Thursday, March 22, 2012
Customers' complaints that their brokerage firms overcharge for their services rarely fare well in the courts, and the Seventh Circuit's recent opinion in Appert v. Morgan Stanley (Mar. 8, 2012) is no exception. Plaintiffs brought a class action complaining that Morgan Stanley's fee for sending confirmations (a "handling, postage and insurance" or HPI fee) bore no relationship to actual costs and was excessive. In 2002, the HPI fee was $2.35 per transaction, later raised to $5.00 and then $5.25. In 2002, postage and handling charges were about 43 cents.
So what, said the court in affirming the district court's dismissal. The customer's agreement with the firm did not suggest that the HPI fee represented actual costs, and Morgan Stanley had no implied duty under applicable state law to charge a fee that was reasonably proportionate to actual costs where it notified customers in advance of the charges and they were free to decide whether to continue business with the firm.