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NOTICE OF FILING OF OFFICIAL TRANSCRIPT (Status Conference) held on 7/19/2021 before… — Bofa Ca Unemployment (Dkt. 55)
Filed July 19, 2021 in Bofa Ca Unemployment; one of 1415 filings from this case.
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| Court | U.S. District Court for the Southern District of California |
|---|---|
| Filed | 2021-07-19 |
U.S. District Court for the Southern District of California · No. 3:21-md-02992-GPC-MSB · Doc. 55 · 2021-07-19 · Docket on CourtListener
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UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF CALIFORNIA
In Re Bank of America California
Unemployment Benefits Litigation.
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No. 21-md-02992-LAB-MSB
July 19, 2021
11:39 a.m.
San Diego, California
TRANSCRIPT OF STATUS CONFERENCE
BEFORE THE HONORABLE LARRY ALAN BURNS
UNITED STATES DISTRICT JUDGE
APPEARANCES:
For the Plaintiff KARIN BORNSTEIN SWOPE, ESQUIRE
Jennifer Yick, et. (Telephonic)
al: BRIAN DANITZ, ESQUIRE (In Person)
ANDREW KIRTLEY, ESQUIRE (In Person)
Cotchett, Pitre & McCarthy, LLP
6519 1st Avenue, NW
Seattle, WA 98117
For the Plaintiffs DANIEL L. WARSHAW, ESQUIRE
Jonathan Smith and Pearson, Simon & Warshaw, LLP
Alex Yuan: 15165 Ventura Boulevard
(Telephonic) Suite 400
Sherman Oaks, CA 91403
For the Plaintiff ARIN RACHEL SCAPA, ESQUIRE
Clara Cajas: Mary Alexander & Associates, P.C.
(Telephonic) 44 Montgomery Street
Suite 1303
San Francisco, CA 94104
For the Plaintiffs NICHOLAS J. BONTRAGER, ESQUIRE
Steven Hart and Martin & Bontrager APC
Michael Adams: 4605 Lankershim Boulevard
(Telephonic) Suite 535
Toluca Lake, CA 91602
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For the Plaintiff THOMAS FRAYSEE, ESQUIRE
Robert Wilson: Knox Ricksen LLP
(Telephonic) 2033 N. Main Street
Suite 340
Walnut Creek, CA 94596
For the Consolidated CONNIE CHAN, ESQUIRE (Telephonic)
Yick Plaintiffs: MICHAEL RUBIN, ESQUIRE (In Person)
Altshuler Berzon LLP
177 Post St.
Suite 300
San Francisco, CA 94108
For the Plaintiff JOSHUA BRANDON SWIGART, ESQUIRE
Jennifer Meza, Swigart Law Group, APC
et al.: 2221 Camino Del Rio South
(Telephonic) Suite 308
San Diego, CA 92108
DANIEL G. SHAY, ESQUIRE
Law Office of Daniel G. Shay
2221 Camino Del Rio South
Suite 308
San Diego, CA 92108
For the Plaintiff JEAN SUTTON MARTIN, ESQUIRE
Carlos Rodriguez: Morgan & Morgan
(Telephonic) 201 North Franklin Street
7th Floor
Tampa, FL 33602
For the Class GAYLE MERYL BLATT, ESQUIRE
Plaintiffs: DAVID S. CASEY, JR., ESQUIRE
CaseyGerry
110 Laurel Street
San Diego, CA 92101
For the Plaintiff YURY KOLESNIKOV, ESQUIRE
Lindsay McClure: Bottini & Bottini, Inc.
7817 Ivanhoe Avenue
Suite 102
La Jolla, CA 92037
For the Plaintiff SHANNON FRANCES NOCON, ESQUIRE
Michael Willrich: NATASHA N SERINO, ESQUIRE
Schack Law Group
16870 West Bernardo, Suite 400
San Diego, CA 92127
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For the Defendants: THOMAS MICHAEL HEFFERON, ESQUIRE
(Telephonic)
Goodwin Procter LLP
1900 N St. NW
Washington, DC 20036
JAMES W. MCGARRY, ESQUIRE (In Person)
YVONNE CHAN, ESQUIRE (In Person)
Goodwin Procter LLP
100 Northern Avenue
Boston, MA 02210
JANICE P. BROWN, ESQUIRE (In Person)
Meyers Nave
600 B Street, Suite 1650
San Diego, CA 92101
Court Reporter:
CYNTHIA R. OTT, RDR, CRR
District Court Clerk's Office
333 West Broadway, Suite 420
San Diego, California, 92101
cynthia_ott@casd.uscourts.gov
Reported by Stenotype, Transcribed by Computer
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SAN DIEGO, CALIFORNIA, JULY 19, 2021, 11:39 A.M.
* * * *
THE COURT: Folks, you're here on the civil matter,
the MDL case? All right. If you'll give us just a minute.
We've been going for quite a while. Give us five minutes and
I'll be back out.
(A recess was taken.)
THE COURT: Is it connected so they can hear me and
anyone else by telephone, Tish?
(Discussion off the record.)
MS. SWOPE: Yes, hello. This is Karin Swope from
Cotchett Pitre.
THE COURT: Okay, Ms. Swope. I got Ms. Swope's
appearance. Are there other individual counsel who want to
state their appearances?
MR. WARSHAW: Good morning, Your Honor. My name is
Daniel Warshaw from Pearson, Simon & Warshaw.
THE COURT: Thank you, Mr. Warshaw.
MS. SCAPA: Good morning, Your Honor. Good morning,
Your Honor. This is Arin Scapa from Mary Alexander &
Associates on behalf of Plaintiff Clara Cajas.
THE COURT: All right. Thank you, Ms. Scapa.
Others? I'm sorry, start again, two people started at
once.
MR. BONTRAGER: Nick Bontrager, Martin & Bontrager,
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Your Honor, representing Steven Hart and Michael Adams.
THE COURT: Okay. Mr. Bontrager.
MR. FRAYSSE: Good morning, Your Honor. This is
Thomas Fraysse with Knox Ricksen, LLP for Plaintiff Robert
Wilson.
THE COURT: Good morning, Mr. Fraysse.
MR. SWIGART: This is Josh Swigart, on behalf of the
Meza and Meza-related matters.
THE COURT: Good morning, Mr. Swigart.
MS. CHAN: Good morning, Your Honor. This is Connie
Chan from Altshuler Berzon, on behalf of the consolidated case
plaintiffs.
THE COURT: All right, Ms. Chan. Good morning.
MR. HEFFERON: Your Honor, good morning. This is
Thomas Hefferon, on behalf of the defendants.
THE COURT: All right, Mr. Hefferon. Good morning.
Is Mr. Nolan on the line? Jim Nolan? Chris Hamner?
Jean Martin from Morgan & Morgan?
MS. MARTIN: Yes, Your Honor. Hello, this is Jean
Martin from Morgan & Morgan.
THE COURT: Okay.
Mr. Boucher, Raymond Boucher, from Boucher, LLP?
