if you're using the model clause you do need to make sure that that model language actually reflects what you're doing as far as overdraft policy and to your point your honor what the form says and it's not in the first section which is kind of been batted around here but in that form the credit unions do disclose typically what the specific overdraft charges so for example it would say we charge you thirty five dollars when you overdraft so in your hypothetical i would expect the credit union to indicate in the form that what it's charging as far as  so based on your argument that you have to look back to the account agreement doesn't your argument with respect to this regulation rest on your interpretation of the contract well it has to because as judge thrashed correctly  did you have to look at both documents together as one so if we were to disagree with you on the contract interpretation claim would we necessarily disagree with you on the ass declining well i would argue no because i believe that the  regulation is clear and what it says if you use the model clause then you are you are in the safe harbor and i don't i haven't seen any argument to suggest that the term enough money must mean or can best in the wrong i apologize to judge thrash but i think what judge thrash was getting at there was probably has his frustration with the fact that the federal reserve board developed one form it did so over many years of testing it shows the specific words the term enough money that was changed swapped out and tested with folks and at the end of the day they came up with one for thrash was was frustrated because he acknowledged that the regulators know that there's either a ledger balance used or an available balance method and yet they gave us one form which says an overdraft will occur when you don't have enough money and so i think he's he's acknowledging the fact that that probably could have been stated more artfully this is the same issue that the chamber scorecard appled with in chambers the judge agreement as in this case was for available bell so unless the court has any other questions i will yield to my friend thank you g is a sizeable institution it has over one hundred thousand customers in the state of georgia studies show that over half of those people get an overdraft in a given year so this is a big case it affects a lot of people those people often get multiple overdraft and as i've said the ones that get the most overdraft are the most vulnerable and they've also said in your when you start the first time that we are talking about probably what might be a small subset of most of the people are going to really overdraft anyway you look at it and you're going to say if there's a real overdraft if there's a real point which the bank asked my son there's not money we're talking about i would think a narrower group of people who would i don't know if it's cutting illegal and whether that's enough but who are sort of electronically cutting but but under the contract maybe but that's the group we're talking about absolutely about fifteen percent of overdraft fees all we're talking about here and i do want to push back a little bit on your honor the person the entity kiting here is l e they didn't used to do this nobody used to do this judge martin and i had a case in two thousand and eight eleven years ago in judge morton went to great pains to understand what in the heck was would be a bank doing that was white versus and it was inexplicable to us at the time to everyone at the time these fees don't add up you never went to the negative why there overdraft fees how do you respond his argument that the regulators were aware at the time they created of the form  the financial institutions were using both the ledger and the available balance methods they were aware that a few institutions were pushing the envelope they decided that we're not going to set up a form that feeds to the bottom feeders and they're not going to set up a forum that suggests they should go out there and engineer their software to manipulate transactions and get an extra fifteen percent from the poorest among us that was what they chose to do we're going to do it the way most financial institutions do it we're going to show that on this  if you go out and do something radical in your program and are going to c'est more fees you're going to have to update your form like your honor said do you charge a thirty dollars fee the thirty five dollars fee i've had one charge of forty two dollars you know when do you charge it how quickly do you charge you charge a sustained overdraft fee if your account is in the negative for ten days for example all these things must be disclosed they're very bad i think you've answered judge prior's question and i understand the universe they're dealing with i've got one form that will be yes we do in paragraph twenty seven we show exactly what's been happening this has been a change across the country consultants are whispering and bankers and credit union directors ears here's more money here's how you can do it nobody used to do this and i can show you the judge martin and i wrestled with this eleven years ago no one understood what was going on regulators didn't understand was going on but there was software engineering that was being rolled out across the country to jack up overdraft fees and that's all this case deals with is that little slice it is improperly tabulated the contract didn't catch up the overdraft opt in form didn't catch up l g is on the hook for that that's all this case is about thank you