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RESPONSE IN OPPOSITION -- (re: pldg. ( 1 in MDL No. 2954), ( 2 in MDL No. 2954) )… — Agent Fee Litigation (Dkt. 17)
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Wells Fargo & Co. and Wells Fargo Bank, N.A.'s response in opposition to DNM Contracting, Inc.'s motion for transfer under 28 U.S.C. § 1407, filed June 24, 2020 as Document 17 before the United States Judicial Panel on Multidistrict Litigation in In re: Wells Fargo Paycheck Protection Program Litigation, MDL Docket No. 2954. The response argues that the eight included actions lack a common factual core: one is a securities class action, one concerns agent fees, another challenges a business checking account requirement, and the remaining prioritization cases differ in class definitions and claims. It states that as of June 20, 2020 the bank had approved 178,533 PPP loans totaling over $10 billion, with an average loan size of $57,931. It asks the Panel to deny the motion or, in the alternative, to consolidate before Chief Judge Philip A. Brimmer in the District of Colorado.
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Case MDL No. 2954 Document 17 Filed 06/24/20 Page 1 of 20
BEFORE THE UNITED STATES JUDICIAL
PANEL ON MULTIDISTRICT LITIGATION
MDL Docket No. 2954
IN RE: WELLS FARGO PAYCHECK
PROTECTION PROGRAM LITIGATION
ORAL ARGUMENT REQUESTED
WELLS FARGO & CO. AND WELLS FARGO BANK, N.A.’S RESPONSE IN
OPPOSITION TO MOTION FOR TRANSFER AND COORDINATION OR
CONSOLIDATION UNDER 28 U.S.C. § 1407
Wells Fargo & Co.1 and Wells Fargo Bank, N.A., by and through their undersigned
counsel, oppose DNM Contracting, Inc.’s (“Movant”) Motion for Transfer and Coordination or
Consolidation Under 28 U.S.C. § 1407 (the “Motion”), and state the following in opposition:
I. INTRODUCTION
Movant seeks to consolidate eight actions (the “Included Actions”) that allege various,
disparate claims that have something to do with Wells Fargo Bank’s participation in the recently
enacted Paycheck Protection Program (“PPP”).2 The Motion should be denied. Consolidation is
proper only where the movant has demonstrated that cases share common facts that are numerous
or complex and that consolidation would serve “the convenience of parties and witnesses” and
1
Specially appearing Defendant Wells Fargo & Co., which has been named as a defendant
in several of the actions at issue, is not a proper defendant to those actions. It is a financial holding
company under the Bank Holding Company Act of 1956, 12 U.S.C. § 1841, and has never offered
loans under the Paycheck Protection Program.
2
A potential tag-along action, BAM Navigation, LLC v. Wells Fargo & Co., et al., No. 0:20-
cv-01345 (D. Minn.), was filed on June 11, 2020. Counsel for BAM Navigation, LLC filed a
Notice of Related Action identifying this case as related to the Included Actions on June 23, 2020
(Dkt. No. 11).
Case MDL No. 2954 Document 17 Filed 06/24/20 Page 2 of 20
“promote the just and efficient conduct” of the actions. 28 U.S.C. § 1407; In re Nat’l Credit Union
Admin. Bd. Mortgage-Backed Sec. Litig., 996 F. Supp. 2d 1374, 1376 (J.P.M.L. 2014). Movant
fails to satisfy that burden here, most notably because the Included Actions lack the “common
factual core” necessary for consolidation. In re Stirling Homex Corp. Sec. Litig., 442 F. Supp.
547, 549 (J.P.M.L. 1977).
Movant contends that the Included Actions “share substantially similar allegations and
common issues of fact and law” because each such action alleges that Wells Fargo Bank “violated
the ‘first-come, first-served’ mandate by the [Small Business Administration]” in connection with
the PPP and seeks certification of a class (or classes) of “eligible PPP applicants who were harmed
as a result of the Defendants’ illegal practices.” (Mot. at 4-5.)
This is not remotely an accurate description of the Included Actions. Two of the Included
Actions are not even brought by PPP applicants at all: one action is a putative securities class
action brought by a Wells Fargo & Co. shareholder, and another action is brought by purported
third-party “agents” who claim that they are owed fees by Wells Fargo Bank and other lenders due
to the assistance they allegedly provided to PPP borrowers.3 A third action, although brought by
plaintiffs who allegedly sought PPP loans, makes claims based on alleged facts that are completely
unrelated to the “first-come, first-served” allegations — that case instead challenges Wells Fargo
Bank’s requirement that PPP loan applicants have a pre-existing business checking relationship
with the bank.
3
On June 23, 2020, the day before this Opposition was due to be filed, the parties to the
agent fees action stipulated to its removal from the Schedule of Actions because the agent fees
action is “the subject of and is included in the Schedule of Actions for a separate motion pending
before the Panel, In re Paycheck Protection Program (PPP) Agent Fees Litigation, MDL No.
