Wells Fargo Nets Minor Victories in Class Action
MINNEAPOLIS (CN) - Several class members in a pension fund mismanagement lawsuit against Wells Fargo were tossed out by a federal judge, who also refused to dismiss trial testimony from the bank's expert witnesses.
U.S. District Court Judge Donovan W. Frank granted the bank's motion to dismiss sixteen plaintiffs who brought ERISA claims, after agreeing with Wells Fargo that the suit by the lead plaintiff - the City of Farmington Hills Employees Retirement System - alleges only common and state law claims.
The case revolves around the plaintiffs' investments with Wells Fargo in a securities lending program ("SLP") that invested a majority of its funds with now insolvent companies, including Lehman Brothers and Cheyne Finance.
The plaintiffs sought damages for breach of fiduciary duty, breach of contract, violations of the Minnesota Prevention of Consumer Fraud Act, unlawful trade practices, deceptive trade practices and civil theft, which prompted Wells Fargo to seek dismissal of class members bringing claims under ERISA.
Judge Frank granted the decertification of these sixteen class members, but held that the court "expresses no opinion at this time as to whether the ERISA plaintiffs may be properly joined in this matter in the event plaintiffs were to further amend their complaint or add an additional class representative."
Wells Fargo's motion to dismiss the civil theft claim was also granted by Judge Frank, who relied on the Minnesota "theft by swindle statute," which is "intended to punish 'any fraudulent scheme, trick or device whereby the wrongdoer deprives the victim of his money or property by deceit or betrayal of confidence.'"
Judge Frank concluded that "the allegations in this case, and the evidence in the record ... do not support a claim that plaintiffs were initially tricked or deceived into entering into the SLP. Rather, this lawsuit arises from the allegedly improper actions of Wells Fargo in misrepresenting or failing to disclose material information to plaintiffs that would have potentially contributed to plaintiffs' ability to make an informed decision as to whether to stay in the SLP or exit at an earlier time."
In a final blow to the plaintiffs, Judge Frank denied their motion to dismiss the testimony of Wells Fargo's expert witnesses, after concluding the testimony met Federal Rule of Evidence requirements.
The testimony from the three witnesses included assertions that Wells Fargo did not breach its duties to clients invested in the SLP and properly followed federal guidelines in regards to investments, while also disputing claims that Wells Fargo should have anticipated the Lehman Brothers bankruptcy.
Despite claims from the plaintiff that the experts only "adopt the self-serving conclusions of Wells Fargo's employees and lack independent reasoning or methodology," Judge Frank kept the testimony.