Bank of America officers must answer questions in unemployment benefits lawsuit

In a rare move, a federal judge in San Diego has ordered two top Bank of America officers to sit for depositions in a massive consumer class action over allegedly mishandled unemployment benefit claims during the pandemic. 

In denying the bank's bid for reconsideration on Wednesday, U.S. District Judge Gonzalo P. Curiel ruled that CEO Brian Moynahan, and former COO Thomas Montag can be queried on the issue of punitive damages, a reminder of the vast sums potentially at stake in the litigation. 

The depositions must be accomplished by Sept. 30 and can be no longer than four hours for Moynahan and two hours for Montag, Curiel held.

To win the right to depose two C-suite executives, plaintiffs' lawyers had to get past the barrier imposed by the apex doctrine, which shields top corporate or government officials from most depositions. But in this case, Curiel ruled, the two have unique, first-hand knowledge of key facts and less intrusive discovery has failed. In re: Bank of America California Unemployment Benefits Litigation, 3:21-md-02992 (S.D. Cal., filed June 4. 2021).

The issue of deposing Moynahan and Montag has been litigated for nearly a year and a half. Curiel found that the plaintiffs exhausted less burdensome avenues to discovery by deposing numerous mid-level executives, creating a record that showed Moynahan and Montag may have been involved in a decision that is crucial to the case--the creation of a system that seriously disadvantaged account holders seeking help.

The lawyers who will ask the questions represent 109,000 Californians who allege that badly needed unemployment benefits were stolen from their prepaid debit card accounts due to the bank's failure to have basic security measures in place. 

When account holders called to file a claim, the bank allegedly used an automated "claim fraud filter" to summarily deny the claim and freeze their accounts, often for months. The plaintiffs accuse the bank of prioritizing its own interests over theirs.

Said one of the lead plaintiffs' lawyers, Michael Rubin of Altshuler Berzon LLP, "Our lawsuit alleges that the bank owed a fiduciary duty to more than 100,000 innocent Californians who relied on unemployment insurance benefits during the height of the COVID pandemic yet whose access to those benefits was blocked by the bank for self-interested economic reasons in breach of that duty and applicable federal and state laws."

Brian Danitz of Cotchett, Pitre & McCarthy LLP is co-lead with Rubin for the class. "The stakes could not be higher," he said. "The bank systematically violated consumer protection laws to protect its profits."

Leading the defense team for Bank of America is James W. McGarry of Goodwin Procter LLP, who did not respond to a request for comment on Thursday. Bank of America representatives also did not respond. 

In prior statements, the bank has denied wrongdoing and asserted that it has meritorious defenses, including that it was forced to block accounts when it detected attempts at unauthorized access to its funds.

Curiel certified five closely linked classes in June in a 98-page order that excluded any members who made fraudulent claims and let the plaintiffs' disgorgement and punitive damages requests remain in place. Bank of America has appealed the class certification and the order that Moynahan and Montag must sit for depositions, but Curiel declined to stay the litigation while the 9th U.S. Circuit Court of Appeals considers the matter.

In reaffirming his deposition order on Wednesday, Curiel cited a discovery ruling made in 2012 that included an extensive discussion of the apex doctrine in a patent case, Apple Inc. v. Samsung Elecs. Co. Ltd., 282 F.R.D. 258. 

More recently, the apex doctrine worked for Mark Zuckerberg when a municipal judge in Washington, D.C., refused to require the Meta Platforms Inc. CEO's deposition in a 2022 data privacy case. But the next year, a federal judge in San Francisco ordered Zuckerberg to be deposed in a copyright suit. Kadrey et al. v. Meta Platforms Inc., 3:23-cv-03417 (N.D. Cal., filed July 7, 2023).

Adam Winkler, a UCLA School of Law professor who has written about corporate law, said the apex doctrine protects executives from vexatious litigation, but is not designed to be absolute when plaintiffs can show there's a real need for their testimony.

"There's a balance," he said. "If judges make plaintiffs prove it up, executives are not immune."