2950.” (Dkt. No. 13.) The Panel has yet to issue an order removing the agent fees action.
2
Case MDL No. 2954 Document 17 Filed 06/24/20 Page 3 of 20
The remaining five Included Actions (as well as the lone potential tag-along action) do
bring claims related to Wells Fargo Bank’s alleged prioritization of certain customers for PPP
loans, but the commonality between these actions ends there. Plaintiffs in each action differ in
respects that are highly relevant to questions of standing, injury, and mootness: Some plaintiffs
have received PPP loans through Wells Fargo Bank. Other plaintiffs’ applications have been
withdrawn by the borrower, approved pending receipt of information from the borrower, or are
still pending.4 Even assuming that these plaintiffs can demonstrate that they have standing to bring
their claims and that there is a live controversy, these issues will be the subject of individualized
discovery not suited to centralization. Plaintiffs’ unique circumstances alone counsel against
centralization, but there are also substantial case-specific differences in class definitions, causes of
action, and allegations. These myriad dissimilarities between the Included Actions “reduce any
efficiencies to be gained from centralization” and militate against consolidation. In re Trilegiant
Membership Program Mktg. & Sales Practices Litig., 828 F. Supp. 2d 1362, 1363 (J.P.M.L. 2011).
In response to a separate motion to consolidate dozens of actions brought by purported
agents claiming an entitlement to fees for helping borrowers with their PPP loan applications,
Wells Fargo Bank has supported consolidation. See Wells Fargo Bank, N.A.’s Response to Alliant
CPA Group LLC’s Motion for Transfer of Actions, In re Paycheck Protection Program (PPP)
Agent Fees Litigation, MDL No. 2950, Dkt. No. 174. Unlike here, those cases raise the exact same
threshold question, there are many more of them pending in multiple courts across the country,
4
Wells Fargo will offer evidence of each plaintiff’s PPP loan application status at the
appropriate time and in the appropriate jurisdiction. Wells Fargo chose not to submit
documentation regarding its customers’ loan applications in a public filing; however, Wells Fargo
can provide such documentation to the Panel for in camera inspection should the Panel request it.
3
Case MDL No. 2954 Document 17 Filed 06/24/20 Page 4 of 20
they raise fewer and simpler plaintiff-specific questions, and the efficiencies to be gained by
litigating them in a consolidated proceeding are significant.
The requirements for transfer under Section 1407 are present for the agent fee cases, but
they are not met here. Accordingly, the Included Actions should stay in the courts where they
were filed.
II. BACKGROUND
Congress created the PPP as part of the Coronavirus Aid, Relief, and Economic Security
Act, Pub. L. 116-136 (“CARES Act”) to assist small businesses facing hardship during the global
COVID-19 pandemic. The PPP initially provided $349 billion in funding for loans to help small
businesses meet payroll and cover other expenses. Those funds were quickly depleted, however,
and, on April 24, 2020, the President signed into law the Paycheck Protection Program and Health
Care Enhancement Act, Pub. L. No. 116-139, which allocated an additional $310 billion in funds
to the PPP. The PPP loans, which are forgivable and guaranteed by the Small Business
Administration (“SBA”), are not made by the federal government or the SBA, but by private
lenders like Wells Fargo Bank. No bank is required to participate in the PPP; however, nearly
5,500 lenders across the country volunteered to do so. These lenders have approved over
4,600,000 loans, totaling more than $515 billion through two rounds of funding.5 Over $128
billion of allocated funding currently remains in the PPP.6
On April 5, 2020, Wells Fargo Bank announced that it was planning “to distribute a total
of $10 billion to small business customers under the requirements of the PPP” and would focus on
5
Paycheck Protection Program, https://www.sba.gov/funding-programs/loans/coronavirus-
relief-options/paycheck-protection-program.
6
Paycheck Protection Program (PPP) Report at 9, SMALL BUS. ADMIN. (June 20, 2020),
https://www.sba.gov/sites/default/files/2020-06/PPP_Report_200620-508.pdf (“SBA Report”).
4
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serving nonprofits and businesses with under 50 employees, which had “fewer resources” than
other businesses.7 In addition, Wells Fargo Bank stated that it would not retain fees generated
from PPP loans.8 Subsequently, on April 8, 2020, following action by the Federal Reserve, Wells
Fargo Bank announced that “it w[ould] expand its participation in the Paycheck Protection
Program and offer loans to a broader set of its small business and nonprofit customers subject to
the terms of the program.”9 Wells Fargo Bank limited its PPP loans to applicants with “a Wells
Fargo Business checking account as of Feb. 15, 2020.”10 In the following days, Wells Fargo Bank
“mobilized hundreds of Wells Fargo employees and launched new automation and technology so
[it could] process the extremely high volume of [PPP] applications.”11 According to public SBA
statistics, Wells Fargo Bank is the fifth largest PPP lender; as of June 20, 2020, it had approved
178,533 loans totaling over $10 billion, with an average loan size of $57,931—the second lowest
average among the 15 identified lenders, and little more than half of the overall average loan size
of $110,187.12
The Included Actions assert that Wells Fargo Bank engaged in various forms of purported
misconduct related somehow to the PPP. One, Ma v. Wells Fargo & Co, et al., No. 3:20-cv-03697
7
Wells Fargo Receives Strong Interest in the Paycheck Protection Program (PPP), WELLS
FARGO NEWSROOM (Apr. 5, 2020), https://newsroom.wf.com/press-release/community-banking-
and-small-business/wells-fargo-receives-strong-interest-paycheck.
