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OFFICIAL TRANSCRIPT of Hearing held on 7/30/2020 before the Panel at Washington, DC.… — Agent Fee Litigation (Dkt. 56)
Summary
The official transcript of oral argument held July 30, 2020 before the United States Judicial Panel on Multidistrict Litigation in In Re Wells Fargo Paycheck Protection Program Litigation, MDL Number 2954, filed August 28, 2020 as Document 56. It records argument on centralization, heard by video conference before a panel chaired by Judge Karen K. Caldwell, with two listed members recused. Counsel for DNM Contracting, Inc. asks for the Southern District of Texas or, alternatively, Southern California; counsel for Karen's Custom Grooming LLC urges the Southern District of California; and counsel for Wells Fargo opposes centralization and supports the District of Colorado if it is ordered. The panel questions counsel on how many cases remain pending and on tag-along actions. The thirteen-page transcript closes with the court reporter's certificate signed August 9, 2020.
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Case MDL No. 2954 Document 56 Filed 08/28/20 Page 1 of 13
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1 BEFORE THE UNITED STATES JUDICIAL PANEL
ON MULTIDISTRICT LITIGATION
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3 IN RE WELLS FARGO PAYCHECK . MDL Number 2954
PROTECTION PROGRAM LITIGATION . July 30, 2020
4 - - - - - - - - - - - - - - - 4:27 p.m.
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TRANSCRIPT OF ORAL ARGUMENT
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7 BEFORE: HONORABLE KAREN K. CALDWELL, CHAIR
United States District Court
8 Eastern District of Kentucky
9 HONORABLE ELLEN SEGAL HUVELLE
United States District Court
10 District of Columbia
11 HONORABLE R. DAVID PROCTOR
United States District Court
12 Northern District of Alabama
13 HONORABLE CATHERINE D. PERRY
United States District Court
14 Eastern District of Missouri
15 HONORABLE NATHANIEL M. GORTON (Recused)
United States District Court
16 District of Massachusetts
17 HONORABLE DAVID C. NORTON (Recused)
United States District Court
18 District of South Carolina
19 HONORABLE MATTHEW F. KENNELLY
United States District Court
20 Northern District of Illinois
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22 Official Court Reporter: SARA A. WICK, RPR, CRR
U.S. Courthouse, Room 4704-B
23 333 Constitution Avenue Northwest
Washington, D.C. 20001
24 202-354-3284
25 Proceedings recorded by stenotype shorthand.
Transcript produced by computer-aided transcription.
Case MDL No. 2954 Document 56 Filed 08/28/20 Page 2 of 13
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1 APPEARANCES:
2 For DNM Contracting, Inc.: ALFONSO KENNARD, JR., ESQ.
Kennard Law P.C.
3 2603 Augusta Drive, 14th Floor
Houston, Texas 77057
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For Karen's Custom Grooming
5 LLC: KATHLEEN A. HERKENHOFF, ESQ.
Haeggquist and Eck LLP
6 225 Broadway, Suite 2050
San Diego, California 92101
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For Wells Fargo Bank, N.A.,
8 Wells Fargo & Company: CHRISTOPHER M. VIAPIANO, ESQ.
Sullivan & Cromwell LLP
9 1700 New York Avenue Northwest
Suite 700
10 Washington, D.C. 20006
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Case MDL No. 2954 Document 56 Filed 08/28/20 Page 3 of 13
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1 P R O C E E D I N G S
2 (All participants present via video conference.)
3 JUDGE CALDWELL: We will now proceed to hear the final
4 case of the day, MDL 2954, In Re Wells Fargo Paycheck Protection
5 Program Litigation.
6 Mr. Kennard, you're back.
7 MR. KENNARD: It's an honor to be back, Judge. Thank
8 you so much.
9 You've already heard my arguments on each bank needing to
10 have its own bucket. So I won't reiterate that here. And you
11 have heard my arguments now on the notion that there are damages
12 incurred regardless of whether or not they were ultimately
13 funded in the first round and regardless of whether or not there
14 are funds that remain available.
15 I would advocate for the Southern District of Texas. Here,
16 we've got a highly capable judge in Judge Bennett, who would not
17 have now an exorbitant amount of MDL cases, but I will defer to
18 my colleagues on whether the Southern District of Texas is not
19 as acceptable to them. We just first and foremost believe that
20 this would require MDL certification.