MR. WARSHAW: Your Honor, Mr. Boucher is my cocounsel.
This is Daniel Warshaw. I'm appearing on behalf of both of our
plaintiffs. I've already made my appearance.
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THE COURT: Okay. Thank you, Mr. Warshaw.
MR. WARSHAW: Jonathan Smith and Alex Yuan. Thank
you, Your Honor.
THE COURT: How about Jackson Morgus from Anderlini &
McSweeney? Andre Verdun?
All right. I think we've accounted for everyone who
is appearing by telephone. May I have appearances of counsel
that are here in person?
MR. DANITZ: Good morning, Your Honor. Brian Danitz
of Cotchett, Pitre & McCarthy.
THE COURT: All right. Good morning.
MR. DANITZ: On behalf of the consolidated Yick
Plaintiffs.
MR. RUBIN: Michael Rubin, Altshuler Berzon, on behalf
of the consolidated Yick Plaintiffs.
MS. BLATT: Good morning, Your Honor. Gayle Blatt of
CaseyGerry, also on behalf of the class plaintiffs.
THE COURT: All right.
MR. CASEY: Good morning, Your Honor. Dave Casey,
CaseyGerry, on behalf of the class plaintiffs.
THE COURT: Good morning.
MR. KOLESNIKOV: Good morning, Your Honor. Yury
Kolesnikov from Bottini Bottini, on behalf of Plaintiff Lindsay
McClure.
THE COURT: We're having trouble. Can you restate
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your name in the -- I'm having trouble hearing you.
MR. KOLESNIKOV: Yury Kolesnikov from Bottini Bottini,
Your Honor.
THE COURT: Okay.
MR. SHAY: Good morning, Your Honor. Daniel Shay on
behalf of Meza and Abarr, co-counsel with Josh Swigart.
THE COURT: All right. Good morning.
MR. KIRTLEY: Good morning, Your Honor. Andrew
Kirtley, on behalf -- from Cotchett, Pitre & McCarthy, on
behalf of the consolidated Yick Plaintiffs.
THE COURT: Good morning.
MS. NOCON: Good morning, Your Honor. Shannon Nocon,
on behalf of Plaintiff Michael Willrich.
THE COURT: All right.
MS. SERINO: Natasha Serino of the Schack Law Group,
on behalf of Plaintiff Michael Willrich.
THE COURT: Good morning.
MR. MCGARRY: Good morning, Your Honor. Jim McGarry
from Goodwin Procter, on behalf of the defendant.
THE COURT: Mr. McGarry, good morning.
MS. CHAN: Good morning, Your Honor. Yvonne Chan from
Goodwin Procter, also for the defendant.
THE COURT: Good morning.
MS. BROWN: Good morning, Your Honor. Janice Brown of
Meyers Nave, on behalf of defendant.
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THE COURT: All right. Good morning, Ms. Brown. I
know some of you personally, some of you I don't know
personally. I'm Judge Burns.
With us here today is the assigned magistrate judge on
the case, the MDL case, Judge Berg. Do you want to raise your
hand?
JUDGE BERG: Good morning.
THE COURT: Michael Berg and his staff are here. And
he has his principal law clerk, as do I, who have looked at
this.
This is our first meeting post-MDL certification.
There are a number of things I want to go over, beginning with
the organization of counsel, who will take the lead in this.
I have the proposal here to have lead counsel
designated as the Cotchett firm, along with the Altshuler
Berzon firm. And proposed liaison counsel is the Casey form.
The first question I had for you is, why do I need so many lead
or liaison counsel? It doesn't seem like it's that huge an
action that's going to take three different law firms to
organize this, but I'm happy to hear what the reasons might be.
MR. DANITZ: Well, Your Honor, what we have found --
THE COURT: State your names to begin with again.
MR. DANITZ: Brian Danitz of Cotchett, Pitre &
McCarthy. Your Honor, the Altshuler firm and the Cotchett firm
have been working very well together as colead counsel
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appointed in the Yick matter, the consolidated Yick matter.
There are quite a few plaintiffs to work with
throughout the state. The consequence for so many Californians
across the length and breadth of the state is rather pressing
and severe.
THE COURT: What do you estimate the size of the --
potentially, the size of the plaintiffs' group?
MR. DANITZ: We have not yet gotten any discovery on
that question, but we believe it is in the hundreds of
thousands, Your Honor.
THE COURT: Okay. And tell me how that breaks down.
Are these people that actually tried to get in touch with Bank
of America, and were turned away by what you allege is, you
know, faulty reporting systems or mechanisms for reporting
fraud or nonreceipt of payments, or is this a -- is this
a -- is that the whole group or is this --
MR. DANITZ: Well, Your Honor, we believe there will
be subclasses in the final consolidated complaint for the
class. One group will be those who were summarily -- had their
claims for unauthorized transactions summarily closed due to a
faulty fraud filter.
THE COURT: Right. That's the current certified
class, right? Just that smaller group?
MR. DANITZ: Yes, Your Honor.
THE COURT: Do you have any idea how many people
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comprise that group?
MR. DANITZ: We actually do not know the exact number
of that group.
THE COURT: Okay.
MR. DANITZ: And then the other issues are those of
the security breaches, and that would be a larger group, Your
Honor.
THE COURT: So these are the people that were issued
the cards without the chip in them, with what you contend is
the faulty strip that led to fraud and breaches of the security
system.
MR. DANITZ: Yes, Your Honor. We further allege that
there were security lapses within Bank of America.
THE COURT: All right. Do you have an idea, at this
point, how many people actually lost money owing to fraud or
nonreceipt of expected payments?
MR. DANITZ: We do not have the exact numbers yet.
THE COURT: All right.
MR. RUBIN: Your Honor, may I say a word?
THE COURT: Sure, of course.
MR. RUBIN: This actually relates mostly to an item
later on the agenda, but I wanted to raise it early. I'm
Michael Rubin from Altshuler Berzon.
THE COURT: Good morning, again.
MR. RUBIN: Good morning.
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In a separate matter, the last item on the agenda
involves adding the Employment Development Department as a
defendant and we oppose that. And we had discussed that with
Judge Chhabria earlier.
I have a separate client, the Center for Workers
Rights, a nonprofit in Sacramento. The Center has been engaged
in confidential negotiations with EDD about a separate set of
issues that doesn't implicate the contract with the bank or the
problems here.
When I received the Court's agenda listing that last
item, I sent it to the Attorney General, and asked whether I
could disclose anything to the Court, because we're starting
out our relationship, and I wanted to be completely forthright
and make sure that the Court understands.
This morning, I received an e-mail confirming that I
may disclose to the Court that although there is no agreement,
we are in settlement negotiations to resolve separate issues
involving EDD's administration. This is before money even gets
to the Bank of America, so there's no overlap, no conflict.
But I thought, and the Attorney General agreed, that
it was appropriate to disclose that before Your Honor decided
who should be interim or who should be co-counsel in this case,
lead counsel, in case that affected the Court's consideration
of the issues at all.
THE COURT: Okay. It may have bearing.
