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RESPONSE IN OPPOSITION -- (re: pldg. ( 1 in MDL No. 2954) ) Filed by Plaintiff Guofeng… — Agent Fee Litigation (Dkt. 29)
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A memorandum of law filed June 24, 2020 before the United States Judicial Panel on Multidistrict Litigation in In re Wells Fargo Paycheck Protection Plan Litigation, MDL No. 2954, as Document 29. Plaintiff Guofeng Ma, who brought the putative securities class action Ma v. Wells Fargo & Company et al., 3:20-cv-03697 (N.D. Cal.), opposes DNM Contracting Inc.'s motion to transfer and centralize eight actions in the Southern District of Texas. The memorandum argues under 28 U.S.C. § 1407 that the securities case shares no meaningful common factual core with the other actions, that transfer would not serve convenience or efficiency, and that the Private Securities Litigation Reform Act of 1995 imposes its own lead plaintiff process and discovery stay. It asks the Panel to deny the motion as to the securities action. The seven-page memorandum is signed by Jeremy A. Lieberman of Pomerantz LLP.
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Case MDL No. 2954 Document 29 Filed 06/24/20 Page 1 of 7
BEFORE THE
UNITED STATES JUDICIAL PANEL ON
MULTIDISTRICT LITIGATION
§
IN RE WELLS FARGO PAYCHECK § MDL DOCKET NO. 2954
PROTECTION PLAN LITIGATION §
§
§
MEMORANDUM OF LAW
IN OPPOSITION TO MOTION FOR TRANSFER AND CENTRALIZATION
Guofeng Ma (“Ma”), plaintiff in the putative securities class action Ma v. Wells Fargo &
Company et al., 3:20-cv-03697 (N.D. Cal.) (the “Securities Class Action”), respectfully submits
this memorandum of law in opposition to the motion of DNM Contracting Inc. (“DNM” or
“Movant”) to transfer the Securities Class Action to the United States Judicial Panel on
Multidistrict Litigation (“MDL”) for centralization of the actions in the Southern District of Texas
for coordinated or consolidated pretrial proceedings (the “Motion”).
I. PRELIMINARY STATEMENT
DNM’s Motion seeks transfer into the MDL, for consolidation or coordination, of eight
pending litigations (as enumerated in the Schedule of Actions filed with the Motion (Dkt. No. 1-
2), the “Included Actions”), the only common element among which is that each concerns, in some
respect, the participation of Wells Fargo & Co. (“WFC”) and/or Wells Fargo Bank, N.A. (“Wells
Fargo Bank” and, together with WFC, “Wells Fargo”) in the Paycheck Protection Program (“PPP”)
recently enacted by Congress. Yet DNM’s motion falls well short of the standard for transfer and
consolidation. Consolidation is proper only where the movant has demonstrated that the cases at
issue share common facts that are numerous or complex and that consolidation would serve “the
convenience of parties and witnesses” and “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.
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Case MDL No. 2954 Document 29 Filed 06/24/20 Page 2 of 7
2d 1374, 1376 (J.P.M.L. 2014). Here, all that the Securities Class Action shares with the other
Included Actions is that each includes allegations related in some way to Wells Fargo’s
participation in the PPP. This single and extremely general point of commonality plainly does not
constitute a nexus of common facts that are either numerous or complex. See, e.g., In re Stirling
Homex Corp. Sec. Litig., 442 F. Supp. 547, 549 (J.PM.L. 1977) (consolidation requires “common
factual core” between actions). The claims in the Securities Class Action involve questions of fact
and legal theories (e.g., falsity, materiality, scienter, market efficiency, loss causation, and
statutory damages under the Securities Exchange Act of 1934 (the “Exchange Act”)) that are
wholly distinct from those at issue in the other Included Actions, none of which concerns securities
fraud. The putative class in the Securities Class Action consists of WFC shareholders, none of
whom are implicated as parties or witnesses in the other Included Actions. Whether WFC and its
top executives knowingly or recklessly made false and misleading statements concerning WFC’s
compliance with the requirements of the PPP is the factual core of the Securities Class Action, a
core that is not shared with any of the other Included Actions. Moreover, the lack of the requisite
common factual core clearly means that centralization would not make the proceedings any more
convenient for the parties and witnesses, nor yield any efficiency gains with respect to the
judiciary, the litigants, or their counsel.
