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RESPONSE IN OPPOSITION -- (re: pldg. ( 1 in MDL No. 2954) ) Filed by Plaintiff Karen's… — Agent Fee Litigation (Dkt. 33)
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An opposition brief filed June 24, 2020 as Document 33 in In re: Wells Fargo Paycheck Protection Program Litigation, MDL No. 2954, before the United States Judicial Panel on Multidistrict Litigation. Plaintiff Karen's Custom Grooming LLC opposes DNM Contracting, Inc.'s motion under 28 U.S.C. §1407 to transfer the listed actions to the Southern District of Texas. The brief responds to the Panel's June 10, 2020 directive on alternatives to centralization, then describes each listed action with its case number, named defendants and proposed class. It argues that neither side addressed the convenience of witnesses or the location of documents, and that a California district court should be preferred because Wells Fargo has principal offices there. As alternative relief it asks for transfer to the Southern District of California; the brief runs nine pages.
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Case MDL No. 2954 Document 33 Filed 06/24/20 Page 1 of 9
BEFORE THE
UNITED STATES JUDICIAL PANEL ON
MULTIDISTRICT LITIGATION
IN RE: WELLS FARGO PAYCHECK MDL No. 2954
PROTECTION PROGRAM LITIGATION
PLAINTIFF KAREN’S CUSTOM GROOMING LLC’S OPPOSITION TO PLAINTIFF
DNM CONTRACTING, INC.’S MOTION FOR TRANSFER OF ACTIONS TO THE
SOUTHERN DISTRICT OF TEXAS PURSUANT TO 28 U.S.C. §1407 FOR
COORDINATED OR CONSOLIDATED PRETRIAL PROCEEDINGS
Pursuant to 28 U.S.C. §1407, Plaintiff in Karen’s Custom Grooming LLC v. Wells Fargo
& Company, Wells Fargo Bank, N.A., et al. Case No. 3:20-cv-956-LAB-BGS (S.D. Cal.) (the
“KCG Action”), respectfully opposes Plaintiff DNM Contracting, Inc.’s (“DNM”) motion, filed
before the United States Judicial Panel on Multidistrict Litigation (the “Panel”), to transfer the
eight below listed actions (or any current or future tag-along or related actions) (collectively the
“Actions”) to the Southern District of Texas (the “DNM Motion”).
I. INTRODUCTION
Plaintiff in the KCG Action, Karen’s Custom Grooming LLC (“KCG”) submits that
DNM’s Motion should be denied, that it fails to meet the standards for imposing the relief
requested, and that the Southern District of Texas is not a proper forum to which to transfer,
whether for centralization or consolidation, the pre-trial litigation of the Actions. As set forth
herein, KCG submits that the Southern District of California is the appropriate forum.
Case MDL No. 2954 Document 33 Filed 06/24/20 Page 2 of 9
II. EFFORTS IN THE KCG ACTION TO COMPLY WITH THE PANEL’S JUNE 10,
2020 DIRECTIVE (ECF No. 4)
In ECF No. 4 (“Text Only Notice”) 1, the Panel directed the parties to: “. . . address what
steps they have taken to pursue alternatives to centralization (including, but not limited to,
engaging in informal coordination of discovery and scheduling, and seeking Section 1404 transfer
of one or more of the subject cases).”
The KCG Action names Wells Fargo & Company (“WFC”) and Wells Fargo Bank, N.A.