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When you asked -- when you proposed the certification
originally, was it for a larger class?
MR. RUBIN: No, Your Honor.
THE COURT: It was always limited to this class
of -- that Judge Chhabria gave preliminary certification to.
MR. RUBIN: Your Honor, to clarify, there are really
two separate sets of issues, as Mr. Danitz identified. Those
that Judge Chhabria issued a preliminary injunction on.
THE COURT: Right.
MR. RUBIN: That is the certified class. And then
there are the others who may be affected by the inadequate
security measures that the bank implemented.
THE COURT: Okay.
MR. RUBIN: So the class that Judge Chhabria was
focused on is narrower than the class --
THE COURT: Sure.
MR. RUBIN: -- that may be the focus of the
consolidated complaint.
THE COURT: Yeah. As I look at this, do you have a
sense -- I mean, it seems to me that obviously different people
with entitlement would have suffered different losses, right?
I mean, maybe somebody got fleeced one time with a hacker or
somebody getting in, another time, you know, everything was
gone. It might be hard to reach certification on any larger
class, because the amounts of loss that the individual
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plaintiffs have are not typical of one another, they're very
different, right?
MR. RUBIN: It might be, Your Honor, but the way that
we have structured -- the way we structured the complaint in
Yick, and the way we proposed to structure the consolidated
complaint in this case, anticipates those issues, and does it
in a way that we're confident would be appropriate for class
certification, given the nature of the relief not only that
we've obtained thus far, but intend to get in the future.
I think this can be effectively managed as a class
action, and we'll set that out in detail in the forthcoming
papers.
THE COURT: Do you share the estimate that there may
be as many as a hundred thousand or more affected plaintiffs?
MR. RUBIN: There might be. Judge Chhabria opened up
discovery on May 18th. We served discovery on June 9th at the
same time the parties exchanged their Rule 26(f) disclosures.
We haven't received that discovery yet, because as Your Honor
knows, you have stayed discovery pending the issuance of the
CMO. But we will get those numbers from the bank when the bank
responds to the discovery that we issued back in early June.
THE COURT: All right. Ms. Blatt, anything to offer
on behalf of the logistical firm?
MS. BLATT: Well, thank you, Your Honor. Gayle Blatt
here. I think that it's -- the proposed structure is
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appropriate, because I think that there is an immediate need
for relief for this class. Their information and their money
is at risk. And for us, as liaison counsel, part of our role
will be to, one, try to help resolve the issues, but also
there's a great need for communication, because these people
are suffering. And there are a lot of plaintiffs' counsel, as
you see, that Judge Chhabria coordinated -- or consolidated the
cases, but yet there is a whole slew of individual cases as
well.
We are here for the class. We're asking for
appointment for the class. But nonetheless, there is somebody
who needs to be the intermediary to share the information, to
obtain information, and to help facilitate and serve lead
counsel in their efforts to get this case to conclusion as
quickly as possible.
THE COURT: Has -- since the injunction was issued,
has -- has any progress been made on getting people money that
they didn't receive, for example, those that were entitled?
Has the state or the bank started sending checks out at all?
Has any of that happened?
MR. DANITZ: Well, Your Honor, letters went out per
the injunction.
THE COURT: Right.
MR. DANITZ: Informing card holders of their rights.
However, without discovery, we don't have access to that
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information.
THE COURT: Okay. Do defendants have any perspective
on the proposal for lead and liaison counsel?
MR. MCGARRY: Jim McGarry, thank you, Your Honor.
You know, I guess it's all relative. When the cases
were consolidated before Judge Chhabria, the Yick Plaintiffs
asked for an organizational structure that had eight different
law firms involved. And even Judge Chhabria thought that was a
bit much.
And so from our perspective, three may seem a lot, I
understand that, Your Honor.
THE COURT: It's better than eight, though.
MR. MCGARRY: Certainly better than eight. So we
really don't take a position on that. I guess the one concern
we do have is, there remains this issue of the individual
plaintiffs who are not parties to the class action, but have
largely identical claims, and how those people will be
represented. Our concern is not with how they are represented,
but our concern is that we are able to coordinate all of that
in a way that makes sense, and we only have to deal with one
set of counsel, and those types of logistical issues.
THE COURT: Are any of the individual claims
materially different from those filed on behalf of this
putative class?
MR. MCGARRY: The legal claims, Your Honor, are almost
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identical across the board. There are a handful of -- of
individual plaintiffs who have a few slightly different
variations on the claims.
THE COURT: Right.
MR. MCGARRY: But for the most part, the majority of
the individual cases that have been filed are substantively
almost identical to the Yick complaint.
THE COURT: Any reason why those can't be consolidated
in the amended complaint?
MR. DANITZ: Well, Your Honor, the most recent -- this
is Brian Danitz. The most recent individual complaint, the
Abarr complaint, has over 250 plaintiffs. These are
presumptive opt-outs from the class. They are not -- they are
presumptively not part of the class.
There is a likelihood of some tension that the counsel
be at cross-purposes in one single master complaint.
Plaintiffs -- class plaintiffs suggest that an omnibus motion
to dismiss, and an omnibus opposition to the motion to dismiss
is an efficient way to go forward, but there need not be one
unwieldy large complaint with counsel at cross-purposes.
We have no objection to two master complaints, one for
the individuals, which will have almost 300 plaintiffs, one for
the class action, consolidated for pretrial purposes. And we
think that would be an efficient way to proceed.
THE COURT: I'm not sure why, though, if the substance
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in the legal claims are the same between the individuals at
this point, it's not different. I mean, certainly, I have
authority to have a single consolidated -- to order a single
consolidated complaint, right?
MR. DANITZ: Well, Your Honor, yes.
THE COURT: Why would we have two that essentially
raise the same legal claims on parallel track?
MR. DANITZ: There is no question that the individual
complaints followed on from our complaint.
THE COURT: Yeah.
MR. DANITZ: And largely reflect our complaint.
THE COURT: Right.
MR. DANITZ: Some of the other causes of action
include design defect, conversion, which are not part of the
class -- class claims. But we agree that it is largely in line
with the class claims, Your Honor.
THE COURT: All right. Assuming the Court adopts the
proposed organizational structure, it seems to me the next
issue is whether the discovery should continue at this point.
I'm inclined to lift the stay on discovery, and let it
proceed at this point. I suppose I should talk to defense
counsel first, pending an anticipated motion to dismiss and a
timetable.
I think you propose a timetable for the filing of the
consolidated complaint, and then a motion to dismiss, and a
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hearing on that.
Is your position that discovery should be stayed
pending that?
MR. MCGARRY: Yes, it is, Your Honor. Jim McGarry.
THE COURT: Yeah. I don't know why I'd do that at
this point. I mean, coming into it, you know, I was cautious
until I want -- I wanted to learn more and read the complaint
and all. But now, it seems to me that it will probably help us
with the organization of the lawsuit to start the discovery.
They're unable to answer, for example, you know, the
total number of people that are to be affected. I think they
can get some clarification of that fairly quickly with
discovery.