8
Id.
9
Wells Fargo to Expand Participation in the Paycheck Protection Program (PPP), WELLS
FARGO NEWSROOM (Apr. 8, 2020), https://newsroom.wf.com/press-release/community-banking-
and-small-business/wells-fargo-expand-participation-paycheck.
10
Id.
11
Statement from Wells Fargo on the Paycheck Protection Program, WELLS FARGO
NEWSROOM (Apr. 16, 2020), https://newsroom.wf.com/press-release/corporate-and-
financial/statement-wells-fargo-paycheck-protection-program.
12
SBA Report, at 7; Paycheck Protection Program, https://www.sba.gov/funding-
programs/loans/coronavirus-relief-options/paycheck-protection-program.
5
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(N.D. Cal.) is a putative securities class action alleging that Wells Fargo & Co., its CEO, and CFO
violated federal securities laws by making material misstatements about Wells Fargo Bank’s PPP
loan allocation. Another Included Action, Full Compliance, LLC, et al. v. Amerant Bank, N.A., et
al., No. 1:20-cv-22339 (S.D. Fla.), brings claims based on an entirely different set of facts and
issues: namely, agents’ entitlement (or lack thereof) to collect fees from PPP lenders under the
CARES Act. Plaintiffs (Florida limited liability companies) allege that Wells Fargo Bank owes
them agent fees because they assisted small businesses in applying for PPP loans with the bank,
despite having no contractual or other relationship with Wells Fargo Bank. Yet another Included
Action, Scherer, et al. v. Wells Fargo Bank, N.A., No. 4:20-cv-01295 (S.D. Tex.), brings claims
concerning Wells Fargo Bank’s eligibility criteria for PPP loans. Plaintiffs allege that Wells Fargo
Bank unlawfully excluded PPP loan applicants who did not have a business checking account with
the bank as of February 15, 2020.
The remaining cases, including the potential tag-along case (together, the “Prioritization
Cases”), relate to Wells Fargo Bank’s supposed failure to process PPP applications on a “first-
come, first-served” basis, which plaintiffs allege is required by the CARES Act, but even these
cases lack a “common factual core.”13 Stirling Homex Corp., 442 F. Supp. at 549. The
Prioritization Cases are rife with distinct and different “case-specific factual and legal issues.” In
re Express Scripts Holding Co. Sec., Deriv. & Employee Ret. Income Sec. Act (ERISA) Litig., 273
13
The Prioritization Cases include (1) BSJA, Inc., et al. v. Wells Fargo & Co., et al., No. 2:20-
cv-03588 (C.D. Cal.); (2) DNM Contracting, Inc. v. Wells Fargo Bank, N.A., No. 4:20-cv-01790
(S.D. Tex.); (3) Physical Therapy Specialists, P.C. v. Wells Fargo Bank, N.A., No. 1:20-cv-01190
(D. Colo.); (4) Marselian v. Wells Fargo and Company, et al., No. 4:20-cv-03166 (N.D. Cal.),
(5) Karen’s Custom Grooming LLC v. Wells Fargo & Company, et al., No. 3:20-cv-00956 (S.D.
Cal.); and (6) BAM Navigation, LLC v. Wells Fargo & Co., et al., No. 0:20-cv-01345 (D. Minn.)
hereinafter referred to as BSJA, DNM, Physical Therapy Specialists, Marselian, Karen’s Custom
Grooming, and BAM, respectively.
6
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F. Supp. 3d 1369, 1371 (J.P.M.L. 2017). For example, each of the complaints in the Prioritization
Cases includes different state statutory and common law claims with different elements and
potential defenses. The composition of the proposed putative class(es) also varies from case to
case. Some are putative statewide classes (BSJA, Physical Therapy Specialists, BAM), another is
nationwide (DNM), and two complaints propose one statewide and one nationwide class
(Marselian, Karen’s Custom Grooming). Moreover, the classes include different types of
plaintiffs: some of the classes are limited to plaintiffs who applied for PPP loans (BSJA, Marselian,
Karen’s Custom Grooming, BAM); another merely requires class members to have attempted to
apply (Physical Therapy Specialists). One putative class is limited to borrowers who applied for
PPP loans with Wells Fargo Bank, but were not issued loans or whose applications were not
processed (Marselian); another consists of class members whose applications were not processed
in the order of receipt (Karen’s Custom Grooming); three others are restricted to class members
who were not issued loans and/or whose applications were not processed in accordance with the
CARES Act and/or SBA regulations or, in the case of BAM, Minnesota law (BSJA, Physical
Therapy Specialists, BAM); and the last putative class includes Wells Fargo Bank small business
customers who utilized Wells Fargo Bank for assistance with and processing of their PPP loans
(DNM). Four of the six proposed classes require class members to have been eligible for PPP
loans (BSJA, Physical Therapy Specialists, Marselian, BAM).
