I hate to be a nayayer when individuals seek redress for wrongdoing. And while it ought to be possible to make a case on behalf of employees who were fired by Wells for refusing to meet or failing to meet unrealistic sales targets, the lawsuit filed in California state court last Friday, Polonsky v. Wells Fargo Bank & Co., does not appear to be that case.
The lawsuit is on behalf o two former Wells employees, and seeks class action status for other Wells employees who were fired or demoted for failing to meet sales quotas because they would not break the law.
I’ve embedded the filing at the end of this post. Here’s a recap from Bloomberg:
The lawsuit offers details of how low-level bankers were allegedly pushed to create at least 10 new accounts a day in a sales initiative that has blown up into a scandal and prompted U.S. lawmakers to call for Chief Executive Officer John Stumpf’s resignation. Bankers were “coached” to secretly open fee-generating accounts and often resorted to using false customer contact information like NoName@WellsFargo.com on accounts so they couldn’t be traced back, according to the complaint.
The bank, according to the Los Angeles suit, rewarded employees with promotions for using tactics including “sandbagging” — opening fake accounts the day after a customer instructed the bank not to; “pinning” — assigning personal identification numbers without customer authorization; and “bundling” — lying to customers about limited availability of certain products in packages.
While Wells Fargo fired 5,300 employees that it blamed for opening accounts without client approval, the bankers who sued Thursday said the dishonest practices were orchestrated by Stumpf.
Aargh. It would help if the reporters who write up these cases were up on the state of play, or would even search their own archives.
This lawsuit has simply repackaged allegations from the Los Angeles City Attorney’s complaint last year. The “details” that this Bloomberg story cites are not new, as a story by Bloomberg’s own Matt Levine demonstrates.
The novel element is that this suit takes these allegations (which have never been proven to be true, recall that this case was settled without any admissions being made by Wells Fargo) and uses them to contend that the real victims were the employees that were terminated or demoted by Wells for not meeting sales targets.
While that claim may seem obvious, it needs to be carefully argued and supported to hold up in court. This filing doesn’t come close to having Big Building Law Firm fit and finish. It repeatedly makes overly broad assertions that will not be hard for Wells Fargo to knock down. And that’s not surprising. The lawsuit is by a solo practitioner who specializes in employment law. Now there have been one-horse firm employment lawyers who are feared in Corporate America and go to war successfully on behalf of terminated senior employees and labor unions. But in general, employment law is a backwater, and this filing is on a par with the few cases I’ve read on behalf of low-level workers. Statements like this do not inspire confidence:
It is also illegal to engage in Securities Fraud by boosting the stock price as a result of conduct which one knows to be fraudulent, such as the scam perpetuated by Wells Fargo above.
That’s not a legal argument. That’s a handwave.
Similarly, the filing provided information that contradicts its unduly confident positions, such as “Employees who did not ‘game’ were surely denoted or fired” and “Because it was impossible to consistently meet a quota without “gaming”…” Really? That is tantamount to saying that every single customer facing employee who kept a job at Wells cheated. Even with Wells Fargo’s nutty targets, there were almost certainly some that met them if nothing else by being in operations where the customer mix was more favorable to selling more “solutions”. The case includes a quote from its 2014 Annual Report that customers in the wealth management area had over 10 products on average. That makes sense because they might have a brokerage account, invest in a Wells Fargo index fund (Wells is a leader in running equity index funds), have dividends and interest payments swept into a money market fund, etc. So the employees in that part of the bank may not have been harassed as much as branch staffers because their entire area regularly exceeded Wells Fargo’s targets, plus those customers might have had personal account reps, and high net worth individuals like dealing with the same individual over time.
Another issue is that a CNN reported last week that whistleblowers said they were fired as a result of complaining, and the bank had procedures in place to create a paper trail that they were defenestrated for something else, usually being late. But one can imagine that managers took note of the bank’s desire to have tidy records to justify firings, and they’d similarly work up a case file on employees who beefed about their targets informally. In other words, if this case actually got anywhere, one of Wells Fargo’s first steps might be to present an analysis of personnel records as to why customer-facing employees were demoted or fired, and show that they consisted overwhelmingly of performance deficiencies like rudeness to co-workers, showing up to work drunk, frequent errors in documents, etc. The onus would be on the plaintiffs to show otherwise.
But that’s even assuming this case moves forward to discovery. It will have to surmount two major hurdles. Wells Fargo will file a motion for summary judgment, basically saying there isn’t enough here for the court to bother. Assuming it passes summary judgment, it also needed to get a class certification. Otherwise, it’s just a wrongful termination suit on behalf of two ex workers.
I’d very much like to get a reading from the attorneys in the commentariat, but this case falls well short of the caliber of other class action filings I’ve read. The facts and causes of action for the lead plaintiff are typically argued in some detail, and then there is an explicit discussion as to why the other co-plaintiffs have similar enough cases for them to be treated as a class. Even though as a matter of form, this case has a section titled, “Class Action Allegations,” it take the position that it’s obvious that there’s a bunch of employees who were wrongly terminated and therefore of course they constitute a class (“The claims of the Named Plaintiffs are typical of those of every other member of the Plaintiff Class.”). That’s unlikely to be a winning approach.
And final causes for pause: the small firm class action attorney I know (and these are ones with successful track records) seek to team up with major class action firms before taking on major targets. That’s critical because it takes very deep pockets to fund the expenses on a high stakes class action suit. The fact that this attorney appears to have no class action experience means he probably does not know what he does not know. For instance, selection of lead plaintiff and choice of venue are key strategic choices in these cases. My guess, by contrast, is that these two former Wells Fargo employees came to this attorney (who does appear to have a good reputation for routine employment cases) and he or they wanted to make a much more comprehensive case against Wells Fargo.
The one bit of good news if this case does not get class certification, it won’t prevent better formulations of this type of action from being filed. And there’s so much sordid information coming out about Wells Fargo that it’s going to continue to be a litigation magnet.