Bias v. Wells Fargo & Co.
942 F. Supp. 2d 915
N.D. Cal.2013Background
- Plaintiffs allege Wells Fargo engaged in fraudulent default-related fees, through marked-up BPOs and inspections, via an enterprise including Wells Fargo entities, Premiere Asset Services, and brokers/vendors.
- Premiere allegedly acted as a phony third-party to disguise third-party costs as Wells Fargo charges.
- A Mortgage Servicing Package program allegedly automated default-related fee imposition designed by Wells Fargo executives.
- Plaintiffs Bias, Breaux, and White-Price assert classClaims against Wells Fargo Bank, N.A. and Wells Fargo & Company for five claims seeking class relief.
- The SAC defines a nationwide class of US residents whose Wells Fargo-serviced loans were assessed default-related fees.
- The motion to dismiss the SAC was denied; the court left open issues for class certification and compelled Wells Fargo to answer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for UCL claims | Nedlloyd governs; class issues require California gov't interests. | Louisiana law should apply; California has no sufficient connection. | Nedlloyd analysis applies; issue reserved for class certification stage. |
| UCL standing | Plaintiffs suffered economic injury and reliance; overcharges. | No injury or reliance; market-rate fees defeat standing. | UCL standing found; injury in fact and reliance adequately pled. |
| UCL fraud/omission with 9(b) | Omissions and misrepresentations pleaded with particularity; exclusive control by Wells Fargo. | Fraudulent pleading lacks specificity; statements of law not actionable. | Fraudulent prong and overall UCL claim held plausibly pled; 9(b) applied; claim denied to be dismissed. |
| RICO standing | Overcharged customers injured in business or property; proximate causation. | No injury; market rates negate. | RICO standing recognized; injury to property shown by overcharged fees. |
| RICO 1962(c) sufficiency (enterprise and predicate acts) | Wells Fargo enterprise with Premiere and vendors; predicate acts via mail/wire fraud. | Insufficient enterprise distinctiveness; actions are within normal course of business. | Second claim denied; enterprise and predicate acts plead sufficient to survive dismissal. |
Key Cases Cited
- Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (Cal. 1992) (choice-of-law governs class claims when provisions apply; assess scope and public policy)
- Washington Mutual Bank, F.A. v. Superior Court, 24 Cal.4th 906 (Cal. 2001) (test for enforcing contract-based choice-of-law provisions in California)
- Tobacco II Cases, 46 Cal.4th 298 (Cal. 2009) (standing in UCL requires injury and causation; reliance in fraud prong if appropriate)
- Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (Cal. 2011) (economic injury and reliance can be pled where overpayment results from unfair practice)
- McCann v. Foster Wheeler LLC, 48 Cal.4th 68 (Cal. 2010) (governmental interest approach in choice-of-law when no agreement governs law)