21 As to Wells Fargo specifically and their policies and
22 procedures, they have failed wholly to follow the model dictated
23 by the Act, which is first come first served is the way to go,
24 and many have suffered as a result of that.
25 And I will now yield for any questions since a bulk of my
Case MDL No. 2954 Document 56 Filed 08/28/20 Page 4 of 13
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1 arguments have already been made in the last six minutes.
2 JUDGE CALDWELL: Questions? Judge Huvelle.
3 JUDGE HUVELLE: Yes. How many cases against Wells
4 Fargo are now still pending? It seemed that we heard from the
5 other two banks that the number of cases has shrunk since the
6 beginning, and I was wondering when the last one was filed.
7 MR. KENNARD: I think the last one was filed several
8 months ago, Judge. I haven't seen a whole bunch of new ones
9 coming in right now. But as I sit here right now, I am not in a
10 position to give an exact number as to how many Wells Fargo
11 cases remain, but as I understand, they are -- it's closer to
12 the original number filed than the alternative.
13 JUDGE HUVELLE: Which might have been five or six, I
14 guess. Okay. I will ask someone else, then. Thank you.
15 JUDGE CALDWELL: Anyone else have questions for
16 Mr. Kennard?
17 Thank you, Mr. Kennard. You've reserved a minute for
18 rebuttal.
19 MR. KENNARD: Thank you.
20 JUDGE CALDWELL: We will now hear from Kathleen
21 Herkenhoff.
22 MS. HERKENHOFF: Good afternoon. Can you hear me?
23 JUDGE CALDWELL: We can hear you, but we cannot see
24 you. It appears that maybe your screen is being blocked.
25 MS. HERKENHOFF: Can you see me now?
Case MDL No. 2954 Document 56 Filed 08/28/20 Page 5 of 13
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1 JUDGE CALDWELL: No. We are happy to hear from you.
2 We would like to see you, but we will hear from you. Okay, we
3 can see you.
4 MS. HERKENHOFF: Again, good afternoon. My name is
5 Kathleen Herkenhoff. I work at Haeggquist & Eck out of San
6 Diego, California, and I represent Karen's Custom Grooming in
7 one of the Wells Fargo cases.
8 Before starting, I guess to briefly answer the question
9 raised with the last counsel, by my count, I believe there's
10 about seven cases. We've lost item numbers 2 and 3 on the
11 schedule of actions. That was the Scherer action. They were
12 both dismissed, whether voluntarily or otherwise, and that's in
13 ECF 44. An additional case which Wells Fargo noticed had been
14 filed in ECF 49. That's the Borisov individual case in the
15 Central District. So we lost a Central District but we gained a
16 Central District.
17 And so to go to the primary focus of my argument, it's
18 correct that I opposed centralization as it was originally
19 proposed, which would have included the securities class action,
20 not that they could not have been included, but for procedural
21 reasons, they are set up under a different statutory scheme.
22 They have a discovery stay. It didn't seem appropriate to
23 centralize with them. They apparently agree, because they have
24 not only made that position but left.
25 So now in Northern District, we only have the one case,
Case MDL No. 2954 Document 56 Filed 08/28/20 Page 6 of 13
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1 Marselian, filed by a different firm and which I have noted in
2 my papers is filed by a firm that is located here in San Diego
3 for a client here in San Diego. So in addition to my case which
4 is San Diego-centric, you have the Marselian case filed in
5 Northern District but by counsel and a client in San Diego. You
6 now have an additional Central District case.
7 So when we talk about where these cases are related or
8 directed, not only is it California, but it's Southern
9 California. And I think my issue with the centralization
10 proposal for Southern District of Texas originally, their claims
11 are much more narrow as styled in their complaint. Out here in
12 California between Marselian and myself, we have nationwide-
13 proposed classes. We have state of California classes. And as
14 between the two, I think even Wells Fargo's briefs indicated my
15 claims are broader.
16 So the broader claims are in California. The banks have
17 principal places of business in California. Their lawyers,
18 while McGuire Woods and Sullivan & Cromwell are in different
19 areas, they also have Los Angeles bases.
