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Fredrick S. Levin quoted in Law360 article, "'Extraordinary' $46M BofA award upends punitives formula"


Fredrick S. Levin

Fredrick S. Levin was quoted on April 27, 2018 in a Law360 article, “'Extraordinary' $46M BofA award upends punitives formula,” which discussed Judge Christopher M. Klein’s judgment excoriating Bank of America and its executives for its mistreatment of a California couple, Erik and Renee Sundquist, and violating bankruptcy restrictions on foreclosures. The judge awarded the couple $1 million in compensatory damages and $45 million in punitive damages — a 45:1 ratio compared to the Supreme Court precedent of 10:1. In addition, the judge surprisingly directed the couple to give $40 million of the award to third parties, including law schools and consumer advocacy groups.

The article stated, “Judge Klein cites two primary inspirations for his third-party injunction: So-called split-recovery statutes, little-known state laws that direct plaintiffs to turn over a percentage of punitive awards to the government, and an Ohio Supreme Court case from 2003. In that case, Dardinger v. Anthem Blue Cross & Blue Shield, the court reduced a $50 million punitive award against an intransigent insurer to $30 million, then directed Robert Dardinger to donate $20 million of that money to set up a cancer research fund. The highly controversial decision cited ‘a philosophical void between the reasons we award punitive damages and how the damages are distributed’ to justify its decision and referenced the concept of ‘common law evolution’ to defend its right to issue it. Judge Klein took both ideas and ran with them, and his decision appears to be the first since Dardinger to feature a third-party injunction directing plaintiffs how to spend a punitive award.”

In regard to Judge Klein’s decision, Levin added that the “cure may have been worse than the disease. He focuses on the constitutional issues raised by the Trilogy, but doesn’t cite any on point authority other than the Ohio case to justify why he’s able to issue this injunction in the first place. He was essentially writing on a tabula rasa — I thought this was an extraordinary use of judicial power.” He also noted that “Judge Klein may have started a conversation, but predicts the case is destined to remain an outlier decision due to its shaky foundations.”

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