MR. MCGARRY: Your Honor, Jim McGarry, if I may, a
couple things. One is, unlike most cases where you get to the
motion to dismiss stage, and no information has been exchanged,
the preliminary injunction proceedings actually resulted in a
lot of information being exchanged. And there's a
number -- there are numbers in those. There were declarations
by, like, five different bank employees about the processes and
procedures, including numbers around people potentially
impacted.
The other thing is that, you know, we think that
resolving the motion to dismiss will actually make this more
efficient.
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We do believe there are some claims that are
straightforward legal claims for Your Honor to decide that we
think we have a strong chance of winning.
So for example, Mr. Rubin talked about claims around
data security, and Your Honor asked about claims around, you
know, chip cards versus nonchip cards. We think those issues
are straightforward legal issues. And if we're successful in
knocking out at least those parts of the claim, there's
significant amounts of discovery that won't need to occur.
The discovery -- the document requests that plaintiffs
referenced had 89 separate document requests, and that was the
very first thing that happened. And a lot of them had to do
with data security, had to do with customer service issues, all
of which we think are subject to dismissal.
So in order to address this case most efficiently, we
think the logical thing to do is have the motion to dismiss
briefed and decided. Then we will know what the scope of the
case is. We will know what claims are left, and we will know
what plaintiffs are left, because there are a number -- counsel
represented the number of individual plaintiffs who have
claims.
There are a number of those who we think will be
subject to dismissal. And so the logical thing to do, from our
perspective, is to figure out what the case is going to look
like, and then we know what discovery we need. And then follow
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the normal local 16.1 procedures.
If the motion to dismiss is not granted in full, we'll
answer, we'll have an ENE, and then we can have discovery go
from there.
THE COURT: Walk me through -- there are parts of what
is alleged that I don't fully understand, but maybe you can
help me with some of the technical material.
If I were entitled to this -- to a payment, and I
didn't get it. And then I called Bank of America's number,
would I get a recording, or would I talk to a live person when
I'm saying, hey, I didn't get my check, or you sent me a
statement that shows I'm -- a deficit amount, rather than an
amount that I'm owed. Would I talk to a live person or was
there a recording?
MR. MCGARRY: You almost always will start with an
electronic prompt, you know, like you call any company
nowadays.
THE COURT: Right.
MR. MCGARRY: No one answers the phone on the first
ring, right, you're always --
THE COURT: Right. So where does it go after I punch
2?
MR. MCGARRY: If you punch 2, it depends on your
issue. If your issue is, I did not -- there's an unauthorized
charge on my account, right? Then your call is going to go to
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the claims group. There is a --
THE COURT: Is that a recording or a live person?
MR. MCGARRY: Live person.
THE COURT: The way it was being administered.
MR. MCGARRY: It was a live person and -- it was a
live person, other than on Sundays and --
THE COURT: Then it was call back during business
hours or --
MR. MCGARRY: Yeah. And that has since changed as a
result of our negotiations with the PI process.
THE COURT: Was there a record kept of those who
called with complaints, either of nonreceipt or trying to
report fraud? Did the bank keep a record of each person?
MR. MCGARRY: The records are maintained for each
account. So if Your Honor were to call in, right?
THE COURT: Right.
MR. MCGARRY: And then someone at the bank were to go
back and look to see what -- you know, when Judge Burns called
in, that's the way the record would be kept.
THE COURT: Okay. And would it reference the person
by name, too? I assume an account is registered in the name of
a person, and maybe a telephone or Social Security number,
something like that?
MR. MCGARRY: Yes. It would reference the name of the
person, too.
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THE COURT: The defendants at this point, at least the
bank, has the ability to turn over that information to help us
ascertain how big this might be?
MR. MCGARRY: We have -- we have the ability to turn
over sort of high-level numbers on various subsets of the
population that you're asking about.
THE COURT: Yeah.
MR. MCGARRY: Yes.
THE COURT: Because I'm assuming, and maybe this is
wrong, but I'm assuming that there were some people that got
paid as they were supposed to, and there was no fraud claims,
even though they were, you know, given one of these cards with
a stripe, rather than a chip. And they would be excluded,
obviously, for most of the -- most of the claims.
Maybe some people never called in. But to, you know,
get our arms around how many people called in and got what is
alleged to have been, you know, a substandard response, I think
if you could turn that information over, that would help, too.
We're going to end up with something, right? I mean,
the motion to dismiss, you don't anticipate is going to be a
complete winner, maybe some claims will be stripped, but
there'll still be some part of this that survives, don't you
anticipate?
MR. MCGARRY: Jim McGarry, Your Honor. Yeah, I think
we intend to file a case dispositive motion. I think we have
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stronger arguments for resolution on a number of the claims.
And I will say, in response to Your Honor's question about, you
know, the number of people who just got their card and use it,
you know, more than 91 percent of the people who actually got
the cards, they used it.
They went through, they transferred the money to
another account. They use it in their day-to-day. They had no
problems with it.
THE COURT: Fully paid, then? I mean, no claim that
money was fraudulently taken from my account, or I didn't get
the full amount I was entitled to? Is that the 91 percent
figure?
MR. MCGARRY: I'm talking about people that don't even
get there. These are just people who they were unemployed,
they applied for benefits, they got their card. They used
their card. They had no reason to call in. There was no
issues whatsoever with the --
THE COURT: I thought one of the allegations is that
even after cards were issued to the proper person, that they
were susceptible to some kind of hacking and fraud, where
unauthorized people were drawing funds from the account, would
that include the group you're talking about?
MR. MCGARRY: No, I'm talking about people who haven't
even had that problem.
THE COURT: Okay. All right. So you're talking about
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the people that nothing went wrong. They got the card, they
got paid as expected. There was never any claim of fraudulent
charge. And what I'm trying to figure out, you gave me a
figure of 91 percent. You say that 91 percent of the people
who were entitled to draw benefits in this way got them without
any known problems?
MR. MCGARRY: I would say -- that's not exactly right,
because 91 percent of the people who got cards used them.
There is no doubt whatsoever that lots of those people did not
have a right to the cards that they got.
THE COURT: Oh.
MR. MCGARRY: And obtained them by fraud.
THE COURT: Yeah.
MR. MCGARRY: But they're gone. They used their card.
They didn't try to --
THE COURT: Oh.
MR. MCGARRY: -- double dip. They didn't try to go
and take extra funds. So they're in the 91 percent. People
who had no problem, but we had no reason to believe they had a
problem, because they just used the card.
THE COURT: Like the orange card, bank error in your
favor, right, with Monopoly?
MR. MCGARRY: Something like that, Your Honor.
THE COURT: Yeah. You've estimated that it will take,
what, 14 days to come up with a consolidated complaint?
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MR. RUBIN: Yes, Your Honor.
THE COURT: And then as I understand it, the Bank of
America and the defendants anticipate moving to dismiss the
consolidated complaint. And you think you can have your motion
ready in 30 days after the complaint is filed?
MR. MCGARRY: Jim McGarry. Your Honor, I guess it
depends on what you order about what the complaint looks like.
