A federal judicial panel has sent two closely watched cases to California involving Wells Fargo’s sales practices and antitrust class actions related to the Volkswagen emissions scandal. In an order on Wednesday, the U.S. Judicial Panel on Multidistrict Litigation sent about 25 cases alleging a cartel among several German automakers to Charles Breyer, the San Francisco federal judge who oversaw hundreds of class actions brought over a “defeat device” that allowed Volkswagen vehicles to cheat emissions tests. Those cases settled last year for $14.7 billion.
Breyer, who also is one of seven judges on the MDL panel, was a “logical choice” given the “potential for factual overlap” with the Volkswagen emissions cases, wrote MDL Panel Chairwoman Sarah Vance.
“According to some plaintiffs, the VW defendants’ adherence to this illegal agreement necessitated the cheat at the heart of the VW ‘clean diesel’ MDL via emissions cheating technology supplied by defendant Robert Bosch (which is a defendant in some cases in this litigation,” she wrote.
The cases were filed in the wake of a July article in the German magazine Der Spiegel revealing that Audi, Volkswagen, Porsche, BMW and Daimler conspired for 21 years to exchange confidential information about the manufacturing of their vehicles, including the device at the heart of the emissions scandal.
All the carmakers and many of the plaintiffs’ attorneys had supported sending the cases to New Jersey, where nine of the cases had been filed.
In a somewhat more uncharacteristic move, the panel today sent 14 cases against San Francisco-based Wells Fargo & Co. to U.S. District Judge Andrew Guilford, who is overseeing three of the lawsuits in Santa Ana, California. The lawsuits claim that Wells Fargo steered its auto financing customers to National General Insurance Co., which signed them up to insurance they didn’t want. It’s one of several scandals rocking Wells Fargo, which paid $185 million in fines and settled class actions for $142 million following disclosures that as many as two million accounts were opened without the consent of customers.
On Tuesday, Wells Fargo CEO Tim Sloan appeared before the Senate Banking Committee this week to defend arbitration agreements with class action waivers.
The settlement over the fake accounts, however, could unravel in the wake of revelations last month that 1.4 million more accounts were opened than previously disclosed. U.S. District Judge Vince Chhabria is overseeing that settlement and, on Wednesday, U.S. District Judge Jon Tigar refused to dismiss a related shareholder derivative class action. Both judges are in San Francisco.
But in the auto insurance cases, the panel appeared influenced by plaintiffs’ attorneys who had supported Southern California because two companies named as defendants—a subsidiary called Wells Fargo Dealer Services and Balboa Insurance Co.—were based in Irvine, California. Two individuals from Wells Fargo Dealer Services, former President Dawn Martin Harp and Bill Katafias, former head of indirect auto lending, also were named as defendants.
“Moreover, it is alleged that key entities and individuals with direct responsibility for the alleged conduct in this litigation are located in this district and, therefore, relevant documents and witnesses may be located there,” Vance wrote. “Indeed, at oral argument, Wells Fargo represented that the primary witnesses would be found in the Central District of California.” Last year, Wells Fargo Dealer Services and Wells Fargo paid more than $24 million to federal regulators after illegally possessing 413 cars owned by service members.