Mitchell v. Wells Fargo Bank

• Citation: 355 F.Supp.3d 1136
• Decision Date: 21 December 2018
• Docket Number: Case No. 2:16-cv-966
• Parties: Lawrence J. MITCHELL, et. al., Plaintiffs, v. WELLS FARGO BANK, et. al., Defendants.
• Court: U.S. District Court — District of Utah

355 F.Supp.3d 1136

Lawrence J. MITCHELL, et. al., Plaintiffs,

v.WELLS FARGO BANK, et. al., Defendants.

Case No. 2:16-cv-966

United States District Court, D. Utah, Central Division.

Signed December 21, 2018

Steven A. Christensen, Zane L. Christensen, Christensen Young & Associates PLLC, Sandy, UT, for Plaintiffs.

David H. Fry, Eric P. Tuttle, Erin J. Cox, Munger Tolles & Olson LLP, Los Angeles, CA, Elaina M. Maragakis, James S. Jardine, Michael D. Mayfield, Ray Quinney & Nebeker (SLC), Salt Lake City, UT, for Defendants.

MEMORANDUM DECISION AND ORDER GRANTING DEFENDANTS' 12(b)(1) MOTION AND GRANTING, IN PART, DEFENDANTS' 12(b)(6) MOTION

CLARK WADDOUPS, United States District Court Judge

Introduction

Before the court is Wells Fargo Bank, N.A. and Wells Fargo & Company's Motion to Dismiss Plaintiffs' Third Amended Complaint. Defendants argue that a majority of Plaintiffs fail to allege standing and move to dismiss under Rule 12(b)(1). Defendants also move to dismiss each of the Plaintiffs' fifteen claims under Rule 12(b)(6) for failure to state a claim. After careful consideration of the arguments set forth in the briefs and oral argument, the court now GRANTS Defendants' 12(b)(1) Motion. And, as explained below, the court GRANTS in part, and DENIES in part, Defendants' 12(b)(6) Motion. The conclusion the court was required to reach based on the pleadings and arguments made in this case should not be read as an affirmation that Wells Fargo's conduct was appropriate or correct. Indeed, the facts presented indicate a massive system wide failure by the bank. Many of the claims here, however, fail to meet pleading requirements and must be dismissed as discussed below.

Background

In this action, Plaintiffs allege that Wells Fargo employees used customers' confidential information to open fraudulent accounts in the customers' names to meet sales goals, and that Wells Fargo encouraged, knew of, or should have known of this practice. Plaintiffs nationwide have made very similar allegations against Wells Fargo, and have filed suit in other districts. See In re Wells Fargo Fraudulent Account Opening Litig. , 282 F.Supp.3d 1360, 1361 (U.S. Jud. Pan. Mult. Lit. 2017).¹ Of those actions filed in other districts, Jabbari v. Wells Fargo Bank, N.A. , No. 3:15-cv-2159-VC (N.D. Cal.) is the most relevant to this case. Because this case is so closely tied to Jabbari , the court discusses the history of Jabbari where relevant.

The Jabbari plaintiffs filed their action against Wells Fargo on May 13, 2015, Jabbari , No. 3:15-cv-2159 (N.D. Cal. Oct. 20, 2017), (ECF No. 1), making it the first-filed putative class action. Plaintiffs in this case filed this action on September 16, 2016. (ECF No. 2.) On November 3, 2016, Plaintiffs filed a Second Amended Complaint. (ECF No. 15.)² Sometime around February 16, 2017, this court received notice that the Judicial Panel on Multidistrict Litigation ("JPML") would hear argument on whether to create an MDL action from the several cases filed against Wells Fargo related to fraudulent account openings. (See ECF No. 51.) On February 28, 2017, this court stayed the case pending the JPML's decision. (ECF No. 54.)

On March 28, 2017, the parties in Jabbari filed a Joint Notice of Settlement. Jabbari , No. 3:15-cv-2159 (N.D. Cal. Oct. 20, 2017), (ECF No. 96.) On April 5, 2017, the JPML determined it would not order centralization due to the nationwide class settlement-in-principle reached by the parties in Jabbari . See In re Wells Fargo Fraudulent Account Opening Litig. , 282 F.Supp.3d at 1361. On that same day, Plaintiffs moved to lift the stay in this case. (ECF No. 55.) On April 13, 2017, this court heard argument from the parties regarding the propriety of lifting the stay in light of the pending Jabbari settlement. (See ECF Nos. 58, 61.) The court ultimately lifted the stay. (ECF No. 60.) On June 7, 2017, the court held a hearing during which the court granted Plaintiffs' oral motion to amend their complaint. (ECF No. 67.) Plaintiffs filed their currently operative Third Amended Complaint on June 27, 2017. (ECF No. 69.) The Third Amended Complaint initially listed 76 named Plaintiffs, but through a series of voluntary dismissals, was eventually reduced to 57.³ (See ECF No. 69.)

On July 8, 2017, the court in Jabbari entered an order preliminarily approving the settlement in that case. Jabbari , No. 3:15-cv-2159 (N.D. Cal. July 8, 2017), (ECF No. 165.) That order provided that the "Settlement Class Members who do not opt out agree to release all claims that could have been asserted, or that arise out of the same transactions or occurrences as the claims against Wells Fargo entities that were or could have been asserted in [the Jabbari ] action." Jabbari v. Wells Fargo & Company , No. 3:15-cv-2159, 2017 WL 5157608, at *5 (N.D. Cal. July 8, 2017). Later, the court in Jabbari entered an order setting the opt out deadline for February 19, 2018. Jabbari , No. 3:15-cv-2159 (N.D. Cal. Oct. 20, 2017), (ECF No. 176 at 4.) The opt out deadline is relevant here. Those who did not opt out of the Jabbari settlement are unable to pursue their claims in this case.

