By Sydney Price

Central National Bank NA and a class of former inmates who were charged fees for using the bank's prepaid debit cards from partner Numi Financial reached a $2.8 million settlement following mediation, but the parties have requested the court stay the case while class counsel investigates Numi's potential insolvency.

According to the notice the parties filed Thursday, the plaintiffs reached a settlement with Central National Bank and Trust Co., now known as Stride Bank NA, on March 4. The bank has proposed paying a subclass of plaintiffs from the $2.8 million settlement fund, according to the notice.

Numi, the suit's other defendant, said it was likely to file for bankruptcy because of its potential liability in the case. It offered to settle with the defendants for $1 million paid over five years.

The parties jointly requested the court stay further proceedings in the case for 45 days while the class and its consultants evaluate additional information related to Numi's financial situation.

"If a settlement with Numi is reached, then the parties will submit that agreement, the CNB settlement agreement, and the proposed form of notice to class members for preliminary approval by the Court," the joint notice states.

Plaintiff Danica Love Brown first filed the suit in 2015. In August 2018, U.S. District Judge Michael W. Mosman granted Numi's request to dismiss the suit. That same month, Brown appealed to the Ninth Circuit, which in March 2020 reversed and remanded the case.

The district court case was reopened the next month, with the Ninth Circuit's instructions "to determine whether the fees are a 'fair approximation of the cost of benefits supplied.'"

The most recent version of the suit was filed in July 2020. Brown was arrested at a Portland protest in 2014 for minor, nonviolent charges and taken into custody at Multnomah County Detention Center. The $30.97 she had on her was confiscated and held for her while she was incarcerated, according to the complaint.

Brown argued that when she was released eight hours later, she accepted a prepaid debit card with her funds, and its associated fees, because she otherwise wouldn't have access to her money.

A $5.95 monthly maintenance fee — almost 20% of her funds — was charged five days after the card was issued, the complaint says. Brown was alerted to the fee when she tried to use the card, and it was rejected for insufficient funds, causing another charge to her account, which was later depleted through a maintenance fee, according to the complaint.

She sought to represent a nationwide class of former inmates who were charged fees for using the prepaid debit cards to access funds that were confiscated when they were taken into custody

In its rejected August 2020 motion for summary judgment, Numi argued Brown could have avoided the fees by using the card's no-fee methods.

The company said card users could transfer a card balance to their personal bank account, but Brown opted not to because she didn't want to give the company her banking information.

The plaintiffs secured class certification in June 2021, but the court limited the class definition to only those inmates who did not solicit a card when they were released and were given one anyway, since the option of cash was not available.

Counsel for Numi and Central National Bank declined to comment on Friday. Counsel for Brown did not immediately respond to requests for comment.

The class is represented by Chris R. Youtz and Richard E. Spoonemore of Sirianni Youtz Spoonemore Hamburger PLLC, Shelby Leighton of Public Justice PC, and Daniel L. Marshall of the Human Rights Defense Center.

The defendants are represented by Eric J. Nystrom, John C. Ekman and Natalie I. Uhlemann of Fox Rothschild LLP.

The case is Brown et al. v. Stored Value Cards Inc. et al., case number 3:15-cv-01370, in the U.S. District Court for the District of Oregon.

--Editing by Lakshna Mehta.