The Prioritization Cases also allege different types of supposed misconduct. In DNM, for
example, the plaintiff’s 12-page complaint focuses narrowly on Wells Fargo Bank’s purported
prioritization of “select customers” and “bigger businesses” for PPP loans. (DNM Compl. ¶ 1.)
On the other hand, plaintiff’s 55-page complaint in Karen’s Custom Grooming alleges a whole
host of purported wrongs, including allegations that Wells Fargo Bank prioritized customers
7
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seeking large loan amounts, failed to put applicants in a queue based on when they first expressed
interest in a PPP loan, and failed to timely host a website where all those seeking PPP loans could
apply. (Karen’s Custom Grooming (“KCG”) Compl. ¶¶ 11-13, 16.)
The plaintiffs’ individual circumstances vary widely in ways that have ramifications for
standing, injury, and mootness. While some plaintiffs have received PPP funding through Wells
Fargo, others’ loan applications were withdrawn, remain pending, or were approved pending
receipt of certain information from the borrower.
III. LEGAL STANDARD
“When civil actions involving one or more common questions of fact are pending in
different districts, such actions may be transferred [by this Panel] to any district for coordinated or
consolidated pretrial proceedings . . . . upon its determination that” centralization will serve “the
convenience of parties and witnesses” and “promote the just and efficient conduct of such actions.”
28 U.S.C. § 1407(a). The party seeking transfer bears the “burden of demonstrating the need for
centralization.” In re Best Buy Co., Inc., Cal. Song-Beverly Credit Card Act Litig., 804 F. Supp.
2d 1376, 1379 (J.P.M.L. 2011). This burden is even “heavier” where “only a minimal number of
actions are involved.” In re Kissi, 923 F. Supp. 2d 1367, 1369 (J.P.M.L. 2013). “[C]entralization
under Section 1407 should be the last solution after considered review of all other options.” Best
Buy, 804 F. Supp. 2d at 1378; cf. In re Gemcap Lending I, LLC, Litig., 382 F. Supp. 3d 1352, 1352
(J.P.M.L. 2019) (“We do not find Section 1407 centralization is necessary for a minimal number
of parties and actions, particularly where the parties have made no effort to informally
cooperate.”).
8
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IV. ARGUMENT
A. Individual facts predominate over alleged common fact questions.
To be eligible for centralization under Section 1407, it is not enough that the Included
Actions have “some factual overlap.” In re Abbott Labs., Inc., Similac Prods. Liab. Litig., 763 F.
Supp. 2d 1376, 1377 (J.P.M.L. 2011). Rather, the Included Actions must share a “common factual
core.” Stirling Homex Corp., 442 F. Supp. at 549. Denial of a motion for transfer is warranted
when “individual facts contained in [the Included Actions] will predominate over any alleged
common fact questions.” Abbott Labs., 763 F. Supp. 2d at 1376; see also, e.g., In re Pharmacy
Benefit Plan Adm’rs Pricing Litig., 206 F. Supp. 2d 1362, 1363 (J.P.M.L. 2002) (denying transfer
where “unique questions of fact predominate[d] over any common questions”). In addition,
“common questions of fact among the[] actions [must be] sufficiently complex and/or numerous
to justify centralization.” Nat’l Credit Union, 996 F. Supp. 2d at 1376; Abbott Labs., 763 F. Supp.
2d at 1377 (“Although plaintiffs are correct that some factual overlap exists among the present
actions, the proponents of centralization have failed to convince us that any shared factual
questions in these actions are sufficiently complex and/or numerous to justify Section 1407
transfer . . . .”). Here, the Motion should be denied because, although the Included Actions broadly
pertain to Wells Fargo Bank’s participation in the PPP, “individual facts contained in these actions
[] predominate over any alleged common fact questions.” Abbott Labs., 763 F. Supp. 2d at 1376.
1. Ma, Full Compliance, and Scherer do not share a common factual core
with the Prioritization Cases or each other.
Ma, Full Compliance, and Scherer are entirely different from the Prioritization Cases —
and from each other — and for that reason should not be centralized. As explained above, Ma is
a putative securities class action alleging that Wells Fargo & Co., its CEO, and its CFO made
material misstatements about the Company’s PPP loan allocation, artificially inflating the
9
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Company’s stock price. Named plaintiff and the other class members allegedly were induced to
purchase shares at these inflated prices and suffered losses when the “truth” emerged that Wells
Fargo Bank was actually prioritizing certain customers, causing the Company’s stock price to fall.
