Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 1 of 111 Page ID #:3276 1 2 3 4 5 6 7 8 9 10 11 12 13 Roland Tellis (SBN 186269) rtellis@baronbudd.com Daniel Alberstone (SBN 105275) dalberstone@baronbudd.com Mark Pifko (SBN 228412) mpifko@baronbudd.com Sterling L. Cluff (SBN 267142) scluff@baronbudd.com David B. Fernandes, Jr. (SBN 280944) dfernandes@baronbudd.com BARON & BUDD, P.C. 15910 Ventura Boulevard, Suite 1600 Encino, California 91436 Telephone: (818) 839-2333 Facsimile: (818) 986-9698 Roman M. Silberfeld (SBN 62783) rsilberfeld@robinskaplan.com ROBINS KAPLAN LLP 2049 Century Park East, Suite 3400 Los Angeles, California 90067 Telephone: (310) 552-0130 Facsimile: (310) 229-5580 Aaron M. Sheanin (SBN 214472) asheanin@robinskaplan.com ROBINS KAPLAN LLP 2440 W. El Camino Real, Suite 100 Mountain View, California 94040 Telephone: (650) 784-4040 Facsimile: (650) 784-4041 Plaintiffs’ Co-Lead Counsel *Additional counsel listed on signature page 14 15 UNITED STATES DISTRICT COURT 16 CENTRAL DISTRICT OF CALIFORNIA 17 18 19 20 Case Number: 8:17-ML-2797-AG-KES IN RE WELLS FARGO COLLATERAL PROTECTION INSURANCE LITIGATION AMENDED CONSOLIDATED CLASS ACTION COMPLAINT JURY TRIAL DEMANDED 21 22 23 Hon. Andrew J. Guilford 24 25 26 REDACTED VERSION 27 28 28 75946874.1 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 2 of 111 Page ID #:3277 1 2 3 I. Table of Contents NATURE OF ACTION ............................................................................................. 1 4 II. THE PARTIES .......................................................................................................... 3 5 A. Plaintiffs .......................................................................................................... 3 6 B. Defendants ....................................................................................................... 6 7 III. JURISDICTION AND VENUE ................................................................................ 8 IV. INTRA-DISTRICT ASSIGNMENT ......................................................................... 9 8 9 10 V. FACTS COMMON TO ALL COUNTS ................................................................. 10 11 A. Collateral Protection Insurance and Force-Placed Insurance ....................... 10 12 B. 13 Defendants Unlawfully Force-Place CPI on Millions of Borrowers’ Automobile Loan Accounts for More Than 14 Years .................................. 14 14 1. The CPI Vendor Provided Tracking Services and Insurance Placement Services for the CPI Program ............................................ 14 2. The CPI Vendor Paid an Undisclosed Kickback in the Form of an Unearned Commission to Wells Fargo’s Subsidiary ..................... 16 3. Defendants Operated the CPI Program as a Single, Continuous Enterprise Since Inception .................................................................. 18 4. The CPI Program Was Lucrative for Defendants ............................... 22 5. Charges to Wells Fargo’s Auto Loan Borrowers Were Not Insurance Premiums ............................................................................ 25 6. Wells Fargo and Its CPI Vendor Unlawfully Force-Placed CPI ........ 29 15 16 17 18 19 20 21 22 23 24 a. Wells Fargo Obtained Borrowers’ Insurance Information from the Automobile Dealer at the Time of Sale ..................... 29 b. Defendants Disregarded Borrowers’ Proof of Insurance ......... 31 c. Defendants Sent False and Misleading “Insurance Request” Letters to Borrowers ................................................. 32 25 26 27 28 28 75946874.1 i AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 3 of 111 Page ID #:3278 1 d. Wells Fargo Had No Practice of Monitoring the CPI Vendor’s Telephone Calls to Borrowers .................................. 36 e. Defendants Sent False and Misleading “Coverage Issued” Letters to Borrowers ................................................................. 37 2 3 4 5 6 7. Wells Fargo Sent Admittedly Deceptive Account Statements to Borrowers ............................................................................................ 40 8. Wells Fargo Identified Other Features of the CPI Program That Harmed Borrowers .............................................................................. 43 9. Defendants Knowingly Ignored and Failed to Track Consumer Complaints About CPI ........................................................................ 46 7 8 9 10 C. Wells Fargo’s Management, Risk Officers, and Board of Directors Knew That the CPI Program Harmed Its Customers .................................... 48 D. The New York Times Exposes Defendants’ Force-Placed CPI Scheme ....... 51 11 12 13 14 15 VI. PLAINTIFFS’ EXPERIENCES .............................................................................. 56 Plaintiff Angelina Camacho .................................................................................... 56 Plaintiff Odis Cole ................................................................................................... 58 16 17 Plaintiff Nyle Davis ................................................................................................. 59 18 Plaintiff Duane Fosdick ........................................................................................... 60 19 Plaintiff Regina Gonzalez ........................................................................................ 62 20 Plaintiff Brandon Haag ............................................................................................ 64 21 Plaintiff Paul Hancock ............................................................................................. 66 22 Plaintiff Dustin Havard ............................................................................................ 67 23 24 Plaintiff Brian Miller ............................................................................................... 69 25 Plaintiff Analisa Moskus ......................................................................................... 70 26 Plaintiff Keith Preston ............................................................................................. 72 27 Plaintiff Victoria Reimche ....................................................................................... 73 28 75946874.1 ii AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 4 of 111 Page ID #:3279 1 Plaintiff Dennis Small.............................................................................................. 74 2 Plaintiff Bryan Tidwell ............................................................................................ 74 3 VII. STATUTE OF LIMITATIONS............................................................................... 77 4 5 6 7 A. Discovery Rule .............................................................................................. 77 B. Fraudulent Concealment ............................................................................... 