(“WFB”) as defendants (including certain DOE defendants). Prior to the date of filing this
opposition, KCG’s counsel asked WFC and WFB’s counsel (“Defendants’ Counsel”) for the
position of WFC and WFB (“Defendants”) on the DNM Motion, its position on a choice of district,
and other related issues. See Declaration of Kathleen Herkenhoff in support of this opposition
brief, filed concurrently herewith (“Herkenhoff Decl.”). Until being served this morning via ECF
notification with the brief (ECF No. 17) filed by Defendants in opposition to the DNM Motion
(and in a call thereafter with one of Defendants’ Counsel), KCG had not received information from
Defendants’ Counsel as to their clients’ ultimate position on the DNM Motion. The only
information that KCG had received prior to service of ECF No. 17 was Defendants’ Counsel’s
agreement that no party to the KCG Action will file any §1404 transfer motions for a particular
time period, and that each party agrees to continue WFC and WFB’s time to respond to the
operative complaint in the KCG Action (currently continued through August 4, 2020 pending the
scheduled July 30, 2020 hearing on the DNM Motion). See Herkenhoff Decl, at Exhibits 1 and 2
(the “KCG Stipulations”). 2
1
As used herein, all references to “ECF No. ___” are to the electronic entries in the docket
for MDL No. 2954. All emphasis is added and citations omitted, unless otherwise noted.
2
The KCG Stipulations also alerted the Honorable Chief Judge Larry A. Burns of the
Southern District of California that the DNM Motion has been filed with the Panel. It is not evident
that the DNM Motion was served on the proposed various district courts presiding over the
Actions.
2
Case MDL No. 2954 Document 33 Filed 06/24/20 Page 3 of 9
As set forth in the KCG Stipulations, the parties in the KCG Action have discussed issues
concerning the time schedule for responsive pleadings in certain of the other Actions vis-à-vis
agreeing to a schedule in the KCG Action for WFC and WFB to respond to the operative complaint.
Id. KCG’s counsel also notified Defendants’ Counsel that it will be issuing a document
preservation letter. See Herkenhoff Decl. While KCG’s counsel reserves its right to commence
discovery in the KCG Action, given the import of ECF No. 4, KCG is, and remains, willing to
confer with Defendants’ Counsel (or counsel for other plaintiffs at an appropriate time) to consider
and evaluate conservation of resources of all parties pending the outcome of the DNM Motion.
III. FACTUAL OVERVIEW OF THE ACTIONS
While all of the Actions relate in some manner to the events surrounding the participation
and conduct of WFC and/or WFB in the Payroll Protection Program (the “PPP”) that is part of
Title I of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) (Public
Law 116-136), and each asserts relief on behalf of a proposed class or classes, there are key factual
and legal differences between the Actions that Defendants view (see ECF No. 17) as roadblocks
to transfer and consolidation. Plaintiff KCG takes the position that transfer and consolidation for
some of the consumer actions (as identified below) may be appropriate, but not in the manner
sought by the DNM Motion, which seeks transfer to the Southern District of Texas.
As demonstrated below, with regard to actions filed to redress wrongs perpetrated on
consumers seeking PPP loans through Defendants, it is the KCG Action and potentially one other
action (the Marselian Action as defined below) that have the broadest class definitions in that they
both seek to certify a nationwide class on behalf of businesses and individuals, as well as a sub-
class of such persons within the State of California. 3 As Defendants indicate, the KCG Action
3
ECF No. 17, Defendants’ response in opposition to the DNM Motion, seeks to characterize
the nature of the defined classes in the KCG Action. While KCG does not agree with the
characterization of the classes in the KCG Action, nor the import of Defendants’ comparison of
those class allegations to those in the Marselian Action, Defendants’ position does not impact the
real issue herein, which is that the DNM Motion should be denied. Similarly, for purposes of this
3
Case MDL No. 2954 Document 33 Filed 06/24/20 Page 4 of 9
contains a broad range of facts and claims asserting liability. See ECF No. 17 (describing the KCG
Action as alleging a “multiplicity of purported wrongs.”).
The Actions (based on the DNM Motion’s Schedule of Actions and attachments thereto)
are as follows:
DNM Contracting, Inc. v. Wells Fargo Bank, N.A., Civil Action No. 4:20-cv-01790 (S.D.
Tex.) (the “DNM Action”).
The DNM Action is a proposed consumer class action, naming WFB as a defendant, and is
asserted only on behalf of a class of all WFB small business customers who utilized WFB for
assistance with and processing of their PPP loans administered by the SBA (i.e. the Small Business
Administration). 4 See ECF No. 1-4.
