Miller v. Bank of America - $75 million

Daily Journal Extra
January 18, 2005 p.13

James Sturdevant, Thomas Brandi and Mark Johnson are laughing their way to the bank, or at least beaming proudly on behalf of their clients after winning last year’s fifth-largest verdict.

The trio in February won $75 million in a class action against Bank of America on Behalf of 1.1 million Social Security beneficiaries whose funds were illegally seized.  The bank was accused of intercepting the federal benefit monies from its direct-deposit customers to pay bank over draft charges without their customers’ consent.  Miller v. Bank of America, 301917 (S.F. Super. Ct. Feb. 25, 2004).

San Francisco Superior Court Judge Anne Boulaine added $284 million to that figure for unfair business practice and unfair competition claims in December, and the verdict is still climbing.

Under a little-used provision of the state’s Consumer Legal Remedies Act, the jury added $1,000 in special damages for each elderly or disabled class member who suffered substantial physical, emotional or economic damage on top of the $75 million finding.  With a class between 1 million and 1.3 million members, nearly all of whom plaintiffs’ attorneys claim are eligible for the special damages, the figure could pass the $1 billion mark once the exact number of class members is determined.

“Every member of this class was at least elderly or disabled – if not, both,” Sturdevant of the Sturdevant Law Firm says.  “This is the first case where a jury and a judge awarded damages in that category, and they did so conservatively.”

The act’s provision allows for damages of up to $5,000 per class member, says Sturdevant, who tried the case with lead counsel Thomas Brandi of The Brandi Law Firm in San Francisco and Mark Johnson, an associate at The Sturdevant Law Firm.

The case began in January 1998, when Bank of America mistakenly credited $1,800 to Paul Miller, a permanently mentally disabled Social Security recipient.   In April 1998, the bank withdrew the funds without notifying Miller, overdrawing his account. 

At the behest of legal counsel, the bank set up a new account for Miller’s $640 monthly deposits but didn’t close the defaulted one.  It later froze the new account to pay off the previous account’s negative balance.  The attorneys took up Miller’s case on behalf of 1 million class members similarly situated.

At trial, it was revealed that when pressed about the charges, that bank’s legal department backed down and reversed the fees, Brandi says.  But if a customer never questioned the charges, the bank would continue the charges without telling the account holders.

Brandi says a turning point in the case was exposing, through discovery of internal bank communications, that bank lawyers told bank officials the practice of withdrawing Social Security monies to pay overdraft fees was illegal.  Bank officials objected to entering the document into evidence because of attorney client privilege, Brandi says.

“We established privacy had been waived [by the bank] and got into evidence a document that basically said … ‘We can’t do this,’ … so the bank stood naked before the jury,” Brandi says.

Sturdevant says the impact of the bank’s action was dramatically illustrated by his team’s expert witness.

“I felt it was important for the jury to understand in the macro sense, or global sense, what are the common characteristics of the people we are talking about … so the jury didn’t think the handful of people it saw were in some way aberrations.”  Sturdevant says.

Social Security beneficiaries make up 10 percent of the bank’s accounts, Sturdevant says.

Boulaine’s decision on the unfair business practices part of the trial still needs to be signed, which will trigger the deadline to file an appeal.

Bank of America’s lead trial counsel, Joseph Genshlea of Sacramento-based Weintraub Genshlea & Sproul and c0-counsel Arne D. Wagner of Morrison & Foerster both declined to comment on the case and deferred comment to the bank’s corporate communications department.

“We have said all along that we believe this suit is without merit and continue to believe that the judgment will be reversed on appeal,” says Shirley Norton, a Bank of America spokeswoman.  “The bank treats these accounts in the same way as every other bank in the industry, and there is overwhelming authority that the bank’s practices are appropriate.”

- Amy K. Spees