78 VIII. CLASS ACTION ALLEGATIONS ........................................................................ 79 8 A. Class Definitions ........................................................................................... 79 9 B. Class Certification Requirements: Federal Rule of Civil Procedure 23 ....... 81 10 11 IX. RICO ALLEGATIONS ........................................................................................... 83 X. CAUSES OF ACTION ............................................................................................ 85 12 FIRST CLAIM FOR RELIEF: Violations of the Racketeer Influenced and Corrupt Organizations Act ............................................................................ 85 13 14 A. The CPI Enterprise ........................................................................................ 85 B. Conduct of the CPI Enterprise ...................................................................... 87 C. Pattern of Racketeering Activity ................................................................... 89 18 D. Damages ........................................................................................................ 92 19 SECOND CLAIM FOR RELIEF: Violation of the Bank Holding Company Act ................................................................................................................. 93 15 16 17 20 THIRD CLAIM FOR RELIEF: Violation of the California Unfair Competition Law ........................................................................................... 98 21 22 23 FOURTH CLAIM FOR RELIEF: Fraud by Concealment .................................... 99 24 FIFTH CLAIM FOR RELIEF: Unjust Enrichment ............................................. 102 25 XI. 26 XII. DEMAND FOR JURY TRIAL ............................................................................. 105 PRAYER FOR RELIEF ........................................................................................ 104 27 28 75946874.1 iii AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 5 of 111 Page ID #:3280 1 Plaintiffs Angelina Camacho, Odis Cole, Nyle Davis, Duane Fosdick, Regina 2 Gonzalez, Brandon Haag, Paul Hancock, Dustin Harvard, Brian Miller, Analisa Moskus, 3 Keith Preston, Victoria Reimche, Dennis Small, and Bryan Tidwell bring this action on 4 behalf of themselves and all others similarly situated (collectively “Plaintiffs”) against 5 Defendants Wells Fargo & Company, Wells Fargo Bank, N.A. (collectively, “Wells 6 Fargo”), National General Holdings Corp. and National General Insurance Company 7 (collectively, “National General”) (together with Wells Fargo, the “Defendants”). Plaintiffs 8 allege the following based upon information and belief, the investigation of counsel, and 9 personal knowledge as to the allegations pertaining to themselves. 10 I. 11 NATURE OF ACTION On September 27, 2016, following the announcement of its $185 million 12 settlement with federal regulators concerning its fraudulent bank account scheme, Wells 13 Fargo’s Board of Directors promised “to ensur[e] that all aspects of the Company’s business 14 are conducted with integrity, transparency, and oversight.”1 Unfortunately, however, even 15 under its new management, Wells Fargo’s fraudulent practices continue. 16 For more than fourteen years, Wells Fargo and its predecessors, together with 17 auto insurance underwriter National General and its predecessors (“CPI Vendor”), engaged 18 in a scheme to bilk millions of dollars from approximately 2 million unsuspecting Wells 19 Fargo customers. Through this scheme, Wells Fargo and the CPI Vendor forced millions 20 of customers to pay for auto insurance—commonly known as Collateral Protection 21 Insurance (“CPI”)—they did not need or want. Making matters worse, Defendants 22 possessed information showing that these customers already had their own insurance but 23 24 25 26 27 28 28 1 See Business Wire, Independent Directors of Wells Fargo Conducting Investigation of Retail Banking Sales Practices and Related Matters, September 27, 2016, available at https://www.businesswire.com/news/home/20160927006772/en/Independent-Directors-Wells-FargoConducting-Investigation-Retail; Business Wire, Wells Fargo Issues Statement on Agreements Related to Sales Practices, September 8, 2016, available at http://www.businesswire.com/news/home/20160908006266/en/Wells-Fargo-Issues-StatementAgreements-Related-Sales (emphasis added); Wells Fargo, Wells Fargo Announces Plan to Remediate Customers for Auto Insurance Coverage, July 27, 2017, available at https://newsroom.wf.com/pressrelease/consumer-lending/wells-fargo-announces-plan-remediate-customers-auto-insurance. 1 75946874.1 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 6 of 111 Page ID #:3281 1 intentionally ignored this information when they forced-placed CPI. When Wells Fargo’s 2 customers complained and informed Defendants that they maintained independent 3 insurance on their vehicles, making CPI unnecessary, Wells Fargo refused to remove the 4 unlawful charges. 5 Defendants’ force-placed CPI scheme was first reported by the New York 6 Times on July 27, 2017, after the Times obtained an internal report commissioned by Wells 7 Fargo’s executives. 8 customers, including active military personnel, paid for unnecessary CPI, pushing nearly 9 275,000 of them into delinquency, and resulting in nearly 25,000 unlawful vehicle 10 repossessions. As a result the CPI scheme, these individuals suffered financial harm 11 including inflated premiums, delinquency charges, late fees, repossession costs, increased 12 interest rates, overdraft fees, and damage to their credit reports. The internal report revealed that more than 800,000 auto loan 13 When confronted by the Times article, Wells Fargo’s spokesperson Jennifer A. 14 Temple publicly stated, “[w]e take full responsibility for these errors and are deeply sorry 15 for any harm we caused customers.” This lawsuit tests Wells Fargo’s commitment to its 16 customers and seeks full compensation for all damages Defendants caused. 17 As alleged in more detail below, Defendants sought to unlawfully generate 18 profits by force-placing unnecessary CPI on unsuspecting customers and then collected 19 payments for insurance premiums, interest, and other fees, while also sharing in undisclosed 20 kickbacks in the form of unearned commissions and other compensation, thereby increasing 21 the costs paid by every individual on whose accounts Defendants force-placed CPI. These 22 concealed kickbacks increased the charges to all borrowers on whom Defendants had force- 23 placed CPI, whether duplicative or not, and provided Defendants with the financial 24 incentive to perpetuate the CPI scheme. 25 To carry out the scheme, Wells Fargo provided borrower information to its 26 CPI Vendor. The CPI Vendor, in turn, was supposed to check electronic and hard copy 27 insurance information to confirm whether Wells Fargo’s customers had insurance coverage. 