A federal judge in Newark has rejected Wells Fargo Bank’s motion to strike class allegations in a suit claiming it made hourly workers solicit new accounts while working off the clock.
The ruling comes as Wells Fargo attempts to dig itself out of a scandal over allegations that employees were pressured to open millions of unauthorized accounts in the names of existing customers. Last year the bank was fined $185 million by the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the city and county of Los Angeles in the case.
Wells Fargo said in the motion that no objective mechanism is available for identifying who is in the proposed class, but U.S. District Judge Esther Salas of the District of New Jersey disagreed, finding that company records would permit documentation of who is a class member. Salas also rejected Wells Fargo’s assertion that the proposed class is an impermissible fail-safe class, meaning that identifying class members requires a determination of the merits of a proposed class member’s claim as a prerequisite to class membership. Salas agreed that the class appears fail-safe, but she said the law is unclear about whether such a class is impermissible and that the defendant’s objection on that basis should be addressed at the class certification stage.
Wells Fargo sought to strike class allegations before discovery in the suit, which was filed in October 2016. The suit seeks certification of a class action for violation of the New Jersey Wage and Hour Law and a collective action for violation of the Fair Labor Standards Act.
The named plaintiffs, Juan Carlos Merino and Agustin Morel Jr., were hourly employees of Wells Fargo who claim they and all other hourly employees of the bank were required to meet quotas for opening new accounts. Failure to meet quotas could result in termination or demotion, they claim. Plaintiffs allege that meeting those quotas required them to solicit accounts outside of regular business hours, and that managers knew, or should have known, that meeting their quotas required employees to solicit new accounts outside of regular business hours.
The new-account scandal prompted the company’s chief executive, John Stumpf, to step down, and 5,300 workers were fired for alleged improper sales practices. The revelations prompted the states of California and Illinois to stop doing business with Wells Fargo.
Employees claim they were not paid overtime for hours worked in excess of 40 each week and were not allowed to record off-site solicitation time on their regular reports. But the company issued workers “off-site sheets” to keep track of after-hours solicitations, which plaintiffs said is an acknowledgement that managers knew workers were putting in several hours each day beyond normal business hours.
In its motion to strike class allegations, Wells Fargo said class membership could not be readily determined by objective criteria and the court would have to make individualized inquiries of each potential class member to determine if he or she worked off the clock. Class treatment has been held to be inappropriate under such circumstances, Wells Fargo asserted. The bank also asserted that identifying class members would also require “a determination of the merits of any proposed class member’s claim.”
Salas said the class consists of those who worked as hourly employees for Wells Fargo who were required to meet quotas for opening new accounts, have worked more than 40 hours per week and have not been paid overtime wages. But Wells Fargo must keep payroll records by law, and documents identified by plaintiffs—quota requirements, off-site sheets and related policies, procedures and reports, and documents reflecting the number of new accounts opened by hourly employees and target numbers for new accounts—can identify class members, Salas said.
Salas said she was not won over by Wells Fargo’s contention that, regardless of whether such records might have probative value in deciding the merits of an individual’s overtime claim, they would not allow an employee’s membership in the proposed class to be readily ascertained. “Wells Fargo’s contention begs an unanswered question: Why is it certain that such information cannot be readily ascertained? After all, no discovery has been exchanged, and this argument seems to presuppose that discovery shows or doesn’t show,” Salas said.
The judge also said that her conclusion that the fail-safe argument should be addressed at the class certification stage was based on a 2012 case from the U.S. Court of Appeals for the Seventh Circuit that was cited by Wells Fargo, Messner v. Northshore Univ. HealthSystem. That case held that defining a class to avoid being over-inclusive or the fail-safe problem is “more of an art than a science,” and those problems “can and often should be solved by refining the class definition rather than by flatly denying class certification on that basis.”
Robert Szyba of Seyfarth Shaw in New York, representing Wells Fargo, declined to comment on the ruling. Roosevelt Nesmith, a Montclair solo representing the class, said he was pleased with the ruling, adding, “We look forward to continuing to prosecute the case on behalf of the proposed class of present and former Wells Fargo bankers.”