A federal appeals court sounded very skeptical about Well Fargo’s eleventh-hour argument that more than 1 million depositors potentially hit with excessive overdraft fees should be forced individually to pursue a remedy through arbitration.
The bank’s arbitration defense was raised well after the 2008 suit was filed — leading one jurist on the three-judge panel to question the wisdom of chasing such a gambit.
“Whatever,” Judge Adalberto Jordan said during Wednesday’s argument, responding to an explanation from a Wells lawyer about why the bank changed strategies.
“I mean, parties choose their litigation strategy, and sometimes they predict the future correctly and sometimes they don’t,” the judge said, according to an audio recording of the argument released on Friday.
Five depositors sued the embattled bank in 2008, claiming they were slammed with excessive overdraft fees because Wells reordered the charges.
Most banks used to reorder each day’s charges to clear the highest-price purchase first — thus increasing the chances of charging overdraft fees.
Every bank settled those claims — except Wells Fargo.
If it loses its attempt to force depositors to chase down a remedy through arbitration — and not through a class-action lawsuit — it could face a payout of more than $1 billion, experts close to the case estimate.
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A trial court judge in Florida denied Wells Fargo’s arbitration argument — which set up Wednesday’s appeals court argument in Atlanta.
It is not known when the appeals court will rule.
Lawyers for the depositors have claimed that the bank was too late in trying to narrow who can join the class, which could balloon to more than a million people.
During the hearing, Sonya Winner, a lawyer for Wells Fargo, said the bank would have mounted the arbitration strategy earlier — but it did not appear viable until a decision in a related case. It was that comment that prompted Jordan to blurt out, “Whatever.”
“Everybody’s devoted 5, 6, 6¹/₂ years to litigation on substantial motions to dismiss, certifications of a class, everything else,” Jordan said. “It all could have been avoided had you initially asserted your arbitration right with regard to the named plaintiffs and had that issue resolved one way or another.”
Wells tried once before, in 2011, to stop depositors from forming a class action. The previous argument was not a winner.
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