Banks are seemingly all-powerful, and yet we have repeatedly been able to hold them accountable for their unethical behavior. When banks that gamble with the property and well-being of Americans face true justice, it is always a time for honest citizens to celebrate. That is the case of JPMorgan, which must now pay $4 billion in punitive damages over the mishandling of an American Airlines executive’s estate.
When the late Max Hopper passed away in 2010, he left no will behind to establish how his $19-million-dollar fortune was to be divided among his heirs, which included his wife of 28 years and two adult children from a previous marriage.
Ironically, for someone who suffered at the hands of a bank even after death, Hopper had been Chief Information Officer at Bank of America for three years, in-between two solid decades at American Airlines, where he pioneered the SABRE airline reservation system, an industry landmark.
After Hopper died of a stroke, JP Morgan entered the picture as the administrator of his estate. The banking giant’s role involved organizing Hopper’s finances, collecting and paying debt, and releasing the resulting funds to his heirs: widow Jo Hopper, son Dr. Stephen Hopper, and daughter Laura Wassmer.
But JPMorgan failed miserably at that task. According to a spokesperson for Hopper’s heirs, “Instead of independently and impartially collecting and dividing the estate’s assets, the bank took years to release basic interests in art, home furnishings, jewelry, and notably, Mr. Hopper’s collection of 6,700 golf putters and 900 bottles of wine... Some of the interests in the assets were not released for more than five years.”
The most shocking of the bank’s actions in the case is the fact that, “they sued [the heirs] with their own money and depleted the estate,” in the words of a spokesperson for the late executive’s children. This was, in fact, a determining factor for the jury’s decision.
"The nation’s largest bank horribly mistreated me and this verdict provides protection to others from being mistreated by banks that think they’re too powerful to be held accountable," the widow said in a statement.
A Dallas court found Jo Hopper’s claims to have merit and after a trial that went on for a whole month, JPMorgan Chase was found to be responsible of breach of contract and fiduciary duty. The court ruled in favor of the heirs, awarding $4 billion in punitive damages, $4.7 million in actual damages, and another $5 million to cover attorney fees.
JPMorgan has said it will appeal, of course.
Punitive Damages Against Banks
The banking lobby has enjoyed tremendous success in convincing legislators to close the courthouse doors to bank fraud victims. JPMorgan has spent $1.4 million on lobbyists this year according to OpenSecrets.org. Bank and their executives spend millions more on campaign contributions. The average Joe on the street simply can’t compete with that.
Over the years, these lobbying efforts have been successful in placing caps on punitive damages. In Texas, where this case was heard, state law caps punitive damages at just two times actual damages. Two times $4.7 million is a far cry from $4 billion.
So, what will happen? Texas does have an exception to the cap. And it is for banks that engage in fraud.
Unfortunately, we believe that the punitive damages will dramatically trimmed but we don’t believe that an appeals court will set aside the jury’s findings of liability by the bank.
Despite the headlines, punitive damage awards against banks are the exception. The U.S. Supreme Court says they are appropriate, however, to deter future bad conduct and to punish malicious conduct. Once punitives are assessed, the court can trim the award unless the amount is within a reasonable range. Are punitives that are 851 times the actual damages reasonable? No.
In 2003, the Supreme Court suggested the upper limit of punitives should not exceed 9 times the actual damages.
Last month’s verdict certainly got the attention of JPMorgan Chase and every other bank. The public is still furious about the banking meltdown in 2007 and how bankers have become the new American aristocracy. This case represents the very reason why banks are reluctant to go to trial.
In March of 2016, we wrote about a Montana judge who approved a 58 multiplier against First Interstate Bank. Their actions caused a thriving family-owned logging business to close its doors. That caused 50 people to lose their jobs. [Disclosure: we are representing borrowers in a lawsuit against First Interstate.]
Presently we are litigating another punitive damage case against banks, this one involving PNC Bank, Wells Fargo and several other major banks.
For years, courts seemed to favor banks but even that climate is changing. Normally we see judges called upon to reduce punitive damage awards. Earlier this year, however, a federal bankruptcy judge levied a $45 million sanction against Bank of America after finding the bank’s conduct against a couple was “brazen” and “heartless.” (For its part, a bank spokesperson said, “Regrettably, the customers had a challenging experience.”)
Punitive Damages and Geography
Where you live also affects whether a jury is even likely to assess punitive damages. A study by a Harvard Law professor found most large punitive jury awards came from California and Texas. In our own experience, we also see a statistically significant number of awards against banks coming from Montana.
Banks have figured this out and today’s loan documents often specify where a suit must be brought and what state’s law applies.
MahanyLaw and Judge, Lang & Katers – Lender Liability Lawyers
Suing banks is not for the fainthearted. Most lender liability lawyers are expensive and work for banks. We don’t. We concentrate in suing banks, mortgage servicers, and fiduciaries. Our clients are businesses. Sometimes we will handle an individual case. Our minimum amount in controversy is generally $5 million but call us if the amount is close.
For more information, contact attorney Brian Mahany at brian@mahanylaw or by phone at (414) 704-6731 (direct).