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Another local manager has sued Wells Fargo saying she was fired due to the oppressive and fraudulent sales tactics employed by the company. Rachael DeBoy of Cibolo sued the company accusing them of fraud, breach of contract, quantum meruit (i.e., alleging the company did not pay what was owed), and for wrongful termination. In the Petition filed under DeBoy v. Wells Fargo Bank, N.A., No. 2017-CI-12897, the former Branch Manager accuses the bank of imposing stringent sales quotas starting in 2011. Ms. DeBoy complained about the unethical sales tactics. She said these sales tactics harmed customers. She complained to managers, Human Resources and to the Ethics phone line. She received no response. But, her better sales persons were fired or transferred. She was set up to fail, she alleges.

She went out on maternity leave and was replaced by a temporary manager who reinforced the bank’s unethical sales practices. Then, upon her return to work, she received a poor job evaluation with no warning and no job coaching.She had formerly been a stellar employee.

She resigned to avid a termination. Her replacement received a raise and a promotion. I previously wrote about the first lawsuit by Alex Leal against Wells Fargo here. Lawsuits based on “wrongful termination” in Texas will not go far. There is no such cause pf action in Texas. Her other causes of action are perhaps problematic. The Plaintiff alleges she was denied bonuses and raises due to the unethical practices. But, given the bad publicity about Wells Fargo and its shady practices, she may succeed. See San Antonio Express News report here.

It was big news just a few months ago that Wells Fargo bank pressured its employees to engage in fraudulent sales tactics. Some employees were even issuing credit cards and setting up new bank accounts for its customers – without the customers’ permission. It was fraud. But, was it illegal? That distinction matters in a state like Texas. In Texas, there is no law protecting employees from employers engaging in fraud. But, there is a law against requiring an employee to engage in illegal activity. Alex Leal has filed suit against Wells Fargo. His lawsuit appears to lie right at the intersection of what is illegal and what is fraudulent but perhaps lawful. He was a branch manager at a branch on the West side of San Antonio. In his lawsuit, he says he was fired because he refused to go along with the sales tactics.

He also alleges defamation. I just wrote a post about defamation here and how hard it is to show defamation in the work place. To win, Mr. Leal must not just show management lied about him, he must show they knew it was a lie and they sought to cause him harm.

Mr. Leal is also suing for age discrimination, saying management preferred younger employees because they were more likely to go along with these fraudulent sales tactics. He says he was replaced by a 29 year old manager. See San Antonio Express News report.

You have to love capitalism. I still believe the capitalistic system is the best around. But, the crazy things it can lead to. Everyone has heard about the Wells Fargo scandal. Bank tellers at Wells Fargo were required to open a certain amount of new accounts every month. The pressure was on to meet a certain goal every month. So, many Wells Fargo employees opened false accounts in the name of customers. They were so desperate to meet their goals, that they basically took money from customers to open accounts that the customers did not want.

Every bank customer at Wells Fargo signs an arbitration agreement when they open their account. Does that arbitration agreement apply to a fraudulent account? Yes, it does, according to early court opinions. Customers have tried to sue the bank for its fraudulent sales practices and have been stymied by the arbitration provision for the one true account. As one Los Angeles lawyer said, its “laughable to any logical person.” See Los Angeles Times report. In one instance, Wells Fargo opened eight accounts fraudulently in the name of one customer. But, a San Fransisco district court would not let him sue the bank.

Arbitration is often, paid-for justice. At least one study has shown that there is a “repeat player” effect. That is, an arbitrator will favor a repeat customer. In this context, Wells fargo would be the repeat player. They would have hundreds or more such arbitrations, while each customer likely has just the one. If there arbitrator wants more arbitrations, he knows he should find in favor of the repeat customer.

Plaintiffs in employment cases often contend they are paid less than other, similarly situated co-workers. The Defendant then argues no, the plaintiff does not truly know that. Many times, the court will side with the employer and find that the employee is relying on speculation when s/he claims to “know.” Since, many plaintiffs are relying on hearsay when they make that sort of a claim. They often rely on water cooler talk.

In Sims v. Wells Fargo Bank, N.A., No. H-16-3212, 2018 U.S. Distilled. LEXIS 19896 (S.D. Tex. 2018), the court sided with the employee. Rochelle Sims was an African-American branch manager. A male business banking specialist transferred into Ms. Sims’ branch. In reviewing his performance, the plaintiff realized the male subordinate was paid more than she was. She did some research and saw that other male, non-African-American  branch managers were paid more than she was.

