Motion - The Bank’s Procedures Fail the Mathews v. Eldridge Balancing Test. ....................... 9 (2021-05-13)
- Document type
- Motion
- Date
- 2021-05-13
- Case
- The Bank’s Procedures Fail the Mathews v. Eldridge Balancing Test. ....................... 9
- Case number
- 3:21-cv-00376-VC
Summary
Plaintiffs' Reply in Support of Motion for Preliminary Injunction and Provisional Class Certification in Yick, et al. v. Bank of America, N.A., Case No. 3:21-cv-00376-VC, a class action in the U.S. District Court for the Northern District of California, filed April 29, 2021 as Document 80 and set for hearing May 13, 2021 before Judge Vince Chhabria. The reply argues that the class should be provisionally certified under Rule 23(a) and Rule 23(b)(2) and that plaintiffs are likely to succeed on claims challenging the bank's claims investigation, account freeze and customer service practices for EDD debit cardholders. It contends the bank's practices violate EFTA, 15 U.S.C. §1693f, its cardholder agreements and its EDD-Bank contract, and that its freeze procedures violate due process. It is signed by Cotchett, Pitre & McCarthy, LLP and Altshuler Berzon LLP as interim co-lead counsel.
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Case 3:21-cv-00376-VC Document 80 Filed 04/29/21 Page 1 of 23
JOSEPH W. COTCHETT (SBN 36324) MICHAEL RUBIN (SBN 080618)
jcotchett@cpmlegal.com mrubin@altber.com
ANNE MARIE MURPHY (SBN 202540) STACEY M. LEYTON (SBN 203827)
amurphy@cpmlegal.com sleyton@altber.com
BRIAN DANITZ (SBN 247403) MATTHEW MURRAY (SBN 271461)
bdanitz@cpmlegal.com mmurray@altber.com
KARIN B. SWOPE (Pro Hac Vice) CONNIE K. CHAN (SBN 284230)
kswope@cpmlegal.com cchan@altber.com
ANDREW F. KIRTLEY (SBN 328023) JAMES BALTZER (SBN 332232)
akirtley@cpmlegal.com jbaltzer@altber.com
COTCHETT, PITRE & MCCARTHY, LLP ALTSHULER BERZON LLP
840 Malcolm Road, Suite 200 177 Post Street, Suite 300
Burlingame, CA 94010 San Francisco, CA 94108
Telephone: (650) 697-6000 Telephone: (415) 421-7151
Facsimile: (650) 697-0577 Facsimile: (415) 362-8064
Interim Co-Lead Counsel for Plaintiffs and the Interim Co-Lead Counsel for Plaintiffs and
Proposed Class the Proposed Class
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
JENNIFER YICK, Case No. 3:21-cv-00376-VC
ROLAND OOSTHUIZEN,
ROSEMARY MATHEWS, CLASS ACTION
CARLOS RODRIGUEZ,
J. MICHAEL WILLRICH, PLAINTIFFS’ REPLY IN SUPPORT OF
LINDSAY MCCLURE, MOTION FOR PRELIMINARY
ROBERT L. WILSON, INJUNCTION AND PROVISIONAL
CHRISTOPHER MOSSON, CLASS CERTIFICATION
CLARA CAJAS,
STEPHANIE SMITH, Date: May 13, 2021
ALAN KARAM, Time: 2:00 p.m.
AZURI MOON, Crtm: 4, 17th Floor
VANESSA RIVERA, Judge: Hon. Vince Chhabria
CANDACE KOOLE, and
LUIS PEREZ, on behalf of themselves
and all others similarly situated,
Plaintiffs,
vs.
BANK OF AMERICA, N.A.; and
DOES 1 through 50, inclusive,
Defendants.
Reply ISO Motion for Preliminary Injunction and Provisional Class Certification
Case No. 3:21-cv-00376-VC
Case 3:21-cv-00376-VC Document 80 Filed 04/29/21 Page 2 of 23
TABLE OF CONTENTS
I. THE COURT SHOULD PROVISIONALLY CERTIFY THE CLASS .......................... 1
A. Article III Standing Requirements Are Satisfied. ................................................................ 1
B. All Requirements of Rule 23(a) and Rule 23(b)(2) Are Satisfied. ....................................... 2
II. PLAINTIFFS ARE ENTITLED TO A PRELIMINARY INJUNCTION ....................... 3
A. Plaintiffs Are Likely to Succeed on the Merits of Their Claims Underlying the Requested
“Claims Investigation” Injunctions. ..................................................................................... 3
1. The Bank’s “Claims Investigation” Practices Violate EFTA, Its Cardholder
Agreements, and Its EDD-Bank Contract. ........................................................................ 3
B. Plaintiffs Are Likely to Succeed on the Merits of Their Claims Underlying the
Requested “Account Freeze” Injunctions............................................................................. 5
1. The Bank’s Account Freeze Practices Breach its Contracts and Their Implied
Covenants of Good Faith and are Unfair under the UCL.................................................. 6
2. The Bank’s Account Freeze Practices Violate Due Process. ............................................ 7
a. The Bank Is A State Actor. ........................................................................................... 7
b. The Bank’s Procedures Fail the Mathews v. Eldridge Balancing Test. ....................... 9
C. Plaintiffs Are Likely to Succeed on the Merits of Their Claims Underlying the Requested
“Customer Service” Injunctions. ........................................................................................ 10
1. The Bank’s Customer Service Practices Are Unfair Under the UCL and Breach the
EDD-Bank Contract. ....................................................................................................... 10
2. Plaintiffs Are Third Party Beneficiaries of the EDD-Bank Contract. ............................. 11
D. Plaintiffs Face a Likelihood of Irreparable Harm, and the Balance of Equities and
Public Interest Tips Sharply in Their Favor. ...................................................................... 12
III. THE REQUESTED RELIEF IS NECESSARY AND APPROPRIATE........................ 13
i
Reply ISO Motion for Preliminary Injunction and Provisional Class Certification
Case No. 3:21-cv-00376-VC
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TABLE OF AUTHORITIES
Page(s)
Cases
AFL-CIO v. EDD,
88 Cal.App.3d 811 (1979) ...................................................................................................9, 13
Am. Mfrs. Mut. Ins. Co. v. Sullivan,
526 U.S. 40 (1999) .....................................................................................................................8
Badie v. Bank of Am.,
67 Cal.App.4th 779 (1998) ........................................................................................................7
Bates v. United Parcel Serv., Inc.,
511 F.3d 974 (9th Cir. 2007) .....................................................................................................1
Beno v. Shalala,
30 F.3d 1057 (9th Cir. 1994) ...................................................................................................12
Bowen v. Mass.,
487 U.S. 879 (1988) .................................................................................................................15
Briggs v. Sullivan,
886 F.2d 1132 (9th Cir. 1989) .................................................................................................12
Brown v. Stored Value Cards, Inc.,
2016 WL 4491836 (D. Or. Aug. 25, 2016) ................................................................................8
Burton v. Wilmington Parking Auth.,
365 U.S. 715 (1961) ...................................................................................................................8
Byorth v. USAA Casualty Ins. Co.,
333 F.R.D. 519 (D. Mont. 2019)................................................................................................3
Campion v. Old Rep. Home Prot. Co.,
272 F.R.D. 517 (S.D. Cal. 2011) ...............................................................................................2
D.L. v. Dist. of Columbia,
713 F.3d 120 (D.C. Cir. 2013) ...................................................................................................2
De La Torre v. CashCall, Inc.,
5 Cal.5th 966 (2018) ..................................................................................................................7
Dioquino v. Sempris, LLC,
2012 WL 6742528 (C.D. Cal. Apr. 9, 2012) .............................................................................2
ii
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Case 3:21-cv-00376-VC Document 80 Filed 04/29/21 Page 4 of 23
FDIC v. Mallen,
486 U.S. 230 (1988) ...................................................................................................................9
