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Wells Fargo’s Unauthorized-Account Settlement Upheld by 9th Cir.

July 20, 2020, 8:17 PM

Wells Fargo’s $142 million settlement to resolve class claims that it pressured its sales team to open bank accounts on behalf of customers without their authorization or consent stands following a Ninth Circuit ruling Monday.

Settlement objectors tried to argue that the class failed to meet federal Rule 23’s predominance requirement because the district court didn’t perform a choice-of-law analysis with respect to the class’s state law claims.

But the trial judge didn’t have to conduct the analysis before certifying the class for purposes of settlement, Judge Ronald M. Gould wrote for the appeals court.

The class demonstrated that it could prove its Fair Credit Reporting Act claim by a common course of conduct, and the class’s state law claims weren’t significant enough to destroy the predominance of questions under the federal law, Gould said.

A district court generally doesn’t commit legal error “by not conducting a choice-of-law analysis, despite variations in state law, before determining that common issues predominate for a settlement class,” Gould said, citing the U.S. Court of Appeals for the Ninth Circuit’s decision in In re Hyundai & Kia Fuel Economy Litigation.

Predominance is easier to satisfy in the settlement context, insofar as a court doesn’t have to consider whether the case, if tried, would present management problems, Gould said.

Gould rejected objectors’ arguments that the class’s other claims under state law, the Racketeer Influenced and Corrupt Organizations Act, and the Stored Communications Act were more central to the lawsuit.

It wasn’t clear error for the district court to conclude that the FCRA claim alone provided the class with a reasonable recovery given the feasibility of its legal options, Gould said.

The class, represented by Shahriar Jabbari and Kaylee Heffelfinger, claimed that Wells Fargo’s sales quotas caused employees to open multiple unauthorized bank accounts, including credit lines, for their customers. They alleged that customers, having accumulated unpaid fees, would start receiving calls from creditors. The bank would then offer or enroll them in credit-protection services at an additional cost, they said.

Judges Mary H. Murguia and Gary Feinerman, sitting by designation from the U.S. District Court for the Northern District of Illinois, joined in the decision.

The class is represented by Keller Rohrback LLP. Wells Fargo is represented by Munger, Tolles & Olson LLP.

Bandas Law Firm PC, N. Albert Bacharach Jr. PA, Law Offices of John J. Pentz, and Christensen Young & Associates PLLC argued for the objectors.

The case is Jabbari v. Farmer, 9th Cir., No. 18-16213, 7/20/20.

To contact the reporter on this story: Holly Barker in Washington at hbarker@bloombergindustry.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Peggy Aulino at maulino@bloomberglaw.com

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