Order Granting in Part/Denying in Part Motion to Dismiss FAMCC and Granting Reconsideration — In re BofA Unemployment Litigation

Record facts

U.S. District Court for the Southern District of California · No. 3:21-md-02992-GPC-MSB · Doc. 297 · 2024-04-08 · Docket on CourtListener

Full text

1 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
 
 
 
 
 
 
 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF CALIFORNIA 
 
IN RE: BANK OF AMERICA 
CALIFORNIA UNEMPLOYMENT 
BENEFITS LITIGATION, 
 
 Case No.:  21MD2992-GPC(MSB) 
 
ORDER 
 
(1) GRANTING IN PART AND 
DENYING IN PART DEFENDANT’S 
MOTION TO DISMISS; AND  
 
(2) GRANTING PLAINTIFFS’ 
MOTION FOR 
RECONSIDERATION  
 
[Dkt. Nos. 146, 151.] 
 
 
This multi-district litigation was transferred to the undersigned judge on April 8, 
2024.  (Dkt. No. 261.)  Pending before the Court is Defendant’s fully briefed motion to 
dismiss, (Dkt. Nos. 146, 171, 175), and Plaintiffs’ fully briefed motion for 
reconsideration of the Court’s order granting dismissal of the UCL claim with prejudice.  
(Dkt. Nos. 151, 158, 161.)  Based on the reasoning below, the Court GRANTS in part 
and DENIES in part Defendant’s motion to dismiss with leave to amend and GRANTS 
Plaintiffs’ motion for reconsideration with leave to amend. 
/ / / 
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3141   Page 1 of 17

 
2 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Background 
California’s Employment Development Department (“EDD”) administers 
unemployment benefits in California, and in 2010, entered into an exclusive contract with 
Defendant Bank of America, N.A. (“BANA”) to distribute those benefits through Bank-
issued and Bank-administered prepaid debit cards which are linked to individual Bank 
depository accounts.  (Dkt. No. 136, First Amended Master Consolidated Complaint 
(“FAMCC”) ¶¶ 1, 2, 39.)  In 2015, EDD accepted BANA’s proposal to extend the scope 
and duration of the contract from August 1, 2016 through July 31, 2021.  (Id. ¶ 42.)  
 
Plaintiffs, like other millions of Californians, lost their jobs during the COVID-19 
pandemic and were found eligible by EDD for unemployment and other public benefits.  
(Id. ¶ 1.)  The state’s unemployment rate skyrocketed from 3.9% in January 2020 to 
16.4% in April 2020 following closure orders from Governor Gavin Newsom.  (Id. ¶ 74.)  
Since the start of the COVID-19 pandemic in March 2020, EDD received at least 18.5 
million claims for various unemployment benefits.  (Id. ¶ 75.)  For instance, in the first 
week of December 2000, EDD received 341,813 claims which was a 600% increase from 
December 2019.  (Id.)  In turn, BANA issued more than 9 million EDD debit cards to 
individuals found eligible for unemployment benefits.  (Id.)  Per the exclusive contract 
between EDD and BANA, the BANA issued benefit payments through Bank-issued and 
Bank-administered prepaid debit cards.  (Id. ¶ 2.)  These pre-paid debit cards were 
subject to rampant third-party fraud during the COVID-19 pandemic and tens of millions 
of dollars have been stolen from these bank accounts.  (Id. ¶¶ 76-78.)   
 
On January 14, 2021, Class Plaintiff Jennifer Yick commenced a purported class 
action titled Yick v. Bank of America, N.A., No. 3:21-cv-376, in the United States District 
Court for the Northern District of California.  (Id. ¶ 106.)  Eight additional class actions 
were subsequently filed and consolidated with Yick on March 29, 2021.  (Id.)  On April 1, 
2021, Plaintiffs in the Yick consolidated class action sought a preliminary injunction 
enjoining BANA from automatically denying fraud claims based on its faulty “Claim 
Fraud Filter” and freezing or blocking claimants’ accounts without investigation.  (Id. ¶¶ 
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3142   Page 2 of 17

