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Wanted: Plaintiffs Firm That Meets Alsup's StandardsU.S. District Judge William Alsup has indicated he'll certify a class of California residents in a flood insurance case against Wells Fargo, but he wants different counsel on the case.
2013-06-24 05:11:47 PM
SAN FRANCISCO — At least you always know where you stand with U.S. District Judge William Alsup.
The famously tough federal judge is shopping for new plaintiffs lawyers to pursue a class action against Wells Fargo Bank because he isn't happy with the team that brought suit.
Alsup on Friday conditionally certified a class of California residential borrowers who were automatically signed up for flood insurance at above-market rates, while at the same time seeking to replace the lawyers who filed the suit and sought appointment as class counsel.
The Wagoner Law Firm, Owings Law Firm and Walker Law, all based in Little Rock, Ark., and San Jose solo Sheri Kelly misled the court regarding similar pending suits and gave a "lackluster performance" in discovery, Alsup stated in his order. "The court has had prior and disappointing experience with several of the applicant firms and attorneys," he wrote, calling Lane v. Wells Fargo, 12-4026, a "rare case" where class members best interest might rest on the selection of new counsel.
Kelly, the group's local counsel, could not immediately be reached for comment. According to her web site, Kelly previously practiced at Burlingame's Cotchett, Pitre & McCarthy and Girard Gibbs, both highly regarded plaintiffs shops.
The group's suit before Alsup challenges the Wells Fargo practice of purchasing flood and hazard insurance for residential properties securing loans it acquired from Fannie Mae or Freddie Mac, a practice known as "force-placement." Wells Fargo allegedly received kickbacks from insurance providers on the policies.
Alsup refused to certify a nationwide class due to variations in state law. He also denied a motion to certify a class of Arkansas borrowers, finding those claims would be better litigated in Arkansas. In his order, Alsup noted that numerous class actions involving force-placed insurance on home mortgages have been filed in recent years and said plaintiffs lawyers had misrepresented their status to gain an advantage.
"For example," Alsup wrote, "in plaintiffs' motion for class certification, counsel cited seven different ongoing actions alleging similar claims against defendant, but stated that 'these cases do not overlap with this case in any manner.' This was and remains inaccurate."
Moreover, he wrote, the same group of plaintiffs lawyers had sought to derail a nationwide settlement in a similar suit against Chase Home Finance because the settlement would hurt their own action against Chase.
"This was a hold-up maneuver unworthy of Rule 23 practice," Alsup wrote.
In securities class actions, it is the lead plaintiff who chooses its counsel, Alsup noted. However, he wrote, the choice of class counsel in consumer class actions is up to judges, who have broad discretion to appoint lawyers who will fairly and adequately represent the class.
Alsup said the current plaintiffs lawyers could still seek appointment and encouraged them to co-apply with other counsel "preferably familiar with the successful conduct of class actions in this district."
The deadline for applications is July 19. Lawyers seeking appointment should explain their experience in class action and other complex litigation, their familiarity with the claims at issue and their track record in achieving class verdicts or settlements, Alsup stated.
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