Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_16-cv-00492/USCOURTS-casd-3_16-cv-00492-1/pdf.json

Nature of Suit Code: 430
Nature of Suit: Banks and Banking
Cause of Action: 12:0085 National Banks: Rate of Interest on Loans, Discounts, and Purchases

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3:16-cv-00492-L-WVG

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JOANNE FARRELL,

Plaintiff,

v.

BANK OF AMERICA, N.A.,

Defendant.

Case No.: 3:16-cv-00492-L-WVG

ORDER GRANTING DEFENDANT'S 

MOTION [Doc. 29] FOR 

CERTIFICATION OF 

INTERLOCUTORY APPEAL AND 

STAY

Pending before the Court is Defendant Bank of America’s (“BoA”) motion for 

certification of interlocutory appeal and stay. The Court decides the matter on the papers 

submitted and without oral argument. See Civ. L. R. 7.1(d)(1). For the reasons stated 

below, the Court GRANTS BoA’s motion. 

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I. BACKGROUND

This case is a putative class action focused on BoA’s practice of levying $35 fees 

(“Extended Charges”) against deposit account holders for failing to rectify an overdrawn 

deposit account within five days. To open a deposit account with BoA, a customer must 

first execute a Deposit Agreement [Doc. 8-3]. Under the terms of the Deposit Agreement

BoA charges a $35 fee (the “Initial Charge”) anytime a deposit account holder writes a 

check against insufficient funds. When a deposit account holder thus overdrafts his or 

her account, the BoA has discretion as to whether to honor the overdrawn check by

advancing funds to the payee sufficient to cover the note. However BoA levies the Initial 

Charge whether it advances the fees or not. In the event BoA does advance the funds, the 

deposit account holder is obligated under the Deposit Agreement to pay back BoA’s

advance and any fees incurred. Failure to do so within five days triggers an Extended 

Charge. 

Plaintiff wrote some checks against insufficient funds. BoA honored the checks 

but charged her $35 Initial Charges for not having sufficient funds. When Plaintiff failed 

to remedy her negative account balance within five days, BoA levied an Extended 

Charge. Because the Extended Charges, as a percentage of her negative account balance, 

exceeded the interest rate permitted by the National Banking Act, Plaintiff filed this

putative class action against BoA, alleging violation of 12 U.S.C. §§ 85, 86 (the “NBA”). 

(See Compl.) BoA moved to dismiss Plaintiff’s Complaint, arguing that the Extended 

Charges were not “interest” and therefore cannot trigger the NBA. (See MTD [Doc. 8].) 

The Court disagreed and therefore denied BoA’s motion. (See MTD Order [Doc. 20].) 

BoA now moves for permissive certification of interlocutory appeal pursuant to 28 

U.S.C. § 1292 and a stay pending the outcome of appeal. Plaintiff opposes. (See Opp’n 

[Doc. 47].) 

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II. DISCUSSION

As a general matter, a party may only appeal final decisions that dispose of a case 

before the district court. 28 U.S.C. § 1291. However, 28 U.S.C. § 1292(b) provides a 

narrow exception to this final judgment rule. Under § 1292(b), a district court may 

permit a party to petition the circuit court for review of an interlocutory decision 

concerning (1) a controlling question of law about which (2) there is substantial grounds 

for a difference in opinion and (3) resolution of which may materially advance the 

termination of the litigation. Couch v. Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010) 

(citing 28 U.S.C. § 1292(b)). 

The relevant question of law here is whether the Extended Charges constitute 

interest rather than 12 C.F.R. § 7.4002 authorized deposit account service charges. If the 

Extended Charges are interest, Plaintiff’s claims survive. On the other hand, if the 

Extended Charges are instead 12 C.F.R. § 7.4002 authorized deposit account service 

charges, Plaintiff’s claims must be dismissed with prejudice. Thus, there can be no 

question that this is a controlling question of law and that its resolution may materially 

advance the termination of the litigation.1

There are also reasonable grounds for a difference of opinion on this issue. As the 

Court noted in its order denying BoA’s motion to dismiss, there is no binding authority 

that addresses this specific issue. However, at least three district court cases have 

considered it. All three reached the conclusion that Extended Charges do not constitute 

interest under § 85. Mcgee v. Bank of America, N.A., 2015 WL 4594582 (S.D. Fla 2015); 

Shaw v. BOKF, Nat. Ass’n, 2015 WL 6142903 (N.D. Okla. 2015); In re TD Bank, N.A., 

150 F. Supp. 3d 593 (D.S.C. 2015). Though this Court disagrees with those decisions 

 

1 Plaintiff also argues that further discovery is necessary before certification of interlocutory appeal. 

The Court disagrees. The fundamental question is whether a bank’s coverage of an overdraft constitutes 

“an extension of credit.” No further factual development is necessary to decide this issue. Indeed this 

Court and all three other federal district court decisions to decide this issue did so on a motion to 

dismiss. See Mcgee v. Bank of America, N.A., 2015 WL 4594582 (S.D. Fla 2015); Shaw v. BOKF, Nat. 

Ass’n, 2015 WL 6142903 (N.D. Okla. 2015); In re TD Bank, N.A., 150 F. Supp. 3d 593 (D.S.C. 2015). 

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and explained why in its previous order denying BoA’s motion to dismiss, the fact that all 

other decisions considering this issue reached a different conclusion strongly suggests 

that “reasonable jurists might disagree on [this] issue’s resolution.” Reese v. BP 

Exploration (Alaska) Inc., 643 F.3d 681, 688 (9th Cir. 2011). Accordingly, the Court 

GRANTS BoA’s motion to certify a permissive interlocutory appeal under 28 U.S.C. § 

1292(b). 

III. CONCLUSION AND ORDER

For the foregoing reasons, the Court GRANTS BoA’s Motion to certify a 

permissive interlocutory appeal under 28 U.S.C. § 1292(b). In the interests of judicial 

efficiency, it is further ordered that this litigation is stayed until the Ninth Circuit decides 

either (1) not to hear this certified interlocutory appeal or (2) reaches a decision on the 

merits as to whether the Extended Charges constitute “interest” under the NBA. The 

parties shall notify the Court of the occurrence of either of the above events and, in the 

interim, provide joint status reports once every six months from the entry of this order. 

IT IS SO ORDERED. 

Dated: April 11, 2017

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