28 A CPI policy was only lawfully authorized if Wells Fargo’s customers did not maintain 75946874.1 2 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 7 of 111 Page ID #:3282 1 sufficient insurance to cover the amount owed on their vehicles.2 But, in reality, Defendants 2 intentionally ignored available insurance information, then frequently, and without any 3 notice, automatically deducted CPI charges from the customers’ bank accounts, along with 4 the regularly scheduled principal and interest payment for the auto loan. Compounding the 5 problem, Defendants’ failure to properly disclose the CPI and/or the resulting automatic 6 deductions from customers’ bank accounts often put them in a financial tailspin. 7 In furtherance of their scheme to wrongfully force-place CPI, Defendants 8 falsely represented to, and concealed from, customers—through form insurance placement 9 letters, uniform bank statements, and online balance reports—that customers owed Wells 10 Fargo more money (because of the CPI charges) than they actually did. In fact, a Wells 11 Fargo internal audit determined that the bank’s billing statements were “deceptive” as to 12 CPI charges.3 Examples of these misrepresentations and omissions are detailed below. 13 Wells Fargo knew it was the only major bank or large auto finance company 14 with a CPI scheme.4 Although senior Wells Fargo executives had long known that the CPI 15 scheme harmed customers, Wells Fargo only shut it down in September 2016 after 16 recognizing that maintaining the CPI scheme “could lead to reputational risk and potential 17 legal exposure.”5 18 19 II. A. THE PARTIES Plaintiffs 20 Plaintiff Angelina Camacho (“Camacho”) is currently a resident and a citizen 21 of the State of New Jersey. Plaintiff Camacho obtained an auto loan through Wells Fargo 22 23 24 25 2 Wells Fargo Dealer Services, Financial Education, Understanding Your Auto Loan, available at https://www.wellsfargodealerservices.com/consumers/financialeducation/understandingyourautoloan/def ault.asp#fees. 26 3 WFCPI_00035207 at 214; WFCPI_00050483 at 484. 27 4 WFCPI_00050483 at 484. 28 5 WFCPI_00035207 at 208. 75946874.1 3 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 8 of 111 Page ID #:3283 1 Bank, N.A., or its predecessors, subsidiaries or divisions, was assessed charges for CPI 2 and/or related fees, and was damaged thereby. 3 Plaintiff Odis Cole (“Cole”) is currently a resident and a citizen of the State of 4 Illinois. Plaintiff Cole obtained an auto loan through Wells Fargo Bank, N.A., or its 5 predecessors, subsidiaries or divisions, was assessed charges for CPI and/or related fees, 6 and was damaged thereby. 7 Plaintiff Nyle Davis (“Davis”) is currently a resident and a citizen of the State 8 of Missouri. Plaintiff Davis obtained an auto loan through Wells Fargo Bank, N.A., or its 9 predecessors, subsidiaries or divisions, was assessed charges for CPI and/or related fees, 10 and was damaged thereby. 11 Plaintiff Duane Fosdick (“Fosdick”) is currently a resident and a citizen of the 12 State of California. Plaintiff Fosdick obtained an auto loan through Wells Fargo Bank, 13 N.A., or its predecessors, subsidiaries or divisions, was assessed charges for CPI and/or 14 related fees, and was damaged thereby. 15 Plaintiff Regina Gonzalez (“Gonzalez”) is currently a resident and a citizen of 16 the State of Minnesota. Plaintiff Gonzalez obtained an auto loan through Wells Fargo Bank, 17 N.A., or its predecessors, subsidiaries or divisions, was assessed charges for CPI and/or 18 related fees, and was damaged thereby. 19 Plaintiff Brandon Haag (“Haag”) is currently a resident and a citizen of the 20 State of Wisconsin. Plaintiff Haag obtained an auto loan through Wells Fargo Bank, N.A., 21 or its predecessors, subsidiaries or divisions, was assessed charges for CPI and/or related 22 fees, and was damaged thereby. 23 Plaintiff Paul Hancock (“Hancock”) is currently a resident and a citizen of the 24 State of Indiana. Plaintiff Hancock obtained an auto loan through Wells Fargo Bank, N.A., 25 or its predecessors, subsidiaries or divisions, was assessed charges for CPI and/or related 26 fees, and was damaged thereby. 27 Plaintiff Dustin Havard (“Havard”) is currently a resident and a citizen of the 28 State of Mississippi. Plaintiff Havard obtained an auto loan through Wells Fargo Bank, 75946874.1 4 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 9 of 111 Page ID #:3284 1 N.A., or its predecessors, subsidiaries or divisions, was assessed charges for CPI and/or 2 related fees, and was damaged thereby. 3 Plaintiff Brian Miller (“Miller”) is currently a resident and a citizen of the State 4 of Mississippi. Plaintiff Miller obtained an auto loan through Wells Fargo Bank, N.A., or 5 its predecessors, subsidiaries or divisions, was assessed charges for CPI and/or related fees, 6 and was damaged thereby. 7 Plaintiff Analisa Moskus (“Moskus”) is currently a resident and a citizen of 8 the State of California. Plaintiff Moskus obtained an auto loan through Wells Fargo Bank, 9 N.A., or its predecessors, subsidiaries or divisions, was assessed charges for CPI and/or 10 related fees, and was damaged thereby. 11 Plaintiff Keith Preston (“Preston”) is currently a resident and a citizen of the 12 State of Nevada. Plaintiff Preston obtained an auto loan through Wells Fargo Bank, N.A., 13 or its predecessors, subsidiaries or divisions, was assessed charges for CPI and/or related 14 fees, and was damaged thereby. 15 Plaintiff Victoria Reimche (“Reimche”) is currently a resident and a citizen of 16 the State of Colorado. Plaintiff Reimche obtained an auto loan through Wells Fargo Bank, 17 N.A., or its predecessors, subsidiaries or divisions, was assessed charges for CPI and/or 18 related fees, and was damaged thereby. 19 Plaintiff Dennis Small (“Small”) is currently a resident and a citizen of the 20 State of Tennessee. Plaintiff Small obtained an auto loan through Wells Fargo Bank, N.A., 21 or its predecessors, subsidiaries or divisions, was assessed charges for CPI and/or related 22 fees, and was damaged thereby. 23 Plaintiff Bryan Tidwell (“Tidwell”) is currently a resident and a citizen of the 24 State of California. Plaintiff Tidwell obtained an auto loan through Wells Fargo Bank, 25 N.A., or its predecessors, subsidiaries or divisions, was assessed charges for CPI and/or 26 related fees, and was damaged thereby. 27 28 75946874.1 5 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 10 of 111 Page ID #:3285 1 B. Defendants 2 Defendant Wells Fargo & Company is a Delaware corporation and bank 3 holding company with its principal place of business in San Francisco, California. Wells 4 Fargo & Company is one of the nation’s largest corporations, providing a wide-range of 5 financial services to customers throughout the United States. Wells Fargo & Company 6 participated in the force-placement of CPI alleged herein from its California offices, 7 including the decision (and/or ratification of the decision) to enter into agreements with its 8 CPI Vendor to wrongfully force-place CPI on hundreds of thousands of borrowers 9 throughout the United States. 