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Gutierrez v. Wells Fargo Bank, NA

United States Court of Appeals, Eleventh Circuit

May 10, 2018

DOLORES GUTIERREZ, on behalf of herself and all others similarly situated, MARC MARTINEZ, on behalf of himself and all others similarly situated, ALEX ZANKICH, WILLIAM RUCKER, individually and on behalf of all others similarly situated, Plaintiffs - Appellees,
v.
WELLS FARGO BANK, NA, Defendant-Appellant. MELANIE L. GARCIA, CELIA SPEARS-HAYMOND, as an individual and on behalf of all others similarly situated, Plaintiffs - Appellees,
v.
WELLS FARGO BANK, NA, Defendant-Appellant.

          Appeals from the United States District Court for the Southern District of Florida D.C. Docket Nos. 1:09-md-02036-JLK, 1:09-cv-23685-JLK, 1:09-cv-23834-JLK, 1:09-cv-21386-JLK, 1:08-cv-22463-JLK, 1:09-cv-21680-JLK

          Before TJOFLAT and JORDAN, Circuit Judges, and STEELE, [*]] District Judge.

          OFLAT, Circuit Judge:

         This appeal arises from five class actions brought by bank customers ("Plaintiffs") alleging that their banks unlawfully charged them overdraft fees. These cases have been before this Court multiple times in recent years.[1] In this appeal, Wells Fargo appeals the District Court's denial of its motion to compel arbitration with the unnamed Plaintiffs comprising the classes. The District Court denied the motion because it found that Wells Fargo waived its arbitration rights as against those unnamed Plaintiffs. We hold that the District Court's finding of waiver with respect to the unnamed Plaintiffs was erroneous. We therefore vacate the District Court's order.

         I.

         Plaintiffs, all current or former checking account holders of Wells Fargo or Wachovia ("Wells Fargo"), [2] filed these class actions in 2008 and 2009. Plaintiffs allege that Wells Fargo committed certain unlawful practices relating to the charging of overdraft fees. Wells Fargo is one among dozens of banks accused of such conduct: in June 2009, the Judicial Panel on Multidistrict Litigation consolidated the class action here with numerous other cases throughout the country in which plaintiffs accused various banks of the same or similar overdraft practices. Garcia v. Wachovia Corp., 699 F.3d 1273, 1276 (11th Cir. 2012). Wells Fargo's accounts were governed by customer agreements that provided for arbitration of disputes on an individual basis. In relevant part, the customer agreements stated, "Either [the customer] or the Bank may require the submission of a dispute to binding arbitration at any reasonable time notwithstanding that a lawsuit or other proceeding has been commenced." Id. at 1275. Additionally, the customer agreements prohibited customers or Wells Fargo from consolidating any disputes or "includ[ing] in any arbitration any dispute as a representative or member of a class." Id.

         After the cases were consolidated in late 2009, the District Court on November 6, 2009, ordered all of the defendant banks to file all "merits and non-merits motions directed to the operative complaints, " including motions to compel arbitration, by December 8, 2009. Wells Fargo did not move the named Plaintiffs to arbitrate their claims. Instead, it joined several other banks in filing an omnibus motion to dismiss.[3]

         On April 14, 2010, the District Court observed that only a handful of the defendant banks had moved to compel arbitration prior to its December 8, 2009 motions deadline. Accordingly, the Court ordered any defendant who intended to seek arbitration to file a motion to compel by April 19, 2010. In response, Wells Fargo filed a reply to the Court's order which stated that it would not seek to compel arbitration with the named Plaintiffs but wished to reserve its arbitration rights against any plaintiffs "who [might] later join, individually or as putative class members, in this litigation." Wells Fargo explained that its "arbitration rights as to a nationwide class, for newly added plaintiffs, and/or for plaintiffs from newly added states are not yet at issue." [4] Subsequently, Wells Fargo filed its answers to the five complaints. In each of its five answers, Wells Fargo alleged that "[a]bsent members of the putative classes have a contractual obligation to arbitrate any claims they have against Wells Fargo."

         Thereafter, the case proceeded toward class certification. The parties commenced class-related discovery and motions practice, which continued for about one year. Then, on April 27, 2011, the Supreme Court held that § 2 of the Federal Arbitration Act, 9 U.S.C. § 2, preempts state-law rules voiding consumer arbitration agreements that bar class-wide arbitration procedures. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 351-52, 131 S.Ct. 1740, 1753 (2011).

         This decision prompted Wells Fargo to reconsider its arbitration strategy. Two days after the Supreme Court issued its opinion in Concepcion, Wells Fargo moved to compel the named Plaintiffs to arbitrate their disputes. The District Court denied the motion, finding that Wells Fargo waived its arbitration rights as against the named Plaintiffs by failing to timely move to compel arbitration prior to extensive discovery and litigation proceedings. Wells Fargo appealed on the basis that moving to compel arbitration against the named Plaintiffs prior to Concepcion would have been futile. This Court affirmed the District Court's decision, holding that a motion to compel arbitration would not have been futile prior to Concepcion because the question of whether federal law preempted state laws that voided class-wide arbitration provisions was merely unsettled, not squarely adverse to Wells Fargo's rights. Garcia, 699 F.3d at 1275.

         On remand, the named Plaintiffs moved the District Court to certify the class. Wells Fargo opposed certification. Among other arguments, Wells Fargo contended that a lack of numerosity existed because all customers bound by enforceable arbitration provisions would have to be excluded from the class and, because all of Wells Fargo's customers had signed such provisions, there simply would not be enough class members to make a class action viable.

         At the same time it filed its opposition to class certification, Wells Fargo filed conditional motions to compel arbitration against the unnamed class members in the event the District Court certified the class.[5] On April 8, 2013, without ruling on the named Plaintiffs' motion for class certification, the District Court denied Wells Fargo's conditional motions to compel arbitration. Wells Fargo appealed, and we vacated the decision. In re Checking Account Overdraft Litig. (Spears-Haymond I), 780 F.3d 1031, 1037-39 (11th Cir. 2015). We held that because no class including the unnamed putative class members had been certified, the District Court "lacked jurisdiction to rule on the arbitration obligations of the unnamed putative class members, " and further that the named Plaintiffs lacked third-party standing to assert waiver or other arguments against arbitration on behalf of the unnamed putative class members. Id.

         On remand, the District Court granted Plaintiffs' motion for class certification. Immediately thereafter, Wells Fargo moved to compel arbitration as to the unnamed class members. The District Court denied that motion, holding that Wells Fargo had waived its rights to demand arbitration as to the unnamed class members because it "acted inconsistently with its arbitration rights" during its pre-certification litigation efforts" and "significant prejudice ...


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