If the complaint is only about the class action plaintiffs, I
think we can probably do that in 30 days. If we're adding
the --
THE COURT: Yeah.
MR. MCGARRY: -- individuals to a consolidated
complaint --
THE COURT: I'm leaning toward that, because I don't
see how it helps to have, you know, parallel -- because you're
going to have to answer both, right?
MR. MCGARRY: Yeah.
THE COURT: And you'd probably move to dismiss on
both, so why not consolidate these? I don't want a bunch of
fringe complaints out there.
MR. MCGARRY: I agree, Your Honor. And in that case,
I think we'd ask for 45, because there will be a number of
individual plaintiffs whose facts we need to address.
THE COURT: And then after that, the proposal is a
reply in 20 days. I suppose we would up that to 30 now?
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How about the complexity of these issues? Do you
think these are straightforward? We have -- the reason I ask
is, we have a local rule on 25 pages for movant's brief, 10
pages for a reply. Would that be adequate, given what you
anticipate the challenges will be?
MR. MCGARRY: Probably not, Your Honor. What I
would -- what I would ask for is maybe 40 pages. And we will
try to do it for less. And if -- depending on the -- you know,
what the consolidated complaint looks like, in the unlikely
event we need to come back for more, we can ask you at that
time.
THE COURT: All right.
MR. RUBIN: Your Honor, would you like us to address
either the Court's questions about discovery and the
appropriateness of the stay or the consolidation of the
individual cases?
THE COURT: No, I think the latter has been addressed,
to some extent. I'm leaning in favor of that. Not the
discovery issue, which you're reading my mind, I was going to
come back and ask you about your position on it.
MR. RUBIN: I can address one more point about the
individuals, if I might.
THE COURT: Sure.
MR. RUBIN: We were very careful in the way we framed,
in our status conference statement, how the individuals would
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be treated, partly because there are so many individuals and
partly because, at present, we don't represent those
individuals.
And we're concerned -- we want this to be as
streamlined and as efficient a case as possible. What we
proposed to the individual plaintiffs' counsel was that they
accept all of the Court's rulings on legal matters.
They will be bound by the Court's determinations on
the motion to dismiss as to all of the legal issues. There
will be no need for individual litigation, at least until the
summary judgment stage, and even discovery will be limited only
to the extent the bank has unique defenses as to any individual
plaintiff will the bank take discovery or the individuals take
discovery.
So the agreement that we reached, obviously subject to
Your Honor's approval, which we proposed in the interest of
streamlining these procedures, is to basically take the
individual cases, and we have all of the lawyers for the
individuals on the phone, some in the courtroom now, and
basically put them on hold, where they are stipulating, and
they will formally stipulate in court to be bound by your legal
rulings as to the overwhelming number of overlapping issues
that will be in the consolidated complaint. To the extent the
MDL is over, because you're just doing the pretrial, obviously,
then those individual cases, if there's anything left, whatever
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the case looks like --
THE COURT: Will go back to the assigned judge.
MR. RUBIN: -- will be tried. But there shouldn't be
any need for you, unless there's a unique defense applicable to
a particular individual, to have to deal with the individuals.
THE COURT: Right.
MR. RUBIN: And if, Your Honor, there is a unique
defense applicable to an individual, from our perspective as
class counsel in the consolidated cases, we would prefer not to
deal with it.
THE COURT: Sure.
MR. RUBIN: Because they're not our clients. That's
why we would propose the language that we actually use there
has been signed off specifically by counsel. And if Your Honor
would consider that before issuing a ruling, I'd appreciate it.
THE COURT: Okay. Will do.
MR. RUBIN: And as to the discovery, Your Honor, this
case -- these cases were filed at the end of last year, at the
beginning of this year. So we're more than six months into the
cases already.
Obviously, a great deal has transpired. Yes, it's
true that Bank of America did disclose a fair amount of
information to us during the very successful negotiations over
what the terms of the preliminary injunction should be.
However, that was disclosed subject to a very strict
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confidentiality order, so we're limited in our ability to use
it. We need discovery to confirm and make a matter of public
record a lot of those facts.
And we were very careful in framing our initial
request for production of documents, to focus on the issues
that need to be confirmed as well as those issues to be
explored.
And the fact that you have the magistrate judge in the
room with us, we assume that we will be working with you and
Judge Berg as a team. To the extent we have overreached in the
slightest in our request for production, I'm sure we'll hear
about it. But we've been very thoughtful, because once we did
the Rule 26(f) disclosures, once Judge Chhabria opened up
discovery, we went through, what do we need to know to prove
the case. And having waited this long, and really as counsel
has explained, we have people who are suffering.
We want to move this case along. We think the fact
that we got a preliminary injunction after just a few months of
litigation was extraordinary, in terms of the benefit it
provided to these unemployed people who were really hurting.
We want to continue moving the case along at a
comparable pace with the assistance of the Court. We can do
that by pursuing discovery, subject to whatever limitations the
magistrate judge imposes on that process.
THE COURT: What's being proposed is essentially an
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additional 60-day delay before discovery starts. And I have to
take seriously the representation that defense counsel believes
that at least some of the claims are going to be out. And the
effect of that, if that happens, of course, is to narrow the
discovery, I think, to some extent.
So I was leaning toward lifting the stay when I came
in, but now in light of the representations and the estimate of
how long it'll take, I'm inclined to leave it in place until
the motion to dismiss is heard and decided.
MR. RUBIN: If I may?
THE COURT: Yeah, sure.
MR. RUBIN: I have heard what defense counsel said. I
would have to balance against that what Judge Vince Chhabria
said, in ordering the preliminary injunction on the principal
issues in this case. And as you recall from his two orders, he
found a strong likelihood of success on the merits.
Now, I understand, Your Honor, you're going to take a
fresh look at all of the issues, but the fact that a federal
district court judge, after extensive briefing, concluded that
the principal legal theories we've advanced have a strong
likelihood of success on the merits --
THE COURT: Right.
MR. RUBIN: -- is an indication that perhaps the bank
is not going to be as successful in eliminating the claims.
THE COURT: It's a little more narrow, though, isn't
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it? I mean, I read his injunction carefully. And really, the
injunction just concerned the bank's response to the problem,
and that the response was inadequate. And Judge Chhabria
thought that the bank should be more responsive. And then, you
know, the individual bullet points in the injunction pointed
out things that needed to be done to make that happen. It
didn't implicate any of the broader issues, though.
MR. RUBIN: It did, Your Honor, and very briefly.
THE COURT: Sure.
MR. RUBIN: It specifically found on the EFTA, the
Electronic Funds Transfer Act, the UCL, and the breach of
contract claims, which are the backbone of the case, that we
have a likelihood of success on the merits.
The only reason he ordered the bank to provide those
particular remedies is because those remedies are required by
law, by statute, by regulation, by the common law principles
underlying our complaint.
Yes, he wanted to alleviate the irreparable harm to
the affected individuals, to the greatest extent possible. But
he never would have gotten to that point unless we had strong
legal claims that compelled the bank to provide these
protections and these procedures.