10 Defendant Wells Fargo Bank, N.A. is a subsidiary of Wells Fargo & Company, 11 and is a national bank organized and existing as a national association under the National 12 Bank Act, 12 U.S.C. §§ 21 et seq., with its principal place of business in San Francisco, 13 California. Wells Fargo Bank, N.A. owns the automobile loans secured by Class members’ 14 vehicles, which are located throughout the United States. Wells Fargo Bank, N.A. is the 15 primary entity used by Wells Fargo & Company for the origination and servicing of 16 automobile loans. Wells Fargo Bank, N.A., originates and services loans to consumers 17 through its Wells Fargo Dealer Services division, headquartered in Irvine, California. 18 As detailed herein, Wells Fargo Dealer Services is the successor-in-interest to 19 Wachovia Dealer Services, Inc. (“Wachovia”) and WFS Financial Inc. (“WFS”), both of 20 which served the same roles and functions in the CPI scheme as Wells Fargo Dealer 21 Services. WestFin Insurance Agency, Inc. (“WestFin”) is also a wholly-owned subsidiary 22 of Wells Fargo Bank, N.A. 23 At all material times herein, each Wells Fargo defendant and their predecessors 24 and affiliates were the agents, servants, or employees of, and acted within the purpose, 25 scope and course of said agency, service, or employment, and with the express or implied 26 knowledge, permission, and consent of the other Wells Fargo defendants, and ratified and 27 approved the acts of the other Wells Fargo defendants. 28 75946874.1 6 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 11 of 111 Page ID #:3286 1 Wells Fargo & Company exercises specific and financial control over the 2 operation of Wells Fargo Bank, N.A. and its affiliates, and it dictates the policies and 3 practices of Wells Fargo Bank, N.A. Wells Fargo & Company also exercises power and 4 control over the specific activities in this lawsuit, and it is the ultimate recipient of the 5 revenue and profits from the conduct described herein. 6 Defendant National General Holdings Corp. is a Delaware corporation and an 7 insurance holding company headquartered in New York, New York. National General 8 Holdings Corp. is a specialty personal lines insurance holding company that traces its roots 9 to 1939, and provides personal and commercial automobile, homeowners, umbrella, 10 recreational vehicle, motorcycle, supplemental health, and other niche insurance products. 11 National General Holdings Corp. participated in the force-placement of CPI alleged herein, 12 including the decision (and/or ratification of the decision) to enter into agreements with 13 Wells Fargo to wrongfully force-place CPI on hundreds of thousands of borrowers 14 throughout the United States. 15 Defendant National General Insurance Company (“National General” or 16 “NGIC”) is a national insurance agency incorporated in Missouri, with its principal place 17 of business in Winston-Salem, North Carolina. National General administers the CPI 18 division of the National General Lender Services business on behalf of its parent 19 corporation, National General Holdings Corp. National General also provides insurance 20 tracking and CPI throughout the United States. National General was the CPI Vendor for 21 all aspects of Wells Fargo’s CPI Program from 2015 until the termination of the CPI 22 Program in September 2016. The scope of its services included, among other things, 23 insurance tracking, borrower identification, policy placement, and underwriting CPI that 24 Wells Fargo force-placed on auto loan borrowers throughout the United States. 25 As detailed herein, National General is the successor-in-interest to several 26 other entities that operated as Wells Fargo’s CPI Vendor. Those entities included Newport 27 Management Corporation (“Newport”), Meritplan Insurance Company (“Meritplan”), and 28 Balboa Insurance Company (“Balboa”) which underwrote CPI and provided insurance 75946874.1 7 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 12 of 111 Page ID #:3287 1 tracking services during the period 2002 to 2011. These companies’ participation in the 2 force-placed CPI scheme was approved of and managed by executives located in Irvine, 3 California. These companies issued CPI from Irvine, California. 4 On June 1, 2011, QBE First Insurance Agency, Inc. (“QBEF”) acquired the 5 assets and liabilities of Newport, Meritplan, and Balboa, then becoming the CPI Vendor. 6 QBEF underwrote CPI and provided insurance tracking services during the period 2011 to 7 2015. QBEF’s participation in the force-placed CPI scheme was approved of and managed 8 by executives located in Irvine, California. QBEF issued CPI from Irvine, California. On 9 July 15, 2015, National General Holdings Corp. announced the acquisition of the assets and 10 liabilities of the parent company of QBEF. 11 At all material times herein, each National General defendant and their 12 predecessors and affiliates were the agents, servants, or employees of, and acted within the 13 purpose, scope and course of said agency, service, or employment, and with the express or 14 implied knowledge, permission, and consent of the other National General defendants, and 15 ratified and approved the acts of the other National General defendants. 16 Whenever, in this Complaint, reference is made to any act, deed or conduct 17 Defendants committed in connection with Defendants’ force-placed CPI scheme and the 18 related enterprise, the allegations mean that each of the Defendants engaged in the act, deed, 19 or conduct by or through one or more of their officers, directors, agents, employees, or 20 representatives, each of whom was actively engaged in the management, direction, control 21 or transaction of Defendants’ ordinary business and affairs, and the affairs of the enterprise. 22 III. JURISDICTION AND VENUE 23 This Court has jurisdiction over this matter under 28 U.S.C. § 1331 based on 24 the federal claims asserted under the Racketeer Influence and Corrupt Organizations Act, 25 18 U.S.C. §§ 1961 et seq., and 18 U.S.C. §§ 1331, 1334, 1962, and 1964, and the Bank 26 Holding Company Act, 12 U.S.C. § 1972 et seq. 27 This Court also has jurisdiction over this action pursuant to the Class Action 28 Fairness Act (“CAFA”), 28 U.S.C. § 1332(d), because at least one Class member is of 75946874.1 8 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 13 of 111 Page ID #:3288 1 diverse citizenship from one Defendant, there are more than 100 Class members, and the 2 aggregate amount in controversy exceeds $5 million, exclusive of interest and costs. 