Fuentes v. Shevin,
407 U.S. 67 (1972) ...............................................................................................................9, 10
Gale v. Hyde Park Bank,
384 F.3d 451 (7th Cir. 2004) .....................................................................................................5
GECCMC 2005-C1 Plummer St. Office Ltd P’ship v. JPMorgan Chase Bank,
671 F.3d 1027 (9th Cir. 2012) .................................................................................................12
Geneva Tower Tenants Org. v. Federated Mortg. Invs.,
504 F.2d 483 (9th Cir. 1974) .....................................................................................................8
Goldberg v. Kelly,
397 U.S. 254 (1970) .............................................................................................................9, 10
Golden Gate Rest. Ass’n v. City & Cnty. of S.F.,
512 F.3d 1112 (9th Cir. 2008) .................................................................................................13
Goonewardene v. ADP,
6 Cal.5th 817 (2019) ................................................................................................................12
Hernandez v. Sessions,
872 F.3d 976 (9th Cir. 2017) ...................................................................................................15
Herskowitz v. Apple, Inc.,
301 F.R.D. 460 (N.D. Cal. 2014) ...............................................................................................2
Hewlett v. Squaw Valley Ski Corp.,
54 Cal.App.4th 499 (1997) ......................................................................................................14
Jamie S. v. Milwaukee Pub. Sch.
668 F.3d 481 (7th Cir. 2012) .....................................................................................................2
Jimenez v. Allstate Ins. Co.,
765 F.3d 1161 (9th Cir. 2014) ...................................................................................................3
Kilgore v. KeyBank, N.A.,
718 F.3d 1052 (9th Cir. 2013) .................................................................................................14
Leschniok v. Heckler,
713 F.2d 520 (9th Cir. 1983) ...................................................................................................12
Lopez v. Heckler,
713 F.2d 1432 (9th Cir. 1983) .................................................................................................12
iii
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Case No. 3:21-cv-00376-VC
Case 3:21-cv-00376-VC Document 80 Filed 04/29/21 Page 5 of 23
Mathews v. Chevron Corp.,
362 F.3d 1172 (9th Cir. 2004) .................................................................................................15
Moran v. Prime Healthcare Mgmt., Inc.,
3 Cal.App.5th 1131 (2016) ........................................................................................................7
Pac. Radiation Oncology, LLC v. Queen’s Med. Ctr.,
810 F.3d 631 (9th Cir. 2015) ...................................................................................................14
Pasadena Republican Club v. W. Justice Ctr.,
985 F.3d 1161 (9th Cir. 2021) ...................................................................................................8
Rawson v. Recovery Innovations, Inc.,
975 F.3d 742 (9th Cir. 2020) .....................................................................................................8
Rendell-Baker v. Kohn,
457 U.S. 830 (1982) ...................................................................................................................8
Rodriguez v. Hayes,
591 F.3d 1105 (9th Cir. 2010) ...................................................................................................3
Ross v. Lockheed Martin Corp.,
2020 WL 4192566 (D.D.C. July 21, 2020)................................................................................2
Sampson v. Murray,
415 U.S. 61 (1974) ...................................................................................................................12
Shell v. Schmidt,
126 Cal.App.2d 279 (1954) ...............................................................................................11, 12
South Bay Chevrolet v. Gen. Motors Acceptance Corp.,
72 Cal.App.4th 861 (1999) ........................................................................................................7
Spiegel v. Ryan,
946 F.2d 1435 (9th Cir. 1991) .............................................................................................9, 10
Tinsley v. Snyder,
922 F.3d 957 (9th Cir. 2019) .....................................................................................................1
Wal-Mart Stores, Inc. v. Dukes,
564 U.S. 338 (2011) ...................................................................................................................2
Wilson v. Harris, N.A.,
2007 WL 2608521 (N.D. Ill. Sept. 4, 2007) ..............................................................................3
Withrow v. Concannon,
942 F.2d 1385 (9th Cir. 1991) .................................................................................................15
iv
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Zigas v. Superior Court,
120 Cal.App.3d 827 (1981) ...............................................................................................11, 12
Statutes
15 U.S.C. §1693f .........................................................................................................................3, 4
12 C.F.R. §1005.2(b)(3) ...................................................................................................................2
12 C.F.R. §1005.11(c)..................................................................................................................3, 4
12 C.F.R. §1005.15(a)(2) .................................................................................................................2
31 C.F.R. §1020.320(a)....................................................................................................................5
Rules
Federal Rules of Civil Procedure:
Rule 23(a)...................................................................................................................................2
Rule 23(b)(2) ......................................................................................................................1, 2, 3
Rule 23(b)(3) ..............................................................................................................................2
v
Reply ISO Motion for Preliminary Injunction and Provisional Class Certification
Case No. 3:21-cv-00376-VC
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The Bank’s response to Plaintiffs’ detailed factual submissions and well-supported legal
analysis rests on platitudes and generalities. The Bank offers scant or no rebuttal to many of
Plaintiffs’ claims. Nor does it seriously dispute the key factual predicates supporting injunctive
relief. The Bank admits the secret “fraud analysis” it purportedly used to deny the claims and
freeze the accounts of tens of thousands of Class Members erroneously branded at least 66,000
legitimate benefits recipients as “criminals.” Yet the Bank continues to use this highly flawed
“fraud analysis” on a classwide basis to summarily deny claims and freeze (or “block”) accounts
without further investigation, forcing Class Members to undergo an often futile months-long
process to regain access to their benefits. The Bank also admits the only customer service
representatives (CSRs) actually authorized to assist cardholders with fraud claims and
frozen/blocked accounts are not available 24/7. The Bank’s professed concern that the injunction
will be a “bonanza for criminals” ignores that it only addresses Bank-initiated freezes and claim
denials; nothing impairs EDD’s or law enforcement’s ongoing efforts to combat UI fraud.
