Overdraft Litigation
Grice v. Independent Bank
Date: Aug. 6, 2025
Issue: Whether the South Carolina federal court erred by denying class certification in a lawsuit accusing Independent Bank of improper overdraft fee assessment practices.
Case Summary: In a unanimous decision, a Fourth Circuit panel revived a class action lawsuit against Independent Bank over its overdraft practices.
In 2020, Jamila Grice sued Independent Bank, alleging it treated customer accounts as overdrawn even when balances could cover transactions, imposed multiple insufficient-funds fees on a single transaction to increase revenue, and charged two separate out-of-network fees for one ATM withdrawal.
Grice moved to certify nationwide classes for each type of wrongful fee that Independent Bank allegedly charged. Opposing class certification, Independent Bank argued South Carolina’s “door-closing statute,” S.C. Code Ann. § 15-5-150, prohibited Grice from representing class members who were not state residents. The statute generally prevents nonresidents from suing foreign corporations in South Carolina courts for claims arising outside the state. Judge Timothy Cain of the U.S. District Court of South Carolina agreed and denied Grice’s motion for class certification.
On appeal, the panel reversed and remanded, concluding the court erred by applying the South Carolina statute instead of Federal Rule 23. The panel applied the Supreme Court’s 2010 decision in Shady Grove Orthopedic Associates PA v. Allstate Insurance Co., 559 U.S. 393 (2010), which resolves conflicts between a federal rule and a state law. The panel explained Rule 23 provides a “one-size-fits-all formula” for class certification in federal court, but the door-closing statute imposes additional requirements on nonresident class members, and thus Rule 23 controls.
The panel rejected Independent Bank’s argument that Rule 23 is invalid under the Rules Enabling Act, emphasizing that Rule 23 regulates procedure, not substantive rights. Because Rule 23 is valid and governs, the door-closing statute cannot limit class certification in federal court.
In concurrence, Judge Agee agreed the class action should be revived but argued the majority’s Shady Grove analysis was unnecessary. In his view, the panel should have deferred to the South Carolina Supreme Court’s own interpretation of the Door Closing Statute in Farmer v. Monsanto Corp., which concluded the law “clearly does not apply to federal suits.”
Bottom Line: The class action against Independent Bank can proceed after the Fourth Circuit ruled that a South Carolina “door-closing” statute cannot bar out-of-state plaintiffs from joining the suit.
Document: Opinion