3 This Court may exercise supplemental jurisdiction over Plaintiffs’ state-law 4 claims pursuant to 28 U.S.C. § 1367 because all of Plaintiffs’ state-law claims are derived 5 from a common nucleus of operative facts and are of the kind Plaintiffs would ordinarily 6 expect to try in one judicial proceeding. 7 8 This Court has personal jurisdiction over Defendants pursuant to 18 U.S.C. § 1965 and 12 U.S.C. § 1975. 9 Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) because Wells 10 Fargo maintains its principal places of business in California. Moreover, Defendants are 11 considered to reside in this District because their contacts with it are sufficient to subject 12 them to personal jurisdiction herein. Furthermore, the acts giving rise to Plaintiffs’ claims 13 occurred, among other places, in this District. At oral argument before the Judicial Panel 14 on Multidistrict Litigation, “Wells Fargo represented that the primary witnesses would be 15 found in the Central District of California.” In re Wells Fargo Auto Ins. Marketing & Sales 16 Practices Litig., MDL No. 2797, Dkt. No. 90 at 2 (J.P.M.L. Oct. 5, 2017). 17 IV. INTRA-DISTRICT ASSIGNMENT 18 This action is properly assigned to the Santa Ana Division of this District 19 pursuant to the Central District Local Rules because a substantial portion of the events or 20 omissions giving rise to Plaintiffs’ claims arise in the counties served by the Santa Ana 21 Division of this Court. Several named Plaintiffs and proposed Class Representatives, as 22 well as thousands of Class members, obtained automobile loans, had CPI force-placed on 23 their loans, and suffered injuries as a result of Defendants’ CPI scheme in the counties 24 served by this Division. Moreover, Defendants conduct substantial business in the counties 25 served by this Division. Finally, the Judicial Panel on Multidistrict Litigation centralized 26 this litigation as MDL No. 2797 before the Honorable Andrew J. Guilford, presiding in the 27 Santa Ana Division of this District. 28 75946874.1 9 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 14 of 111 Page ID #:3289 1 2 V. A. FACTS COMMON TO ALL COUNTS Collateral Protection Insurance and Force-Placed Insurance 3 Vehicles in the United States are typically covered by one of the following 4 three categories of insurance: liability insurance, collision insurance, and comprehensive 5 insurance. 6 Liability insurance provides coverage when the insured is the at-fault driver in 7 an incident that causes property damage or injury to a person. Consumers are required by 8 laws in most states to maintain liability insurance. Collision insurance covers the vehicle 9 when it is in a collision with another driver or stationary object. Comprehensive coverage 10 handles all other kinds of non-collision damages, such as flooding, fires, and natural 11 disasters, among other things. 12 The auto insurance policies at issue in this case are commonly referred to as 13 CPI. Unlike auto insurance policies commonly taken out by vehicle owners, which not only 14 cover the insured vehicle, but also liability for collisions with other vehicles, property loss, 15 and bodily injury, CPI only covers the cost of damage to the insured vehicle. Although 16 vehicle owners are not required to maintain collision or comprehensive coverage by law, 17 according to a 2013 Insurance Information Institute report, 78% of insured drivers purchase 18 comprehensive coverage and 73% purchase collision coverage, in addition to the mandatory 19 liability insurance.6 20 When vehicle owners take out loans to purchase their vehicles, their lender 21 may obligate them to carry insurance.7 If borrowers do not obtain insurance to protect the 22 loan collateral, namely their vehicles, their lender may purchase it for them. Yet, Wells 23 24 25 26 27 William Hoffman, Forced Protection: How Will the Industry Respond to Wells Fargo’s Insurance Scandal, Auto Finance News (October 5, 2017), available at https://www.autofinancenews.net/forcedprotection-how-will-the-industry-respond-to-wells-fargos-insurance-scandal/. 6 7 Wells Fargo, Car Loan FAQ’s, available at https://www.wellsfargo.com/help/faqs/auto-loans/. 28 75946874.1 10 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 15 of 111 Page ID #:3290 1 Fargo’s internal documents show that it is the only major lender that force-placed CPI on 2 its auto loan borrowers.8 3 As described in detail throughout this Complaint, Wells Fargo purchased CPI 4 from National General and its predecessors, force-placed CPI on its auto loan borrowers’ 5 accounts, and tacked on CPI charges for premium, interest, and unearned commissions to 6 the borrowers’ principal, thus raising the borrowers’ monthly payments. The unearned 7 commissions were paid by the CPI Vendor as kickbacks to one of Wells Fargo’s affiliates 8 for the force-placement of CPI. These kickbacks ensured that the CPI charges to Wells 9 Fargo’s borrowers were more expensive than the premiums for coverage borrowers 10 obtained on their own. Indeed, Wells Fargo’s consultant Oliver Wyman 11 12 9 These unearned commissions 13 generated undisclosed charges even when CPI was properly placed on borrowers’ accounts. 14 Even after Wells Fargo stopped receiving commissions in 2013, it continued to assess CPI 15 charges on borrowers’ accounts in excess of the cost of CPI or other auto insurance 16 products. 17 In this regard, the CPI market created by the partnership between Wells Fargo, 18 National General, and their predecessors was “rigged” against the borrower because it 19 pushed up costs for consumers, rather than down.10 Instead of competing in the open 20 insurance marketplace, the CPI Vendor offered compensation and other considerations to 21 Wells Fargo, which Wells Fargo accepted, for its CPI business. The compensation and 22 considerations—in other words, kickbacks—were paid for by the CPI Vendor through 23 unreasonable expenses included in the CPI premium charged to Wells Fargo, which were 24 25 8 WFCPI_00035207 at 214; WFCPI_00050483 at 484. 26 9 WFCPI_00030113 27 28 10 Kristin Broughton, Do problems with lender-placed auto insurance go beyond Wells? American Banker (August 8, 2017, 5:31 p.m. EST), available at https://www.americanbanker.com/news/doproblems-with-lender-placed-auto-insurance-go-beyond-wells. 75946874.1 11 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 16 of 111 Page ID #:3291 1 then passed-on to the unsuspecting borrowers. These expenses included not only the 2 unearned commissions but also the cost of tracking services for Wells Fargo’s indirect auto 3 loan portfolio, which were passed-on at a disproportionate rate only to those borrowers who 4 paid charges for force-placed CPI. The structure of the CPI Program so benefitted Wells 5 Fargo that it did not seek to obtain a competitive insurance product or conduct a request for 6 proposals (“RFP”) for 12 years from the inception of the CPI Program in 2002 until 2014.11 7 The CPI market was characterized by “reverse competition” in that borrowers 8 who were forced to pay CPI charges lacked the ability to exert market power over prices. 