Scherer v. Wells Fargo Bank, N.A., Civil Action No. 4:20-cv-01295 (S.D. Tex.) (the
“Scherer Action”).
The Scherer Action is a proposed consumer class action, naming WFB as a defendant, and
is asserted only on behalf of a class of: “(a) all individuals or entities who qualify for a loan under
the PPP and (b) who were prevented from even applying for a PPP loan by Wells Fargo solely
because they do not have a pre-existing business checking and/or debt relationship with Wells
Fargo as of February 15, 2020.” See ECF No. 1-5.
response to the DNM Motion, KCG will not attempt to address issues asserted by Defendants
about the naming of Wells Fargo & Company, any issues of mootness, or similar items. KCG
reserves all rights, however, to address these issues, whether in reply, at any oral argument on the
DNM Motion, or in the KCG Action.
4
Each of the summary descriptions herein of the defined classes in the listed actions is
simply intended to convey certain key facts about the defined classes, not all specific details. For
the precise definition of each such class, the operative pleadings are on file with the Panel and
where available, the “ECF No. ___” of such operative pleadings is provided for ease of reference.
Similarly, where the subject action seeks relief based upon alleged misconduct directed to persons
or entities seeking a PPP loan from the Defendants, based on a variety of statutory or common law
counts, for ease of reference, these actions are referred to herein as a “consumer” class action.
4
Case MDL No. 2954 Document 33 Filed 06/24/20 Page 5 of 9
BSJA, Inc., et al., v. Wells Fargo & Co., Wells Fargo Bank, N.A., et al. Civil Action No.
2:20-cv-03588 (C.D. Cal.) (the “BSJA” Action”).
The BSJA Action is a consumer class action, naming both WFC and WFB as defendants,
but is only asserted on behalf of a class of businesses in the State of California who applied for
PPP loans. See ECF No. 1-6.
Karen’s Custom Grooming LLC v. Wells Fargo & Company, Wells Fargo Bank, National
Association, et al., Civil Action No. 3:20-cv-956-LAB-BGS (S.D. Cal.) (the “KCG Action”).
The KCG Action is a consumer class action, naming both WFC and WFB (and various
DOES) as defendants, and the action is asserted on behalf of a class of businesses and individuals
(defined in the KCG Action as “Eligible Recipients”), both in the State of California and
nationwide. See ECF No. 1-10.
Marselian (d/b/a Bistro Pazzo) v. Wells Fargo & Co., Wells Fargo Bank, N.A., et al., Civil
Action No. 4:20-cv-03166-HSG (N.D. Cal.) (the “Marselian Action”).
The Marselian Action is a consumer class action, naming both WFC and WFB as
defendants, and is asserted on behalf of a class of both individuals and business, both in the State
of California and nationwide. See ECF No. 1-9.
Physical Therapy Specialists, P.C. v. Wells Fargo Bank, N.A., Civil Action No. 1:20-cv-
01190 (D. Colo.) (the “Physical Therapy Action”).
The Physical Therapy Action is a consumer class action, naming WFB as a defendant, and
is asserted only on behalf of account holders incorporated in, or having a principal place of
business in, the State of Colorado. See ECF No. 1-7.
Ma v. Wells Fargo & Co., Charles W. Scharf, and John R. Shewsberry, Civil Action No.
3:20-cv-03697 (N.D. Cal.) (the “Ma Action”).
The Ma Action is a securities class action pursuant to the Private Securities Litigation
Reform Act of 1995, naming only WFC and certain individual defendants. See ECF No. 1-11.
5
Case MDL No. 2954 Document 33 Filed 06/24/20 Page 6 of 9
Full Compliance, LLC, et al. v. Amerant Bank, N.A., et al., Civil Action No. 1:20-cv-22339
(S.D. Fla.) (the “Full Compliance Action”).