On January 30, 2018, Defendants filed their Motion to Dismiss the Third Amended Complaint for lack of subject matter jurisdiction under Rule 12(b)(1) and for failure to state a claim under Rule 12(b)(6). (ECF No. 144.) On February 12, 2018, Plaintiffs filed their Response. (ECF No. 149.) On February 26, 2018, Defendants filed their Reply. (ECF No. 151.)

On June 14, 2018, the court in Jabbari entered an order granting final approval of the class action settlement. Jabbari , No. 3:15-cv-2159 (N.D. Cal. June 14, 2017), (ECF No. 271.) Attached as "Exhibit A" to that order was a list of those individuals who had opted out of the Jabbari settlement. Jabbari , No. 3:15-cv-2159 (N.D. Cal. June 14, 2017), (ECF No. 271 at 16–27.) That list contained the names of 967 individuals. (See Jabbari , No. 3:15-cv-2159 (N.D. Cal. June 14, 2017), (ECF No. 271 at 27.)

The Jabbari court "approve[d] that list, including those who filed untimely exclusions, as constituting the list of all Persons who have submitted timely requests for exclusion from the Settlement Class." Jabbari , No. 3:15-cv-2159 (N.D. Cal. June 14, 2017), (ECF No. 271 at 8.) The order also included "Exhibit B," a list of those individuals who "filed both a claim and an exclusion," and for whom the court provided "shall not be excluded unless they subsequently communicate their intent ... to withdraw their claim and not participate in the Settlement on or before July 7, 2018." Jabbari , No. 3:15-cv-2159 (N.D. Cal. June 14, 2017), (ECF No. 271 at 9.)

This court heard oral argument on Defendants' Motion to Dismiss on June 20, 2018. (ECF No. 159.) On July 31, 2018, the Plaintiffs filed a "Request for the Court to take Judicial Notice." (ECF No. 160.) In this filing, Plaintiffs requested that "the Court consider all proposed Plaintiffs as members of a potential class action" because of appeals of the Jabbari case. (See ECF No. 160 at 2.) Plaintiffs included no authority in support of their request. On August 7, 2018 the defendants filed an Objection to Plaintiffs' request, arguing that "Plaintiffs' submission is not altogether clear with respect to the implications of the appeals in this action ...." (ECF No. 161 at 2.) The court agrees and declines Plaintiffs' request.

ANALYSIS

Remaining Plaintiffs

As explained above, the Third Amended Complaint initially listed 76 named Plaintiffs, but through a series of voluntary dismissals, the number was eventually reduced to 57. (See ECF Nos. 69, 81, 83–85, & 141.) And, as also explained above, only those Plaintiffs who opted out of the Jabbari settlement can proceed in this case.

The court requested that Plaintiffs' attorneys provide a list of those Plaintiffs who opted out of the Jabbari settlement. (See ECF No. 156.) Plaintiffs' counsel provided a list, representing that 37 "individuals have withdrawn from the Jabbari litigation." (ECF No. 157 at 2–3.) As explained below, only 33 individuals involved in this case opted out of the Jabbari settlement.

Four individuals on the Plaintiffs' list of 37 should be removed—"Nedelka Martinsen," "Adrienne Thompson," "Concepcion Powell," and "Charles Jones." First, as Defendants point out, "Number 33" on that list, "Nedelka Martinsen," "was left off the Third Amended Complaint." (Tr. 18: 25; also, compare ECF No. 157 at 3 with ECF No. 69.) Without "Nedelka Martinsen," the number of Plaintiffs on Plaintiffs' counsel's list becomes 36.

Second, as the Defendants point out, Plaintiffs mistakenly "repeat" "Number 31" on their list, "Adrian Thompson," "under a different spelling"—"Adrienne Thompson." (See Tr. 18: 15–19 also, compare ECF No. 157 at 3 with ECF No. 69.) The court assumes that the person listed in the Jabbari court's Exhibit A as "Adrienne Thompson" is the "Adrian Thompson" from this case. Even under that assumption, the court must remove Plaintiffs' "Number 12." This brings the list's total to 35.

Third, Defendants also pointed out at oral argument that "Number 32" on Plaintiffs' list, "Concepcion Powell," is not listed on Jabbari's "Exhibit A" as a confirmed opt out, or Exhibit B as a possible opt out. (See Tr. 18: 22–24.) At oral argument, Plaintiffs did not respond to Defendants' argument on this point. The court has independently confirmed that no one named "Concepcion Powell" is listed on the Jabbari court's Exhibit A or Exhibit B. See Jabbari , No. 3:15-cv-2159 (N.D. Cal. Oct. 20, 2017), (ECF No. 271 at 16–30.) Because the Plaintiffs did not respond to Defendants' argument, and because the court has confirmed that no one named "Concepcion Powell" is listed as having opted out, the court assumes Concepcion Powell did not opt out of the Jabbari settlement. Plaintiffs' list is reduced to 34.

Fourth, Defendants point out that "Charles Jones" "is the person who the [Plaintiffs'] parenthetical states" "does not appear on [the Jabarri court's]...