9 Wells Fargo’s auto loan borrowers were vulnerable to excessive CPI charges, because they 10 did not request CPI but were forced to pay for it at a cost far greater than an independent 11 auto insurance policy. In fact, for hundreds of thousands of borrowers, they had no choice 12 but to pay the CPI charges that were crammed onto their accounts, despite the fact that they 13 had their own independent auto insurance. Again, in the words of Wells Fargo’s consultant 14 Oliver Wyman, 15 12 16 After Defendants force-placed a CPI policy on a Wells Fargo borrower, Wells 17 Fargo assessed a full year’s worth of CPI charges against the borrower’s account, and then 18 charged interest each month on the CPI before applying payments to the principal loan 19 balance. This ensured that Wells Fargo’s CPI charges got paid first, and any deficiency 20 resulted in the borrower falling short on the underlying loan.13 21 The core decisions concerning the force-placed CPI scheme were made by 22 Defendants in their California offices and headquarters. These decisions implemented a 23 nationwide practice of force-placing Defendants’ unnecessary CPI on Wells Fargo’s 24 25 26 11 WFCPI_00017004 at 009; WFCPI_00040990 at 992. 27 12 WFCPI_00030113. 28 13 See Understanding Your Auto Loan, supra at note 2. 75946874.1 12 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 17 of 111 Page ID #:3292 1 automobile loan customers and assessing improperly inflated premiums against their 2 accounts in exchange for lucrative kickbacks from the CPI Vendors. 3 Defendants are no strangers to force-placed insurance abuse in the more 4 traditional home mortgage CPI market. For example, in May 2013, Wells Fargo Bank N.A., 5 QBE Specialty Insurance Co., and a class of Florida homeowners reached a settlement 6 which required Wells Fargo to pay up to $19.25 million to Florida homeowners. The suit 7 charged Wells Fargo, among others, with deriving improper financial benefits from force- 8 placed insurance.14 Additionally, in 2014, while Wells Fargo’s automobile CPI scheme was 9 in full-swing, a Florida federal judge approved a $281 million settlement reached by Wells 10 Fargo and Assurant Inc. in a suit over their force-placed homeowners insurance practices.15 11 The suit, which involved about 1.3 million class members, alleged Wells Fargo allowed 12 Assurant to automatically issue force-placed insurance on mortgage loans if a borrower’s 13 voluntary insurance lapsed. After collecting high premiums on the new coverage, Wells 14 Fargo passed the payments along to Assurant, who would later funnel a portion of the 15 premiums back to Wells Fargo as “commissions.” 16 Finally, in 2015, Wells Fargo and Assurant settled a putative class action in 17 Illinois federal court in which they were accused of conspiring to inflate the cost of force- 18 placed hazard insurance in order to provide kickbacks to Wells Fargo.16 19 20 21 22 23 24 25 26 27 28 14 LendersRisk.com, Regulatory Landscape for 2016: Lender-Placed Insurance and What You Need to Know, February 8, 2016, available at http://lendersrisk.com/index.php/regulatory-landscape-for-2016lender-placed-insurance-and-what-you-need-to-know/. Kelly Knaub, Law360, Wells Fargo’s Contested $281M Force-Placed Deal Approved, October 30, 2014, available at https://www.law360.com/articles/591839/wells-fargo-s-contested-281m-force-placeddeal-approved. 15 16 Dani Kass, Law360, Wells Fargo, Assurant Settle Force-Placed Insurance Suit, May 11, 2015, available at https://www.law360.com/articles/654372/wells-fargo-assurant-settle-force-placed-insurancesuit. 75946874.1 13 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 18 of 111 Page ID #:3293 1 2 Defendants Unlawfully Force-Place CPI on Millions of Borrowers’ Automobile Loan Accounts for More Than 14 Years 3 Wells Fargo’s CPI Program existed from 2002 to 2016. During that time 4 period, Wells Fargo and its predecessors forced-placed CPI on millions of auto loan 5 borrowers, even when borrowers maintained sufficient insurance to protect Wells Fargo’s 6 collateral. Wells Fargo effectuated the CPI Program with and through its CPI Vendors 7 including National General and its predecessors under Insurance Administration 8 Agreements (“IAA”) and General Agency Agreements (“GAA”). 9 companies involved in the CPI Program were WFS, Wachovia, WestFin, and WFDS. The 10 National General companies involved in the CPI Program were Newport, Meritplan, 11 Balboa, QBEF, and NGIC. B. 12 1. The Wells Fargo 13 The CPI Vendor Provided Tracking Services and Insurance Placement Services for the CPI Program 14 On March 15, 2002, Wells Fargo’s predecessor, WFS, entered into the original 15 IAA with National General’s predecessor, Newport.17 Like Wells Fargo, WFS was engaged 16 in the business of extending credit and financing for automobile buyers and lessors.18 WFS 17 and Newport replaced the original IAA with another IAA effective October 1, 2005.19 18 Pursuant to the IAA, Newport provided “Tracking Services.” Specifically, 19 Newport was charged with tracking the vast majority of the loans in WFS’s indirect auto 20 loan portfolio to determine whether the borrowers maintained acceptable insurance 21 covering the underlying collateral, namely, the vehicles.20 22 Under the IAA, Newport provided daily reports to WFS of borrowers which 23 Newport did not verify had obtained or maintained acceptable insurance. Newport also 24 25 17 WFCPI_00015256 at 296. 26 18 Id. 27 19 WFCPI_00015256 at 296-322. 28 20 Id. 75946874.1 14 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 19 of 111 Page ID #:3294 1 identified those borrowers to its affiliates, Meritplan and Balboa, both of which had issued 2 a CPI Master Policy to WFS for the placement of CPI on individual borrowers’ accounts. 3 Under the CPI Master Policy, which covered all eligible vehicles in WFS’s 4 indirect auto loan portfolio, certificates of coverage for specific vehicles were added (or 5 removed) if WFS and the CPI Vendor determined these vehicles required CPI coverage. 