The Full Compliance Action names WFB and a host of other banks as defendants, and it is
not based on the same misconduct alleged in the above-described consumer class actions, such as
the KCG Action. See ECF No. 1-8. The Full Compliance Action is filed on behalf of “agent[s]”
who essentially “facilitated” other businesses in seeking PPP loans, and who now claim they are
owed agent fees pursuant to the CARES Act and the PPP. 5
BAM Navigation, LLC v. Wells Fargo & Co., Wells Fargo Bank, N.A., Civil Action No.
0:20-cv-01345-JTR-ECW (D. Minn.) (the “BAM Navigation Action”).
The BAM Navigation Action is a consumer class action, naming WFC and WFB as
defendants, and is asserted on behalf of specific persons or entities in the State of Minnesota who
applied for a PPP loan via Defendants. See ECF No. 11-3. The BAM Navigation Action is not
listed on the Schedule of Actions, but was filed thereafter.
IV. CONVENIENCE TO POTENTIAL WITNESSES AND OTHER FACTORS
SUPPORT TRANSFER TO A DISTRICT COURT WITHIN CALIFORNIA
DNM cites cases from the Panel holding that differences such as those identified above as
to the named defendants, or the defined classes, are not reasons to defeat centralization, and
Defendants cite cases to the contrary (see ECF No. 17). However, the key issue – that neither
factually address – remains the convenience of the witnesses and the location of documents. Cases
cited by DNM, however, do highlight this as a key factor in reaching a decision on the appropriate
transferee court. See e.g. In re Radiation Incident at Washington, 400 F. Supp. 1404, 1407
(J.P.M.L. 1975) (in finding the District of Columbia to be the most suitable transferee forum, the
Panel noted that “many of the relevant documents and witnesses are located in the Washington,
D.C. metropolitan area . . . .”); In re Bank of N.Y. Mellon Corp. Foreign Exch. Transactions Litig.,
857 F. Supp. 2d 1371, 1373 (J.P.M.L. 2012) (in selecting the Southern District of New York, the
5
ECF No. 16 indicates that the Panel has ordered that the Full Compliance Action is removed
from the DNM Motion.
6
Case MDL No. 2954 Document 33 Filed 06/24/20 Page 7 of 9
Panel noted that the defendant was headquartered in that district and that the subject operations
occurred within the district); In re Ford Motor Co. Speed Control Deactivation Switch Prods. Liab.
Litig., 398 F. Supp. 2d 1365, 1367 (J.P.M.L. 2005) (ordering centralization in the Eastern District
of Michigan because defendant’s headquarters were located within the district and it was “likely”
that it would be the source of “relevant documents and witnesses . . . .”). Indeed, in a recent
Transfer Order issued by the Panel in IN RE: Wells Fargo Auto Insurance Marketing and Sales
Practices Litigation, Transfer Order, MDL No. 2797 (J.P.M.L. Oct. 5, 2017) (the “WF Auto
Insurance MDL Transfer Order”), the Panel ordered centralization in the Central District of
California based on, among other factors, the “convenience of the parties and witnesses”,
particularly after a representation by Wells Fargo’s counsel at the hearing that the “primary
witnesses would be found in the Central District of California.”
Neither DNM nor Defendants have addressed this issue (the convenience of witnesses or
the location of documents) as to the respective transferee districts that they propose (Southern
District of Texas or District of Colorado, respectively). As set forth above, in attempts to confer
with WFC and WFB prior to filing this Opposition, Plaintiff KCG was not informed as to the
position of these key defendants on where the majority of the documents or corporate witnesses
would be located. See Herkenhoff Decl. Nor do the Defendants address this issue in ECF No. 17,
nor was that position provided on the call KCG’s counsel received after the filing of ECF No. 17.
Id.
In the absence of any showing by either DNM or Defendants on the issue, in particular, of
the convenience of witnesses or the location of Defendants’ corporate documents, the rational
conclusion is that a district court located in California should be preferred over courts in either
Texas or Colorado, under any scenario, given that WFC and WFB each have principal offices in
California.
