Federal Court Certifies Five California Classes in Pandemic Unemployment Benefits Case Against Bank of America
Judge Gonzalo P. Curiel of the U.S. District Court in San Diego issued a 98-page order today granting plaintiffs’ motion to certify five classes in the multidistrict litigation against Bank of America. The class action seeks to hold the Bank accountable for violating state and federal laws for more than 100,000 Californians who received unemployment and disability benefits through Bank-issued prepaid debit cards during the COVID pandemic.
Plaintiffs allege that during the pandemic, California benefits recipients had their unemployment benefits stolen from their prepaid debit card accounts due to the Bank’s failure to implement basic security measures, such as including industry-standard EMV chips on the cards. Under a federal statute, the Electronic Funds Transfer Act, banks are required to investigate cardholders’ claims of unauthorized transactions on their accounts. Plaintiffs allege that instead of conducting the required investigations, the Bank used an automated Claim Fraud Filter to summarily deny all cardholder claims involving unauthorized transactions at ATMs and to freeze the cardholders’ accounts, depriving them of access to previously paid benefits. The Bank then compounded the harm by making it nearly impossible for many aggrieved cardholders to reach its customer service centers, often forcing them to spend hours on hold, only to be disconnected.
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, and issued a sweeping Preliminary Injunction in June 2021 finding that plaintiffs “demonstrated a strong likelihood of success on their claims” and that the Bank’s “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.” That injunction required the Bank to stop using its Claim Fraud Filter to automatically deny claims or freeze accounts, to reopen and investigate claims previously denied based on the Claim Fraud Filter, to reimburse all cardholders whose claims the Bank improperly denied, and to take specific, court-ordered steps to improve its call center customer service.
The Yick consolidated cases and other similar cases pending against the Bank throughout California were then transferred into a multi-district litigation before the district court in San Diego, with Cotchett, Pitre & McCarthy LLP and Altshuler Berzon LLP appointed co-lead counsel, and CaseyGerry appointed Liason Counsel.
On July 14, 2022, Bank of America entered into Consent Orders with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency which mirrored many of the claims in plaintiffs’ original complaints and which required the Bank to pay fines to the government totaling $225 million.
Today, the District Court certified five classes—called the Claim Denial, Credit Rescission, Account Freeze, Customer Service, and EMV Chip classes. The Multi- District Litigation will now move forward toward trial as a class action under California and federal law. Plaintiffs seek class-wide damages, including statutory, treble, and punitive damages, for the Bank’s wrongful conduct, including for its:
• violations of the federal Electronic Funds Transfer Act by failing to timely
investigate and reimburse unauthorized transaction claims;
• violations of the California Consumer Privacy Act by issuing EDD debit cards
without EMV chips and failing to ensure the confidentiality of plaintiffs’ personal
information;
• violations of the California Unfair Competition Law by unfairly denying claims
and freezing accounts; and
• violations of due process rights by depriving class members of a protected
property interest without providing adequate due process;
• negligence in failing to include security chips on EDD debit cards and failing
adequately to staff its customer service call center;
• breaches of 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 98-page decision is a critical step toward achieving justice for 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. This pandemic era case can finally move forward toward trial and hold the Bank accountable for failing to live up to its obligations at a tremendous cost to so many vulnerable Californians.
Michael Rubin of Altshuler Berzon, co-lead counsel for the Class:
Today’s class certification order marks a huge milestone for the class. It was painful enough for those 109,000 out-of-work Californians to learn, during the height of the pandemic, that hundreds, sometimes thousands, of dollars had been stolen from their critically needed UI benefits accounts through unauthorized ATM withdrawals. But that pain was magnified many times over when the Bank turned around and accused those cardholders themselves of being the criminals. The Bank’s refusal to reimburse their stolen funds and its callous decision to freeze all access to their previously paid EDD benefits rested on an outrageous Bank policy – whose legality will be the central issue at trial – that automatically denied the claim of every EDD debit cardholder who reported an unauthorized ATM transaction. We look forward to proving the claims of all five classes at trial, and to the court holding the Bank responsible for the harm it caused – which could lead to treble damages as well as punitive damages under the governing law.
Connie Chan, a partner at Altshuler Berzon:
At the height of the pandemic, Bank of America chose to prioritize its own economic interests at the expense of tens of thousands of unemployed Californians by summarily denying claims and freezing accounts without any investigation. Despite subjecting all California UI recipients to the same set of policies, the Bank has tried to prevent class members from enforcing their rights by insisting they should all be forced to file individual lawsuits. Today’s class certification order recognizes that the victims of the Bank’s “Claim Fraud Filter” policies should be allowed collectively to prove their claims in court. It is a crucial and long-awaited step towards holding the Bank accountable for its callous and unlawful policies that harmed so many when they needed their UI benefits most.
David Casey, a partner at Casey Gerry Schenk Francavilla Blatt & Penfield:
This has been a David versus Goliath battle, where individuals who were placed in unnecessary financial distress by the acts of one of the world’s largest banks, after years of legal battles, are finally on the way to obtaining justice in court.
The lawsuit is In re Bank of America California Unemployment Litigation, Case No. 3:21-md-2992-GPC-MSB, 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 Liaison Counsel for the Class.