For the reasons set forth below, Ma respectfully requests that the Panel deny DNM’s
Motion with respect to the Securities Class Action.
II. ARGUMENT
Transfer of an action for coordination or consolidated pretrial proceedings is only
warranted if: (1) the actions share common questions of fact; (2) transfer would be for the
convenience of the parties and witnesses; and (3) transfer would advance the just and efficient
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Case MDL No. 2954 Document 29 Filed 06/24/20 Page 3 of 7
conduct of the litigation. 28 U.S.C. § 1407(a). All three criteria must be met for transfer to be
proper. “[C]entralization under Section 1407 should be the last solution after considered review
of all other options.” In re Best Buy Co., Inc. Cal Song Beverly Credit Card Act Litig., 804 F.
Supp. 2d 1376, 1378 (J.P.M.L. 2011) (emphasis supplied). Here, all three criteria weigh against
transfer of the Securities Class Action to the MDL.
A. The Securities Class Action Lacks Meaningful Factual and Legal Commonality
with the Other Included Actions
There is no meaningful factual or legal commonality between the Securities Class Action
and the other Included Actions. In its motion brief, DNM inaccurately asserts that the Securities
Class Action “seeks certification of [a class] consisting of eligible PPP applicants who were
harmed as a result of Defendants’ illegal practices.” Dkt. No. 1-1 at 5. DNM is wrong. The
Securities Class Action does not assert claims on behalf of eligible PPP applicants. Rather, it is
on behalf of a putative class of investors who purchased or otherwise acquired WFC securities
between April 5, 2020 and May 5, 2020 (the “Class Period”) and alleges fraud claims arising under
the Exchange Act—namely, that WFC and certain of its executives knowingly or recklessly made
false or misleading statements during the Class Period concerning Wells Fargo’s compliance with
the requirements of the PPP. See generally Securities Class Action Dkt. No. 1. Considering
Movant’s wholly inaccurate description of the Securities Class Action, Ma respectfully submits
that DNM’s motion appears to rest on a fundamental misunderstanding of the class at issue and
claims alleged in the Securities Class Action.
Of the seven other Included Actions:
• Five assert claims related to Wells Fargo Bank’s alleged prioritization of certain
customers for PPP loans;1
1
BSJA, Inc., et al. v. Wells Fargo & Co., et al., 2:20-cv-03588 (C.D. Cal.); DNM Contracting,
Inc. v. Wells Fargo Bank, N.A., 4:20-cv-01790 (S.D. Tex.); Physical Therapy Specialists, P.C. v.
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Case MDL No. 2954 Document 29 Filed 06/24/20 Page 4 of 7
• One action is brought by purported third-party “agents” claiming that they are owed
fees by Wells Fargo Bank and other lenders in connection with assistance provided to
PPP borrowers;2 and
• One action challenges Wells Fargo Bank’s requirement that PPP loan applications have
a pre-existing business checking relationship with the bank.3
The following questions of fact that are central to the Securities Class Action are thus
wholly irrelevant to the seven other Included Actions: (1) whether Defendants’ statements of
compliance with PPP requirements were false; (2) whether Defendants’ statements were material;
(3) whether Ma and other WFC investors relied on the foregoing statements; (4) whether the
market for WFC securities was “efficient”; (5) whether Defendants made the false statements with
scienter; (6) whether the false statements were the proximate cause of the losses incurred by Ma
and other WFC investors; (7) whether Ma and other WFC investors suffered economic loss when
WFC’s stock price declined; and (8) calculation of WFC’s statutory damages under the Exchange
Act (which typically involves use of a regression analysis or “event study” unique to securities
class actions).
All that the Included Actions have in common, then, is that each broadly pertains, in some
respect, to Wells Fargo’s PPP participation. Clearly “individual facts contained in these actions []
will predominate over any alleged common fact questions,” In re Abbott Labs., Inc., Similac Prods.
Liab. Litig., 763 F. Supp. 2d 1376 (J.P.M.L. 2011), and the Included Actions thus lack the requisite
meaningful “common factual core” for centralization to be appropriate. Stirling Homex Corp.,
442 F. Supp. at 549.
Wells Fargo Bank, N.A., 1:20-cv-01190 (D. Colo.); Marselian v. Wells Fargo & Company, et al.,
4:20-cv-03166 (N.D. Cal.); and Karen’s Custom Grooming LLC v. Wells Fargo & Company, et
al., 3:20-cv-00956 (S.D. Cal.).