As the supplemental declarations submitted with this reply demonstrate, the same Bank
practices that have harmed Plaintiffs continue to harm new victims every day, depriving them of
their only source of income and leaving them unable to pay their rent or feed their families. The
Bank’s conduct will continue to harm countless others unless immediately enjoined. 1
I. THE COURT SHOULD PROVISIONALLY CERTIFY THE CLASS
A. Article III Standing Requirements Are Satisfied.
The Bank argues that Article III precludes provisional class certification because some
Class Members may lack standing. Opp. 19-21. But in a Rule 23(b)(2) class action, “standing is
satisfied if at least one named plaintiff meets the requirements.” Bates v. United Parcel Serv.,
Inc., 511 F.3d 974, 985 (9th Cir. 2007) (en banc); see also B.K. by next friend Tinsley v. Snyder,
922 F.3d 957, 966-67 (9th Cir. 2019) (if one plaintiff has standing, standing inquiry ends). 2
1
As used herein, “Ex.” refers to exhibits to the Declaration (Dkt. No. 65; Exs. 1-39) and
Supplemental Declaration (Dkt. No. 81; Exs. 40-52) of Brian Danitz in support of this Motion.
2
The Bank does not dispute many named plaintiffs’ standing. E.g., Ex. 14 (Koole Dec.) ¶¶6-
10, 12-13; Ex. 24 (Rivera Dec.) ¶¶6-14; Ex. 25 (Rodriguez Dec.) ¶¶5-8; Ex. 27 (Smith Dec.)
¶¶6-8; Ex. 32 (Willrich Dec.) ¶¶5-12; Ex. 34 (Yick Dec.) ¶¶6-13; Ex. 36 (Perez Dec.) ¶¶6-14.
1
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B. All Requirements of Rule 23(a) and Rule 23(b)(2) Are Satisfied.
The Bank also challenges Rule 23 commonality and whether it acted “on grounds that
apply generally to the class,” Opp. 23-25, but acknowledges several uniform, classwide policies
and practices.3 The Bank claims to have subjected all EDD Debit Cardholders who report
unauthorized transactions to an initial “fraud analysis” to determine if they are “criminals … not
entitled to benefits.” Letson Dec. ¶21; see also Daniels Dec. ¶¶5-6. If that initial analysis
identifies the claimant as a likely criminal, the Bank (1) automatically closes the fraud claim
without further investigation, and (2) automatically freezes (or, as of March 18, 2021, sometimes
“blocks”) the claimant’s account without notice or opportunity to be heard and refuses to
investigate further unless EDD directs it to unfreeze the account. Letson Dec. ¶¶19, 21;
Gargagliano Dec. ¶¶4-5. The Bank also concedes that if a Class Member calls the Bank seeking
help, the CSR answering the call will be untrained and unauthorized to provide substantive
assistance, and must place the caller on hold and transfer them to a “Fraud Call Center” or
“Claims Initiation Call Center,” neither of which operates 24/7. Golden Dec. ¶¶14-15, 17-19.
Plaintiffs challenge these common policies and practices as unlawful and unfair,
including because they deny Class Members their EFTA right to a “good faith investigation”
before denial of their claims and provisional credit in the interim, due process right to notice and
opportunity to be heard before being deprived of their benefits, and contract right to meaningful
customer service. Mot. 8-19. Plaintiffs’ common contentions will “drive the resolution of the
litigation.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011).4 And requiring the Bank to
3
The Bank’s cases in which no common practice existed (Herskowitz v. Apple, Inc., 301
F.R.D. 460, 481 (N.D. Cal. 2014); D.L. v. Dist. of Columbia, 713 F.3d 120, 127 (D.C. Cir.
2013); Jamie S. v. Milwaukee Pub. Sch.¸668 F.3d 481, 497-99 (7th Cir. 2012); Ross v. Lockheed
Martin Corp., 2020 WL 4192566, *5 (D.D.C. July 21, 2020)) are thus inapposite, as are those
addressing Rule 23(b)(3)’s “predominance” requirement (Campion v. Old Rep. Home Prot. Co.,
272 F.R.D. 517, 531 (S.D. Cal. 2011)). Opp. 22-24.
4
Unlike the EFTA cases on which the Bank relies (Opp. 23), the common questions here do
not turn on any individual’s “unique” “chain of events.” Dioquino v. Sempris, LLC, 2012 WL
6742528, *7 (C.D. Cal. Apr. 9, 2012). The Bank fails to explain why the PUA program falls
under 12 C.F.R. §1005.2(b)(3)(ii)(B) instead of §1005.2(b)(3)(i)(B) and §1005.15(a)(2)
(government benefit programs), but the answer is irrelevant because the Cardholder Agreement
makes the Bank’s Zero Liability policy and Regulation E applicable to all “accounts that involve
the use of [an EDD Debit] Card.” Amaral Dec. Exh. 1 at 6-9; and the Bank cannot presume Class
2
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comply with EFTA by making a good faith investigation into each claim will not result in a
“different injunction” (Opp. 24) for each Class Member. See Rodriguez v. Hayes, 591 F.3d 1105,
1122-25 (9th Cir. 2010) (certifying Rule 23(b)(2) class challenging practice of prolonged
detention without bond hearings and seeking injunction requiring individual hearings with
“burden placed on the government”). 5 Rule 23’s requirements are thus satisfied. See id. at 1125-
26; Jimenez v. Allstate Ins. Co., 765 F.3d 1161, 1165 (9th Cir. 2014); Mot. 22-25.
II. PLAINTIFFS ARE ENTITLED TO A PRELIMINARY INJUNCTION
A. Plaintiffs Are Likely to Succeed on the Merits of Their Claims Underlying
the Requested “Claims Investigation” Injunctions.
1. The Bank’s “Claims Investigation” Practices Violate EFTA, Its
Cardholder Agreements, and Its EDD-Bank Contract.
The Bank admits that it automatically closes all fraud claims flagged by its initial “fraud
analysis” without further investigation. It contends this procedure (about which it reveals no
information) satisfies EFTA’s requirement that it promptly “investigate the alleged error” and
“determine whether an error occurred.” 15 U.S.C. §1693f(a); 12 C.F.R. §1005.11(c)(1); see Opp.
8, 10. But the Bank cannot satisfy EFTA by conducting pro forma “investigations” into claims of
unauthorized transactions that, by the Bank’s admission, have erroneously branded tens of
thousands of law-abiding Class Members as criminals until EDD or the Bank re-confirms their
eligibility through identity verification procedures the Bank could have applied at the outset.
EFTA imposes not only a procedural duty to investigate, but substantive duties to “make
a good faith investigation of the alleged error” and to deny claims only upon “a reasonable
basis.” 15 U.S.C. §1693f(e) (emphases added) (also prohibiting willful denial of claim “when
such conclusion could not reasonably have been drawn from the evidence available to the [Bank]
at the time of its investigation”). 6 The Bank’s exclusive reliance on its initial “fraud analysis” is
Members “made fraudulent claims” or “opened accounts for criminal purposes” without first
conducting the good faith investigation EFTA requires. Opp. 23.
