Lexington resident Lachin Hatemi didn’t start out hoping to shake up the financial industry, he just needed a bank account as he completed a medical residency in Buffalo, New York.
But as the U.S. Supreme Court justices prepare to announce which cases will be taken up next term, among the petitions for writ of certiorari they will consider is Lachin Hatemi v. M&T Bank Corporation.
Hatemi, 34, says the case began as a dispute over overdraft fees. He was living in New York in 2011 when, he says, he started noticing $35 overdraft charges for a service he says he never authorized.
“My $5 coffee is becoming $40 coffee,” he explains.
From there Hatemi’s case evolved into one asking more central questions of the rights of individuals verses the power of large financial institutions. It’s a case that touches on current anxieties about growing inequality and anger toward banking institutions in the wake of the Great Recession and Occupy Movement.
If Hatemi’s name and face seem familiar, it’s because his battle against big banks isn’t his only headline-grabbing David-and-Goliath tussle with a powerful institutions. A former University of Kentucky medical student, Hatemi also has been at the center of a blizzard of legal action tied to the university and the Kentucky Medical Service Foundation’s compliance with state Open Records Law requirements. UK spokesman Jay Blanton declined to comment on Hatemi or the litigation.
Hatemi’s adversaries, including the foundation, have at times painted him as unreasonable or badgering. In conversation Hatemi has a direct but easy manner. He mixes a mastery of sometimes arcane details with self-deprecating assessments of his legal activities, noting wryly the amount of time and money he’s invested in fighting a small fee.
“Who else does this?” he says of himself, shaking his head.
But he also talks of the bank officials and others “underestimating” him and allows, “I’m not someone to be messed with.”
He feels that’s what happened in New York when he tried to get answers about his overdraft fees. He says he asked repeatedly that the bank refuse any charges not covered by his balance. Hatemi says he asked an M&T manager for something in writing to certify he had opted out of the drafts.
“He told me there was nothing to give me in writing, that this was only verbally and we can only do something verbally,” Hatemi recalled. “Lightbulbs went off in my head. Like, this is kind of a neat loophole. Something you can only do verbally; my word against your word. ... This doesn’t sound right.”
The case moved from the overdraft fees to the rules governing how financial institutions may set up and run such services — in particular, updated requirements under the federal Electronic Fund Transfer Act and subsequent Dodd-Frank Wall Street Reform and Consumer Protection Act — before landing on more fundamental questions of contracts that seek to limit class actions and compel arbitration for disputes.
Hatemi believes the bank was violating requirements of the Dodd-Frank Act by allegedly not providing a separate opt-in or opt-out form for overdraft services. Hatemi says the bank was simply signing customers up for the service without the form, which he claims enriched the bank illegally.
Efforts to seek comment from M&T Bank were not successful.
But the issues of fees and fairness were sidelined long ago by questions of standing.
“They never argue the merits of the case,” Hatemi says.
The case Hatemi is appealing to the U.S. Supreme Court essentially is a question of whether he has the right to bring this case at all. Lexington-based attorney Andre Regard has been representing Hatemi in the U.S. Supreme Court appeal.
After winning several rulings, the U.S. Second Circuit Court of Appeals in March reversed a lower court's ruling, basically saying Hatemi’s dispute should be settled through arbitration, not court.
“If it goes to arbitration, you’re going to lose nine out of 10 times,” Hatemi says.
Still, the possibility the highest court in the land will take up his case is a long shot. The U.S. Supreme Court says it receives 7,000 to 8,000 petitions for a writ of certiorari each term, out of which it typically chooses 80. Hatemi is clear-eyed about his chances.
“Chances are usually about 3 or 4 percent,” Hatemi says. “I think our case it’s a little higher, but you’re still talking about low-teens.”
The Supreme Court should announce its decisions during the first week in October.