On August 5, the U.S. Court of Appeals for the 4th Circuit reversed and remanded a lower court’s decision that denied a plaintiff’s motion for class certification in her lawsuit against a bank. The plaintiff, a South Carolina resident, alleged the defendant engaged in three wrongful practices: (i) treating accounts as overdrawn despite having sufficient funds; (ii) charging multiple insufficient-funds fees for a single transaction; and (iii) imposing two separate out-of-network fees for a single out-of-network ATM withdrawal transaction. The plaintiff sought to certify nationwide classes for each type of alleged improper fee, but the bank argued that South Carolina’s “Door Closing Statute” barred her from representing nonresident class members whose claims did not arise in South Carolina. The district court sided with the bank and denied certification, limiting the class to South Carolina residents. As a result of the limited class, the district court also held that the plaintiff could not meet the numerosity requirement for class certification.

On appeal, the 4th Circuit found that the district court erred by applying the Door Closing Statute to restrict class membership in federal court. The appellate court held that Federal Rule of Civil Procedure 23 governs class certification and empowers a federal court to certify a class in every case where Rule 23’s criteria are met and noted that a state cannot limit that permission by imposing additional requirements. The panel concluded that because the Door Closing Statute directly conflicts with Rule 23, the federal rule controls, and remanded the case for further proceedings.