Bias v. Wells Fargo & Co.
312 F.R.D. 528
N.D. Cal.2015Background
- Wells Fargo used an internal unit (Premiere Asset Services) to order Broker’s Price Opinions (BPOs) for defaulted mortgage loans from ~2001–July 2010 and charged borrowers BPO fees that included a mark-up above what PAS paid third‑party brokers.
- BPO charges were not reflected on monthly mortgage statements; mark‑ups were typically $25–$40 and Wells Fargo stopped the PAS/mark‑up practice in July 2010.
- Named plaintiffs (all Louisiana residents) sued Wells Fargo and sought class certification for two nationwide classes: (1) an Assessed Class (injunctive relief under California UCL) and (2) a Paid Class (damages under unjust enrichment, RICO, fraud, and UCL).
- Court found the parties’ mortgage choice‑of‑law clauses (Louisiana law) enforceable and declined to apply California UCL/fraud law to the named plaintiffs, denying certification of claims premised on California law (and thus denying the Assessed Class and UCL/fraud claims for the Paid Class).
- The Court granted partial certification: a narrowed nationwide Paid Class, limited to a civil RICO claim (18 U.S.C. §1962(c)) for borrowers who paid a BPO amount greater than what Wells Fargo (through PAS) paid the third‑party vendor, for the period Feb. 11, 2008–July 1, 2010.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law — applicability of California UCL/fraud to named plaintiffs | Apply California law nationwide; UCL/fraud claims available for the class | Mortgage choice‑of‑law provisions pick Louisiana; California law should not govern | Held for Defendants: Louisiana choice‑of‑law enforced; California UCL/fraud cannot be applied to named plaintiffs, so Assessed Class and UCL/fraud claims denied |
| Commonality / Typicality / Ascertainability for Paid Class | Uniform practice: Wells Fargo charged marked‑up BPO fees; common issues and records identify payors | Variations in mark‑ups, mortgage forms, and payment records defeat common proof and identity | Held for Plaintiffs (with narrowing): commonality and typicality met; class limited to those who paid a BPO exceeding the amount paid to vendor; class ascertainable from Wells Fargo records |
| Predominance — Nationwide unjust enrichment claims | Nationwide unjust enrichment viable; state laws don’t materially vary for this claim | Unjust enrichment elements vary materially across states; nationwide class untenable | Held for Defendants: nationwide unjust enrichment class denied due to materially varying state laws (Mazza) |
| Predominance & reliance — RICO (mail/wire fraud) claim and damages model | RICO elements (enterprise, pattern, mail/wire fraud) and reliance can be proven classwide; payment can infer reliance; damages calculable from Wells Fargo data | Individualized proof of exposure/reliance, affirmative defenses, and damages variations predominate | Held for Plaintiffs (in part): RICO liability elements capable of classwide proof; reliance may be proven by presumption/circumstantial inference (payment); damages model plausible; class certified for RICO limited to Feb 11, 2008–July 1, 2010 |
Key Cases Cited
- Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (Cal. 1992) (choice‑of‑law framework and test for fundamental California policy)
- Washington Mutual Bank v. Superior Court, 24 Cal.4th 906 (Cal. 2001) (clarifies Nedlloyd step on fundamental policy and materially greater interest)
- Bias v. Wells Fargo & Co., 942 F.Supp.2d 915 (N.D. Cal. 2013) (earlier district‑court choice‑of‑law discussion in this action)
- Mazza v. American Honda Motor Co., Inc., 666 F.3d 581 (9th Cir. 2012) (elements of unjust enrichment vary materially by state; impacts certification of nationwide unjust enrichment classes)
- Comcast Corp. v. Behrend, 133 S.Ct. 1426 (U.S. 2013) (plaintiffs must demonstrate damages model tied to legal theory for predominance)
- Wal‑Mart Stores, Inc. v. Dukes, 564 U.S. 338 (U.S. 2011) (rigorous commonality inquiry; classwide answers must resolve central issues)
- Affiliated Ute Citizens v. United States, 406 U.S. 128 (U.S. 1972) (presumption of reliance in omission‑based securities cases; discussed analogously for omissions)
- Leyva v. Medline Industries, Inc., 716 F.3d 510 (9th Cir. 2013) (individualized damages do not alone preclude class certification)