5
See also, e.g., Byorth v. USAA Casualty Ins. Co., 333 F.R.D. 519, 533-34 (D. Mont. 2019)
(certifying Rule 23(b)(2) class where plaintiffs challenged common practice of adjusting claims
“without … individualized investigation”).
6
See also Reg. E, Official Interpretations §1005.11(a)-4 (Bank must follow Regulation E
error resolution procedures, even for closed accounts); id. §1005.11(c)(4)-5 (types of information
banks should review in investigating claims); Wilson v. Harris, N.A., 2007 WL 2608521, at *2
3
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wholly unreasonable given its knowledge that a high percentage of flagged individuals are
exactly who they say they are. See infra at 5-6. The Bank could easily root out these false
positives by asking the same identity verification questions it apparently now asks in its new
“unblocking” process (which, under EFTA, would be evidence “available to the [Bank]”) before
denying their claims and freezing their accounts. Cf. Gargagliano Dec. ¶9. And the Bank has
shown it can quickly verify the identities of or reimburse claimants who file a lawsuit, appear in
news reports, or make clear they have contacted Plaintiffs’ counsel. 7
To avoid paying provisional credit, the Bank routinely denies Class Members’ claims
without investigation, forcing them to seek “reconsideration” and undertake a convoluted and
seemingly unending process to challenge that result. Mot. 4-5; Ex. 40 (Barron Dec.) ¶¶10-17; Ex.
42 (Gonzales Dec.) ¶¶12-15; Ex. 44 (Hollman Dec.) ¶¶6-10, 15-18; Ex. 47 (Peters Dec.) ¶¶6-12;
Ex. 48 (Salgado Dec.) ¶¶6-13; Ex. 51 (Smith Dec.) ¶¶6-9. Bank now asserts that its
“reconsideration” process is not subject to EFTA and that it can take as long as it wants to “re”-
investigate claims without paying provisional credit. Opp. 10. But the Bank’s deliberate choice
not to undertake the same verification procedures at the outset that it can apparently apply with
ease on “reconsideration” (when sufficiently motivated by a litigation threat) reveals that its
classwide practice is just a transparent and unlawful scheme to circumvent EFTA and Regulation
E, which require good faith investigations and payment of provisional credit if not timely
completed. Mot. 4, 9; see 15 U.S.C. §1693f(c); 12 C.F.R. §1005.11(c)(2).
Nor can the Bank invoke “law enforcement guidance” as supposed justification for its
failure to provide cardholders the EFTA-required “results of [its] investigation” and an
“explanation of [its] findings.” See Mot. 9; Opp. 10 n.10. The Bank claims it cannot disclose any
(N.D. Ill. Sept. 4, 2007) (denying dismissal where bank failed to investigate past ATM use,
review security footage, or determine consumer’s location during unauthorized transactions); In
re USAA Fed. Sav. Bank, CFPB No. 2019-CFPB-0001 (Jan. 3, 2019) (restitution required where
bank did not consider relevant details in its records and reasonable review would have favored
consumer); cf. Ex. 31 (Veronneau Dec.) ¶16 (CSR conceded Bank “had photographic evidence
showing the criminals who stole from my account” but “would not reimburse me”).
7
See, e.g., Ex. 17 (Mathews Dec.) ¶11; Ex. 20 (Oosthuizen Dec.) ¶9; Ex. 43 (Grenfell Dec.)
¶¶11-12; see also Ex. 51 (Smith Dec.) ¶¶10-12; Amaral Dec. Exh. 13 at 4.
4
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information about its same- or next-day denials. But even the FinCEN Advisory on which it
relies identifies several “red flag indicators of UI fraud.” Chan Dec. Exh. 9 at 2-3. The Bank
could have provided a similar level of detail to cardholders whose claims it rejected if defensible
reasons existed. Its failure to provide any explanation violates EFTA and underscores that it had
no good faith basis. See Mot. 9; Gale v. Hyde Park Bank, 384 F.3d 451, 453 (7th Cir. 2004).8
For the same reasons Plaintiffs are likely to succeed on the merits of their claims under
EFTA and Regulation E, which along with the Bank’s “Zero Liability” policy are incorporated
into the Cardholder Agreement and EDD-Bank Contract, they are also likely to succeed on their
breach of contract and UCL “unlawful” claims. See Mot. 10-11, 18.
2. The Bank’s “Claims Investigation” Practices Breach the Implied Covenant
of Good Faith and Fair Dealing and Are Unfair Under the UCL.
The Bank’s practice of denying without investigation the claims of anyone flagged by its
flawed initial “fraud analysis,” and subjecting those who seek reconsideration to a months-long
process of uncertainty, long phone wait times, and futile calls with inadequately trained CSRs
who provide false and contradictory information—while depriving those claimants of provisional
credit—is “unfair” under the UCL and violates the implied covenant of good faith and fair
dealing. Mot. 10-11, 18-19. The Bank offers no response to Plaintiffs’ showing.
B. Plaintiffs Are Likely to Succeed on the Merits of Their Claims Underlying
the Requested “Account Freeze” Injunctions.
Based solely on the results of its so-called “fraud analysis,” the Bank not only summarily
closes cardholders’ fraud claims but also automatically freezes (or sometimes “blocks”)
cardholders’ accounts without notice or opportunity to be heard, and without further
investigation unless and until EDD directs it to unfreeze the accounts, which can take months
given EDD’s backlog. See Letson Dec. ¶¶19, 21; Gargagliano Dec. ¶¶4-5; Mot. 13 n.9.
The Bank knows its “fraud analysis” is gravely flawed and that it routinely freezes
accounts of Class Members not flagged by EDD, law enforcement, or the Bank’s secret “fraud
8
The Bank cites an obligation “to keep suspicious activity reports (‘SARs’) confidential”
(Opp. 10 n.10), but an EFTA-required explanation to cardholders of the basis for rejecting their
claims is not a SAR, see 31 C.F.R. §1020.320(a), and does not require disclosure of a SAR.
5
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mitigation strategies.” Letson Dec. ¶23; Ex. 52. The Bank admits having unfrozen 66,000
accounts after EDD reconfirmed the claimants’ eligibility and 900 more based on its own
verification (while leaving at least 35,000 others frozen, despite EDD having verified 6,700).
Chestnut Dec. ¶9; Gargagliano Dec. ¶¶4-5, 8, 15. 9 These numbers suggest the Bank’s “fraud
analysis” will continue to wrongfully ensnare tens of thousands of unemployed Californians.
For more than six months, the Bank took no steps to investigate the identities of frozen
accountholders, test the accuracy of its initial “fraud analysis,” or afford legitimate
accountholders any recourse to preserve or regain access to the funds in their accounts. Not until
March 18, 2021—after Plaintiffs put the Bank on notice of this motion—did the Bank introduce
its new “unblocking” process to allow some (but far from all) accountholders to regain access to
their accounts, which requires (yet again) calling the Bank and answering a series of identity-
verification questions. Gargagliano Dec. ¶¶9, 11-12. This “unblocking” process is itself flawed.
