Misrepresentation claims survive in Wells Fargo fake job interview class action

SAN FRANCISCO (CN) —  A federal judge ruled early Monday morning that class action claims accusing some Wells Fargo employees of conducting fake job interviews to get around the company’s diversity guidelines could proceed.

The class plaintiffs are former investors of Wells Fargo, who filed suit in 2022 after the New York Times published articles in May and June 2022 detailing Wells Fargo’s practice of conducting interviews with diverse candidates for positions that had already been filled or for positions the company knew the candidate was not qualified for.

After the New York Times’ articles were published, Wells Fargo’s common stock price plummeted, causing the plaintiff investors to suffer significant losses and damages, they claim.

In her 21-page ruling Monday morning, U.S. District Judge Trina Thompson, a Joe Biden appointee, wrote that new evidence — including declarations from multiple former employees across the country working in different divisions who acknowledged the fake interviews — was enough to prove for the misrepresentation claims to survive at this point.

“Defendants misleadingly stated that they implemented a policy requiring a slate of 50% diverse candidates to improve diversity, equity, and inclusion. Taking plaintiffs’ allegations as true, defendants implemented these policies in a manner that did not align with this goal,” Thompson wrote.

Wells Fargo had argued in a August 2023 hearing that its public statements committing to increased workforce diversity were not misleading because the company solely promised that 50% of interview candidates would be diverse, without addressing whether those diverse candidates would be hired. Thus, whether the interviews were conducted with the intent to hire the candidates is not relevant.

“Defendants’ arguments ignore the surrounding language in the accused statements, and the greater context in which the statements were made,” Thompson wrote.

Thompson noted that Wells Fargo framed the diverse search requirement as a method for improving the pipeline of candidates by interviewing more diverse candidates, but that the new evidence showed the company knew these candidates never had a chance of being hired.

“Defendants misleadingly stated that they implemented a policy requiring a slate of 50% diverse candidates to improve diversity, equity and inclusion. Taking plaintiffs’ allegations as true, defendants implemented these policies in a manner that did not align with this goal,” Thompson wrote.

Thompson wrote that Wells Fargo implemented the diversity policy in the context of lawsuits and pressure from investors, the government and the general public to do more to increase diversity at the company, so any reasonable investor would expect the policy to address the underlying issue, not make it worse.

The plaintiffs initially argued that Wells Fargo execs knew about the practice of fake interviews because employees complained about them to upper management — making statements from reports and notices filed with the Securities Exchange Commission and press releases, which emphasized the company's commitment to improving workforce diversity, materially false.

However, the complaint was dismissed in August 2023 for failure to plead both falsity and knowledge of wrongdoing.

The plaintiffs amended their complaint, conducting an independent investigation interviewing nine former Wells Fargo employees, in addition to introducing four new documents that they said showed fake interviews were “systemic” at the company.

Wells Fargo’s 2020 diversity guidelines required that at least 50% of candidates interviewed for positions that have salaries of more than $100,000 a year come from an underrepresented racial, ethnic or gender group or were veterans, people with disabilities or members of the LGBTQ community.

In an emailed statement, Wells Fargo said it is "deeply dedicated to diversity, equity and inclusion and does not tolerate discrimination in any part of our business. The claims in this lawsuit have no merit, and we will continue to defend ourselves against them." The company also noted both the Justice Department and the Securities and Exchange Commission closed investigations into its hiring practices without taking any action.

Counsel for the class plaintiffs did not respond to requests for comment before publication.

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