Ohio federal jury finds Fifth Third Bank owes no damages in $444M cash advance suit

Cash Advance
Klopfenstein, et al. v. Fifth Third Bank
Date: April 27, 2023

Issue: Whether Fifth Third Bank owed damages for breaching its contract with customers by charging customers a higher annual percentage rate than advertised.

Case Summary: An Ohio federal jury rejected class plaintiffs’ $444 million breach of contract claim related to the bank’s early access cash advance loan program and found no liability for Fifth Third Bank under the voluntary payment doctrine.

In 2013, a group of borrowers sued Fifth Third Bank alleging the bank falsely advertised its cash loan program. The borrowers claimed Fifth Third Bank breached its loan contracts when it allegedly charged annual percentage rates as high as 3,650% on loans taken through its Early Access program. According to the borrowers, Fifth Third Bank advertised 120% APRs on all early access loans. The borrowers sought $444 million in damages alleging multiple claims including violation of the Truth in Lending Act (TILA), fraud, breach of contract and unjust enrichment.

The district court granted summary judgment for the borrowers for their TILA claims but dismissed the other allegations under Ohio law. The court determined the bank’s contract unambiguously disclosed the method of calculating APR despite admitting the result “may be misleading.” Furthermore, the district court emphasized the borrowers did not dispute whether they knew about a 10% transaction fee, and thus no breach of contract occurred. On appeal, a split Sixth Circuit panel (2-1) revived the breach of contract claim in 2019. The panel found the loan contracts included contradictory definitions on the term “APR.” The panel remanded the case to the district court.

Following an eight-day trial, the Ohio federal jury found the bank breached its contract with the borrowers. But the jury determined the bank was not liable for damages under the voluntary payment doctrine. The voluntary payment doctrine bars recovery of payments voluntarily made with full knowledge of the facts, and without fraud or material mistake of fact or law. Fifth Third Bank was accused of fraud, but those claims were dismissed before trial.

On May 11, 2023, the borrowers asked the court for a directed verdict on the voluntary payment doctrine. The borrowers argued they lacked sufficient information about whether their loans had APRs above 120%, and therefore did not have all necessary information for the doctrine to apply. According to the doctrine, the payers must have “full knowledge of the relevant facts.” The court disagreed and did not order Fifth Third Bank to pay damages, despite agreeing with the borrowers’ breach of contract claim.

Bottom Line: The borrowers said they will appeal the Ohio federal jury’s verdict.

Documents: Verdict