Wells Fargo hit with multiple lawsuits over bogus accounts, aggressive sales quotas

Wells Fargo is already facing four potential class-action suits and could soon face more from customers, former employees and investors over the bank's fake-accounts scandal.
(Justin Sullivan/Getty Images)

As beleaguered banking giant Wells Fargo & Co. deals with inquiries from federal prosecutors and scrutiny from lawmakers, it’s facing a growing number of civil lawsuits brought by customers and former employees.

In a little more than two weeks since the San Francisco bank admitted that employees created as many as 2 million accounts for customers without their permission, Wells Fargo has been hit with at least four prospective class-action lawsuits – and several law firms are looking for plaintiffs and considering cases of their own.

Among the latest actions was a case filed Monday in Los Angeles federal court by attorney Jonathan Delshad on behalf of employees who may have been fired or demoted over the last 10 years for refusing to open bogus accounts to meet aggressive sales goals.


It alleges violations of federal financial and labor laws, including failure to pay for overtime worked to meet the goals. It seeks damages of at least $7.2 billion.

“I expect many other law firms around the country will be bringing cases,” said Delshad, a West L.A. lawyer. “A lot of attorneys are going to try to get on the bandwagon.”

Wells Fargo has admitted to firing roughly 5,300 employees since 2011 for opening accounts without customers’ knowledge. On Sept. 8, it agreed to pay $185 million to federal regulators and the Los Angeles city attorney’s office over the practices.

Delshad had filed a previous class-action suit last week in Los Angeles Superior Court but that one was limited to employees who had worked for the bank in California. It seeks damages of $2.6 billion for wrongful termination and unpaid wages.

Soon after filing the case, Delshad said his office started receiving calls from former Wells Fargo employees across the country, spurring him to file the federal case.

“We’ve had constant phone calls from people saying the same things that happened in California had happened in other places,” he said. “They all say the exact same thing, whether they’re in Alabama, Georgia, Alaska, Florida. They call, and it’s like listening to a tape recorder.”


Another case, filed in federal court in Utah and also seeking class-action status, was filed on behalf of consumers who were harmed by the bank’s practices. The action was taken despite the fact that Wells Fargo has successfully fought off many lawsuits from consumers because of arbitration clauses in contracts that force customers to give up their right to take the bank to court.

Wells Fargo has in many cases successfully argued that those arbitration clauses apply to disputes even over the bogus accounts.

Delshad’s cases were not the first filed by employees terminated over the scandal. The allegations are similar to those made in a 2014 suit brought against the bank by nine former Wells Fargo employees. That case is scheduled to go to trial next year in Los Angeles Superior Court.

If Delshad’s federal case is allowed to proceed as a class action, it’s not clear how many workers would be eligible to participate. The lawsuit states that a review of Wells Fargo’s personnel records should show which current and former employees might be eligible.

Wells Fargo spokesman Ancel Martinez said the bank disagrees with the allegations in Delshad’s suits and “will vigorously defend against the misrepresentations (they) contain.”

Customers and employees aren’t the only ones taking Wells Fargo to court. Law firm Robbins Geller Rudman & Dowd announced the first lawsuit from Wells Fargo investors late Monday. It alleged that the bank kept investors in the dark about its sales practices and that investors were harmed when the bank’s stock plummeted in the days after the settlement agreement.

Goldberg Law, a Century City firm that specializes in suing companies on behalf of investors, said days after the settlement was announced that it was looking into whether the bank’s board violated its fiduciary duty to shareholders.

Investors also might have grounds to sue the bank if it does not rescind or “claw back” some of the pay headed to Chief Executive John Stumpf and to Carrie Tolstedt, who oversaw the bank division where the accounts were created. Members of the Senate Banking Committee, which held a hearing on the scandal last week, called on Wells Fargo to do so.

Steven Bank, a law professor at UCLA, said language in Wells Fargo’s compensation policy suggests that the bank can claw back some pay — and could give investors reason to sue if the bank doesn’t.

The legal fallout from Wells Fargo’s fake-accounts scandal could spread to other banks too.

Law firm Keller Rohrback said last week that it is investigating similar practices at other banks and could bring a suit against several institutions. The firm brought an earlier class-action lawsuit against Wells Fargo on behalf of customers who had fake accounts opened in their names.

A federal judge ruled that suit should go to arbitration, but the firm appealed the case to the 9th Circuit Court of Appeals. Wells Fargo and the plaintiffs agreed to a so-far undisclosed settlement Sept. 8 — the same day that regulators announced their settlement with the bank.

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