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Dyer v. Wells Fargo Bank

United States District Court, N.D. California

May 12, 2014

BOBBIE PACHECO DYER, et al., Plaintiffs,
WELLS FARGO BANK, N.A., Defendant.


JON S. TIGAR, District Judge.

Before the Court is Plaintiffs Bobbie Pacheco Dyer and Patricia Stallworth's Motion for Preliminary Approval of Settlement. ECF No. 35. Plaintiffs' operative complaint, FAC, ECF No. 27, alleges that Defendant Wells Fargo Bank, N.A. failed to pay commissions to the proposed class of Branch Sales Managers and Home Mortgage Consultants of the Wells Fargo Home Mortgage Division (WFHM) as required by WFHM's Incentive Compensation Plan. The Court will grant the motion, conditionally certify the settlement class, appoint class counsel and the class representative, direct the distribution of class notice, and make a preliminary determination that the settlement is "fair, reasonable, and adequate." Fed.R.Civ.P. 23(e)(2).


Plaintiff Dyer was employed by WFHM as a Producing Branch Sales Manager. FAC ¶ 3. Plaintiff Stallworth was employed as a Home Mortgage Consultant. Id . ¶ 4. Plaintiffs allege that since 2011, Producing Branch Sales Managers have been compensated with a base salary, monthly commissions, and certain bonuses. A Standard Commission Schedule determines the commission rate, depending on how much mortgage business the employee secures. Id . ¶ 18-19. Home Mortgage Consultants are paid according to a similar schedule. According to Plaintiffs, "the vast majority of Producing Sales Branch Managers and Home Mortgage Consultants perform at a level which entitles them to 63 bps" commissions, or.63% of the mortgage business secured by the employee. Id . ¶ 22.

The WFHM Incentive Compensation Plan overrides the commission schedule where it sets forth a specific commission rate. Plaintiffs allege that the Plan provides for special commissions for some types of mortgages, and for commissions based on the commission schedule for others. For example, Plaintiff Dyer alleges that he secured "WFHM loans of Freddie Mac to Freddie Mac Relief Refinance Mortgage refinanced loans and WFHM loans of Freddie Mac to Freddie Mac Relief Refinance Mortgage/Three (3) Step Express refinanced loans, " which, under the Plan, entitled him to commissions according to the commission schedule. Id . ¶ 27-29. However, Plaintiff Dyer alleges that he was paid a flat rate of 43bps on certain loans despite being entitled to a higher rate under the commission schedule. Plaintiff Stallworth likewise alleges that she was paid a flat rate of 43bps when she was entitled to more under the schedule.

Wells Fargo asserts several contract defenses, and argues that Plaintiffs and the proposed class were required to pursue a dispute resolution procedure set up by the Plan within sixty days, and thus, Plaintiffs' claims are barred.

After the Rule 26 conference, the parties agreed to postpone the bulk of discovery in favor of mediation. In connection with the mediation efforts, Wells Fargo provided discovery responses related only to the named Plaintiffs' claims and the size and scope of the class. Plaintiffs also conducted a Rule 30(b)(6) deposition, and Wells Fargo took Dyer and Stallworth's depositions. The parties engaged in a full-day, in-person mediation on January 23, 2014, at which the named Plaintiffs were present, and which resulted in the execution of a memorandum of understanding memorializing the terms of the parties' settlement. Incentive awards, attorneys' fees, and costs were negotiated after the parties had reached agreement on the essential terms of the underlying settlement. In addition, following the mediation, Wells Fargo conducted an internal damages analysis, the results of which it provided to Plaintiffs.

The Settlement Agreement defines a class of
All home mortgage employees of Wells Fargo Bank, N.A. who were paid 43 basis points ("bps"), but who otherwise would have been paid standard commission rates, for originating Wells Fargo to Wells Fargo specialty refinance loans under the Home Affordable Refinance Program (HARP), Freddie Mac to Freddie Mac Relief, and Fannie Mae to Fannie Mae Refi Plus programs, from April 1, 2011 to January 1, 2013, excluding all employee and partner referral loans.

Wells Fargo will create a settlement fund of $14, 743, 101. The fund amount represents 32.7 percent of the amount Plaintiffs allege the settlement class would be entitled to should Plaintiffs prevail at trial, in addition to attorneys' fees, costs, and expenses. Class members will automatically receive a proportional share of the fund, less attorneys' fees, costs, and expenses. The proportional share of the fund belonging to class members who opt out of the class will be returned to Wells Fargo. Plaintiffs intend to request attorneys' fees, costs, and expenses in the amount of 25 percent of the settlement fund amount, as well as incentive awards of $15, 000 each for Dyer and Stallworth.


Class certification under Rule 23 is a two-step process. First, Plaintiff must demonstrate that the four requirements of 23(a) are met: numerosity, commonality, typicality, and adequacy. "Class certification is proper only if the trial court has concluded, after a rigorous analysis, ' that Rule 23(a) has been satisfied." Wang v. Chinese Daily News, Inc. , 709 F.3d 829, 833 (9th Cir. 2013) (quoting Wal-Mart Stores, Inc. v. Dukes, ___ U.S. ___ , 131 S.Ct. 2541, 2551 (2011)).

Second, a plaintiff must also establish that one of the bases for certification in Rule 23(b) is met. Here, by invoking Rule 23(b)(3), Plaintiff must establish that "questions of law or fact common to class members predominate over any questions affecting only individual members, and... [that] a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed.R.Civ.P. 23(b)(3).

The party seeking class certification bears the burden of demonstrating by a preponderance of the evidence that all four requirements of Rule 23(a) and at least one of the three requirements under Rule 23(b) are met. See Wal-Mart , 131 S.Ct. at 2551.

A. Rule 23(a)(1) - Numerosity

Rule 23(a)(1) requires that the class be "so numerous that joinder of all members is impracticable." Numerosity is satisfied here because there are approximately 7, 800 members of the proposed settlement class.

In addition, "[w]hile it is not an enumerated requirement of Rule 23, courts have recognized that in order to maintain a class action, the class sought to be represented must be adequately defined and clearly ascertainable.'" Vietnam Veterans of Am. v. C.I.A. , 288 F.R.D. 192, 211 (N.D. Cal. 2012) (quoting DeBremaecker v. Short , 433 F.2d 733, 734 (5th Cir. 1970)). "[A] class definition is sufficient if the description of the class is definite enough so that it is administratively feasible for the court to ascertain whether an individual is a member.'" Id . (quoting O'Connor v. Boeing N. Am., Inc. , 184 F.R.D. 311, 319 (C.D. Cal. 1998)).

The Court finds that the class definition contained in the Settlement Agreement satisfies this requirement.

B. Rule 23(a)(2) - Commonality

A Rule 23 class is certifiable only if "there are questions of law or fact common to the class." Fed.R.Civ.P. 23(a)(2). "[F]or purposes of Rule 23(a)(2) [e]ven a single [common] question will do." Wal-Mart , 131 S.Ct. at 2556 (internal quotations and quotation marks omitted). However, the common contention "must be of such a nature that it is capable of classwide resolution - which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." Id. at 2551. "What matters to class certification... is not the raising of common "questions" - even in droves - but rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation.'" Id . (quoting Richard A. Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 131-132 (2009)).

The Court finds that the proposed class satisfies the commonality requirement because, at a minimum, the contract interpretation issues presented by Plaintiffs' claims and Wells ...

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