20 I see my time is up, but I think our pitch is
21 centralization of the what I call consumer cases, but certainly,
22 they should be in the Southern District of California.
23 JUDGE CALDWELL: Any questions for Ms. Herkenhoff?
24 Thank you very much.
25 MS. HERKENHOFF: Thank you.
Case MDL No. 2954 Document 56 Filed 08/28/20 Page 7 of 13
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1 JUDGE CALDWELL: We will hear from Mr. Viapiano.
2 MR. VIAPIANO: Good afternoon again, Your Honors.
3 Christopher Viapiano of Sullivan & Cromwell in Washington, D.C.,
4 again representing Wells Fargo & Company and Wells Fargo Bank
5 N.A. Wells Fargo opposes centralization of these cases but, if
6 they are to be centralized, supports centralization in the
7 District of Colorado.
8 In very stark contrast to the agent fee cases that we
9 discussed just a little while ago, movant here seeks to
10 centralize just a handful of actions brought only against Wells
11 Fargo. And this panel has repeatedly held that where there are
12 few actions to be centralized, the proponent of centralization
13 bears the heavier burden.
14 The panel has also considered whether litigation is growing
15 in determining whether centralization is appropriate. There's
16 reason to believe that we are much closer to the end of these
17 prioritization cases being filed than to the beginning.
18 Plaintiffs in these cases claim that Wells Fargo did not
19 process PPP loan applications in the correct order and that they
20 did not receive a loan from Wells Fargo, resulting in injury.
21 As counsel for some of the other lenders have said already
22 today, nearly $130 billion in funding remains available.
23 Lenders continue to accept applications. So any small business
24 that wants a loan and is eligible under applicable SBA
25 regulations can get one, even today.
Case MDL No. 2954 Document 56 Filed 08/28/20 Page 8 of 13
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1 Movant doesn't come close to satisfying its heightened
2 burden for centralization. In seeking centralization, movant
3 focuses on how Wells Fargo processed PPP loan applications.
4 While that undoubtedly is important, it masks significant
5 factual differences among these few cases, differences that
6 movant does not address. Some plaintiffs got PPP loans from
7 lenders other than Wells Fargo. Some withdrew their
8 applications, while others were offered a loan by Wells Fargo
9 but never followed up to provide the necessary information.
10 These factual differences make or break these cases. And
11 contrary to what Mr. Kennard said, they go to such threshold
12 issues as to whether plaintiffs actually were injured and have
13 standing to bring these cases.
14 Indeed, the very first of this type of case filed against
15 Wells Fargo was voluntarily dismissed after we contacted the
16 plaintiffs' counsel to inform them that both of the named
17 plaintiffs received PPP loans from Wells Fargo. If the
18 remaining cases survive motions to dismiss, plaintiffs would
19 have significant difficulty being appointed class
20 representatives. These factual issues about plaintiffs, not how
21 Wells Fargo processed applications, predominate and define these
22 cases.
23 The cases to be centralized here are few in number, not
24 growing, and lack a common factual core, all unlike the agent
25 fee cases we discussed earlier. To the extent necessary,
Case MDL No. 2954 Document 56 Filed 08/28/20 Page 9 of 13
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1 discovery can be coordinated across these cases because Wells
2 Fargo is represented by the same counsel.
3 Thank you, Your Honors.
4 JUDGE CALDWELL: Questions for Mr. Viapiano? Judge
5 Huvelle.
6 JUDGE HUVELLE: Yes. I'm just trying to get a handle
7 on what has happened to the securities case in front of Judge
8 Seeborg. Is that a part of this motion or not a part of this
9 motion? I was confused by what counsel said a moment ago.
10 MR. VIAPIANO: Sorry for talking over you, Your Honor.
11 It is not. The movant and the plaintiff in the securities case
12 stipulated that it would not be a part of this motion.
13 JUDGE HUVELLE: Okay. So that leaves us with one from
14 Texas, one from Northern -- one from Southern California, one
15 from Northern, and one from Colorado, or am I missing one?
