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In Re: Chase Bank USA, N.A. “Check Loan” Contract Litigation

Nationwide Class ActionUnited States District Court (N.D. Cal.)MDL No. 2032, Case No. 3:09-md-02032-MMC (JSC)

Case Type:  Consumer Fraud

The Sturdevant Law Firm was a member of the Executive Committee on this nationwide class action on behalf of Chase credit card customers whose “life of the loan” credit card terms and conditions were unilaterally changed to increase the minimum payment from 2% to 5% with little or no notice. Plaintiffs and the class they have been appointed to represent are credit cardholders who accepted Defendant Chase Bank’s offer of a low APR “check loan” that would remain fixed for the “life of the loan.”  They paid an up-front fee in exchange for their low APRs and, unlike many of Chase’s cardholders, managed to avoid all the built-in traps that would have compromised their ability to maintain the benefits of that low APR.

Chase reaped some $180 million in up-front transaction fees from the group of cardholders that now comprise Plaintiffs and the class.  After that, however, Chase decided that it could profit even more if it eliminated that particular group’s side of the bargain-the low APRs.  So in the middle of the recent economic crisis, Chase notified Plaintiffs and the class that it was more than doubling their monthly payments unless they agreed to surrender their low, fixed APRs and agree to a higher, variable APR.

Plaintiffs filed suit, alleging that singling them out for a minimum monthly payment increase under Chase’s standard Cardmember Agreement-while leaving the payment terms unchanged for the other 99% of Chase’s customers subject to the same Cardmember Agreement-constituted a violation of the implied covenant of good faith and fair dealing.  Plaintiffs also asked the court to certify the implied covenant claims for class treatment. On May 13, 2011, the district court granted Plaintiffs’ motion for class certification, reasoning that whether Chase’s conduct was arbitrary or unreasonable and whether that conduct frustrated its customers’ reasonable expectations were common questions that could be adjudicated for all using common proof-much of which comprised the voluminous evidentiary record the district court considered in reaching its decision. The Ninth Circuit Court of Appeals denied Chase’s request for immediate review.  A settlement was reached late 2012, and on November 2, 2012, the court approved a $100 million settlement of the case.

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