 
3 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
107, 108.)  The Yick court granted a preliminary injunction on May 17, 2021, and 
provisionally certified a class of all EDD Cardholders who call BANA to report 
unauthorized charges.  (Id., Ex. A.)  On June 1, 2021, following negotiations between the 
parties, the Yick court entered a preliminary injunction which: (1) barred BANA from 
considering the results of its Claim Fraud Filter when investigating claims; (2) prohibited 
BANA from denying claims without an investigation and providing the claimant with a 
written explanation; (3) prohibited BANA from freezing any account based on the results 
of the Claim Fraud Filter; (4) required BANA to reopen any claims previously denied 
based on the results of the Claim Fraud Filter; and (5) required BANA to establish 
dedicated toll free numbers for Class Members seeking assistance with fraud claims or 
frozen accounts.  (Id.; Dkt. No. 136, FAMCC ¶ 110.)  Around that same time, numerous 
individuals initiated actions against BANA for injuries stemming from the same alleged 
conduct.   
On June 4, 2021, the Judicial Panel on Multidistrict Litigation transferred the Yick 
class action and individually filed actions to this Court for consolidated pretrial 
proceedings.  (Dkt. No. 1.)  Pursuant to the Court’s order following a case management 
conference, (Dkt. No. 48), Plaintiffs filed a Master Consolidated Complaint (“MCC”) on 
August 17, 2021.  (Dkt. No. 72.)  On May 25, 2023, the Court granted in part and denied 
in part Defendant’s motion to dismiss the MCC with leave to amend.  (Dkt. No. 126.)  On 
June 13, 2023, Plaintiffs filed a First Amended Master Consolidated Complaint 
(“FAMCC”) against BANA.  (Dkt. No. 136.)   
The FAMCC alleges the following claims: 
1. 
Violation of the Electronic Funds Transfer Act (“EFTA”), 15 U.S.C. 
§§ 1963 et seq., and Regulation E ,12 C.F.R. §§ 1005.1 et seq.; 
2. 
Violation of the California Consumer Privacy Act (“CCPA”), Cal. 
Civ. Code §§ 1798.100 et seq.; 
3. 
Violation of the California Customer Records Act (“CCRA”), Cal. 
Civ. Code §§ 1798.80 et seq.; 
4. 
Violation of California’s Unfair Competition Law (“UCL”), Cal. Bus. 
& Prof. Code §§ 17200 et seq.; 
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3143   Page 3 of 17

 
4 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
5. 
Negligence and Negligence Per Se; 
6. 
Negligent Hiring, Supervision, and Retention;  
7. 
Breach of Contract;  
8. 
Breach of Implied Contract; 
9. 
Breach of the Implied Covenant of Good Faith and Fair Dealing; 
10. 
Breach of Fiduciary Duty; 
11. 
Third Party Beneficiary Breach of Contract;  
12. 
Third Party Beneficiary Breach of the Implied Covenant of Good 
Faith and Fair Dealing; 
13. 
Violation of the Due Process Clause of the Fourteenth Amendment of 
the United States Constitution; and  
14. 
Violation of the Due Process Clause of the California Constitution. 
 
(Id.)  On July 11, 2023, Defendant filed a motion to dismiss certain claims of the 
FAMCC and is fully briefed.  (Dkt. Nos. 146, 71, 175.)  On August 7, 2023, Plaintiff 
filed a motion for reconsideration of the UCL claims that were dismissed with prejudice 
and is fully briefed.  (Dkt. Nos. 151, 158, 161.)   
 
On April 3, 2024, the Court granted BANA’s motion to dissolve the preliminary 
injunction because EDD terminated its longstanding contract with BANA, directed 
BANA to close cardholders’ existing EDD debit card accounts, and required BANA to 
provide notice to each affected cardholder and inform those with an existing balance as of 
April 30, 2024, how to recover the funds before they escheat to the state.  (Dkt. No. 255.)  
All provisions of the preliminary injunction order are dissolved as of June 1, 2024.  (Id.)   
Discussion 
I. 
Defendant’s Motion to Dismiss 
A. 
Legal Standard on Federal Rule of Civil Procedure 12(b)(6) 
Federal Rule of Civil Procedure (“Rule”) 12(b)(6) permits dismissal for “failure to 
state a claim upon which relief can be granted.”  Fed. R. Civ. P. 12(b)(6).  Dismissal 
under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or 
sufficient facts to support a cognizable legal theory.  See Balistreri v. Pacifica Police 
Dep’t., 901 F.2d 696, 699 (9th Cir. 1990).  Under Rule 8(a)(2), the plaintiff is required 
only to set forth a “short and plain statement of the claim showing that the pleader is 
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3144   Page 4 of 17

 
5 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
entitled to relief,” and “give the defendant fair notice of what the . . . claim is and the 
grounds upon which it rests.”  Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).   
A complaint may survive a motion to dismiss only if, taking all well pleaded 
factual allegations as true, it contains enough facts to “state a claim to relief that is 
plausible on its face.”  Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 
550 U.S. at 570).  “A claim has facial plausibility when the plaintiff pleads factual 
content that allows the court to draw the reasonable inference that the defendant is liable 
for the misconduct alleged.”  Id.  “Threadbare recitals of the elements of a cause of 
action, supported by mere conclusory statements, do not suffice.”  Id.  “In sum, for a 
complaint to survive a motion to dismiss, the non-conclusory factual content, and 
reasonable inferences from that content, must be plausibly suggestive of a claim entitling 
the plaintiff to relief.”  Moss v. United States Secret Serv., 572 F.3d 962, 969 (9th Cir. 
2009) (quotations omitted).  In reviewing a Rule 12(b)(6) motion, the Court accepts as 
true all facts alleged in the complaint, and draws all reasonable inferences in favor of the 
plaintiff.  al Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). 
 