2
Full Compliance, LLC, et al. v. Amerant Bank, N.A., et al., 1:20-cv-22339 (S.D. Fla.).
3
Scherer, et al. v. Wells Fargo Bank, N.A., 4:20-cv-01295 (S.D. Tex.).
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Case MDL No. 2954 Document 29 Filed 06/24/20 Page 5 of 7
B. Transfer Would Neither be Convenient for the Parties and Witnesses in the
Securities Class Action nor Promote its Just and Efficient Conduct
Even assuming arguendo that sufficient common factual questions existed to support
centralization, Movant must still satisfy its burden with respect to the other two necessary
criteria—namely, to demonstrate that centralization: (i) serves the convenience of the parties and
witnesses; and (ii) promotes the just and efficient conduct of the Included Actions. 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”).
DNM has failed to carry its burden with respect to either of these criteria. WFC’s principal
executive offices are located in San Francisco, California. With respect to convenience for parties
and witnesses, then, centralization of the Included Actions in the Southern District of Texas carries
no evident advantages whatsoever. Moreover, the significant factual differences between the
Included Actions (as detailed above) necessarily mean that centralization will not prevent
duplicative discovery or proceedings, prevent inconsistent trial readings, or promote judicial
efficiency by preserving Court, party, or counsel resources. Rather, consolidation is more likely
to promote inefficiency, as any judge overseeing the multi-district litigation contemplated by
DNM would need to address a multiplicity of case-specific factual and legal issues, as well as
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.”).
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Case MDL No. 2954 Document 29 Filed 06/24/20 Page 6 of 7
Compounding all of the foregoing inefficiencies is the fact that, unlike the other seven
Included Actions, the Securities Class Action is governed by the Private Securities Litigation
Reform Act of 1995 (“PSLRA”), including provisions governing the appointment of a Lead
Plaintiff and Lead Counsel and imposing a mandatory stay of discovery pending resolution of a
motion to dismiss. Pursuant to the PSLRA, any member of the putative class in the Securities
Class Action may seek appointment as Lead Plaintiff for the class and approval of its selection of
Lead Counsel on or before August 3, 2020. See 15 U.S.C. § 78u-4(a)(3)(A). Accordingly, until
after the August 3, 2020 Lead Plaintiff motion deadline, it is unclear whether Ma will in fact
ultimately be responsible for pursuing claims against WFC and the other Defendants on behalf of
the WFC shareholder class in the Securities Class Action, or will in fact be succeeded by another
class member who meets the PSLRA’s statutory “most adequate plaintiff” criteria. See 15 U.S.C.
§ 78u-4(a)(3)(B). In addition, the PSLRA imposes a mandatory stay of discovery pending
resolution of a motion to dismiss the claims in the Securities Class Action. See 15 U.S.C. § 78u-
4(b)(3)(B). With discovery effectively a non-issue in the Securities Class Action until a
significantly later stage than in the other Included Actions, coordination of discovery across all of
the Included Actions will thus, in the best-case scenario, yield little benefit in the Securities Class
Action, and is more likely to add considerations unique the Securities Class Action to the
administrative burden of a judge handling multiple discovery schedules involving a litany of
different parties. That an entire specific statutory schema already exists, in the PSLRA, to govern
the proceedings in the Securities Class Action only underscores the inappropriateness of
centralizing the Securities Class Action with the other Included Actions.
*****
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Case MDL No. 2954 Document 29 Filed 06/24/20 Page 7 of 7
Failure to satisfy any one of the foregoing three criteria would suffice to mandate denial of
DNM’s Motion. Having failed to meet its burden with respect to any of these criteria, DNM’s
motion obviously fails.
C. CONCLUSION
For the foregoing reasons, Ma respectfully requests that this Panel deny DNM’s Motion to
the extent it seeks transfer of the Securities Class Action for consolidation or coordination with
the other Included Actions.
Dated: June 24, 2020 Respectfully submitted,
POMERANTZ LLP
/s/ Jeremy A. Lieberman
Jeremy A. Lieberman
600 Third Avenue, 20th Floor
New York, New York 10016
Telephone: (212) 661-1100
Facsimile: (917) 463-1044
jalieberman@pomlaw.com
Attorney for Guofeng Ma
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