As outlined above, the two cases that arguably have the broadest alleged relief for
businesses and individuals seeking PPP Loans from WFC/WFB are the KCG Action and the
Marselian Action, each of which have plaintiffs with counsel officed within the boundaries of the
7
Case MDL No. 2954 Document 33 Filed 06/24/20 Page 8 of 9
Southern District of California, and with clients alleged to be operating in cities within the
jurisdiction of the Southern District of California. ECF Nos. 1-9 and 1-10. While plaintiff in the
Marselian Action filed in the Northern District of California, it is presumably because WFC and
WFB maintain principal offices in San Francisco. See ECF No. 1-9. Often, however, this issue is
not solely determinative, as seen by the Panel’s decision in the above cited WF Auto Insurance
MDL Transfer Order, and also by positions that even WFB has taken in other (albeit unrelated)
class litigation in the past. See Herkenhoff Decl., at Exhibits 3 – 4 (proceedings where WFB
sought to transfer a class case from the Northern District of California to the Southern District of
California).
Accordingly, pending some affirmative declaration by Defendants submitted to the Panel
(and served upon the parties to the Actions) as to the location of key corporate witnesses and
documents that may be addressed at a hearing or in further briefing, a district court in California
presumptively provides the best forum for litigation of the consumer class claims alleged in the
Actions, if transfer is ordered. As to the three California district courts involved herein for the
consumer class actions (Northern, Southern, and Central), the Southern District of California is
the appropriate choice. Both the plaintiffs and counsel in the KCG Action and Marselian Action
are based in San Diego, California, and the plaintiffs and counsel in the BSJA Action are in the Los
Angeles area (closer to San Diego than San Francisco).
V. CONCLUSION
For the reasons set forth herein, Plaintiff KCG opposes the DNM Motion, and respectfully
requests that the Panel deny the DNM Motion. 6
6
In ECF No. 17, Defendants include the legend “Oral Argument Requested”. KCG similarly
requests oral argument if the Panel is not inclined to summarily deny the DNM Motion in full.
Rule 11.1(c) of the Panel’s Rules provides that the Panel shall not consider transfer when a party
opposes a transfer motion without first holding a session for the presentation of oral argument,
unless certain conditions are met as detailed in Rule 11.1(c)(i)-(ii).
8
Case MDL No. 2954 Document 33 Filed 06/24/20 Page 9 of 9
If, however, the Panel is not inclined to deny the DNM Motion in full, Plaintiff KCG
respectfully requests that the Panel order that all pending and future actions asserting related or
similar claims filed outside the Southern District of California be transferred to the Southern
District of California and assigned to Chief Judge Larry A. Burns, and that all related or similar
actions be consolidated with the KCG Action for coordinated pre-trial proceedings. For reasons
set forth herein, KCG’s position is that the Southern District of California is the most appropriate
District with a pending action that will afford the widest possible relief to the proposed classes, in
a judicial forum that has handled many complex class actions involving WFB. 7 In addition, Chief
Judge Burns of the Southern District of California, who presides over the KCG Action, has served
as a district court judge since 2003 (and served as magistrate judge from 1997 to 2003), bringing
a wealth of experience to overseeing the Actions.
Respectfully submitted,
Dated: June 24, 2020 HAEGGQUIST & ECK, LLP
ALREEN HAEGGQUIST
KATHLEEN A. HERKENHOFF
IAN PIKE
By: s/ Kathleen A. Herkenhoff
KATHLEEN A. HERKENHOFF
225 Broadway, Suite 2050
San Diego, California 92101
Telephone: (619) 342-8000
Facsimile: (619) 342-7878
alreenh@haelaw.com
kathleenh@haelaw.com
ianp@haelaw.com
Attorneys for Plaintiff Karen’s Custom Grooming
LLC
7
If the Panel is not inclined to select a transferee district in California, KCG requests that
the Panel establish a schedule that permits adequate time for the filing of cross-motions to transfer
to a district other than the Southern District of Texas or the District of Colorado (as suggested in
ECF No. 17).
9
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