Where a motion to dismiss is granted, “leave to amend should be granted ‘unless 
the court determines that the allegation of other facts consistent with the challenged 
pleading could not possibly cure the deficiency.’”  DeSoto v. Yellow Freight Sys., Inc., 
957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture 
Co., 806 F.2d 1393, 1401 (9th Cir. 1986)).  In other words, where leave to amend would 
be futile, the Court may deny leave to amend.  See DeSoto, 957 F.2d at 658; Schreiber, 
806 F.2d at 1401.   
B. 
First Cause of Action – Violation of the EFTA  
 
The Electronic Funds Transfer Act (“EFTA”) is a federal consumer protection law 
“establishing the rights, liabilities, and responsibilities of participants in electronic fund 
and remittance transfer systems.”  15 U.S.C. § 1693(a).  The EFTA, together with its 
implementing regulation, Regulation E, codified at 12 C.F.R. § 1005, regulate electronic 
fund transfers and was designed to protect consumers’ accounts.  See 15 U.S.C. § 1693(b) 
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3145   Page 5 of 17

 
6 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
(“primary objective of [the EFTA] . . . is the provision of individual consumer rights.”).  
The EFTA is a remedial statute accorded “a broad, liberal construction in favor of the 
consumer.”  Begala v. PNC Bank, Ohio, Nat'l Ass'n, 163 F.3d 948, 950 (6th Cir. 1998).  
Congress intended the EFTA to provide “a comprehensive scheme of federal regulation 
for all electronic transfers of funds.”  Kashanchi v. Texas Commerce Med. Bank, N.A., 
703 F.2d 936, 939 (5th Cir. 1983).   
An “electronic fund transfer” means “any transfer of funds, other than a transaction 
originated by check, draft, or similar paper instrument, which is initiated through an 
electronic terminal, telephonic instrument, or computer or magnetic tape so as to order, 
instruct, or authorize a financial institution to debit or credit an account. Such term 
includes, but is not limited to, point-of-sale transfers, automated teller machine 
transactions, direct deposits or withdrawals of funds, and transfers initiated by 
telephone.”  15 U.S.C. § 1693a(7).  An “unauthorized electronic transfer” is defined as 
“an electronic fund transfer from a consumer’s account initiated by a person other than 
the consumer without actual authority to initiate such transfer and from which the 
consumer receives no benefit.” 15 U.S.C. § 1693a(12); see also 12 C.F.R. § 1005.2(m) 
(same).  
 
Under the EFTA’s error resolution procedure, when a consumer notifies a financial 
institution that the consumer believes an “error” has occurred in his or her account, the 
“financial institution shall investigate the alleged error, determine whether an error has 
occurred, and report or mail the results of such investigation and determination to the 
consumer within ten business days.”  15 U.S.C. § 1693f(a).  The EFTA mandates specific 
steps the financial institution must take depending on the results of its investigation, as 
well as the time frames in which the steps must be taken.  15 U.S.C. §§ 1693f(b)-(d).  To 
trigger a financial institution’s obligations under the EFTA, consumers must identify a 
qualifying error.  15 U.S.C. § 1693f(a); 12 C.F.R. § 1005.11(b).  Qualifying errors 
include:  
(i) An unauthorized electronic fund transfer; 
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3146   Page 6 of 17

 
7 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
(ii) An incorrect electronic fund transfer to or from the consumer's account; 
(iii) The omission of an electronic fund transfer from a periodic statement; 
(iv) A computational or bookkeeping error made by the financial institution  
relating to an electronic fund transfer; 
(v) The consumer's receipt of an incorrect amount of money from an 
electronic terminal; 
(vi) An electronic fund transfer not identified in accordance with § 1005.9 or 
§ 1005.10(a); or 
(vii) The consumer's request for documentation required by § 1005.9 or § 
1005.10(a) or for additional information or clarification concerning an 
electronic fund transfer, including a request the consumer makes to 
determine whether an error exists under paragraphs (a)(1)(i) through (vi) of 
this section. 
 
12 C.F.R. § 1005.11(a)(1)(i)-(vii); see also 15 U.S.C. § 1693f(f)(1)-(7).  “A request for 
documentation or other information must be treated as an error unless it is clear that the 
consumer is requesting a duplicate copy for tax or other record-keeping purposes.”  12 
C.F.R. Pt. 1005, Supp. I at 11(a) (Official Interpretation of § 1005.11(a)).1   
 
In the prior order, the Court dismissed the EFTA claim for those Plaintiffs who 
solely alleged they reported account freezes to BANA because “[n]either EFTA nor Reg 
E lists account freezes as a qualifying error.”  (Dkt. No. 126 at 15-16.2)  The Court noted, 
though, that to the extent Plaintiffs argued that they also requested additional information 
“to determine whether there was an incorrect or omitted EDD benefits transfer into the 
account,” such allegations were not in the complaint and the Court could not consider 
them but instead granted them leave to amend.  (Id.) 
The FAMCC now alleges that individual Plaintiffs’ accounts were frozen or 
restricted and Plaintiffs requested additional information from BANA as to why their 
 
