Wells’ Fargo class action flop in California via Complex Litigator

For those of us in the trenches representing consumers in class actions, it’s always nice to find good information resources in the law blog world. I’ve stopped by the Complex Litigator a few times. I only caught this post on a consumer class against Wells Fargo because of a Twitter post alerting me to it.

The case, Gutierrez v. Wells Fargo Co., 2010 WL 1233810, 2010 U.S. Dist. Lexis 29082 (N.D.  Cal.  Mar. 26, 2010), arises out of allegedly illegal banking practices that led to improper assessment of overdraft fees. The federal court certified a class, and Wells Fargo filed a motion to decertify the class.

Digression: In representing consumers in class action cases, I privately think of motions to decertify as “Waah! motions,” as they often stand on the same arguments that didn’t succeed, and they frequently employ heated prose to attempt to change the Court’s mind on a decision previously rendered.  In my experience, they are often an expensive waste of time.

Complex Litigator points out that the court found the small amounts at stake to be important in finding a class action would be superior. This was true when the court certified the class and remained true in the decertification motion. The small-stake problem is an important concept that sometimes gets lost in the heated U.S. Chamber of Commerce talking-point criticisms of class actions.

The nickel and diming effect is one that I’ve written about before, but the short version is that consumer class actions provide a means of stopping illegal practices that take small amounts from a large number of people. A corporation that illegally takes a few bucks from a million people makes a few million. Handsome profit if it’s not stopped.

The more interesting part of the CL blog post quotes the court.  As a side note, I’m a bit confused, as it appears to be a quote from an earlier opinion in the case, or maybe I’m missing something. I don’t see the quoted language in the cited Lexis opinion. Likely, it’s my confusion due to insufficient coffee. Nevertheless, I’ll take as a given that CL correctly quotes the court.

Wells Fargo sought decertification because–it argued–the class did a poor job of modeling class-wide damages.  As CL explains,

“It is interesting that the weaknesses in defendant’s transaction data was used by the court to nullify challenges to the methodology used by plaintiffs’ expert to assess damages for the class.  The court found that the same flaws in data would impact an individual’s attempt to prove damages.  The opinion contains a detailed discussion, with an example, of the allged (sic) practices and the damage extrapolation methodology used by plaintiffs’ expert.”

The underlying data problem is one that I see from time-to-time in consumer class actions.  Defendants often resist production of class membership and damage data in large consumer class actions. And once they produce it , they sometimes go so far as to attack the class’s damages model because of the insufficient underlying data. That’s  one of those ironic arguments that I love to see defendants make.

Anyway, kudos to Complex Litigator for pointing out the opinion. Interesting reading for class action practitioners, especially those who handle consumer class actions.

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