See infra at 14. More importantly, the Bank offers no justification for not having asked those
same questions before freezing Class Member accounts (or for shifting the burden to request
reopening on Class Members, in violation of EFTA and other legal obligations). Nor does the
Bank explain why it has not made this re-authentication process available to every Class Member
whose account it froze after they filed fraud claims.
The Bank’s conceded practice of freezing legitimate claimants’ benefits accounts for
months on end based on no investigation (or, at most, a summary, error-prone “fraud analysis”)
and without notice or any pre- or prompt post-freeze opportunity for cardholders to re-verify
their identities breaches the Bank’s contracts and implied covenant of good faith and fair dealing,
is unfair under the UCL, and violates due process.
1. The Bank’s Account Freeze Practices Breach its Contracts and Their
Implied Covenants of Good Faith and are Unfair under the UCL.
The Cardholder Agreement provides that “[i]f [the Bank] suspect[s] irregular,
9
The Bank’s numbers are suspect because, among other reasons, they are not tied to specific
time periods. And the false positive rate is likely even higher, as many additional legitimate
benefits recipients have been verified by EDD, yet the Bank inexplicably refuses to unfreeze
their account. See Mot. 5-6, 13 & n.10 (citing declarations); Ex. 42 (Gonzales Dec.) ¶¶8-10; Ex.
43 (Grenfell Dec.) ¶¶8-12; Ex. 46 (Ospina Dec.) ¶¶10-17.
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unauthorized, or unlawful activities may be involved,” it “may ‘freeze’ (or place a hold on) the
balance pending an investigation.” Amaral Dec. Exh. 1 at 2. The Bank contends that this gives it
unbounded discretion to freeze accounts based on its unreviewable “susp[icion],” no matter how
baseless or lacking in good faith, without providing notice or an opportunity to be heard, and to
maintain that freeze indefinitely, even if the Bank takes no steps to “investigat[e]” the underlying
basis for the freeze, or to ask the cardholder relevant identity-verification questions. See Opp. 12.
The Bank’s position violates the Cardholder Agreement’s plain terms (which authorize a
freeze only “pending an investigation” of the “suspected activities”) and “virtually eliminates the
good faith and fair dealing requirement.” Badie v. Bank of Am., 67 Cal.App.4th 779, 795-97
(1998) (bank must exercise its discretionary power reasonably and consistent with parties’
legitimate expectations); Mot. 15-16. It also breaches its obligations under the EDD-Bank
Contract to “disburse to claimants the amounts that EDD authorizes,” Ex. 52 at 2; see Kirtley
Dec. Exh. 2 at 44, 47; Mot. 16, and is “unfair” under the UCL. See Mot. 18-19.10
2. The Bank’s Account Freeze Practices Violate Due Process.
a. The Bank Is A State Actor.
The Bank denies that it engages in “joint action” rendering it a state actor, characterizing
itself as “merely contracting with the government.” Opp. 13-14. But that ignores its revenue-
sharing arrangement with EDD and belies the many ways its account-freeze practices are
intertwined and jointly undertaken with EDD, including (as shown by the Bank’s own evidence)
that it notifies EDD of all account freezes to enable EDD to “review the cardholder’s status and
determine whether the cardholder is legitimately entitled to the benefits in the card account” and
“continu[es] to work together” with EDD to decide which accounts should remain frozen. 11
10
While the UCL “does not give the courts a general license to review the fairness of
contracts,” it does impose liability where, as here, the challenged practice is “immoral, unethical,
oppressive, unscrupulous or substantially injurious to consumers.” South Bay Chevrolet v. Gen.
Motors Acceptance Corp., 72 Cal.App.4th 861, 886-87 (1999) (emphasis added). Courts have
permitted UCL claims to go forward even where a contract purported to authorize the challenged
conduct. See De La Torre v. CashCall, Inc., 5 Cal.5th 966, 981 (2018); Moran v. Prime
Healthcare Mgmt., Inc., 3 Cal.App.5th 1131, 1149 (2016). In any case, the Bank’s conduct was
not authorized by the Cardholder Agreement, so the Bank’s cases at Opp. 13 n.13 are inapposite.
11
Gargagliano Dec. ¶¶4-6, 8, 15; Chestnut Dec. ¶¶8-9; see also Letson Dec. ¶¶13-19, 25-26
(“BANA has devoted substantial resources and attention to assisting EDD” fraud efforts, such as
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EDD’s website confirms this intertwinement, pledging that EDD is “continuing to work with
Bank of America on shutting down fraudulent claims” and offering guidance on how claimants
with frozen accounts can determine whether to contact EDD or the Bank. Amaral Dec. Exh. 6.
This case is readily distinguishable from Pasadena Republican Club v. W. Justice Ctr., 985 F.3d
1161 (9th Cir. 2021) (cited at Opp. 13-14), where the government lessor obtained no revenue
from the private actor’s lease agreement and had “no input or control” over, or knowledge of, the
meeting-room rentals at issue. Id. at 1165, 1169-71 (quoting lease).12
Independently, the Bank is a state actor here because it performs a public function. The
Bank does not merely “issu[e] service[e] debit cards.” Opp. 13. As it elsewhere acknowledges,
the Bank was “retained by EDD” pursuant to an exclusive contract now in its eleventh year “to
distribute unemployment benefits to qualified claimants.” Chestnut Dec. ¶3 (emphasis added);
see also Letson Dec. ¶10 (similar). The Bank does not dispute that this is a traditional public
function, and as in Brown v. Stored Value Cards, Inc., 2016 WL 4491836 (D. Or. Aug. 25,
2016), Class Members’ relationship with the Bank “only c[a]me about through the exercise of
the state’s power” making the Bank its exclusive benefits distribution partner. Id. at *2.13 As the
EDD’s exclusive benefits distribution partner, the Bank in practice performs the exclusive public
joint meetings, alerting EDD to fraud indicators, giving EDD specific lists, complying with EDD
requests to freeze or consider freezing accounts, notifying EDD of Bank-initiated freezes).
12
The public entity also had no involvement or influence in the defendant’s decisions in
Rendell-Baker v. Kohn, 457 U.S. 830 (1982), and allowed but did not influence the conduct in
Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40 (1999). The Bank asserts Burton v. Wilmington
Parking Auth., 365 U.S. 715 (1961), is “inapposite” without explaining why and despite similar
evidence of financial interdependence. See Mot. 14 (citing Kirtley Dec. Exh. 2 at 1, 89-98, 100-
04). The Bank also ignores the on-point Geneva Tower Tenants Org. v. Federated Mortg. Invs.,
504 F.2d 483, 487-88 (9th Cir. 1974), in which private landlords received federal subsidies and
agreed to abide by subsidy rules. Here, the mutual contractual benefits, the Bank’s obligation to
abide by EDD rules, and coordinated EDD-Bank efforts to address account freezes “together,”
Chestnut Dec. ¶9, strongly support Plaintiffs’ joint action allegations. See also Rawson v.