1 The Official Interpretations are “published in accordance with the broad powers that Congress 
delegated to the [Federal Reserve] Board to fill gaps in the statute.”  Nero v. Uphold HQ Inc.,-- F. Supp. 
3d --, 2023 WL 5426203 *3 n.2 (S.D.N.Y. Aug. 23, 2023) (quoting Roberts v. Fleet Bank (R.I.), 342 
F.3d 260, 265 (3d Cir. 2003), as amended (Oct. 21, 2003)).  
2 Page numbers are based on the CM/ECF pagination. 
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3147   Page 7 of 17

 
8 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
accounts were restricted or sought information BANA relied on to freeze their accounts.  
(See e.g., Dkt. No. 136-1, FAMCC ¶ 308 (Berlt “requested additional information from 
Bank of America as to why his account was restricted.”); ¶ 309 (“Blacksands also 
requested from Bank of America all the information it relied upon which caused the 
freeze of his account.”); ¶ 357 (Stephanie Flores “began receiving EDD distributed 
through Bank of America. . . . In August 2020, Bank of America restricted her access to 
her Account” and she immediately “called Bank of America to inquire as to why a 
restriction was placed on her account and requested additional information regarding the 
restriction.”).)  
In its motion to dismiss, Defendant contends that the “freeze only” Plaintiffs, 
despite their amendments, have not stated a claim under the EFTA as they still fail to 
allege a qualifying error as defined under the EFTA.  (Dkt. No. 146-1 at 9-11.)  It argues 
that Plaintiffs merely allege that they requested additional information about their 
account freezes or restrictions to their accounts that prevented transfers on their accounts, 
and do not allege they requested additional information concerning a specific electronic 
fund transfer.  (Id. at 9.)  Plaintiffs respond they have properly amended the complaint to 
clarify that they requested additional or clarifying information “regarding bank errors 
resulting in missing deposit[] [transfers] or other omissions of EDD benefits transfers into 
their accounts while the freeze continued to be in effect.”  (Dkt. No. 171 at 5.)  
The individual Plaintiffs, whose accounts were frozen or restricted, were all 
authorized recipients of EDD benefits and had either been approved for benefits or had 
been receiving EDD benefits when their accounts were frozen or restricted.  (See e.g., 
Dkt. No. 136-1, FAMCC ¶¶ 308, 309, 325, 357.)  Therefore, the bank accounts that were 
frozen included funds that had already been “transferred” from EDD to BANA.  To the 
extent the bank accounts were frozen prior to funds being deposited by EDD, the 
FAMCC sufficiently alleges a qualifying error.  The FAMCC asserts that Plaintiffs 
requested additional information as to why their accounts were restricted, or in other 
words, requested additional information concerning “an incorrect electronic fund transfer 
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3148   Page 8 of 17

 
9 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
to or from the consumer’s account” or the “omission of an electronic fund transfer from a 
periodic statement.”  See 12 C.F.R. §§ 1005.11(a)(1)(ii), (iii), (vii).  In essence, Plaintiffs 
were seeking additional information regarding electronic fund transfers that did not 
occur.  In considering the broad remedial purpose of the EFTA in favor of consumers, 
and drawing all reasonable inferences in favor of Plaintiffs on a motion to dismiss, the 
Court concludes that the individual Plaintiffs have plausibly alleged a qualifying error as 
defined under the EFTA.   
Accordingly, the Court DENIES Defendant’s motion to dismiss the EFTA claims 
regarding the “freeze only” individual Plaintiffs. 
C. 
Remaining Unopposed Arguments 
 
Defendant also moves to dismiss the second cause of action for violation of the 
CCPA based on the theory regarding unsecure data collection and storage alleged in 
paragraphs 553(b)-(d); the third cause of action under the CCRA, and the fifth cause of 
action for negligence per se based on violations of the California Financial Information 
Privacy Act (“CFIPA”) and CCRA with prejudice for Plaintiffs’ failure and inability to 
amend those claims.  (Id.)  Plaintiffs do not oppose Defendant’s arguments. 
The Court’s prior order granted dismissal of the CCPA claim to the extent it was 
based on BANA “collecting”, “transmitting” and “storing” Plaintiffs’ personal 
information in an inadequately secure manner with leave to amend, dismissed the CCRA 
cause of action with leave to amend and dismissed the negligence per se cause of action 
based on violations of the CFIPA and CCRA with leave to amend.  (Dkt. No. 126 at 27-
28, 29-31, 42-43.)  Plaintiffs did not amend these claims in the FAMCC, and, in fact, 
admit they are unable to amend these claims at this time.  (See Dkt. No. 136-1, FAMCC 
at 281 n.32; 285 n.33; 293 n.35.)  Thus, the Court GRANTS Defendant’s motion to 
dismiss with prejudice the second cause of action under CCPA as it concerns unsecure 
data collection and storage contained in paragraphs 553(b)-(d), the third cause of action 
under the CCRA, and the fifth cause of action for negligence based on the CFIPA and 
CCRA as unopposed.    
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3149   Page 9 of 17