6 Meritplan and Balboa added CPI to those borrowers’ accounts and billed WFS, which in 7 turn, charged the borrowers for CPI. 8 The CPI Vendor’s Tracking Services were distinct from its Insurance 9 Placement Services. Tracking Services included loading insurance information into a 10 database, maintaining and monitoring the insurance tracking database, contacting 11 borrowers, insurance companies and agents about inadequate insurance, and providing 12 customer service to borrowers submitting evidence of adequate insurance. These Tracking 13 Services were the responsibility of WFS (and later Wells Fargo) which, here, outsourced 14 them to the CPI Vendor. The CPI Vendor performed Tracking Services for most of the 15 loans in WFS’s indirect auto lending portfolio, irrespective of whether CPI was force- 16 placed on those borrowers’ accounts. WFS paid a Tracking Fee to the CPI Vendor for each 17 loan that it tracked.21 18 In contrast, the CPI Vendor’s Insurance Placement Services were specific to 19 those borrowers’ accounts on which CPI was force-placed. Insurance Placement Services 20 included notifying WFS that CPI would be force-placed, adding a certificate of coverage 21 for individual borrowers’ accounts to the CPI Master Policy, collecting premium payments 22 from WFS, providing premium refunds to the lender following cancellation, and providing 23 customer service about insurance claims made against the CPI policy. 24 25 26 27 21 Rule 30(b)(6) Deposition of Wells Fargo & Co. and Wells Fargo Bank, N.A. By and Through its Designee James William McLawhorn (“McLawhorn Dep.”) at 213:9-11. 28 75946874.1 15 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 20 of 111 Page ID #:3295 2. 1 2 3 4 5 On March 4, 2002, WestFin, which is presently a subsidiary of Wells Fargo,22 entered into the original GAA with Meritplan and Balboa. On October 18, 2005, WestFin, Meritplan and Balboa replaced the original GAA with another GAA. 23 Under each GAA, Meritplan and Balboa designated WestFin as their insurance agent. 6 7 8 9 10 The CPI Vendor Paid an Undisclosed Kickback in the Form of an Unearned Commission to Wells Fargo’s Subsidiary The GAA enabled WestFin to collect a commission on the net written premium for CPI placed on individual borrowers’ accounts. That WestFin was an insurance agency was critical to the CPI scheme, because the lender (WFS and its successors through and including Wells Fargo) were banks that could not legally receive a commission on CPI. In fact, Wells Fargo’s Rule 30(b)(6) witness testified to the following: 11 12 Q. It’s your understanding, though, that the reason for [WestFin’s] existence is in order to collect the commission that is paid by the vendor. Right? A. Correct. 16 Q. Because it’s an insurance agency? 17 A. Correct. 18 Q. And Wells Fargo Bank or Wells Fargo Auto or Wells Fargo Dealer Services is not an insurance agency? A. Correct.24 13 14 15 19 20 21 22 23 24 Insurance companies commonly pay commissions to their licensed agents, even those affiliated with commercial lenders, to compensate those agents for actual services performed. Agency services that are compensable by commissions include promoting and selling the insurance product, collecting insurance premiums from 25 26 22 WFCPI_00002776 at 778. 27 23 WFCPI_00003667 at 372-97. 28 24 McLawhorn Dep. at 35:16-25. 75946874.1 16 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 21 of 111 Page ID #:3296 1 customers, and forwarding those premiums to insurers. In contrast, the payment of 2 commissions to a bank-affiliated insurance agent that fails to perform these services should 3 internally raise red flags of improper, and even unlawful business practices. 4 commissions are in essence an undisclosed and unearned kickback. These 5 According to the GAA, WestFin’s primary responsibility was to produce 6 insurance business for Meritplan and Balboa, but at no point did WestFin do so. Wells 7 Fargo’s Rule 30(b)(6) witness could not identify a single action WestFin took to produce 8 insurance business.25 Wells Fargo’s corporate designee testified that WestFin did not sell, 9 market or promote CPI to borrowers; collect insurance premiums; communicate with 10 borrowers; or handle inbound or outbound calls with the CPI Vendor, borrowers, or their 11 insurance agencies. In fact, under the GAA, Meritplan and Balboa were responsible for the 12 collection of premiums and issuing refunds, not WestFin.26 13 Nor did WestFin have any other management or administrative role in the CPI 14 Program. Wells Fargo’s Rule 30(b)(6) witness testified that WestFin did not engage in the 15 management or oversight of the CPI Vendor or provide the CPI Vendor with support related 16 to uninsured accounts, claims processing, or vehicle inspections.27 17 Instead, WestFin was merely there to collect unearned commissions. WestFin 18 received commissions from the CPI Vendor on every CPI policy placed on individual 19 borrowers’ accounts, despite the fact that it did not perform any work traditionally 20 associated with an insurance agent. The traditional role of an insurance agent is to assist 21 the policyholder in determining her insurance needs, shopping the market for the insurance 22 product that meets the policyholder’s needs, and seeking the most competitive price for the 23 product. WestFin did not perform any of these functions. 24 customers, Wells Fargo’s internal documents reveal that “Commissions are obtained as 25 25 McLawhorn Dep. at 272:13-273:2. 26 26 McLawhorn Dep. at 35:7-15, 271:10-20, 273:3-5, 273:19-22, 274:3-14. 27 27 McLawhorn Dep. at 273:25-274:2, 274:18-275:12. In reality, and unbeknownst to 28 75946874.1 17 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 22 of 111 Page ID #:3297 1 part of the WFDS CPI program with QBE in order to offset the expenses WFDS incurs as 2 a result of the program.”28 As a subsidiary of Wells Fargo, WestFin’s commissions were booked as 3 4 revenue to the bank. 5 The CPI Vendor’s payment of commissions to WestFin was not justified by 6 any service provided by WestFin or any other legitimate business reason. Instead, these 7 unearned commissions, which generated undisclosed charges, were a kickback to WFS and 8 its successors (through and including Wells Fargo) for force-placing CPI on the accounts 9 of unsuspecting borrowers. 10 3. 11 Defendants Operated the CPI Program as a Single, Continuous Enterprise Since Inception 12 Wells Fargo, National General, and their predecessors operated the CPI 13 Program as a single, continuous enterprise from its inception in March 2002 until its 14 termination in September 2016. Defendants were systematically linked through continually 15 coordinated activities to operate the CPI Program. 16 Throughout the duration of the CPI Program, Defendants employed the use of 17 U.S. wire facilities by electronically exchanging information and money with each other 18 about the CPI Program and individual borrower’s accounts on a daily basis. These 19 electronic exchanges included files on new loans within Wells Fargo’s portfolio to be 20 tracked by the CPI Vendor; lists of accounts on which CPI would be placed or cancelled 21 and removed; dollar amounts of premium to be paid to, and refunded from, the CPI Vendor 22 by Wells Fargo; and dollar amounts of commissions to be paid to, and refunded from 23 WestFin by the CPI Vendor. Throughout the duration of the CPI Program, Defendants 24 settled premium payments and refunds with each other on a daily basis via wire transfer.29 25 26 27 28 WFPI_00017004 at 016 (emphasis added). 