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Wednesday, April 8, 2020

Wells Fargo wants plaintiffs in class action over sales practices to submit claims to arbitration

By Jessica Karmasek | Dec 1, 2016


SALT LAKE CITY (Legal Newsline) - Wells Fargo, facing various lawsuits for improper sales practices, has asked a Utah federal judge to force nearly 60 of 80 named plaintiffs in one suit to bring their claims in arbitration.

Wells Fargo filed its motion to compel and a 16-page memorandum in support in the U.S. District Court for the District of Utah, Central Division, Nov. 23.

The bank asked Judge Clark Waddoups to issue an order compelling the 58 named plaintiffs in the putative class action, filed in September, to submit their claims to binding arbitration and to stay the resolution of its pending motion to dismiss -- and any other litigation -- until the remaining 22 named plaintiffs provide information “sufficient” for Wells Fargo to confirm their identity and bring a motion to compel them to arbitrate their claims as well.

“Plaintiffs’ Second Amended Complaint in this putative class action names an unwieldy 80 representative plaintiffs pursuing 17 causes of action against Wells Fargo. Plaintiffs concede, however, that ‘they entered into valid and enforceable agreements with Defendants whereby Defendants promised to provide goods or services to Plaintiffs and Class Members, and Plaintiffs and Class Members agreed to pay for those goods or services, including payment made with debit or credit cards,’” attorneys for Wells Fargo wrote. “In these same agreements -- which Plaintiffs admit are enforceable -- Plaintiffs agreed to arbitrate any disputes with Wells Fargo, including the claims they assert in this lawsuit.”

Wells Fargo noted, “Plaintiffs are judicially estopped from arguing otherwise, as a party ‘cannot rely on the contract, when it works to their advantage, and repudiate it when it works to their disadvantage.’”

The bank’s attorneys pointed out that the plaintiffs’ use of Wells Fargo’s banking services after being informed of the arbitration agreement constitutes their acceptance of the terms of the agreement.

Wells Fargo, in its motion, also pointed to another lawsuit, brought against it in the U.S. District Court for the Northern District of California, arguing the arbitration agreement must be enforced.

The judge in that case, Jabbari v. Wells Fargo & Co., rejected arguments against enforcing the parties’ agreements to arbitrate.

In addition, Wells Fargo argues, the Federal Arbitration Act requires that agreements to arbitrate be enforced.

“Plaintiffs must therefore arbitrate their claims and may not pursue them in court, as they are attempting to do here,” attorneys for the bank wrote.

Wells Fargo also asked that Waddoups stay further litigation pending the completion of limited discovery by the bank to enable it to move to compel arbitration with the remaining 22 named plaintiffs.

“Plaintiffs should not be permitted to escape enforceable arbitration agreements by their failure to either allege or provide sufficient information to enable Wells Fargo to pursue its right to arbitration,” the bank’s attorneys wrote.

In September, Wells Fargo reached agreements with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the Office of the Los Angeles City Attorney regarding allegations that some of its retail customers received products and services they did not request.

Some Wells Fargo employees reportedly opened as many as 2 million accounts without customers’ knowledge or permission in order to meet sales quotas.

Specifically, the bank agreed to pay a $100 million fine to the CFPB’s Civil Penalty Fund; a $35 million penalty to the comptroller’s office; $50 to the city and county of Los Angeles; and $5 million in customer remediation.

According to the CFPB, the $100 million fine is the largest penalty the bureau has ever imposed.

“Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences,” CFPB Director Richard Cordray said in a Sept. 8 statement.

A week later, three of the current named plaintiffs, all Utah residents, filed a putative class action complaint alleging 10 claims. Soon after, 32 named plaintiffs filed a first amended complaint, alleging 17 claims.

But Wells Fargo argues its agreements are clear.

“The Consumer Account Agreements state that ‘[i]f you have a dispute with the Bank, and you are not able to resolve the dispute informally, you and the Bank agree that upon demand by either you or the Bank, the dispute will be resolved through the arbitration process as set forth in this part,’” it wrote in its motion. “The agreements then define ‘dispute’ as broadly as possible to include any disagreement between the customer and the bank: ‘A dispute is any unresolved disagreement between you and the Bank.’”

The bank contends the plaintiffs’ claims are “indisputably” an unresolved agreement.

“Plaintiffs can hardly claim surprise that unauthorized activity is covered when their Consumer and Business Account Agreements explicitly contemplate disputes related to such activity. Both agreements have a section applying to ‘unauthorized transactions,’ which include ‘a missing signature, an unauthorized signature… or otherwise a transaction that was not authorized by you.’”

California law firm Munger Tolles & Olson LLP and Utah firm Ray Quinney & Nebeker PC are representing Wells Fargo in the action.

From Legal Newsline: Reach Jessica Karmasek by email at

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Organizations in this Story

Consumer Financial Protection BureauWells Fargo Bank National AssociationU.S. District Court for the District of Utah