(Ma Compl. ¶¶ 34-39.) Major factual questions in that case include, but are not limited to, whether
the alleged misstatements were false or misleading, whether the defendants made any purported
misstatements with scienter, and whether Wells Fargo & Co.’s stock price fell as a result of the
“truth” being revealed to the market. Unlike any other Included Action, Ma involves individual
defendants, raising distinct fact questions as to their alleged liability that are ill-suited for
centralization. See In re NebuAd Device Privacy Litig., 716 F. Supp. 2d 1370, 1371 (J.P.M.L.
2010) (motion for transfer denied where the actions were brought against “different internet service
provider defendant[s]”). In addition, the claims (alleged violations of federal securities laws) and
the proposed class (those who purchased or otherwise acquired Wells Fargo & Co. stock during
the Class Period) are unique among the Included Actions.
Full Compliance pertains to a wholly different issue: whether or not “agents” are entitled
to fees under the CARES Act. Plaintiffs allege that Wells Fargo Bank owes them fees because
they purportedly assisted small businesses in applying for PPP loans with the bank. (Full
Compliance Compl. ¶ 51.) Full Compliance is the only Included Action brought by such purported
“agents.” The action is also unique in that it names 19 other financial institutions as defendants.
It also is one of dozens of similar agent fee cases, all of which are subject to inclusion in a different
potential multi-district litigation, In re Paycheck Protection Program (PPP) Agent Fees Litigation,
MDL No. 2950.14
14
As explained above, unlike the Included Actions, the agent fee cases should be
consolidated because they uniformly present the same threshold legal question and it would be
inefficient to litigate them in dozens of courts across the country.
10
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Scherer concerns yet still another, entirely different question: whether Wells Fargo Bank
lawfully refused to accept PPP loan applications from applicants who did not have a business
checking account with the bank as of February 15, 2020. As noted in its motion to dismiss the
second amended complaint in Scherer, filed May 26, 2020, Wells Fargo Bank does not dispute
that it required applicants for PPP loans to be pre-existing customers and instead contends that the
CARES Act permits lenders to impose requirements other than those enumerated in the statute.
See Motion to Dismiss, Scherer, Dkt. No. 29. Wells Fargo Bank believes it is likely to prevail on
its motion to dismiss, but should the case survive the motion, the principal factual question would
likely be whether the individual plaintiffs suffered any harm as a result of Wells Fargo Bank’s
conduct. This kind of individualized inquiry would not lend itself to centralization. In addition,
because the proposed class (entities who were prevented from applying for a PPP loan by Wells
Fargo Bank because they lacked a pre-existing business checking relationship with the Company)
is unique among the Included Actions, case-specific analysis would be required at the class
certification stage.
2. The Prioritization Cases also lack a common factual core.
The Prioritization Cases relate to Wells Fargo Bank’s allocation of PPP loans, but
differences abound among these cases, too. The Prioritization Cases differ in at least four ways:
The plaintiffs’ individual circumstances vary across cases. First, the plaintiffs’
individual circumstances differ materially across actions in ways that have consequences for
standing, injury, causation, and mootness. Some of the plaintiffs have received a PPP loan through
Wells Fargo. Other plaintiffs’ applications have been withdrawn, or approved pending receipt of
follow-up information or documents from the borrower, or remain pending. Counsel for plaintiffs
in one of the Prioritization Cases has indicated that it is searching for a new named plaintiff because
the PPP loan applications of the plaintiffs in that action have been approved.
11
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As these examples make clear, the Prioritization Cases involve fundamental factual
differences without a “common factual core” that supports centralization. A case with named
plaintiffs who may have received funding from Wells Fargo Bank is almost certainly dead in the
water, whereas a case with a plaintiff who may have declined a loan that Wells Fargo Bank offered
will hinge, in large part, on factual questions concerning the plaintiff’s reasons for declining (such
as that the plaintiff secured funding from another lender), and, if the plaintiff obtained a PPP loan
from another lender, whether the plaintiff can reasonably claim to have suffered harm at the hands
of Wells Fargo Bank. Centralization makes little sense given the plaintiffs’ divergent
circumstances and divergent threshold factual and legal questions. See In re Helicopter Crash
Near Cameron, La., 443 F. Supp. 1022, 1023 (J.P.M.L. 1978) (the Panel could not “conclude that
transfer . . . [would] further the purposes of [Section 1407]” where “counsel ha[d] stated that the
question of liability might never arise [in one of the actions] because of important threshold issues
involving the standing of the plaintiff parent in that action to sue”); In re Bernzomatic &
Worthington Branded Handheld Torch Prods. Liab. Litig. (No. II), 410 F. Supp. 3d 1355, 1356
(J.P.M.L. 2019) (Section 1407 centralization was inappropriate where the “accidents in which
plaintiffs suffered injuries arose in different circumstances.”).
