Summary of the Lawsuit
On March 13, 2020, a participant in Wells Fargo & Company 401(k) Plan (the “Plan”) filed a class action lawsuit against Wells Fargo & Company (“Wells Fargo”), their Employee Benefit Review Committee, and other Defendants challenging the management of the Plan. The action is brought on behalf of all participants and beneficiaries of the Wells Fargo & Company 401(k) Plan who invested in funds Defendants selected for the Plan that are affiliated with Wells Fargo—specifically, the Wells Fargo/State Street Target Date Collective Investment Trusts, the Wells Fargo/Causeway International Value Fund, the Wells Fargo Treasury Money Market Fund, and the Wells Fargo Emerging Growth Fund, among others. Plaintiffs allege that the Defendants violated federal law by repeatedly and improperly selecting investment options affiliated with Wells Fargo for the Plan, even though these affiliated options retained higher fees and poorer performance than alternative competitor funds. Plaintiffs allege that selecting these affiliated options benefitted Wells Fargo at the expense of Wells Fargo’s employees by providing Wells Fargo with additional revenue from the funds’ fees and seeding the affiliated options with Plan assets to make them more attractive investments to outside investors.
Under the Employee Retirement Income Security Act of 1974 (“ERISA”), the federal law that sets minimum standards for retirement plans, including the Wells Fargo & Company 401(k) Plan, companies are required to act prudently and solely in the interest of the Plan’s participants when making decisions with respect to the investment of their employees’ retirement savings in company benefit plans. Plaintiffs allege that Wells Fargo did not, as required by law, select or retain Plan investments that were in the best interest of participants, but instead, simply chose and retained the investments that benefited Wells Fargo’s bottom line. (See “Summary of the Claims,” below)
The lawsuit alleges that Wells Fargo improperly earned profits at the expense of its employees, who paid excessive fees and have suffered losses to their retirement due to investment underperformance. The lawsuit seeks to compensate Wells Fargo employees who participated in the 401(k) Plan.
Summary of the Claims
The lawsuit alleges that Wells Fargo & Company and its affiliates have violated numerous provisions of ERISA by, among other things:
- Breaching their fiduciary duties by failing to prudently and loyally select and monitor investments for the Plan;
- Breaching their fiduciary duties by failing to adhere to the Plan’s Investment Policy Statement;
- Engaging in multiple transactions prohibited under ERISA with the Plan’s assets.
In a class action case, one or more individuals— called class representatives—file a lawsuit on behalf of themselves and other similarly situated individuals who have similar legal claims. This procedure permits the claims of a large number of people to proceed in one lawsuit and ensures that all similarly situated persons are treated consistently.
This lawsuit is brought as a class action on behalf of all participants and beneficiaries of the Wells Fargo & Company 401(k) Plan. Excluded from the Class are Defendants and members of their immediate families or any of their heirs, successors, or assigns.
Status of the Litigation
Plaintiff filed a Class Action Complaint on March 13, 2020 in the United States District Court for the Northern District of California (captioned Becker v. Wells Fargo & Co., et al., Case No. 4:20-cv-01803), where the case was assigned to the Honorable Kandis A. Westmore, United States Magistrate Judge and later reassigned to the Honorable Jon S. Tigar, United States District Judge.
Defendants filed a motion to transfer the case to the United States District Court for the Northern District of Minnesota on May 8, 2020. Plaintiffs filed in opposition to Defendants’ motion on June 12, 2020, and Defendants submitted a reply in support of their motion to transfer on July 3, 2020.
On September 21, 2020, Judge Tigar granted the motion to transfer the case, sending the case to the District of Minnesota (captioned Becker v. Wells Fargo & Co., et al., Case No. 1:20-cv-2016). Upon arrival, the case was assigned to the Honorable Donovan W Frank, United States District Judge, and the Honorable Judge Becky R. Thorson, United States Magistrate Judge.
Defendants moved to dismiss the class action case on February 4, 2021. Plaintiffs responded in opposition on March 10, 2021, and Defendants submitted a reply in support of their motion on April 2, 2021.
The Parties argued their positions on Defendants’ motion to dismiss before Judge Frank on April 16, 2021. Judge Frank issued an order on May 12, 2021 denying Defendants’ motion to dismiss in full. Plaintiffs subsequently filed an amended complaint on June 2, 2021, adding two Plaintiffs, a new claim, and additional factual allegations. Defendants answered the Amended Complaint on June 25, 2021.
On January 6, 2022, Parties filed a Joint Notice of Class Action Settlement, informing the Court of their agreement in principle to settle this action on a class-wide basis.
On April 1, 2022, Plaintiffs filed a Motion to preliminarily approve a settlement of $32.5 million. The Court approved the Motion on April 25, 2022. The Final Settlement Hearing is scheduled to take place on August 10, 2022 at 10:00 am CDT before Judge Katherine M. Menendez.
Whom to Contact for More Information
If you believe you may be part of one of these classes, or if you have information which might assist us in the prosecution of these allegations, please contact one of the following persons:
Cohen Milstein Sellers & Toll PLLC
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Suite 500
Washington, D.C. 20005
Telephone: 888-240-0775 (Toll Free) or 202-408-4600
Cohen Milstein’s co-counsel in this case are June Hoidal, Esq., and Charles Toomajian, Esq., of the law firm of Zimmerman Reed LLP, 1100 IDS Center, 80 South 8th Street, Minneapolis, MN 55402.