 
10 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Finally, Defendant moves to dismiss the seventh cause of action for breach of 
contract as to all Plaintiffs with prejudice for failing to amend except for the Section 9 
and 11 theories of Plaintiffs Stephanie Smith, Beth Burns and Crystal Horath.  (Dkt. No. 
146-1 at 7-8.)  Defendant also seeks to dismiss the Section 9 and 11 breach of contract 
claims brought by Plaintiff Jennifer Yick because she amended her allegations that her 
unauthorized transaction claims have been reimbursed in full by BANA.  (Id. at 11.)   
Previously, the Court granted dismissal of the claim for breach of Section 9 and 11 
of the Account Agreement with leave to amend except as to Plaintiffs Jennifer Yick, 
Stephanie Smith, Beth Burns and Crystal Horath.  (Dkt. No. 126 at 52.)  As to Stephanie 
Smith, Beth Burns and Crystal, the FAMCC alleges Plaintiffs “are unable to amend those 
claims at this time.”  (Dkt. No. 136, FAMCC at 302 n.36.)  Thus, the Court GRANTS 
dismissal of the breach of contract claims with prejudice except as to the Section 9 and 11 
claims as to Stephanie Smith, Beth Burns and Crystal Horath as unopposed.   
The Court previously dismissed the breach of contract claims with prejudice as to 
Plaintiffs who had been fully reimbursed.  (Dkt. No. 126 at 51.)  At the time, Yick had 
previously stated a breach of contract claim, but the FAMCC now alleges that she has 
been reimbursed in full by BANA.  (See Dkt. No. 136, FAMCC ¶ 126.)  Thus, the Court 
also GRANTS Defendant’s unopposed motion to dismiss Plaintiff Yick’s Section 9 and 
11 breach of contract claims with prejudice. 
Conclusion 
 
Based on the above, the Court GRANTS in part and DENIES in part Defendant’s 
motion to dismiss.  Specifically, the Court DENIES Defendant’s motion to dismiss the 
first cause of action for violation of the EFTA as to the “freeze only” Plaintiffs.  The 
Court GRANTS Defendant’s motion to dismiss with prejudice as to (1) the second claim 
for violation of the CCPA based on Plaintiffs’ alleged unsecure data collection and 
storage contained in paragraphs 553(b)-(d); (2) third claim for violation of the CCRA; (3) 
fifth claim for negligence per se based on violations of the California Information Privacy 
Act and California Customer Records Act; and (4) Plaintiffs’ seventh claim for breach of 
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3150   Page 10 of 17

 
11 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
contract, including Plaintiff Yick, except for the Section 9 and 11 theories of Plaintiffs 
Stephanie Smith, Beth Burns and Crystal Horath.  Plaintiffs shall file a Second Amended 
Master Consolidated Complaint to remove causes of actions that have been dismissed 
with prejudice within 21 days of the Court’s order.   
II. 
Plaintiffs’ Motion for Reconsideration 
A. 
Legal Standard on Motion for Reconsideration 
 
A motion for reconsideration, under Rule 59(e), is “appropriate if the district court 
(1) is presented with newly discovered evidence; (2) clear error or the initial decision was 
manifestly unjust, or (3) if there is an intervening change in controlling law.”  Sch. Dist. 
No. 1J, Multnomah Cnty., Or. v. ACandS, Inc., 5 F.3d 1255, 1262 (9th Cir. 1993); see 
also Ybarra v. McDaniel, 656 F.3d 984, 998 (9th Cir. 2011).  The Court has discretion in 
granting or denying a motion for reconsideration. Fuller v. M.G. Jewelry, 950 F.2d 1437, 
1441 (9th Cir. 1991).  A motion for reconsideration should not be granted absent highly 
unusual circumstances.  389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 
1999). 
B. 
Fourth Cause of Action - UCL 
 
Plaintiffs move for reconsideration of the Court’s order granting the UCL claim 
with prejudice arguing the Court committed clear error or the initial decision was 
manifestly unjust.  (Dkt. No. 151-1 at 8-9.)  First, they claim they have plead that legal 
remedies would be inadequate for future irreparable harms seeking prospective injunctive 
relief.  (Id. at 6.)  Second, Plaintiffs maintain that the Court’s prior order overlooked 
Plaintiffs’ “unfair” practices claim for which no legal remedies are available.  (Id.)  
Alternatively, Plaintiffs argue that the Court erred by dismissing the UCL with prejudice 
and without an opportunity to amend in this Court or to re-file in state court.  (Id.)  
Defendant responds that the MCC wholly failed to allege that legal remedies are 
inadequate or any facts to support it.  (Dkt. No. 158 at 5.)   
 
On the first argument, the parties agree that the prospective injunctive relief is now 
moot due to the dissolution of the preliminary injunction in Yick v. Bank of America, 
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3151   Page 11 of 17

 
12 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Case No. 21cv1092 and the termination of the contract between EDD and BANA.3  (Dkt. 
Nos. 255, 270, 271.)  Thus, the Court DENIES Plaintiffs’ motion for reconsideration of 
the UCL claim concerning prospective injunctive relief as moot.   
 