In addition, while plaintiffs in the Prioritization Cases generally allege that Wells Fargo
Bank made misrepresentations regarding its PPP loan allocation, including in public statements
such as press releases, certain plaintiffs allege that they had additional individual communications
with the bank in which representations were made to plaintiffs about their loans. For example,
Karen’s Custom Grooming alleges that it received multiple e-mail communications in which Wells
Fargo Bank represented that plaintiff “remained ‘in the queue based upon when [it] submitted [its]
initial interest’” and that Wells Fargo Bank was continuing to “work through the queue in order.”
12
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(KCG Compl. ¶ 44.) Individualized discovery would be required to determine what
representations were made and when, by whom, whether they were false or misleading, and
whether plaintiff justifiably relied on them.
The alleged misconduct varies across cases. Second, the Prioritization Cases allege
varying and different purported misconduct by Wells Fargo Bank. For example, in DNM, plaintiff
alleges that Wells Fargo Bank prioritized “select customers” and “bigger businesses” for approval
and “selectively exclud[ed] Plaintiff and Class Members from the application process.” (DNM
Compl. ¶¶ 1, 28 (emphasis added).) The allegations in Physical Therapy Specialists are materially
different from those in DNM: plaintiff there alleges that Wells Fargo Bank established “separate
line[s]” for Small Business and Commercial Banking customers, treated the Commercial Banking
line as an “express lane,” and, as a result, a smaller percentage of “Wells Fargo’s retail, ‘Small
Business’ customers that tried to apply for PPP loans were approved.” (Physical Therapy
Specialists (“PTS”) Compl. ¶¶ 5, 20.) In contrast to both DNM and Physical Therapy Specialists,
plaintiff in Karen’s Custom Grooming alleges a multiplicity of purported wrongs. Specifically,
plaintiff asserts that Wells Fargo Bank “prevented and/or prejudicially delayed Plaintiff and
members of the Classes in seeking to apply for PPP Loans” by (1) requiring that PPP loan
applicants have a business checking account with Wells Fargo Bank as of February 15, 2020; (2)
focusing its efforts during the first round of funding on businesses with under 50 employees and
nonprofits; (3) failing to put applicants in a queue based on when they first expressed interest and
instead prioritizing applications from customers seeking large loan amounts or applications from
otherwise preferred customers; and (4) failing to timely host an active webpage with a link to the
PPP application in order to permit all those seeking PPP loans to apply. (KCG Compl. ¶¶ 10-13,
16.) These extensive factual dissimilarities in the alleged misconduct weigh strongly against
13
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centralization. See, e.g., In re Starbucks Corp. Mktg. & Sales Practices Litig., 222 F. Supp. 3d
1348, 1349 (J.P.M.L. 2016) (centralization unwarranted where two cases concerned alleged under-
filling of beverages based upon recipes and equipment unique to hot drinks and two others
concerned alleged under-filling of cold beverages based upon recipes and equipment unique to
iced drinks). Further, even if this Panel were to find that the Prioritization Cases involve a
“common factual core,” any common factual questions pertaining to whether Wells Fargo Bank
prioritized certain customers would be “relatively straightforward” and thus not sufficiently
complex to justify centralization. See, e.g., In re Intelius, Inc., Post-Transaction Sales & Mktg.
Litig., 706 F. Supp. 2d 1374, 1375 (J.P.M.L. 2010) (denying centralization where the actions
involved “relatively straightforward consumer misrepresentation claims”); In re Six Flags Fair &
Accurate Credit Transactions Act (FACTA) Litig., 289 F. Supp. 3d 1343, 1344 (J.P.M.L. 2018)
(centralization denied where question of whether defendants “violated the Fair and Accurate Credit
Transactions Act by printing more than the last five digits of consumers’ credit and/or debit card
numbers on their receipts” was a “relatively straightforward” factual issue).
The proposed classes vary across cases. Third, plaintiffs in the Prioritization Cases
propose various classes—statewide, nationwide, or both statewide and nationwide. The types of
plaintiffs included in the classes differ as well. For example, in Marselian, the class is comprised
of small businesses that met the criteria for a PPP loan and timely applied with Wells Fargo Bank,
but whose applications were not processed and/or who were not issued loans. (Marselian Compl.
¶ 88.) The (statewide and nationwide) classes in Karen’s Custom Grooming are comprised of
small businesses who applied to Wells Fargo Bank for PPP loans and whose applications were not
processed in the order received. (KCG Compl. ¶ 67.) Plaintiffs in BSJA, Physical Therapy
Specialists, and BAM bring suits on behalf of businesses qualified for PPP loans who applied for
14
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(or, in the case of Physical Therapy Specialists, who applied or attempted to apply for) loans but
whose applications were not processed and/or who were not issued loans in accordance with the
CARES Act or SBA regulations (or, in BAM, Minnesota law). (BSJA Compl. ¶ 46; PTS Compl.