Recovery Innovations, Inc., 975 F.3d 742, 753-54 (9th Cir. 2020) (state’s involvement in private
parties’ acts and decisions) (citing Jensen v. Lane Cty., 222 F.3d 570, 575 (9th Cir. 2000)).
13
The Bank also does not dispute that its debit cards are EDD’s default payment mechanism
or that EDD strongly encourages their use. Amaral Dec. Exhs. 4, 5. The Bank points only to an
opt-out procedure for receiving paper checks referenced on page 6 of a dense, 19-page
document, which there is no evidence any cardholder has seen, and which requires the
cardholder to “contact the EDD” (thus enduring EDD’s extended wait times). Chan Dec. ¶5 &
Exh. 3 at 3; compare Amaral Dec. Exhs. 4, 5 (mentioning only debit card option).
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functions of both distributing and determining when to withhold benefits by freezing accounts it
has determined to be fraudulent. See Ex. 52.
b. The Bank’s Procedures Fail the Mathews v. Eldridge Balancing Test.
The Bank entirely ignores AFL-CIO v. EDD, 88 Cal.App.3d 811 (1979), which held that
unemployment benefits recipients are entitled to a pre-deprivation notice and hearing before
losing their benefits. See Mot. 12. Instead, the Bank makes two meritless points.
First, the Bank erroneously states that due process is not implicated because “account
freezes do not suspend future benefit payments.” Opp. 14 n.14. But dozens of Class Members
have testified that the Bank’s account freeze immediately halted their benefits, requiring them to
spend hours on the phone with EDD and typically depriving them of benefits for extended
periods. See Mot. at 5; cf. Fuentes v. Shevin, 407 U.S. 67, 84-85 (1972) (due process applies to a
“temporary, nonfinal deprivation of property”); AFL, 88 Cal.App.3d at 821 (retroactive lump
sum payments cannot make UI beneficiaries whole). It is also undisputed that account freezes
strip cardholders of access to benefits payments already in their account, and those funds
seizures are no less subject to the requirements of due process than the suspension of continuing
benefits. See Fuentes, 407 U.S. at 81-82.
Second, the Bank argues that its failure to provide pre-deprivation notice is justified by
its “interest in fighting widespread fraud.” Opp. 14. But the risk that moneys paid pending a
hearing will be unrecoverable from claimants who prove to be illegitimate is outweighed by the
interest in ensuring fair pre-deprivation hearings. See, e.g., Goldberg v. Kelly, 397 U.S. 254, 266
(1970) (pre-termination hearing required even though “benefits paid to ineligible recipients
pending decision at the hearing probably cannot be recouped”). “The potential abuse by some of
the procedures designed to protect all claimants cannot be the basis for deciding whether the
procedures are required by due process.” AFL, 88 Cal.App.3d at 821.14
14
The Bank’s cases are readily distinguishable. FDIC v. Mallen, 486 U.S. 230 (1988), upheld
post-suspension procedures for an indicted bank official suspended from participating in bank
affairs, because the grand jury’s findings provided reasonable assurance that the suspension “was
not baseless.” Id. at 241. Spiegel v. Ryan, 946 F.2d 1435 (9th Cir. 1991), upheld a post-
deprivation hearing procedure because the governing regulations required the agency to “meet
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Even if due process did not require pre-termination notice and hearing, the Bank offers
no justification for its egregious practices here: failing to provide notice until long after the fact
(if at all); failing to provide any explanation of the basis for the freeze (thereby depriving the
claimant of any ability “to be fully informed of the case against him so that he may contest its
basis and produce evidence in rebuttal,” Goldberg, 397 U.S. at 266); and failing to provide any
prompt or reasonable opportunity to contest the basis for the Bank’s “suspicion” that the
cardholder is using a stolen identity. See Fuentes, 407 U.S. at 80 (notice and opportunity to be
heard “‘must be granted at a meaningful time and in a meaningful manner’”) (citation omitted).
C. Plaintiffs Are Likely to Succeed on the Merits of Their Claims Underlying
the Requested “Customer Service” Injunctions.
1. The Bank’s Customer Service Practices Are Unfair Under the UCL and
Breach the EDD-Bank Contract.
In opposing injunctive relief on grounds that its “[CSRs] are already available 24/7” and
the “average wait time for reaching a live [CSR] is under two minutes” (Opp. 15-16), the Bank
repeats the falsehoods it made to a State Assembly Subcommittee in January 2021. See Amaral
Dec. Exh. 7 at 3 (“wait times at our call centers are 1 minute, with the tail being between 1 and 5
minutes”); id. (Chair Ting: “Oh that’s absolutely not …. [The] very consistent [] feedback we are
getting from a number of phone callers [is] that they are on hold for hours.”).
The Bank’s statements were misleading then and now. The Bank acknowledges that the
front-line CSRs in its “Main Call Center” are not able to “handle[] claims … relating to
unauthorized transactions” or blocked or frozen accounts—two issues that “arise frequently with
EDD debit cards.” Golden Dec. ¶¶14-15, 17-19. Those CSRs must place callers “on hold until a
CSR in the Fraud or Claims Call Center is available.” Id. ¶¶10, 14-15. The Bank is also
conspicuously silent on the average wait times for transfers to the “Fraud” or “Claims Initiation”
Call Centers (the relevant inquiry), neither of which is open 24/7. Id. ¶¶15, 17, 19.
The Bank is contractually required to address and resolve Class Member calls promptly,
not just to pick up the phone only to place the caller on hold. The Bank promised in its RFP bid
specific statutory requirements before issuing the [relevant] order,” and the “decision was
supported by detailed findings … following a long investigation ....” Id. at 1440.
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response, incorporated into the EDD-Bank Contract, that “dedicated [CSRs]” would be
“available 24 hours a day, 7 days a week” to “[i]nvestigate transactions (fraud, security, use),”
“[i]nitiate disputes,” “[p]rocess lost/stolen/damaged card requests,” and “answer claimants’
questions and resolve problems.” Kirtley Dec. Exh. 2 at 40, 48, 66, 69. The Bank made similar
guarantees to cardholders in its FAQs. Amaral Dec. Exh. 2 at 6-7. And to secure its 2015 EDD
contract renewal, the Bank represented that its “average handle time [for calls] [had been] 230
seconds.” Kirtley Dec. Exh. 2 at 24 (emphasis added). 15
Despite these promises, as demonstrated by nearly 50 Class Member declarations—
virtually all describing experiences that post-date the Bank’s supposed hiring of additional CSRs
in Spring 2020—EDD cardholders have had to wait on hold for hours before being connected
with anyone, are often disconnected,16 and even when connected are often told that no help is
available from the Bank. See Mot. 17 & n.12 (citing declarations). New declarations submitted
with this Reply establish that these customer service problems are ongoing. 17 The Bank offers no
justification for its broken promises to Class Members who sought assistance and does not even
address Plaintiffs’ UCL theory. Compare Mot. 19; Opp. 15-16.
