Veronica Gutierrez v. Wells Fargo Bank, N.A.
704 F.3d 712
| 9th Cir. | 2012Background
- Gutierrez and Walker sued Wells Fargo in California state court alleging unfair and fraudulent practices under Cal. Bus. & Prof. Code § 17200 due to high-to-low posting of debit transactions.
- Wells Fargo switched from low-to-high to high-to-low posting in 2001, increasing the number of overdrafts and associated fees.
- The district court found the posting order was devised to maximize overdraft fees and that customers were misled about the actual posting order.
- The district court issued a permanent injunction prohibiting high-to-low posting and ordered restitution of $203 million, along with related disclosures.
- The court addressed federal preemption by evaluating whether California UCL claims and remedies were preempted by the National Bank Act and OCC regulations.
- The court considered arbitration potential post-Concepcion but did not vacate the judgment on that ground; Wells Fargo later argued for arbitration but was not successful on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preemption of posting order as a pricing decision | Gutierrez: state law should regulate posting order as an unfair/anti-competitive practice. | Wells Fargo: posting order is a federally authorized pricing decision; preempted. | Preempted; posting order is a federally authorized pricing decision. |
| Preemption of disclosures and restitution | Gutierrez: California law can require disclosures and restitution for misdeeds in posting. | Wells Fargo: disclosures and restitution related to posting are preempted as banking regulation. | Disclosures and restitution predicated on posting were preempted; vacated insofar as tied to posting; restitution order vacated. |
| Fraudulent misrepresentation under UCL | Gutierrez: misleading statements about posting method violate UCL fraud prong. | Wells Fargo: state deception claims should be preempted or limited by federal banking regulation. | Fraudulent misrepresentation claim not preempted; remedies for misleading statements allowed on remand within limits. |
| Arbitration post-Concepcion | Gutierrez: arbitration waiver not required; case should proceed in court. | Wells Fargo: Concepcion supports arbitrating class claims. | No vacatur for arbitration; arbitration not compelled at this stage; proceeding retained in court. |
Key Cases Cited
- Watters v. Wachovia Bank, N.A., 550 U.S. 1 (U.S. 2007) (state laws of general application apply to national banks unless they conflict with NBA)
- Cuomo v. Clearinghouse Ass’n, LLC, 557 U.S. 519 (U.S. 2009) (balance between federal oversight and state law in mixed regimes)
- Bank of Am. v. City and Cnty. of San Francisco, 309 F.3d 551 (9th Cir. 2002) (incidental powers and preemption framework for national banks)
- Martinez v. Wells Fargo Home Mortg., Inc., 598 F.3d 549 (9th Cir. 2010) (OCC regulation of safe and sound banking principles; OCC as exclusive reviewer)
- Concepcion v. American Sec. Ins. Co., 563 U.S. 333 (U.S. Supreme Court 2011) (FAA preemption of Discover Bank rule and enforcement of arbitration agreements)
- Baptista v. JPMorgan Chase Bank, N.A., 640 F.3d 1194 (11th Cir. 2011) (preemption where state rule substantially limits banker’s fee-setting discretion)
- Rose v. Chase Bank USA, N.A., 513 F.3d 1032 (9th Cir. 2008) (preemption of state disclosure requirements for national banks)
- Lyon v. Gila River Indian Community, 626 F.3d 1059 (9th Cir. 2010) (standing and certification standards in UCL actions)