1. 
Unfair Prong  
 
 
a. 
Sufficiency of Allegations  
 
The UCL prohibits “any [1] unlawful, [2] unfair or [3] fraudulent business act or 
practice.”  Cal. Bus. & Prof. Code § 17200.  The “unfair” prong of the UCL creates a 
cause of action for a business practice that is unfair even if not proscribed by some other 
law.  Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1143 (2003).  The 
unfair prong is “intentionally framed in its broad, sweeping language, precisely to enable 
judicial tribunals to deal with the innumerable ‘new schemes which the fertility of man's 
invention would contrive.’”  Id. (quoting Am. Philatelic Soc. v. Claibourne, 3 Cal. 2d 
689, 698 (1935)).    
The Ninth Circuit has identified the following three tests that California courts 
have considered in addressing the “unfair” prong in a consumer case:4 “(1) whether the 
challenged conduct is ‘tethered to any underlying constitutional, statutory or regulatory 
provision, or that it threatens an incipient violation of an antitrust law, or violates the 
 
3 On April 16, 2024, the Court directed the parties to submit supplemental brief on whether the 
prospective injunctive relief is still viable in light of the order dissolving the preliminary injunction.  
(Dkt. No. 264.) 
4 California courts are still divided on which “unfair” standard to apply to consumer suits.  See Nazemi v. 
Specialized Loan Serv., LLC, 637 F. Supp. 3d 856, 864 (C.D. Cal. Oct. 31, 2022) (citing Graham v. 
Bank of America, N.A., 226 Cal. App. 4th 594, 612 (2014) (“the appellate courts split regarding the 
definition of ‘unfair’ business practices in consumer action.”); Hodsdon v. Mars, Inc., 891 F.3d 857, 866 
(9th Cir. 2018) (internal quotation marks and citations omitted) (proper test for whether an action 
violates the unfair prong is “currently in flux among California courts.”).  The Court applies Doe 
because it is the most recent Ninth Circuit opinion on the unfair prong of the UCL concerning 
consumers.  See Epperson v. Genl Motors, LLC, -- F. Supp. 3d --, 2023 WL 8628327, at *6 (S.D. Cal. 
Dec. 13, 2023) (recognizing different approaches adopted by the California courts of appeal as well as 
the Ninth Circuit and ultimately applying Doe “[g]iven that it is the most recently published Ninth 
Circuit opinion on the matter”).   
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3152   Page 12 of 17

 
13 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
policy or spirit of an antitrust law,’ [the “Tethering test”]5; (2) whether the practice is 
‘immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers,’ 
[the “Immoral test”]; or (3) whether the practice's impact on the victim outweighs “the 
reasons, justifications and motives of the alleged wrongdoer [the “Balancing test”].” 6  
Doe v. CVS Pharm., 982 F.3d 1204, 1214-15 (9th Cir. 2020) (internal citations omitted). 
The MCC7 alleges the following conduct as “unfair”:  
BANA’s failure (1) to “maintain, store, share, transmit, or otherwise use 
Plaintiffs’ and Class Members’ personal information”; (2) “to issue EDD 
Debit Cards with EMV chips, despite having for years been aware of the 
risks associated with magnetic stripe technology and despite knowing the 
heightened vulnerability of EDD Debit Cardholders and their Accounts and 
those Cardholders’ heightened interest in securely, reliably, and timely 
accessing their EDD benefits”; (3) “to respond to the rise in demand for 
EDD benefits caused by or related to the COVID-19 pandemic by issuing 
chip cards”; (4) “falsely representing to Plaintiffs, Class Members, and EDD 
that it would provide ‘best-in-class’ fraud monitoring and that it would 
remain ‘at the forefront of fraud and data security strategies benefiting the 
EDD and [EDD’s] claimants’”; (5) “failing to protect Plaintiffs and Class 
Members from unauthorized transactions”; (6) “failing to employ reasonable 
practices and procedures to monitor for, detect, stop, and promptly notify 
Plaintiffs and Class Members about suspicious transactions involving their 
Cards and Accounts”; (7) “failing to provide reasonable or adequate 
customer service assistance to Plaintiffs and other Class Members who 
complained of fraud, despite representing to them that such assistance would 
be available ‘24/7,’ and despite the Bank’s awareness of rampant third-party 
fraud on EDD Debit Cards and Accounts”; (8) “establishing ‘customer 
service’ procedures designed to frustrate and obstruct efforts by Plaintiffs 
and Class Members to file their fraud claims”; (9) “failing to adequately 
 
5 The allegations to support the Tethering test of the “unfair” prong may overlap with the “unlawful” 
prong.  Under these circumstances, “courts may effectively collapse the unlawful prong and the unfair 
prong, as understood by the public policy test, when the violation of a law is shown.’” Pemberton v. 
Nationstar Mort. LLC, 331 F. Supp. 3d 1018, 1050 n.14 (S.D. Cal. June 26, 2018).   
6 While courts have recognized a fourth test from § 45(a) of the Federal Trade Commission Act (“FTC 
test”) which requires that “(1) the consumer injury must be substantial; (2) the injury must not be 
outweighed by any countervailing benefits to consumers or competition; and (3) it must be an injury that 
consumers themselves could not reasonably have avoided”, Camacho v. Auto. Club of S. Cal., 142 Cal. 
App. 4th 1394, 1403 (2006), Plaintiffs do not allege or rely on the FTC test.    
7 The allegations concerning the “unfair” prong of the UCL in the MCC and FAMCC are the same.  
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3153   Page 13 of 17

