Judge Says No Arbitration in Wells Fargo Banking Fraud Class Action

Wells Fargo lost its motion attempting to compel arbitration in a class action lawsuit alleging bank employees opened accounts without customer permission.

Lead plaintiff Lawrence Mitchell alleged in his 2016 class action lawsuit that Wells Fargo employees, under pressure to meet sales quotas, opened fake accounts without customer consent – a violation of a number of state and federal banking laws.

Wells Fargo had successfully argued a number of other federal lawsuits to arbitration after the bank was hit by shocking revelations about shady dealings concerning fake accounts opened by employees without customer knowledge or consent, but U.S. District Court Judge Clark Waddoups refused to send this class action that direction.

“Material questions of fact preclude the court from finding, as a matter law, that (1) certain plaintiffs have formed agreements to arbitrate with Wells Fargo; (2) the remaining plaintiffs have formed valid agreements to delegate all threshold questions to an arbitrator; and (3) Wells Fargo has not intentionally waived its right to seek arbitration in the circumstances,” wrote the judge in his order.

Class action plaintiffs argued that Wells Fargo had given up its right to compel arbitration in this case when Wells Fargo CEO testified in the Senate that the bank was no longer trying to force arbitration in lawsuits over the fake accounts.

The bank argues that the class action lawsuit should be forced to go to arbitration because Wells Fargo customers signed arbitration clauses for their existing authorized accounts. Wells Fargo asserts that litigation stemming from the unauthorized accounts should be covered by the same arbitration clause.

The plaintiffs seek to represent a Class of individuals who were notified that Wells Fargo opened an unauthorized account on their behalf and/or otherwise opened accounts with or otherwise used Wells Fargo services.

A huge amount of litigation is pending over the Wells Fargo banking scandal. The bank has been hit with $185 million in fines by three government agencies. A $142 million settlement is now accepting claims for a nationwide Class of Wells Fargo customers affected by the alleged banking fraud.

Wells Fargo also asserts that it will offer customers a complaints process, free mediation, and a third-party review of accounts dating back to 2009 to identify any unauthorized charges.

“Investigations have concluded that sales practice violations were widespread and recognized within the company for many years,” say court documents. “A report commissioned by Wells Fargo’s Board of Directors noted that internal departments first noticed an increase in sales practice violations in 2002.”

As of 2017, according to a third-party review of Wells Fargo, the total reported unauthorized accounts, credit cards, and other charges is $3.5 million.

The plaintiffs’ attorneys are Steven A. Christensen and Zane L. Christensen of Christensen Young & Associates PLLC.

The Wells Fargo Fake Accounts Class Action Lawsuit is Mitchell, et al. v. Wells Fargo Bank NA, et al., Case No. 2:16-cv-00966, in the U.S. District Court for the District of Utah.