2. Plaintiffs Are Third Party Beneficiaries of the EDD-Bank Contract.
The Bank argues Plaintiffs have no right to enforce the terms of the EDD-Bank Contract
(Opp. 15) but it misstates the legal standard, which asks whether the relevant contract provisions
benefit only EDD cardholders, reflecting the contracting parties’ intent to confer third party
enforcement rights. See Zigas v. Superior Court, 120 Cal.App.3d 827, 838-39 (1981) (tenants
entitled to enforce rent limit provisions in government contracts providing financing assistance to
landlords because tenants were only group that would benefit from those limits); Shell v.
Schmidt, 126 Cal.App.2d 279, 290 (1954) (veterans who would reside in new homes entitled to
15
“Average handle time or AHT is a metric used in contact centers to measure the average
duration of one transaction. It usually starts from the customer beginning the interaction and
covers hold time, talk time, and any other related tasks during the conversation.” See TTEC
Glossary, https://www.ttec.com/glossary/average-handle-time.
16
The Bank’s contrary declaration states only that its “system is not designed to disconnect a
call if a CSR is unavailable.” Golden Dec. ¶7 (emphasis added).
17
See, e.g., Ex. 41 (DiMattia Dec.) ¶¶10-19; Ex. 42 (Gonzales Dec.) ¶13; Ex. 44 (Hollman
Dec.) ¶¶9-18; Ex. 45 (McDonnell Dec.) ¶¶11-14; Ex. 48 (Salgado Dec.) ¶¶11-13.
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enforce construction specification provisions in homebuilders’ federal contract). 18 Here, the
customer service requirements of the EDD-Bank Contract benefit only EDD cardholders, not
EDD. See Kirtley Dec. Exh. 2 at 6, 19, 48, 52, 54. Just as in Shell, where “the statute and the
regulations … resulting in the contract were passed to aid and assist” veterans, 126 Cal.App.2d at
290, the purpose of the UI programs that EDD contracted with the Bank to help administer is to
aid and assist unemployed Californians. See also Zigas, 120 Cal.App.3d at 839-40.19
D. Plaintiffs Face a Likelihood of Irreparable Harm, and the Balance of
Equities and Public Interest Tips Sharply in Their Favor.
Plaintiffs have shown through nearly 50 declarations that the Bank’s challenged practices
have caused and are causing real hardship and suffering, including homelessness and food
rationing. Mot. 6-7; Beno v. Shalala, 30 F.3d 1057, 1063 n.10 (9th Cir. 1994) (even relatively
small reductions in family welfare benefits “impose irreparable harm on recipient families”);
Leschniok v. Heckler, 713 F.2d 520, 523-24 (9th Cir. 1983) (inability to pay “costs of rent,
utilities and food” due to denial of disability benefits is irreparable harm). “Back payments …
cannot erase either the experience or the entire effect of several months without food, shelter or
other necessities.” Briggs v. Sullivan, 886 F.2d 1132, 1140 (9th Cir. 1989).20
The Bank also does not dispute the public’s strong interest in “affording fair procedures
to all persons” and in ensuring that those who have become unemployed during this pandemic
receive prompt relief. See Lopez v. Heckler, 713 F.2d 1432, 1437 (9th Cir. 1983); Mot. 21-22.
While the public also has an interest in preventing UI fraud, the Bank’s challenged practices are
neither necessary nor effective in achieving that goal. See Ex. 52 at 1-2; supra at 6. EDD has
18
The contract in GECCMC 2005-C1 Plummer St. Office Ltd P’ship v. JPMorgan Chase
Bank, 671 F.3d 1027, 1033 (9th Cir. 2012), had an express “no third-party beneficiary” clause.
19
Goonewardene v. ADP, 6 Cal.5th 817 (2019) (Opp. 15 n.15) is distinguishable, as the
purpose of the payroll-outsourcing contract was only “to provide a benefit to the employer,”
providing benefits to employees was not a motivating factor, contract terms were not designed to
protect them, and the employees had “no need” to sue the payroll company because they could
fully recover any unpaid wages from their employer. Id. at 836. Here, by contrast, Plaintiffs have
no recourse against EDD for the Bank’s contractual and statutory violations.
20
Sampson v. Murray, 415 U.S. 61 (1974) is inapposite because it was limited to harms that
routinely attend an individual’s loss of employment. 415 U.S. 91-92 & n.68. The Bank’s other
cases are similarly inapposite, and none involve deprivation of public benefits. See Opp. 18 n.18.
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already enhanced its own fraud-detection systems, including by contracting with a new identity
verification vendor as of October 2020. Chan Dec. Exh. 1 at 3. None of the relief Plaintiffs seek
will interfere with EDD’s efforts to eliminate enrollment fraud, and none will require the Bank to
pay individuals determined by EDD or law enforcement to be criminals. See infra at 15.21 The
public interest tips decidedly in Plaintiffs’ favor. See AFL, 88 Cal.App.3d at 821.
The Bank contends that the requested injunction will harm it by requiring it to pay
provisional credits to “card cracking” criminals. The Bank’s claimed harm appears to be grossly
exaggerated.22 But even if taken at face value, when “preventable human suffering” is weighed
against “entirely economic” injuries, “the balance of hardships tips sharply in favor of the parties
seeking relief.” Golden Gate Rest. Ass’n v. City & Cnty. of S.F., 512 F.3d 1112, 1126 (9th Cir.
2008); see Mot. 19-21. This is particularly so when comparing the suffering of indigent
individuals who lost their livelihoods during the pandemic and rely on unemployment benefits as
their sole source of income, against the capital resources of one of the nation’s largest banks.
III. THE REQUESTED RELIEF IS NECESSARY AND APPROPRIATE
The Bank makes no serious undue-burden argument about the proposed injunction’s
“Claim Investigation” provisions (Proposed PI ¶¶11-12), “Customer Service” provisions (¶¶1-2),
or the provision requiring reopening of fraud claims on request (¶3). Instead, it states this relief is
unnecessary because it has been “working to protect vulnerable consumers” all along (Opp. 4) (a
proposition the record evidence refutes). The Bank claims to have recently converted some
“frozen” accounts to “blocked” status, which it claims adequately “protect[s] legitimate
cardholders.” Opp. 17. But this eleventh-hour response in no way provides Class Members the
relief they need and to which they are entitled. As an initial matter, many accounts remain
21
For example, Plaintiffs’ requested injunction will not affect the 1.4 million accounts on
which EDD stopped payment in late December or the 1.9 million claims that EDD disqualified
based on its new Thomson Reuters security filters. See Chan Dec. Exh. 7 at 3.
