Claims Against Bank of America to go Forward for Failing to Protect Unemployed Californians During Pandemic
Judge Larry A. Burns of the District Court in San Diego issued an order yesterday allowing claims in the multi-district litigation against Bank of America to go forward. The class action seeks to hold BofA accountable for violating state and federal laws and breaching its contract with hundreds of thousands of Californians who receive unemployment and disability benefits through BofA’s prepaid debit cards.
Plaintiffs allege that during the pandemic California benefits recipients had their unemployment benefits stolen from their prepaid debit card accounts due to BofA’s failure to implement basic security measures, including its failure to include industry- standard security chips on the cards. Under federal law, BofA is required to investigate cardholders’ claims of unauthorized transactions on their account. Plaintiffs allege that instead of conducting the required investigations, Bank of America summarily denied cardholder claims and froze their accounts. BofA then failed to handle the high volume of customer service calls from cardholders, leaving many cardholders unable to contact the bank and deprived of access to their benefits for months on end.
The law firm of Cotchett, Pitre & McCarthy filed the class action lawsuit Yick v. Bank of America, N.A. in January 2021. The district court in San Francisco consolidated cases, appointed Cotchett, Pitre & McCarthy and Altshuler Berzon LLP as interim co-lead counsel, then issued a sweeping Preliminary Injunction finding Plaintiffs “demonstrated a strong likelihood of success on their claims” and that “continued denial of these benefits will seriously hinder the ability of many class members to feed their families and keep a roof over their heads.” The injunction required BofA to unfreeze cardholder accounts, reopen investigations into stolen benefits, pay provisional credits and improve customer service.
Cases brought against Bank of America across California were then transferred into a multi-district litigation before District Court Judge Burns in San Diego, with Cotchett, Pitre & McCarthy LLP and Altshuler Berzon LLP appointed co-lead counsel.
On July 14, 2022, BofA entered into a Consent Order with the Consumer Financial Protection Bureau which mirrors many of the claims in Plaintiffs’ original complaint and agreed to pay a $225 million fine.
The District Court’s ruling on BofA’s motion to dismiss allows numerous claims to proceed, including Plaintiffs’ claims that the Bank:
- violated the federal Electronic Funds Transfer Act by failing to timely investigate unauthorized transaction claims;
- violated the California Consumer Privacy Act by issuing EDD debit cards without security chips and failing to ensure the confidentiality of Plaintiffs’ personal information;
- violated Plaintiffs’ due process rights by depriving Plaintiffs of a protected property interest without providing adequate due process;
- was negligent in failing to include security chips on EDD debit cards;
- was negligent in the hiring and supervision of contractors given access to cardholders’ account information;
- acted unfairly in denying claims and freezing accounts; and
- breached fiduciary duties owed to EDD cardholders.
According to Brian Danitz, a partner at Cotchett, Pitre & McCarthy, co-lead counsel for the Class:
The District Court’s thorough 81-page decision is a critical step toward achieving justice for the hundreds of thousands of Californians who were deprived of their only lifeline during the pandemic. Bank of America failed to safeguard the accounts of EDD debit cardholders and then failed to handle fraud claims when made. The decision shows how the Bank failed to live up to its obligations under federal and state law at a tremendous cost to so many vulnerable Californians.
Michael Rubin of Altshuler Berzon, co-lead counsel for the Class:
Today’s long-awaited ruling is a huge victory for the hundreds of thousands of Californians who lost their jobs during the COVID pandemic and were callously deprived by Bank of America of the UI funds to which they were legally entitled and which they desperately needed to pay for their most basic needs.
Connie Chan, a partner at Altshuler Berzon:
The preliminary injunction we obtained in June 2021 stopped the bleeding, and this order now brings us one step closer to holding the Bank accountable and fully compensating all its victims.
Andrew Kirtley, a partner at Cotchett, Pitre & McCarthy:
This ruling vindicates many of Plaintiffs’ legal theories about why BofA’s shoddy administration of unemployment benefits cards throughout the state was not only profoundly harmful but also unlawful in so many ways. Plaintiffs look forward to vigorously prosecuting this case, getting it certified as a class action, and obtaining significant relief for all those harmed by BofA’s practices.
The lawsuit is In re Bank of America California Unemployment Litigation, Case No. 3:21-md-2992-LAB, in the U.S. District Court for the Southern District of California. Cotchett, Pitre & McCarthy LLP and Altshuler Berzon LLP are co-lead counsel for the Class. Casey Gerry Schenk Francavilla Blatt & Penfield LLP is Liason Counsel for the Class.