Nick’s ATM miscue spawns legal nightmare [Indianapolis Business Journal (IN)]

Jon Pike withdrew cash from the ATM at Nick's English Hut on Sept. 27, 2010, paying a $1.50 transaction fee in the process.

That seemingly humdrum moment touched off a legal odyssey for the iconic Bloomington watering hole that nearly three years later might finally be reaching a conclusion.

Pike ended up filing a class action federal lawsuit charging Nick's ATM lacked a fee-disclosure sticker, putting it in violation of the federal Electronic Funds Transfer Act. The suit argues that Nick's "frequent and persistent" non-compliance with the law entitles Pike and hundreds or thousands of other users of the machine to damages far greater than what they paid in fees.

After the taking of depositions and dozens of filings by the parties, the case is now set for a three-day jury trial beginning Oct. 22 in Indianapolis.

If that weren't bad enough, Nick's also is fending off a lawsuit filed by its insurer, Wisconsin-based Society Insurance, which wants a federal court to declare the issues at play in the Pike suit are outside those covered under its policies providing millions of dollars in coverage.

If there is any consolation for the owners of Nick's, it's that scores of business owners across the country feel their pain. American Banker estimates that attorneys filed as many as 2,000 ATM-sticker lawsuits before Congress in December 2012 eliminated the requirement, concluding it was unnecessary given that modern ATMs give users the right to opt out of transactions if they deem fees are too high.

Many of the suits were brought by the same handful of attorneys. For instance, the counsel for Pike Eric Calhoun of the Dallas law firm Travis & Calhoun also represented Zachary Couch, who sued the Indianapolis Indians and its ATM vendor in July 2011, citing the absence of stickers disclosing a $2 fee.

The parties settled that case last October, with the defendants setting up a $35,000 settlement fund that provided users of the ATMs $14.50 for each transaction. Attorneys for the class received the biggest payday, $50,000, which covered fees as well as expenses.

It's not clear how much Nick's has racked up in legal fees or whether the restaurant is trying to settle in advance of the trial. Messages left with Nick's co-owner Susan Bright and the restaurant's attorney, Thomas Rosta of Metzger Rosta LLP in Noblesville, were not returned. Calhoun and Pike, who in the spring wrapped up his second year as a student at Indiana University's medical school, did not respond to inquiries.

Earlier this year, Magistrate Judge Mark Dinsmore granted partial summary judgment to Pike, narrowing the field of issues to be decided at trial to Nick's net worth and its legal liability. Nick's wasn't able to refute Pike's central claim - that there was no fee sticker on the ATM the day of his transaction - but there is uncertainty whether a sticker was missing the entire one-year period for which ATM users would be eligible for a recovery.

During a deposition, Bright said she had known there was a law called the Electronic Funds Transfer Act and knew it required disclosure of ATM fees "in some way," but thought disclosure during the transaction was sufficient.

She said she eventually put a sticker on the machine. Asked if that occurred before Pike sued in September 2011, she said, "Maybe. Maybe not."