Wells Fargo’s $95 Million Labor Deal Survives 9th Circuit Appeal

Wells Fargo Bank NA’s $95 million settlement to resolve claims that it violated California wage-and-hour laws survived an objector’s Ninth Circuit challenge, after the appeals court rejected the argument that one of its prior orders in a related case barred the deal.

The Ninth Circuit had partially affirmed a district court judgment in favor of another class of plaintiffs, but stayed the determination of any additional damages pending the California Supreme Court’s decision in a separate lawsuit that it said could affect whether further damages were owed.

Wells Fargo and the plaintiffs subsequently entered into the $95 million settlement, and the district court approved the deal along with an award of $21 million in attorneys’ fees.

On appeal, objector Kirk E. Fyson argued that the district court violated the Ninth Circuit’s mandate when it approved the settlement while the California Supreme Court case was still pending.

But nothing in the Ninth Circuit’s prior order prohibited the parties from reaching, or the district court from approving, the global settlement or the fee award.

Fyson challenged the fairness of the deal, pointing to a “clear sailing” provision in the settlement agreement. But even if the district court overlooked the potentially problematic provision, any error was harmless, the Ninth Circuit said on Wednesday in the unpublished decision.

A clear sailing agreement, or an agreement by the defendant not to contest the class lawyer’s petition for fees, is thought to faciliate collusion. But the district court didn’t grant the full amount of fees requested and cross-checked the fee award to an hourly rate-based model to determine it was reasonable.

Fyson also argued, among other things, that the district court violated the Class Action Fairness Act because some class members had sustained a “net loss.” The only way to find a net loss in the case, however, would be to assume that class members were entitled to recoup the portion of the court’s prior judgment that had been reserved for attorneys’ fees. But the class members had no right to that money, the appeals court said.

Fyson is represented by Gray & Associates PC, Frank Weinberg & Black PA, Swartz Swidler LLC, and Robert D. Soloff of Plantation, Florida.

The class is represented by Altshuler Berzon LLP, Haffner Law PC, and Stevens LC.

Wells Fargo is represented by Sheppard Mullin Richter & Hampton LLP.

The case is Fyson v. Wells Fargo Bank NA, 9th Cir., No. 22-15694, unpublished 10/12/22.