The U.S. Court of Appeals for the Eleventh Circuit has tossed out class certification for more than 1 million potential plaintiffs suing Wells Fargo, ruling that the banking behemoth did not waive its rights to compel arbitration when it agreed to defend in court five cases seeking damages for the way the bank calculated overdraft charges.

A Florida district judge had granted class certification in the litigation, ruling that—by defending the individual actions and not moving to compel arbitration against the unnamed plaintiffs—Wells Fargo had “signaled to the court that it and plaintiffs that it would not seek arbitration” against this plaintiffs.

Thursday's ruling, written by Circuit Judge Gerald Tjoflat with the concurrence of Judge Adalberto Jordan and Judge John Steele of the U.S. Circuit Court for the Middle District of Florida sitting by designation, said Wells Fargo had reserved its right to pursue arbitration and raised the issue in its defense.

“Fairly read,” Tjoflat wrote, “these actions had the effect of putting both the court and plaintiffs on notice of Wells Fargo's arbitration rights against the unnamed plaintiffs and its intent to invoke them.”

The dispute involves multidistrict litigation in the Southern District of Florida challenging the way Wells Fargo and Wachovia—which was acquired by Wells Fargo in 2008—charged customers for overdrafts on debit cards. According to the complaint, the banks used automated systems to reorganize the order of customers' purchases from highest to lowest rather than chronologically, ensuring that customers' accounts would be debited for the highest transaction first, depleting the funds so that more overdrafts would accrue and generate penalties.

Rather than seeking to enforce arbitration clauses in its contracts, Wells Fargo opted to litigate the case on the merits for nearly two years until the U.S. Supreme Court's 2011 decision in AT&T v. Concepcion, 563 U.S. 333.

That 5-4 decision held that state laws barring enforcement of classwide arbitration agreements were preempted by the Federal Arbitration Act and that arbitration agreements with class action waivers can only be enforced by individual arbitrations.

When that decision came down, Wells Fargo moved the court to compel arbitration against the unnamed class members, which Judge James King declined to do.

Wells Fargo appealed, and in 2015 the Eleventh Circuit ruled that, because no class had been certified at that point, King lacked jurisdiction to decide the issue and sent the case back to King.

On remand, King certified the class and again ruled against Wells Fargo's bid to force arbitration.

Thursday's decision sends the cases back to King, ruling that “Wells Fargo's choice to inform the court it would not seek to compel the named plaintiffs to arbitrate but wished to reserve its options with regard to the unnamed plaintiffs can hardly be said to have been inconsistent with its contractual arbitration rights.”

Fort Lauderdale attorney Bruce Rogow, who argued the case at the Eleventh Circuit, expressed disappointment with the ruling.

“Had Wells Fargo raised arbitration at the outset, nine years of expensive litigation would have been avoided,” said Rogow via email. “Since the Federal Arbitration Act seeks to avoid such a waste of court, client, and lawyer time, the result here is antithetical to the goals of the FAA, and is unfortunate.”

“[Wells Fargo's] initial invocation of arbitration was untimely, as the Court of Appeals held in the first case,” Rogow said. “To allow a failure to waive to be revived against the Class permits defendants to play a grievous game with the courts. We are studying the decision to determine what our next steps will be.”

Sonya Winner of San Francisco's Covington & Burling, who represents Wells Fargo, referred queries to the bank.

“We are pleased with the court's decision, and believe it ruled correctly,” said spokesman Jim Seitz.