Ms. Sims spoke with HR and her supervisor about the pay gap. Her supervisor told her she should step down from the manager position. If not, Wells Fargo would “eat her lunch.” The plaintiff did that and transferred to a different branch. Soon, the male business banking specialist who had come into her old branch was promoted to branch manager. Ms. Sims filed a complaint with he EEOC and filed suit. The employer moved for summary judgment. Wells Fargo argued that Ms. Sim’s claim that she had been paid less than male, non-African-American branch managers had been based on speculation.

The court, however, noted that the employer relied on a conclusory assertion in claiming Sims was not paid more than her counter-parts. The bank offered no evidence, said the court. It relied on inadmissible hearsay to claim her pay was comparable to her male counter-parts. So, it denied summary judgment on the plaintiff’s claim regarding a pay gap. See the decision here.

Mandatory arbitration clauses have become an accepted part of many contracts, when we buy cars, open bank accounts and when we apply for jobs. The mandatory arbitration clauses block employees and consumers from their day in court. But, those clauses are increasingly under attack, according to a recent story in the San Antonio Express News. Arbitration clauses are criticized by the #metoo movement because they are used to hide sexual harassment.

They were also used by Wells Fargo to shield complaints by customers when the bank abused customer data and opened bogus accounts. One state, California, passed a law preventing financial services companies from using arbitration clauses in cases of fraud.

Some companies are re-thinking the use of mandatory arbitration clauses altogether. Microsoft has dropped mandatory arbitration clauses in cases of sexual harassment. Some lawyers here in Texas are advising their corporate clients that mandatory arbitration clauses are not wise. One Dallas lawyer told about a client who lost an arbitration with a supplier. The company then had no avenue for appeal. The losing company was then hit with an arbitration bill of $200,000. Yes, in arbitration, the loser generally pays the expenses of the arbitration. AAA has rules for employment arbitrations in which the employee will not pay the expenses even if s/he loses. But, in most arbitrations, the loser pays the expenses of the arbitration. We tend to think of a lawsuit being free, more or less. The loser in a lawsuit will not be expected to pay the salary of the judge, the court reporter, the court clerk and the bailiff. The losing party will not have to pay for the use of the court room. But, in most arbitrations, someone has to pay those expenses.

One Houston lawyer who advises small automobile dealerships advises his clients to avoid arbitration clauses. He says in the judicial process, you know what to expect. With an arbitrator, you never know quite what to expect. See San Antonio Express News report.

 

 2LT Clovis Ray was killed in Afghanistan recently.  He grew up in Three Rivers, but here in San Antonio,  He joined the US Army at the relatively late age of 32 after many years as an investment banker.  He worked for Wells Fargo and Wachovia banks here in San Antonio before enlisting and going through Officer Candidate School.  He served in Afghanistan with the 25th Infantry Division. 

His father said he was the "best of the best."  I do not doubt it.  Anyone who would leave a well-paying job to enlist and go through OSC must have been an extraordinary person.  He left a wife and 5 year old son.  He was killed by an IED (roadside bomb) in Kunar Province.  He is also survived by his twin brother, Eddie.  2LT Ray and his brother played football for the high school in Three Rivers.  See San Antonio Express News story.  Everyone I knew who went through OCS were excellent officers.  

 An Air Foce Reservist is one step closer to receiving his award of $926,506 in lost pay and benefits.  The 2d Circuit Court of Appeals upheld a lower court ruling that Michael Serricchio suffered discrimination when his employer changed his sales plan after he returned from active duty.  Wachovia paid Mr. Serricchio commissions as a financial advisor.  After returning from active duty, Wachovia changed his sales leads to "cold calls" instead of offering him his original clients or comparable customers. 

Wachovia had argued that it was only required to offer a returning Reservist the same commission structure without reference to the advisor’s prior book of business.  Thus, in effect, the employer had argued that the returning Reservist was required to build back his book of customers.  If he did not, tough luck.  

The new employer, due to corporate changes is Wells Fargo.  The trial court ordered Wells Fargo to pay Mr. Serricchio a draw of $12,300 for the next nine months while be builds up his business.  He was awarded $389,453 in lost pay.  The Uniformed Services Employment and Reemployment Act (USERRA) does not provide for emotional suffering type damages.  The USERRA Act only provides for lost pay and benefits.