And what we're see seeking in the initial discovery
and the discovery we anticipate now, rather than a further
delay that would just extend the time of this case, is to nail
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down the details, take the discovery, so that we can prove up,
so we can have Your Honor, if you agree with us, turn the
preliminary injunction into a permanent injunction, grant the
rulings that are necessary, because after waiting already six
months in order to pursue discovery after it's been open once,
to have it be shut down again would cause more harm to the
plaintiffs who Judge Chhabria was trying to protect. And I'm
sure Your Honor is going to be interested in ensuring that
their legal rights are protected as well.
THE COURT: Is there a way to at least partially
bifurcate the discovery, so the oppressive part doesn't begin
until after the ruling on the motion to dismiss? I mean, could
I leave that to Judge Berg to sit down with you, and figure
out, well, okay, this portion of the discovery can go forward,
and we're going to hold off on the other? I'm concerned about,
you know, individual monetary claims, and all of that. That
would be very intensive, I think, to produce all of that at
this point.
MR. RUBIN: That would be acceptable to plaintiffs,
Your Honor.
MR. MCGARRY: Your Honor, Jim McGarry. If I can
address the concern about the immediacy of harm to individuals.
The nature -- and this is the exact point that you were talking
about, what Judge Chhabria found, and ordered.
The nature of the relief that was drafted
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cooperatively between the parties in connection with the
preliminary injunction was such that for people who had their
error claims denied, right, that's the sort of the meat of the
people that we've been talking about, processes have been put
in place so all of those people have their claims reconsidered,
paid, or they have the opportunity to be reconsidered if they
can only identify themselves, they can only a pass a
verification -- identification verification process.
And so there are negotiated and ordered processes in
place to actually make sure that anybody whose claim was
wrongly denied has a fair shot to get it reinstated. And many
have already.
THE COURT: Have all the letters gone out to the
affected people, to your knowledge?
MR. MCGARRY: Yes, they have, Your Honor.
THE COURT: And what percentage -- if you know, what
percentage of people have been at least made whole, according
to their claims at this point? Do you know that? I'm talking
about their loss claims or fraudulent amount of claims.
MR. MCGARRY: I'm conferring, Your Honor. Give me a
second.
THE COURT: Yeah.
MR. RUBIN: Your Honor, while they're confirming, I
could note that unauthorized transactions continue to occur.
We keep getting calls from people in the same situation.
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Because of Judge Chhabria's order, we're getting better
protections for people once they've had funds stolen from them.
We need to stop the process of people having funds stolen as
well.
THE COURT: Tell me how this works. Do they get a new
card or just money transferred to their account, and they're
using the same cards, month to month, if they're still getting
benefits?
MR. RUBIN: If there is no problem, then the person
uses the same card and the money accumulates in the account
unless they spend it.
THE COURT: What about those that have reported fraud
or have had money unauthorized taken from their account.
MR. RUBIN: Just like you or I, if we reported fraud
to the bank, they would stop the card, reissue immediately a
new card.
THE COURT: With the chip or without? The new cards
coming out, do they have a chip in them?
MR. RUBIN: No, no. And EDD --
THE COURT: Same cards?
MR. MCGARRY: Jim McGarry. At the moment, the same
cards, Your Honor, yeah, but there is a process in place to add
chips.
THE COURT: Okay.
MR. RUBIN: So we need to know.
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THE COURT: So what's the answer to -- of the claims
that have been made since the injunction, what percentage have
been satisfied?
MR. MCGARRY: Roughly, slightly more than 50 percent.
THE COURT: Okay. Bank of America asked in its
briefing to address the question of California EDD as a
defendant. Are you satisfied with the representations that
have been made? Do you want to table that, or is that
something we should still discuss today?
MR. MCGARRY: Jim McGarry. Your Honor, I don't have
an issue, one way or another.
We just wanted to put it on the table because one of
the class action complaints names EDD as a party. And so in
terms of how we're -- how this case is proceeding going
forward, we need to understand whether they're going to
continue to be a party.
My understanding, and counsel can correct me if I'm
wrong, is that they believe, at this point, a consolidated
amended complaint will not include EDD.
THE COURT: That's proceeding on a separate track now.
MR. RUBIN: Well, no, that claim is being dropped in
the case it was raised. We are not including EDD as a
defendant in this case, that's correct.
THE COURT: Okay. All right. And that'll be
reflected in your consolidated pleading?
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MR. RUBIN: Yes, it will, Your Honor.
THE COURT: All right. Well, those are the questions
that I had. I'll tell you preliminarily what I'm inclined to
do. I'm inclined to allow Judge Berg to meet and confer with
you, and determine what, if any, discovery should go forward at
this time.
I think there's a way to bifurcate that, where
progress can be made. I am aware of the urgency, given the
injunctive relief that's been issued so far. And I'm all
about, you know, efficient resolution of matters.
But I think some compromise can be made, or Judge Berg
can rule on what portion of discovery is likely to be
unaffected and should go forward now, which will probably give
you enough to do, given the projections of how many of the
folks are involved here.
I have to think a little bit more about whether I want
a single consolidated complaint. I really don't see the
utility in having two complaints. I mean, I understand what
you've said, and you've gotten the buy-in from the individual
plaintiffs, but I don't -- except for the exotic defenses to
maybe some of the individual claims, I don't see much utility
in having two complaints that raise essentially the same legal
issues. I think that's the whole purpose of the MDL, is to
consolidate these things, and resolve them all at once.
MR. RUBIN: If I may, Your Honor.
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THE COURT: Sure.
MR. RUBIN: If you had two consolidated complaints.
THE COURT: Right.
MR. RUBIN: Two separate complaints.
THE COURT: Right.
MR. RUBIN: The next question would be whether they go
forward in parallel or not. And our proposal is essentially
that only the consolidated class action case go forward, and
the individual cases not go forward at this stage. So it's not
really dealing with two cases at once.
THE COURT: Tell me the benefit if the individual
consolidated cases raise the same legal claims, just as in the
class action one. I don't understand why all of that wouldn't
be resolved at once. You know, I'd hate to end up with an
issue at the end, and says, oh, yeah, but that doesn't apply to
us, because you were only ruling on the consolidated class
action claim.
MR. RUBIN: That's, I think, the magic of the proposed
stipulation we're offering, where counsel would bind them -- in
the individual cases, would bind themselves and their clients
to the rulings on the legal issues in the motion to dismiss.
THE COURT: Which brings me back to the question, why
not have a single, you know, charging document, then. I don't
get it.
MR. RUBIN: Because then --
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THE COURT: I mean, we're going to be bound and then
this one is going to sit dormant until I rule on -- it doesn't
make sense to have two to me.
Unless I'm missing something here. The only thing
you've raised is the prospect that there might be, you know,
special defenses to some of the individual claims. And you
don't want to get bogged down with that, defending, you know,
that. And I understand that.