¶ 24; BAM Compl. ¶ 46.) The class in DNM is broader, covering small businesses who utilized
Wells Fargo Bank for processing of their PPP loans (with no reference to PPP loan eligibility or
if/how the loans were processed). (DNM Compl. ¶ 15.) These variations in class definitions are
likely to result in case-specific questions and discovery at the class certification stage.
The claims vary across cases. Fourth, the Prioritization Cases plead an array of different
claims (five out of the six actions assert at least one unique claim), including but not limited to
violations of different state consumer protection statutes, tortious interference, fraud, and
negligence, each of which involves different elements and potential defenses. Further, even where
different actions allege some claims in common, those claims may be adjudicated with reference
to different states’ laws, depending on the state in which the District Court sits. This Panel
repeatedly has recognized the implication of varying state laws as a reason not to centralize. See,
e.g., In re DIRECTV, Inc., Fair Labor Standards Act (FLSA) & Wage & Hour Litig., 84 F. Supp. 3d
1373, 1375 (J.P.M.L. 2015) (denying centralization of 11 actions where plaintiffs’ claims
implicated multiple states’ laws); In re Title Ins. Real Estate Settlement Procedures Act (RESPA)
& Antitrust Litig., 560 F. Supp. 2d 1374, 1375 (J.P.M.L. 2008) (denying centralization of 25
actions due to variances in state law); In re Long-Distance Tel. Serv. Fed. Excise Tax Refund Litig.,
469 F. Supp. 2d 1348, 1350 (J.P.M.L. 2006) (“The Panel is persuaded, however, that the single
California state law claim brought . . . in the Central District of California action is unique and
therefore should not be included in the [MDL] proceedings at the present time.”); In re Rite Aid
Corp. Wage & Hour Emp’t Practices Litig., 655 F. Supp. 2d 1376, 1377 (J.P.M.L. 2009)
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(“differing provisions” in “various state wage laws” weighed against centralization). Unlike the
agent fee cases, there is no common threshold legal issue that might result in a merits dismissal of
all of the Prioritization Cases.
In short, notwithstanding some factual overlap among the Prioritization Cases, case-
specific questions predominate and weigh against centralization. See In re United Healthcare
Servs., Inc. Harvoni (Ledipasvir & Sofosbuvir) Health Ins. Litig., 222 F. Supp. 3d 1339, 1340-41
(J.P.M.L. 2016) (despite the fact that the actions “unquestionably share[d] factual questions,”
centralization was not appropriate where “one action . . . raise[d] case-specific factual and legal
issues”).
B. Transfer is neither convenient to the parties and witnesses nor would it
promote the just and efficient conduct of the actions.
To demonstrate that centralization serves the convenience of the parties and witnesses and
promotes the just and efficient conduct of the actions, the movant must do more than show that
there are common factual questions. See, e.g., In re Concrete Pipe, 302 F. Supp. 244, 254
(J.P.M.L. 1969) (“[N]either the convenience of witnesses and the parties nor the just and efficient
conduct of actions are served, ipso facto, by transfer just because there are common questions of
fact in the civil actions involved.”); In re Joel Snider Litig., 2020 WL 1503250, at *1 (J.P.M.L.
Mar. 27, 2020) (centralization not warranted despite “some factual overlap” where the actions
were “already . . . proceeding in an orderly manner in the two districts in which they [were]
pending”). The Panel has held that centralization should “eliminate duplicative discovery; prevent
inconsistent pretrial rulings, including with respect to class certification; and conserve the
resources of the parties, their counsel, and the judiciary.” In re Horizon Organic Milk Plus DHA
Omega-3 Mktg. & Sales Practices Litig., 844 F. Supp. 2d 1380, 1380-81 (J.P.M.L. 2012). On the
other hand, transfer may be inappropriate where “suitable alternatives . . . exist in order to minimize
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the possibility of duplicative discovery, inconsistent pretrial rulings, or both.” In re Coal-Fired
Elec. Utils. Clean Air Act Litig., 162 F. Supp. 2d 696, 697 (J.P.M.L. 2001). Centralization is the
option of last resort. See Best Buy, 804 F. Supp. 2d at 1378 (“[C]entralization under Section 1407
should be the last solution after considered review of all other options.”).
Because the Included Actions involve significant factual differences, as set forth above,
centralization will not eliminate duplicative discovery, prevent inconsistent trial rulings, or
conserve the resources of the parties, their counsel, or the judiciary. On the contrary, centralization
would create needless complexity; a judge assigned to oversee the proposed multi-district litigation
would be burdened with numerous case-specific legal and factual questions and case-specific
discovery. See ERISA Litig., 273 F. Supp. 3d at 1371 (“These case-specific issues are likely to
undermine the alleged efficiencies that could be gained from centralizing an already minimal
number of actions.”).