22
The $200 million the Bank “estimates” it lost to “card cracking” in 2020 is an aggregate
amount across 12 state programs, and does not appear to exclude legitimate claims the Bank
initially credited then wrongly denied. See Opp. 6; Letson Dec. ¶¶11-12. According to the
Bank’s own official, transactional fraud levels in the EDD program during the pandemic have
been “very close to if not almost the same as the [level] of transactional fraud that we see in our
normal card business.” Amaral Dec. Exh. 7 at 6-7.
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“frozen” rather than “blocked,” even now. Ex. 49 (Haynes Dec.) ¶¶3, 5. Besides, the unblocking
process is far from seamless. Class Members have spent hours on hold before reaching someone
who can initiate this process. See, e.g., Ex. 40 (Barron Dec.) ¶12 (six hours on phone, transferred
to several departments); Ex. 43 (Grenfell Dec.) ¶¶5-11. 23 The Bank still directs some with
blocked accounts to EDD for re-verification. See, e.g., Ex. 43 (Grenfell Dec.) ¶7. And the Bank
has sometimes re-blocked accounts immediately after unblocking them. Id. ¶¶6-7.
The Bank does not even pretend to have changed its claims investigation or customer
service procedures, which continue to harm legitimate claimants. See, e.g., Ex. 40 (Barron Dec.)
¶¶10, 16; Ex. 41 (DiMattia Dec.) ¶¶8-18; Ex. 44 (Hollman Dec.) ¶¶10-17. Even those who re-
verify their identity (with EDD or the Bank) are not promptly refunded their stolen benefits.
Rather, the Bank requires them to assume the burden of requesting (yet again) that their fraud
claim be reopened—a requirement the Bank does not reveal unless specifically asked—and then
still refuses to issue provisional credit. See Ex. 42 (Gonzales Dec.) ¶12; Ex. 47 (Peters Dec.) ¶11.
The Bank’s remaining objections are equally meritless. First, the Bank contends “the
Claim Investigation Mandate is broader than what Plaintiffs could obtain even if they prevailed
on the merits.” Opp. 11. But injunctions are often framed in different language from underlying
contractual or statutory obligations, or include additional terms as needed to remedy and prevent
noncompliance. Due process requires only “a relationship between the injury claimed in the
motion for injunctive relief and the conduct asserted in the underlying complaint.” Pac.
Radiation Oncology, LLC v. Queen’s Med. Ctr., 810 F.3d 631, 636 (9th Cir. 2015). Moreover,
the UCL “authorizes broad injunctive relief to protect the public from unfair business practices.”
Kilgore v. KeyBank, N.A., 718 F.3d 1052, 1059 (9th Cir. 2013); see also Hewlett v. Squaw Valley
Ski Corp., 54 Cal.App.4th 499, 506 (1997) (UCL remedial authority “extraordinarily broad”). 24
23
The Bank assumes anyone who does not call the new “unblocking” hotline is a criminal,
but many do not call because they have already wasted countless hours on futile calls and have
no reason to believe another call will be any different. See, e.g., Ex. 49 (Haynes Dec.) ¶4. And
claimants whose accounts have been completely drained by fraudulent transactions that the Bank
has refused to credit likewise have little reason to call the Bank to try to unblock their accounts.
24
The Bank cites a North Carolina trial court decision, Opp. 12, but the Cardholder
Agreement on its website states that California law governs. See Amaral Dec. ¶2, Exh. 1 at 11.
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Second, the Bank argues the “Claim Investigation” provisions will provide a “second
windfall” to criminals because it “would be a practical impossibility” to resolve all claims in 10
business days. Opp. 16. But EFTA imposes that 10-day requirement for issuance of provisional
credit, and “[a]n injunction requiring adherence to the regulations … imposes no inappropriate
obligation ….” Withrow v. Concannon, 942 F.2d 1385, 1388 (9th Cir. 1991). The Bank’s
“impossibility” argument merely reconfirms that the Bank failed to conduct good faith
investigations in the first place. 25 The Bank’s argument that the “Account Freeze” provisions will
give criminals access to “billions of dollars” held in accounts frozen at EDD’s request (Opp. 17)
ignores that the injunction specifically authorizes the Bank to keep such accounts frozen and
only requires undoing Bank-initiated freezes (Proposed PI ¶¶8-9).26 And nothing in the
injunction prohibits the Bank from sharing information with EDD “so that EDD [can]
incorporate that information” into its own anti-fraud measures. Opp. 6.
Finally, the Bank argues that requiring it to credit cardholders for claims of unauthorized
transactions unless it can point to affirmative evidence of fraud (Proposed PI ¶6) is “a claim of
damages” disguised as equitable relief. Opp. 4, 25. But injunctive relief often requires the outlay
of funds, especially when restitution is involved. “[T]hat a judicial remedy may require one party
to pay money to another is not a sufficient reason to characterize the relief as ‘money damages.’”
Bowen v. Mass., 487 U.S. 879, 893-94, 900 (1988); accord Mathews v. Chevron Corp., 362 F.3d
1172, 1186 (9th Cir. 2004). Plaintiffs’ requested relief would merely reinstate them to their
original positions, as guaranteed by statute and contract, and is entirely proper. 27
25
The Bank’s suggestion that “EDD and the public” will pay the price (Opp. 16) ignores the
Bank (not EDD) is solely liable for fraudulent transactions. Kirtley.Dec. Exh. 2 at 75 (Req #337).
26
To accommodate the Bank’s concerns about law enforcement-directed freezes (of which
there appear to be only a handful), Plaintiffs submit a modified proposed injunction addressing
EDD and law enforcement requests to freeze accounts. See Modified [Proposed] Order.
27
See Bowen, 487 U.S. at 895 (damages substitute or compensate for loss, while specific
relief restores or obviates loss). The requested relief also is not “mandatory,” because it seeks
only to prohibit the Bank from maintaining its unlawful practices and to restore the legally
mandated status quo. See Hernandez v. Sessions, 872 F.3d 976, 998 (9th Cir. 2017) (injunctive
provisions prohibiting future legal violations are prohibitory). But even if a heightened standard
of review applied (Opp. 9), Plaintiffs satisfy it because without injunctive relief the Class
Members would suffer “extreme or very serious damage … that is not capable of compensation
in damages, and the merits of the case are not doubtful.” Id. at 999 (quotations omitted).
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Respectfully submitted,
Dated: April 29, 2021 COTCHETT, PITRE & McCARTHY, LLP
By: /s/ Brian Danitz
BRIAN DANITZ
Dated: April 29, 2021 ALTSHULER BERZON LLP
By: /s/ Michael Rubin
MICHAEL RUBIN
Interim Co-Lead Counsel for Plaintiffs
and the Proposed Class
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SIGNATURE ATTESTATION
Pursuant to Local Rule 5-1(i)(3), I, Brian Danitz, attest that the other signatories listed, and on
whose behalf this filing is submitted, concur in the filing content and have authorized this filing.
/s/ Brian Danitz
BRIAN DANITZ
17
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