But as you pointed out, that can be remedied by just
saying, look, we're going to stay all of those claims. And if
it doesn't get worked out, you know, ultimately, it'll go back
to the assigned judge to rule on special defenses to
individualized and peculiar claims.
MR. RUBIN: I understand, Your Honor. Giving full
party status to 250 individuals, in addition to roughly 20
class representatives makes for a cumbersome complaint,
cumbersome pleadings, and potential complications, because as
an individual, as a party, has additional rights, whether
exercised or not. And I must defer to your experience on the
bench.
From my perspective, it seems like it would make all
of our jobs harder to have to deal with the individual parties
in the consolidated case.
THE COURT: I don't want to make a hard one out of an
easy one. If you're not opposed to it, then, you know, I guess
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I'll accept that. Do you have a problem with having the two
complaints as has been described?
MR. MCGARRY: Absolutely. I mean, the easiest and
most efficient thing to do is get everybody together in one
complaint, so we can have one set of legal rulings.
THE COURT: Yeah.
MR. MCGARRY: Now, so if Your Honor dismisses claims
regarding -- under plaintiffs' proposal, if Your Honor were to
dismiss claims regarding say, you know, negligence by the use
of a card without a chip in it, right, that would apply to
everybody across the board, okay?
But the problem is that there are many people with
Electronic Funds Transfer Act and similar claims that don't
have -- you know, we think there are defenses to people with
certain fact patterns.
And so if we only have a single consolidated amended
complaint, and there's a series of rulings on that, what's
going to happen is there's going to be processes later that
we'll have to build in the process. And say, okay, Judge Burns
ordered people in these fact scenarios don't have a claim. So
now we have to go back to all the individual complaints, and
say, okay, does this person fit in this fact scenario, or does
this person fit in a different fact scenario? That's the
rationale behind putting it all together in one place.
THE COURT: Yeah, actually, though, I mean, I don't
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see it. If that's really a peculiar problem, it's going to
arise whether we have a single complaint or a consolidated
complaint with the class members and the individual members.
You're still going to run into that, right?
MR. MCGARRY: Right. But if we have it in -- if we do
it in a single consolidated complaint at the beginning, right,
if there's one set of legal rulings, and we know who it applies
to and who it doesn't. Granted, it will be a little bit more
work upfront.
THE COURT: Yeah.
MR. MCGARRY: But it will save a lot more work at the
end, and it will allow us to have as streamlined a case as this
is going to be from the beginning.
THE COURT: Plaintiffs are worried about some of the
outlier claims, so what are you going to do about those?
Because they're going to be hanging on.
MR. MCGARRY: There are very few, Your Honor. Almost
everybody has virtually identical legal claims.
THE COURT: All right. Yes. Tell us your name again,
because we're keeping a record.
MR. SHAY: Yes, Your Honor, Daniel Shay for Abarr, 230
plaintiffs in that complaint.
Two things -- or a few things. First of all, Your
Honor was wondering about numbers. And there's a whole
category of people we haven't talked about this morning, is the
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frozen accounts, where the defendant just unilaterally, when
they started getting pressure from the government --
THE COURT: Right.
MR. SHAY: -- just froze, the media reports, 450,000
accounts. And our clients --
THE COURT: Was that ostensibly to what, prevent
fraud, or further fraud?
MR. SHAY: Yes, Your Honor.
THE COURT: And is that covered by the injunction now
where they're trying to fix that, remediate that, and take
calls from people whose accounts have been frozen?
MR. DANITZ: This is Brian Danitz. I'll address that.
Yes, Your Honor, in terms of no summary freezing of accounts
based on the automated filter.
THE COURT: Yeah, okay, I saw that in there. So they
at least potentially can get relief now, if their account is
frozen, right? If they call in, the injunction requires the
bank to take their call and look at it individually, and make
an individual judgment.
MR. SHAY: Theoretically, Your Honor. However, we
have a number of -- we have a lot of clients whose accounts are
still --
THE COURT: They're under an injunction to act in a
particular way, right, which is to fix this -- at least try to
fix it by taking -- taking these calls.
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MR. SHAY: Yes, Your Honor.
THE COURT: So tell me how that affects this question
of consolidation of the claims?
MR. SHAY: Yes, Your Honor. Well, a few things. You
know, we do intend to file more complaints. And so I'm not
sure how, if we file a consolidated complaint, what happens
with those. These are more like questions. How that would
work.
THE COURT: You mean more individual complaints?
MR. SHAY: Yes, Your Honor.
THE COURT: All right. Raising the same legal claims,
though?
MR. SHAY: Yes, Your Honor.
THE COURT: Yeah, all right. Well, they'd all be
subsumed within a consolidated complaint, though, if those are
being -- you know, of they're the same in nature, right?
MR. SHAY: I guess I'm just wondering about, like,
then we have to file another -- keep filing new consolidated
complaints?
THE COURT: No, I don't think so. I mean, I think I'd
issue an order, saying anything subsequent filed late -- you
know, raising the same claims falls within the purview of this
consolidated complaint that I'm considering, so --
MR. SHAY: Yes, Your Honor.
THE COURT: Okay. I want some time to discuss this.
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MR. SHAY: Yes, Your Honor.
THE COURT: And I'll make a decision on whether one or
two complaints. I don't want to interfere with what's been
agreed to, but this clearly has not been agreed to. And
defense counsel thinks a more efficient way to handle this is
with a single consolidated complaint.
MR. SHAY: No, Your Honor, we do agree. We wholly
stand by Mr. Danitz and Mr. Rubin.
THE COURT: No, no, I'm not saying that. I know you
do. I know that. It's been represented that there's been a
stipulation by all individual plaintiffs' counsel, you know,
that they'll be bound, and want to file their own. But the
defense is saying, look, let's consolidate everything, because
the legal claims, for the most part, are all the same. And to
the extent there's some variance, we're prepared to deal with
those, so --
MR. DANITZ: Your Honor, if I may add.
THE COURT: Sure.
MR. DANITZ: Should the Court decide that there should
be one very large master complaint encompassing both the
individuals and the class claims, we would require probably two
more weeks to draft that complaint.
THE COURT: Extra time, then, okay.
All right. What else do we need to discuss in this
preliminary meeting?
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MR. RUBIN: I think from plaintiffs --
THE COURT: Have we canvassed all of this?
MR. RUBIN: I think that takes care of it, Your Honor.
THE COURT: Uh-huh.
MR. SHAY: Yes, Your Honor, Daniel Shay. Thank you
for more time, just a second or two. You know, our goal -- our
clients are calling us every day. We need our money. I can't
pay my rent. I mean, a third of them are homeless.
THE COURT: They have a remedy now. I mean, the
injunctive relief is in play. It's represented that the bank
has changed -- is complying with the injunction, I assume?
MR. MCGARRY: It is.
THE COURT: So if somebody calls, they're going to get
a live person. And they can say, here's my situation, and get
individualized attention, rather than just a recording or a
hang up, or this is the way this is being handled, don't call
back, right?
MR. SHAY: Your Honor, with all -- it's not -- it's
not happening. They're not getting their money back. Their
accounts are still frozen. They're calling us, you know, every
day. We have to, you know, deal with a lot of people calling
us.
