LOS ANGELES, CALIF. (Nov. 15, 2010)–Jury selection begins this week in Los Angeles Superior Court in a lending discrimination class action against Wells Fargo Bank. Class members are loan customers in minority communities in Los Angeles. Plaintiffs’ counsel will be arguing that Wells Fargo consistently and knowingly discriminated against borrowers in minority neighborhoods, resulting in these borrowers paying more for their loans than borrowers in other parts of Los Angeles County. (Opal Jones, et. al v. Wells Fargo Bank, N.A., Wells Fargo Home Mortgage, et. al Los Angeles Superior Court, Case No. BC337821). Judge Anthony J. Mohr is the presiding judge.
When certifying the class last year, Judge Mohr referred to The Unruh Civil Rights Act. The Act makes it illegal to deny, aid or incite a denial, or make any discrimination or distinction on the basis of, among other things, race, color or national origin. This includes the failure or refusal to provide all persons with full and equal advantages and services in all business establishments.
According to the class action filing, Wells Fargo introduced a computer program in 2002 called “Loan Economics,” which gave loan officers the ability to offer discounts to loan applicants that lowered overall loan costs through reduced fees and interest rates. The lawsuit alleges that branches in predominately white communities could use the program to price loans, while bank branches in predominately minority communities were prevented from doing so by Wells Fargo management.
“Despite overwhelming evidence that members of Wells Fargo’s management were engaged in blatant racial discrimination that caused the class of minority borrowers to pay more for their loans, these officers are still employed and in some cases have been promoted by Wells Fargo,” says A. Barry Cappello, managing partner of the Santa Barbara law firm of Cappello & Noël, and co-counsel representing the class. “The area manager knew he would make more money for himself if his branches didn’t use the pricing program. By discriminating, he benefited himself.”
Class members are defined as borrowers who obtained a first trust deed-secured loan from Wells Fargo Bank or Wells Fargo Home Mortgage for more than $150,000 between May 2002 and December 2005. Members must have applied for their loans at Wells Fargo branches located within specific areas of Los Angeles County.
“Wells Fargo management continually denied requests by minority area branch loan officers to use the program so they could offer lower cost loans to minority borrowers, even when the borrowers were well qualified,” says attorney Leila J. Noël, a partner at Cappello & Noël and plaintiffs’ co-counsel. “These borrowers did not shop loans–they relied on what their Wells Fargo loan representatives told them. They did not know that that these loan officers were prevented from giving them better loan terms and rates. Fortunately, they will now have their day in court.”
Judge Mohr denied Wells Fargo’s motion for summary judgment and motion for class decertification on November 7, clearing the way for trial.
Plaintiffs’ counsel is seeking statutory damages of $4,000 per loan. To participate in the class, class members needed to waive their right to actual damages. An estimated 7,000 borrowers who obtained their loans from minority branch locations are expected to qualify as class members.
Once a jury is selected, the trial will be held at the Central Civil West Courthouse (600 South Commonwealth, 14th fl., Los Angeles) and is expected to last about six weeks.
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