 
14 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
investigate and resolve Plaintiffs’ and Class Members’ claims of 
unauthorized transactions in a timely manner despite the Bank’s promised 
‘Zero Liability’ policy for unauthorized transactions”; (10) “failing to extend 
provisional credit to Plaintiffs and Class Members in cases where the Bank 
was unable to timely investigate and resolve fraud claims”; (11) 
“automatically denying Plaintiffs’ and Class Members’ claims of 
unauthorized transactions without investigation, explanation, or reasonable 
basis, including based solely on the results of a highly unreliable ‘fraud 
filter’”; (12) “rescinding, without explanation or legitimate basis, 
‘permanent’ credits the Bank had previously paid to EDD Debit Cardholders 
upon determining fraud had occurred in their Account”; (13) “freezing 
and/or blocking EDD Debit Card Accounts without a reasonable basis for 
believing that the Cardholders themselves had committed fraud”; (14) 
“freezing and/or blocking EDD Debit Card Accounts not to protect the 
Cardholders but to protect the Bank’s own interests”; and (15) “failing to 
provide reasonable or adequate customer service to Plaintiffs and other Class 
Members seeking assistance in obtaining reimbursement for third-party 
fraud on their Accounts or in accessing their frozen Accounts, despite the 
Bank’s representation” to the contrary.  
 
(Dkt. No. 77, MCC ¶ 577.)  The MCC claims these fifteen acts or failures to act by 
BANA “offend public policy and constitute immoral, unethical, oppressive and 
unscrupulous activities that caused substantial injury, including to Plaintiffs and Class 
Members.  The harm caused by Bank of America’s conduct outweighs any potential 
benefits attributable to such conduct.”  (Id. ¶ 578.)   
 
In the underlying motion to dismiss, BANA argued that Plaintiffs failed to 
sufficiently allege acts that rise to the level of “unfair” under the UCL.8  (Dkt. No. 84-1 at 
46-47.)  Plaintiffs responded that BANA’s argument impermissibly relies on disputed 
 
8 On reconsideration, the parties did not address the threshold question whether the MCC sufficiently 
alleged facts to support a claim under the tests for “unfair” prong of the UCL; instead, the parties 
disputed whether equitable damages were available for similar conduct arising under the “unlawful” and 
“unfair” prongs.  (See Dkt. No. 151-1 at 11-14; Dkt. No. 158 at 12-13; Dkt. No. 161 at 11.)  Because 
Plaintiffs are granted leave to amend, the Court need not consider these arguments.  
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3154   Page 14 of 17

 
15 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
assertions outside the MCC and they alleged “unfair” practices under the balancing test 
and the Cel-Tech tethering test.  (Dkt. No. 90 at 55.)   
 
Despite Plaintiffs’ argument that they allege both the balancing test and Cel-Tech’s 
tethering test, the MCC appears to allege the pre-Cel-Tech9 tests which the Ninth Circuit, 
in Doe, has referred to as the Immoral and Balancing test.  In Morgan, the court of appeal 
explained the confusion and background on the courts of appeal’s use of the varying 
“unfair” prong tests: 
Before 1999, some Courts of Appeal held that “an ‘unfair’ business practice 
occurs when it offends an established public policy or when the practice is 
immoral, unethical, oppressive, unscrupulous or substantially injurious to 
consumers” [ ]while others held that the determination whether a practice is 
unfair “involves an examination of [that practice's] impact on its alleged 
victim, balanced against the reasons, justifications and motives of the 
alleged wrongdoer” [ ].  In 1999, the Supreme Court defined “unfair” in the 
context of a UCL action by one competitor against a direct competitor, 
stating that “any finding of unfairness to competitors under [the UCL must] 
be tethered to some legislatively declared policy or proof of some actual or 
threatened impact on competition.” [Cel–Tech, 20 Cal. 4th at 186-87] But 
the Supreme Court also made clear that its discussion about “unfair” 
practices was limited to actions by competitors alleging anticompetitive 
practices, and did not relate to actions by consumers. [Id. at 187, fn. 12] 
Nevertheless, some courts of appeal have applied the Cel–Tech definition of 
“unfair” to consumer actions [ ], while others (including this court) have 
applied the old definitions [ ]. 
 
Morgan v. AT&T Wireless Servs., Inc., 177 Cal. App. 4th 1235, 1254 (2009) (internal 
citations omitted).   
 
