Schultz v. Bank of America: a Fly in the Financial Buttermilk - Clarifying the Common Knowledge Exception to Improve Litigation Efficiency and Bank Safety

Lauren M. Elfner

In Schultz v. Bank of America, N.A., the Court of Appeals of Maryland considered whether expert testimony was required to determine the standard of care owed by a bank when adding a customer to an account. The court held that expert testimony was necessary to establish the applicable standard of care because adding a customer's name to an account involves internal bank procedures of which a trier of fact has only minimal understanding. In so holding, the court mischaracterized the procedure as complex and opaque and failed to appropriately define the common knowledge exception, thereby improperly placing the burden of loss on plaintiffs rather than on defendant banks capable of investing in innovative security technology. The Schultz court should have instead adopted a clear test for the common knowledge exception that would not only have provided prospective plaintiffs with guidance but also would have offered banks an incentive to establish a market for bank safety.