CLASS ACTION SUIT AGAINST CREDIT CARD ISSUER SETTLED
Chevy Chase Bank agreed to pay $16.1 million to settle a class action lawsuit relating to the bank’s credit card program. Wells v. Chevy Chase Bank, F.S.B., Case No. 24-C-99-000202 (Cir. Ct. Md. July 26, 2006).
Credit cardholders sued the bank for breach of a credit card agreement that expressly selected as its governing law Subtitle 9 of Title 12 of Maryland’s Commercial Law on the basis that fees were increased without the notice required by Subtitle 9.
The Maryland Supreme Court found that a federal savings bank’s contractual undertakings are not preempted under 12 C.F.R. § 560.2. Wells v. Chevy Chase Bank, F.S.B., 377 Md. 197 (2003). The United States Supreme Court denied the petition for certiorari, Chevy Chase Bank, F.S.B. v. Wells, 541 U.S. 983 (2004), and remanded the case so that the lower court could apply state contract law to determine the parties’ rights and obligations under the agreement.
In agreeing to settle, the bank denied any wrongdoing, but indicated that it wanted to avoid further litigation.
Elizabeth Anstaett and Michael Tomkies