(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Jenna Greene

July 18 (Reuters) - ATM fees are one of life's small

annoyances, a few dollars added to an out-of-network withdrawal

because your bank didn't have a machine nearby.

That's why a lawsuit against Citigroup ( C/PN ) for waiving its $3

out-of-network ATM fee for customers of certain credit unions

and community banks, most of them minority-owned, strikes me as

an instance of no good deed going unpunished.

As my Reuters colleague Jonathan Stempel reported, the

third-largest U.S. bank was sued in May by two Florida customers

who do not bank with Citigroup ( C/PN ) and were charged fees for using

its ATMs.

They cried foul, alleging Citigroup ( C/PN ) is discriminating

against clients of non-minority owned banks -- or as the

complaint put it, "financial institutions owned by people of the

wrong race"-- by making them pay ATM transaction fees, while

customers of the 50 banks that are members of Citi's "ATM

Community Network" program are not charged extra.

The plaintiffs are represented by litigation boutique

Consovoy McCarthy, where firm lawyers last year persuaded the

U.S. Supreme Court to strike down race-based college admissions

policies and in June, succeeded on appeal in blocking grants (at

least for now) by Fearless Fund to Black women-owned businesses.

But this case may be a tougher hill for them to climb,

considering nearly one-third of the banks in the community

network program are not even minority-owned, according to

Citigroup ( C/PN ).

Consovoy lawyers Bryan Weir, Daniel Shapiro and Brandon

Haase, who all signed the complaint, did not respond to my

requests for comment.

Citigroup ( C/PN ), which is represented by a Jones Day team that

includes partners Jayant Tambe and Eliot Pedrosa, said it is

"proud of our commitment to expanding affordable banking access

in underserved communities."

The case may turn on a 158-year old civil rights law from

the Reconstruction era that prohibits private parties from

discriminating on the basis of race in making or enforcing

contracts.

Consovoy lawyers successfully invoked the provision, Section

1981 of the Civil Rights Act of 1866, in lawsuits last year

against Morrison & Foerster and Perkins Coie. The suits alleged

the law firms' diversity fellowships for members of

"historically underrepresented" groups improperly discriminated

on the basis of race.

Both firms subsequently modified their fellowship criteria,

and the lawsuits were dropped.

In the Citigroup ( C/PN ) suit, Consovoy lawyers assert the

plaintiffs are being discriminated against because they are "not

clients of a bank or credit union owned by members of Citi's

favored racial groups."

As a result, they say, the plaintiffs (whose races are not

identified) suffer "associational discrimination" by being

charged ATM fees.

But the plaintiffs don't allege that their banks (which are

not identified in the complaint and are not parties to the suit)

even wanted to join the Citi community network, let alone that

they were barred from doing so based on the disfavored race of

their owners.

This strikes me as a potentially fatal flaw. Just as high

school students have been found to lack standing to challenge

admissions procedures at colleges where they didn't apply, Jones

Day lawyers say there's no grounds here to claim the plaintiffs'

banks were wrongly excluded -- especially since 14 of the

community network member institutions are not minority owned.

Nor can the plaintiffs claim to have faced discrimination on

account of their own race in using Citibank's machines, the

Jones Day team continued.

"Citibank treats white or black out-of-network customers

identically," they wrote -- and it's not as if the ATMs can tell

the difference.

"Put more simply," the lawyers continued, "while Citbank's

ATMs require a user to enter his or her personal PIN, they do

not ask any user to enter their race."

The suit proposes a class that would include everyone in the

U.S. who paid a fee to use one of Citibank's 2,000-plus ATMs in

the last four years. While the fee amount is not specified in

court papers, a Citi spokesperson told me the surcharge is $3

across all regions.

The plaintiffs lawyers want the fees refunded -- an amount

that would likely run into the tens or even hundreds of millions

of dollars -- plus punitive and other damages.

They also want the court to order Citi to discontinue the

community network program, which per a company press release was

launched in 2016 to expand access to affordable banking services

"especially in low-income communities and communities of color."

In other words, the plaintiffs' goal if they win is not to

obtain access to free ATM transactions for themselves, but to

end it for others.

As a remedy, it reminds me of an old Soviet-era joke. One

farmer has a cow, the other does not. But then a genie grants

the cow-less farmer a wish!

"Kill my neighbor's cow," the farmer says.