Class Action News

Wells Fargo Can’t Break Up Advisers’ Class Arbitration

Jan. 3, 2019, 4:07 PM

Wells Fargo financial advisers will continue with classwide arbitration of their overtime claims after the bank failed to convince a federal court Jan. 2 to overturn the arbitrator’s decision.

The arbitrator’s ruling that the agreement permitted class arbitration even though it didn’t mention it explicitly was appropriate, Judge Paul A. Engelmayer wrote for the U.S. District Court for the Southern District of New York.

The U.S. Supreme Court heard oral argument in October on whether agreements must include some “magic words” for an arbitrator to determine there is a contractual basis for class proceedings. The outcome of that case could affect cases like this one.

Three former Wells Fargo Advisors LLC financial advisers filed class and collective action claims that the company failed to pay them overtime required by New York law and the Fair Labor Standards Act.

Wells Fargo sought to vacate the arbitrator’s finding that the parties consented to classwide arbitration.

But Wells Fargo’s arbitration agreement failed to limit the scope of arbitration to individual—non-class—proceedings, the court said.

“The arbitrator endeavored to apply the appropriate precedents to the agreement at hand, mindful that the lack of definite Supreme Court guidance inevitably meant that a decision in either direction would be subject to some uncertainty,” the court said.

The court therefore rejected Wells Fargo’s claim that the arbitrator manifestly disregarded the law as baseless.

Outten & Golden LLP and Shavitz Law Group P.A. represented the financial advisers.

Morgan Lewis & Bockius LLP represented Wells Fargo.

The case is Wells Fargo Advisors LLC v. Tucker, 2019 BL 449, S.D.N.Y., No. 18-6757, 1/2/19.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; C. Reilly Larson at rlarson@bloomberglaw.com

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