16 That's four.
17 MR. VIAPIANO: Your Honor, we have those four as a
18 part of the original motion. We noticed a tag-along action that
19 was filed in the District of Minnesota. That gives us five
20 class actions. There is the individual action also filed in
21 California that we noticed as a tag-along. And then late last
22 night in an action that we have not even been served with, there
23 was one class action filed in the Northern District of
24 California.
25 Before that action -- and this is to my point that these
Case MDL No. 2954 Document 56 Filed 08/28/20 Page 10 of 13
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1 cases do not appear to be growing -- the last case, the last
2 class action was filed in mid-June and, before that, the last
3 case in May.
4 JUDGE HUVELLE: But you just filed one yesterday in
5 the Northern District of California, or not?
6 MR. VIAPIANO: We did late last night, Your Honor.
7 JUDGE HUVELLE: So it's a little more recent. And
8 where is the other tag-along? One is in Minnesota, Northern
9 District of California, and the third one?
10 MR. VIAPIANO: That was the individual action pro se,
11 Your Honor. That's in the Central District of California.
12 JUDGE HUVELLE: And do you know whether under
13 California practice they have the ability in California to
14 consolidate cases that are in the Northern, Central, and
15 Southern District, or are they limited by the district?
16 MR. VIAPIANO: I think by the district, though
17 certainly 1404 is available.
18 JUDGE CALDWELL: Anything else? Thank you, all. Now
19 we will hear a minute rebuttal from Mr. Kennard.
20 MR. KENNARD: Thank you, Judge.
21 I think speaking to the last point, clearly the fact that
22 one was filed last night in and of itself is evidence that it is
23 growing. It may not be 100 that have been filed, but one, in
24 essence, is growing. So we've had one filed as recently as last
25 night.
Case MDL No. 2954 Document 56 Filed 08/28/20 Page 11 of 13
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1 Admittedly, there is one claimant in Texas, and the
2 majority are in Southern California. So we would ask in the
3 alternative, if the Southern District of Texas is not ideal,
4 that the MDL be set up in Southern California.
5 It wouldn't make sense to go to Colorado where you only
6 have one claimant, just the same way it wouldn't make sense, if
7 I acquiesced to the notion, there is only one in Texas where I
8 filed our collective action. We have still brought a nationwide
9 collective action in Texas and would be happy to deal with this
10 in Southern California where the bulk reside. Again, we have
11 folks from Minnesota and all over, so it makes sense where the
12 majority of the claimants are, and in fact, Wells Fargo is
13 headquartered in California. I will concede to that point that
14 Southern California would be the best place, but Colorado just
15 makes no sense.
16 I see I am out of time. Thank you, Judge.
17 JUDGE CALDWELL: Thank you.
18 Any questions for Mr. Kennard? All right. Thank you.
19 JUDGE HUVELLE: One final question.
20 JUDGE CALDWELL: Yes, Judge Huvelle.
21 JUDGE HUVELLE: I see two in the Northern District,
22 based on what the defense counsel just said. So to the extent
23 we are looking, why Southern District of California? There's
24 one that's Karen's Custom Grooming. Are there others in
25 Southern California?
Case MDL No. 2954 Document 56 Filed 08/28/20 Page 12 of 13
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1 MR. KENNARD: Judge, as far as I know, that would then
2 equalize the amount in Northern California or Southern
3 California. We would be fine in either one, but we have asked
4 for Texas, and my colleague has asked for Southern California.
5 So I would say California is the place to be, Judge, northern or
6 southern.
7 JUDGE HUVELLE: Okay. Thank you.
8 JUDGE CALDWELL: Anyone else?
9 All right. I would like to thank all counsel who have
10 argued today. That concludes the hearing on MDL 2954. The
11 matter will stand submitted.
12 (Proceedings in MDL 2954 concluded at 4:43 p.m.)
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Case MDL No. 2954 Document 56 Filed 08/28/20 Page 13 of 13
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1 CERTIFICATE OF OFFICIAL COURT REPORTER
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3 I, Sara A. Wick, certify that the foregoing is a
4 correct transcript from the record of proceedings in the
5 above-entitled matter.
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7 Please Note: This hearing occurred during the
8 COVID-19 pandemic and is, therefore, subject to the
9 technological limitations of court reporting remotely.
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12 /s/ Sara A. Wick August 9, 2020
13 SIGNATURE OF COURT REPORTER DATE
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