THE COURT: What's up with that?
MR. SHAY: We want to settle these cases. We don't
want to be part of a class action.
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THE COURT: Okay. No, no, I understand the urgency of
it, but I'm getting mixed information from the sides. On the
one hand, I'm being told, no, no, we're heeding the injunction,
we're doing what we're supposed to.
MR. MCGARRY: We are heeding the injunction. I think
I understand what the disconnect here is. And by the way, I
will say, the bank is always willing to talk about individual
problems, individual resolutions for anybody who's having any
issues. And the plaintiffs on this side know that they can
call us at any time.
I suspect that the confusion here is about the concept
of a freeze. So there's two -- there's two related concepts
here that I think will help explain.
The EDD, which is the issuing -- the EDD is the entity
that determines who is eligible for benefits or not. All the
bank does is distribute those funds. The EDD has placed a
number of -- a large number of calls -- asked the bank to
freeze certain accounts, because they think people are
ineligible. We're obligated to do that. They are --
THE COURT: Those on the phone, if you'll mute your
mics, please, because there's some static coming across.
MR. MCGARRY: So --
THE COURT: Are you saying, then, the freezes are not
by the bank, they're ordered by EDD?
MR. MCGARRY: Two different kinds. The vast majority
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of freezes that have happened in the past, and that still exist
today are as a result of EDD's direction.
So now the bank, even before the preliminary
injunction, because of a concern about the number of freezes
and the bank's efforts to work with EDD to get some of those
freezes lifted, implemented its own policy, where it took a
hundred thousand or more claims are -- accounts, excuse me,
that were frozen, and converted them to a blocked status. And
the only thing you need to know about that distinction is, for
a frozen account, EDD has to say, yes, unfreeze that account.
For a blocked account, the bank will -- will unblock
the account, and allow anyone access if they just call in and
they're able to verify their identity through the types of
things that we all do every day, if you have to do --
THE COURT: Was EDD represented at the hearing on the
injunction?
MR. RUBIN: No, Your Honor.
THE COURT: I mean, I don't know how we deal with this
problem, if the bank is being told by EDD, we're the ones that
are freezing this. We think there is fraud.
MR. RUBIN: Your Honor, I believe this actually points
out some of the differences in the approach to the cases. EDD
has nothing to do with this case. We are not challenging
anything that EDD has done.
We are -- any freeze that the EDD imposed is beyond
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the scope of this case. It may be in an individual case, it's
certainly not in the consolidated class action. Judge Chhabria
asked at the outset whether EDD was involved in the issues and
we explained no.
This is -- this case only involves the bank imposed
freezes, which makes it entirely separate. And I'm concerned
that if some of these individual cases blend in EDD freeze
issues --
THE COURT: Right.
MR. RUBIN: -- we're going to have a mess.
THE COURT: No, I agree with you. Is EDD part of your
complaint as it stands?
MR. SHAY: No, Your Honor. We would like to get to
the ENE, is what I'm getting at, with Judge Berg. We don't
have to have 230 or 250. Just one, we could pick one, we could
pick five.
THE COURT: All right. I'm going to try to keep
this -- the perspective on this, though. And I don't want to
expand it to include something that's not included in any
complaint.
And if the freezes are coming at the direction of the
EDD, then the bank can't be responsible for that. They're the
source of authority for the payments. And the bank just
facilitates what they're being told by them. If that's not
implicated here, it's not an issue I'm going to deal with or
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have as part of this.
MR. SHAY: I mean, our position is that it's still --
it's still a violation of EFTA.
THE COURT: Well, okay. I mean, we can reach that
another day.
MR. SHAY: Yes, Your Honor. Thank you.
THE COURT: But like I said, if the bank is taking
instructions from EDD, and the EDD is saying there's evidence
of fraud, freeze this account, what's the bank to do, pay it?
So we'll leave that for another day.
Okay. I'm prepared to get with Judge Berg and issue
orders on all of these matters that we've discussed. I'll have
an order to you very, very soon, and we'll move forward.
I have written down your revised estimates on the
motion to dismiss, and the time it takes to file a consolidated
complaint if that's the way we go.
MR. RUBIN: Thank you, Your Honor. We appreciate your
time.
THE COURT: Sure, of course. Anyone else have
anything?
MS. BROWN: I have one just brief question, Your
Honor.
THE COURT: Sure.
MS. BROWN: What is the timing that you're thinking
about the discovery with Judge Berg?
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THE COURT: You mean how long before -- if it starts,
if it's not -- if the stay is lifted, how long? I think
that'll be addressed in the order, which will be forthcoming
within the next five days or so. And it'll give you
directions. If I lift the stay and we do partial discovery,
it'll have directions to contact my colleague here, and go
forward quickly. You're able to see them quickly, and make
time?
JUDGE BERG: Any time. And, in fact, I was going to
throw out there, if we want to do an early settlement, perhaps,
with all the individual plaintiffs, as opposed to the big MDL,
I'm happy to do that, too, and get rid of a number of cases
right off the bat.
THE COURT: I think that's a good idea.
So there's your at least partial answer. Maybe if we
can handle individual cases that way, if you're willing to. If
they want to say yeah, there's nothing that prevents us from
going forward at this point.
MR. SHAY: Yes, Your Honor, absolutely. Thank you,
Judge Berg.
THE COURT: So let me direct, then, the individual
plaintiffs' counsel to contact Judge Berg's chambers, and he'll
set something up. It'll probably be in the nature of a joint
ENE, right, to start with?
JUDGE BERG: I think that would be better if there's a
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lot of them.
THE COURT: I assume defendants are in agreement with
that. It'll help pare this down if some agreement can be
reached as to individual plaintiffs, then we'd just be dealing
with -- I mean, this issue of two complaints goes away, then,
right?
MR. MCGARRY: I'm skeptical, Your Honor, that we'd get
rid of everyone.
THE COURT: Oh, you don't know Judge Berg. He's got
lots of talent. He's a real personality. So, force of nature.
MR. MCGARRY: So I've heard. My client is always
happy to have discussions with any of the plaintiffs.
THE COURT: I chose him among the array of very
talented magistrate judges we have here, because he's so adept
at finding solutions to difficult problems.
Okay. Well, thank you all. Nice meeting those of you
that I've not met before. Very nice meeting you. We'll have
an order out very soon.
(The proceedings concluded at 12:45 p.m., July 19, 2021.)
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COURT REPORTER'S CERTIFICATE
I, CYNTHIA R. OTT, Official Court Reporter, United States
District Court, Southern District of California, do hereby
certify that pursuant to 28 U.S.C. §753 the foregoing is a
true, complete and correct transcript of the stenographically
reported proceedings had in connection with the above-entitled
matter and that the transcript page format is in conformance
with the regulations of the Judicial Conference of the United
States.
DATED at San Diego, California, July 26, 2021.
_/s/ CYNTHIA R. OTT
CYNTHIA R. OTT, RDR, CRR
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