Because Plaintiffs may be seeking to rely on the three tests articulated in Doe, the 
Court now considers them.10  In reviewing the allegations in the MCC, the Court 
 
9 Cel-Tech Commc'ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999). 
10 BANA’s argument addressed the merits of the “unfair” acts, which are not proper on a motion to 
dismiss, and did not address whether Plaintiffs had stated a claim under any of the tests Plaintiffs relied 
on.  However, before addressing whether legal remedies are inadequate, the Court must first address 
whether a claim has been sufficiently alleged.   
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3155   Page 15 of 17

 
16 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
concludes that Plaintiffs have failed to sufficiently allege facts to support any of the three 
tests to support the “unfair” prong of the UCL.  As to the Tethering “consumer” test, 
Plaintiffs have not tethered each fifteen challenged conduct to an “’underlying 
constitutional, statutory or regulatory provision’ and the public policy of each 
provision.”11  See Doe, 982 F.3d at 1214–15 (“Applying the tethering test, Does do not 
mention the public policy allegedly violated . . . nor do they explain how, the Program 
violated that policy.”).  Similarly, as to the Balancing test, a summary assertion of “harm 
. . . outweighs any potential benefits attributable to such conduct” without any supporting 
facts is not sufficient to state a claim.  See id. at 1215 (“as to the balancing test, Does 
assert in a conclusory fashion that CVS's conduct “’outweighs any justification, motive or 
reason therefor,’ but they do not allege how that is so.”).  Finally, as to the Immoral test, 
the MCC is void of any facts to support that test.  By merely listing fifteen acts or failures 
to act by BANA without any facts to support any of the three unfair prong tests, Plaintiffs 
have not plausibly stated a claim.  See Nazemi v. Specialized Loan Serv., LLC, 637 F. 
Supp. 3d 856, 864 (C.D. Cal. Oct. 31, 2022) (the failure to plead these issue leaves the 
Court “to guess what conduct Plaintiff[ ] alleged satisfied the ‘unfair’ prong of the 
UCL.”).  Because leave to amend would not be futile, the Court concludes that it clearly 
erred in dismissing the UCL claim with prejudice because “leave to amend should be 
granted ‘unless the court determines that the allegation of other facts consistent with the 
challenged pleading could not possibly cure the deficiency.’”  See DeSoto, 957 F.2d at 
658.  Thus, the Court GRANTS Plaintiffs’ motion for reconsideration dismissing the 
UCL claims with prejudice.  Plaintiffs are granted leave to amend to file a second 
amended master consolidated complaint to cure the deficiencies on the “unfair” prong of 
the UCL.   
 
11 In their motion, Plaintiffs summarily contend that they demonstrated that the unfair conduct 
“undermined the legislative declared public policy of various laws” such as the EFTA, but these 
allegations are not in the MCC.  (Dkt. No. 151-1 at 14 n.2).   
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3156   Page 16 of 17

 
17 
21MD2992-GPC(MSB) 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
 
 
b. 
Allegation of Inadequate Legal Remedies 
Under the UCL, a plaintiff may only seek the equitable relief of restitution and/or 
an injunction.  Korea Supply Co., 29 Cal. 4th at 1144 (“Through the UCL a plaintiff may 
obtain restitution and/or injunctive relief against unfair or unlawful practices.”).  The 
Ninth Circuit has held that plaintiffs seeking equitable relief under the UCL must 
establish that they lack an adequate remedy at law.  Sonner v. Premier Nutrition Corp., 
971 F.3d 834, 844 (9th Cir. 2020) (a plaintiff “must establish that she lacks an adequate 
remedy at law before securing equitable restitution for past harm under the UCL . . . .”).   
 
In the Court’s prior order, it dismissed the UCL claim because Plaintiffs did not 
allege an inadequate remedy at law in the MCC.12  The FAMCC now alleges an 
inadequate remedy at law but only addresses injunctive relief, not restitution.  (Dkt. No. 
136, FAMCC ¶ 285 (only addressing injunctive relief, not restitution).)  Because 
injunctive relief is now moot, FAMCC fails to allege an inadequate remedy at law.   
Accordingly, Plaintiffs are granted leave to amend the FAMCC to allege an inadequate 
remedy at law as it concerns restitution. 
Conclusion 
 
Based on the above, the Court GRANTS Plaintiffs’ motion for reconsideration.  
Plaintiffs shall file a second amended master consolidated complaint within 21 days of 
the Court’s order.   
 
IT IS SO ORDERED. 
Dated:  June 25, 2024 
 
 
 
 
12 In their motion, Plaintiffs acknowledge that they did not allege an inadequate remedy at law in the 
MCC. (Dkt. No. 151-1 at 7 (“Although the MCC did not contain a boilerplate allegation that legal 
remedies are inadequate . . . .”).   
Case 3:21-md-02992-GPC-MSB   Document 297   Filed 06/25/24   PageID.3157   Page 17 of 17

File and source

File

gov.uscourts.casd.709615.297.0.pdf

Size

318,799 bytes

SHA-256

990ccfdeff24d8d9a75540dab2533fda5962c547ef5ea62c6b468342d789c57a

Our copy

gov.uscourts.casd.709615.297.0.pdf

Original

PACER (login required)