Wells Fargo’s Pursuit of Arbitration a Waste of Resources: Plaintiffs

April 24, 2017, 1:30PM. By Gordon Gibb

Atlanta, GAA long-running class action lawsuit alleging banking giant Wells Fargo charged their clients and consumers excessive overdraft fees is attempting to move forward amidst a petition by the plaintiffs that Wells Fargo is not in any position to seek arbitration, as the defendant has tarried too long for arbitration to be appropriate.

Wells Fargo – as has other big banks in recent years – is being taken to task from clients over its alleged overdraft practices involving re-ordering. When debiting the accounts of clients, the bank is accused of playing fast and loose with the sequence of withdrawals, altering the sequence from the original sequence and order of withdrawals as undertaken by the customer, in an attempt to put the account into an overdraft position for which the bank could charge higher fees.

Thousands of plaintiffs came forward to join a class action lawsuit which has been ongoing since 2009. Wells Fargo, according to court documents, initially elected not to pursue arbitration.

Then came the decision, by the US Supreme Court, in 2011 in the case labelled AT&T Mobility v. Concepcion. That outcome bolstered mandatory arbitration clauses that Wells Fargo found attractive, and the bank attempted to pursue arbitration. However, the Eleventh Circuit rejected the petition by Wells Fargo in 2012.

Wells Fargo tried again in June of 2015 after a 2013 order further blocking arbitration by Miami-based US District Court Judge James Lawrence King was vacated by the Eleventh Circuit. The appellate panel had determined that a district court was not in a position to undertake a ruling as to the enforcement of arbitration against unnamed plaintiffs, without first certifying the class.

In June 2015, class certification was successfully achieved, and Wells Fargo went right to the mark to pursue arbitration – only to be rebuffed again by Judge King in Miami in a ruling handed down in October of last year.

Wells Fargo appealed that ruling to the Eleventh Circuit.

Last month, in advance of oral arguments in the appeal, plaintiffs argued in briefs filed with the Court that Wells Fargo, quite simply, missed their chance at arbitration – holding that the granting of arbitration would be a waste of time and resources for the Court, as well as plaintiffs with lawsuits long consolidated in multidistrict litigation.

“Allowing a litigant to wait and see how a case evolves, neglect case management orders meant to resolve time-consuming threshold issues, elect not to exercise arbitration rights against named plaintiffs who are subject to the same arbitration provision as putative class members, and lie in wait in order to request arbitration against the class as a ‘safety valve’ following class certification, is antithetical to the integrity of judicial processes,” the plaintiff brief said.

“Such gamesmanship interferes with and wastes valued judicial and party resources.”

The Wells Fargo bank overdraft fees class actions were originally filed in both California and Florida, and have since been consolidated in federal district court in Miami (The MDL is In re: Checking Account Overdraft Litigation, Case No. 1:09-md-02036, in the US District Court for the Southern District of Florida). Plaintiffs are upset that their careful diligence and management of accounts in order to avoid overdraft fees was all for naught, when the bank – without notice – arbitrarily chose to alter the order of the transactions to generate additional fees from accounts that would have otherwise not gone into overdraft had the bank not meddled with them, or so it is alleged.

Defendants are Wells Fargo Bank NA in addition to Wachovia Bank NA, which Wells Fargo acquired in 2009. The appeals are Garcia et al. v. Wachovia Bank NA, Case No. 16-16823, and Martinez et al. v. Wells Fargo Bank NA, Case No. 16-16820, both in the US Court of Appeals for the Eleventh Circuit.