A Brooklyn appeals court has sanctioned Sullivan & Cromwell for engaging in “frivolous conduct” in its defense of a proposed class action suit over credit card late fees in Westchester County Supreme Court.
In Naposki v. First National Bank of Atlanta, 2572/00, the Appellate Division, 2nd Department, ordered the firm to pay $5,000 to the state Lawyer’s Fund for Client Protection for failing for nine months to inform either plaintiffs counsel or the court of a settlement in a California class action involving identical claims.
Both suits had charged that the credit card division of Wachovia Bank, Sullivan & Cromwell’s client, improperly applied late fees and other penalty charges to accounts according to the hour of payment rather than the day. Wachovia settled the California case, Valloud v. Wachovia, for $775,000 in September 2002.
The New York plaintiffs had appealed the trial court’s dismissal of their suit. But they were not informed of the West Coast settlement until the eve of oral arguments in June 2003, when Wachovia urged dismissal on res judicata grounds.