In addition, there is good reason to believe that dispositive motion practice will soon
eliminate some or all of the Included Actions, which are already few in number, making
centralization an even less suitable solution. Wells Fargo Bank has already moved to dismiss the
second amended complaint in Scherer because it suffers from multiple fatal defects: plaintiff has
not identified a private right of action, see Profiles, Inc. v. Bank of Am. Corp., 2020 WL 1849710,
at *7 (D. Md. Apr. 13, 2020), and failed to plead injury. Moreover, one or more of the Included
Actions may be mooted on the ground that the named plaintiffs have obtained a PPP loan through
Wells Fargo Bank or another bank. Given that the small number of actions here will likely shrink
even more (and perhaps to zero) in the near term, this Panel should deny the Motion. See In re
Droplets, Inc., Patent Litig., 908 F. Supp. 2d 1377, 1378 (J.P.M.L. 2012) (denying centralization
where “a potentially case-dispositive motion [was] pending” because if “that motion [was] granted,
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the remaining five actions w[ould] be pending in only two districts, further weakening the case for
Section 1407 centralization”); In re Accutane Prods. Liab. Litig., 560 F. Supp. 2d 1370, 1370-71
(J.P.M.L. 2008) (vacating transfer order as to specific action because of motion “involv[ing] an
issue of Texas law” that was “unique” to that action and “potentially dispositive of the entire
action”); In re ATM Interchange Fee Antitrust Litig., 350 F. Supp. 2d 1361, 1362-63 (J.P.M.L.
2004) (recognizing that transfer should be denied where pending rulings or motions may moot the
multidistrict proceedings).
In light of the small number of Included Actions and the fact that defendants are
represented by common counsel in all actions except Full Compliance (which involves numerous
financial institution defendants represented by different counsel and should not be consolidated
with the other Included Actions, for the reasons previously discussed), there are “workable
alternative[s] to centralization.” Six Flags, 289 F. Supp. 3d at 1344; Bernzomatic, 410 F. Supp.
3d at 1356 (“Given the limited number of actions and involved counsel, informal coordination of
discovery and other pretrial matters among the parties and involved courts, if the need arises, is
preferable to formal centralization under Section 1407.”). “Notices of deposition can be filed in
all related actions; the parties can stipulate that, where appropriate, discovery taken in one action
can be used in both actions; or the involved courts may direct the parties to coordinate their pretrial
activities.” In re Am. Home Realty Network, Inc., Multiple Listing Serv. Copyright Infringement
Litig., 939 F. Supp. 2d 1372, 1373 (J.P.M.L. 2013). Such informal measures should “minimize or
eliminate duplicative discovery and other pretrial proceedings.” In re 3M Co. Lava Ultimate
Prods. Liab. Litig., 222 F. Supp. 3d 1347, 1348 (J.P.M.L. 2016). Movant has therefore failed to
demonstrate that centralization under Section 1407 is necessary or appropriate.
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C. If this Panel chooses to grant the Motion, the District of Colorado would be
the best forum for consolidation.
Should this Panel determine that transfer is appropriate, it should consolidate the cases
before Chief Judge Philip A. Brimmer in the District of Colorado. The Included Actions are
scattered throughout the country in California, Texas, Colorado, and Florida (and the potential tag-
along action is in Minnesota). The District of Colorado would “provide[] a convenient and
accessible forum for actions filed throughout the country.” In re Walgreens Herbal Supplements
Mktg. & Sales Practices Litig., 109 F. Supp. 3d 1373, 1376 (J.P.M.L. 2015). Denver is centrally
located with a major airport and has ample accommodations near the courthouse. In addition, the
District of Colorado is not currently overseeing any multi-district litigations, making it a good
candidate for centralization. See Horizon, 844 F. Supp. 2d at 1381 (centralization was appropriate
in the Southern District of Florida because that district “[was] presiding over fewer MDL dockets
than other proposed districts”). Further, as an experienced jurist with over 11 years of experience
on the bench, Chief Judge Brimmer “has the experience to steer this litigation on a prudent course.”
In re Nat’l Hockey League Players’ Concussion Injury Litig., 49 F. Supp. 3d 1350, 1350 (J.P.M.L.
2014).
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V. CONCLUSION
For the foregoing reasons, Wells Fargo Bank respectfully requests that this Panel deny the
Motion. If, however, the Panel concludes that transfer is warranted, it should consolidate the
Included Actions before Chief Judge Brimmer in the District of Colorado.
Dated: June 24, 2020 Respectfully submitted,
By: /s/ Christopher M. Viapiano
Christopher M. Viapiano
(viapianoc@sullcrom.com)
SULLIVAN & CROMWELL LLP
1700 New York Ave., N.W., Ste. 700
Washington, D.C. 20006
Telephone: (202) 956-6985
Facsimile: (202) 956-7056
Attorney for Wells Fargo & Co., Wells Fargo
Bank, N.A., Charles Scharf, and John
Shrewsberry
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