28 29 WFCPI_00046240 at p.2. 75946874.1 18 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 23 of 111 Page ID #:3298 1 Throughout the duration of the CPI Program, Defendants held monthly 2 management review meetings by telephone to discuss the CPI scheme including its 3 performance, metrics (including volume of telephone calls with borrowers, number of 4 claims made against CPI, and dollar amount of claims), and additional action items. The 5 CPI Vendor prepared a “scorecard” of metrics for the CPI Program and circulated the 6 scorecard to Wells Fargo, generally by electronic mail, in advance of the monthly 7 management review meetings. Participants in the monthly management review meetings 8 from Wells Fargo regularly included John Van Fossen (Operations Manager, supervisor of 9 the CPI team), James McLawhorn (Customer Services Manager), James Tann Pace 10 (Customer Service Manager), Brian Cheeseman (Insurance Support Manager), and others 11 from Wells Fargo’s finance team or remarketing team. 12 management review meetings from the CPI Vendor included Participants in the monthly 13 14 15 30 16 Throughout the duration of the CPI Program, Defendants also held quarterly 17 business review meetings in-person to discuss the CPI scheme including its performance, 18 metrics, and additional action items. Participants in the quarterly business review meetings 19 discussed these topics in much more detail than they did during monthly management 20 review meetings. The CPI Vendor prepared a business review deck which it circulated to 21 Wells Fargo, generally by electronic mail, in advance of the quarterly business review 22 meetings. The business review deck contained detailed data about the CPI Program 23 including loan volume and CPI penetration; gross and net written premium; average 24 premium per loan; CPI premium and commission trends; CPI distribution by state; borrower 25 account balances and premium rate percentages; CPI letter volume; CPI cancel percentages; 26 27 30 McLawhorn Dep. at 119:4-124:2; Defendants Wells Fargo & Company and Wells Fargo Bank, N.A.’s Initial Disclosures; National General Defendants’ Initial Disclosures. 28 75946874.1 19 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 24 of 111 Page ID #:3299 1 CPI loss experience and trends including by month and policy year; CPI financial results; 2 year-over-year comparisons; CPI claims experience and performance; CPI claim severity, 3 frequency, and payments; and other operational statistics and results.31 4 Although referred to as “quarterly” business review meetings, these meetings 5 occurred two to four times per year at Wells Fargo’s offices or the CPI Vendor’s offices. 6 Many of the individuals who attended quarterly business review meetings also attended 7 monthly management review meetings. Participants in the quarterly business review 8 meetings from Wells Fargo regularly included John Van Fossen, James McLawhorn, James 9 Tann Pace, Brian Cheeseman, Lori Millard (Customer Contact & Collection Manager), and 10 others from Wells Fargo’s finance team or remarketing team. Participants in the monthly 11 management review meetings from the CPI Vendor included 12 32 13 Wells Fargo’s Rule 30(b)(6) witness testified, consistent with internal 14 documents, that there were no material changes in the way the CPI Program was 15 administered throughout its duration.33 This was the case despite the fact that the companies 16 running the CPI Program changed over time and modified the IAA and GAA accordingly. 17 Although the names of the specific Wells Fargo and National General entities changed, their 18 roles and responsibilities did not. 19 As explained above, WFS and Newport replaced the original IAA with another 20 IAA effective October 1, 2005.34 Around the same time, WestFin, Meritplan and Balboa 21 22 23 24 25 31 McLawhorn Dep. at 124:3-125:15; NatGen00292685; WFCPI_00004484-522; WFCPI_00004272-306; WFCPI_00008247-279. 32 McLawhorn Dep. at 124:3-125:15; Defendants Wells Fargo & Company and Wells Fargo Bank, N.A.’s Initial Disclosures; National General Defendants’ Initial Disclosures. 26 33 McLawhorn Dep. at 18:19-29:1. 27 34 WFCPI_00015256 at 296-322. 28 75946874.1 20 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 25 of 111 Page ID #:3300 1 replaced the original GAA with another GAA effective October 1, 2005.35 2 agreements did not otherwise materially change the operation or administration of the CPI 3 Program. 4 These WFS changed its name to Wachovia effective March 1, 2007. WFS and 5 Newport amended the IAA to replace all references to WFS with Wachovia. 6 amendment did not materially change the operation or administration of the CPI Program. 36 7 Wachovia changed its name to Wells Fargo Dealer Service, Inc. (“WFDS”) 8 effective March 20, 2010. WFDS was a wholly-owned subsidiary of Wells Fargo Bank, 9 N.A. Wachovia and Newport amended the IAA to replace all references to Wachovia with 10 WFDS. This amendment did not materially change the operation or administration of the 11 CPI Program.37 This 12 Effective July 1, 2011, Wells Fargo Dealer Services, Inc. dissolved its separate 13 corporate status, merged into Wells Fargo Bank, N.A., and was renamed Wells Fargo 14 Dealer Services. This change to the corporate structure of WFDS did not materially change 15 the operation or administration of the CPI Program.38 16 Effective May 1, 2012, Balboa and Meritplan assigned their duties, 17 obligations, liabilities, rights, title, and interest under the GAA to QBEF. QBEF also 18 succeeded to Newport’s roles and responsibilities with respect to the IAA. Wells Fargo’s 19 internal documents confirm that these changes did not materially change the operation or 20 administration of the CPI Program.39 For example, according to an internal Wells Fargo 21 presentation entitled “Collateral Protection Insurance” from 2012, the “WFDS/QBE 22 23 35 WFCPI_00003667 at 372-97. 24 36 WFCPI_00015256 at 284. 25 37 WFCPI_0015256 at 281. 26 38 WFCPI_0015256 at 279. 27 39 WFCPI_00003367 at 369. 28 75946874.1 21 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 26 of 111 Page ID #:3301 1 relationship started in 2002[.] QBE provides tracking, placement and claims processing[.] 2 Minimal changes to pricing or structure of program since inception.”40 3 Effective on or about July 15, 2015, National General acquired the assets and 4 liabilities of QBE, and succeeded to QBEF’s roles and responsibilities with respect to the 5 IAA. Wells Fargo’s internal documents confirm that this change did not materially change 6 the operation or administration of the CPI Program. For example, an internal Wells Fargo 7 presentation entitled “CPI Update: Collateral Protection Insurance” from April 2016 8 explains that the relationship between Wells Fargo and National General dated to 2002, and 9 states that “National General is formerly known as QBE and Balboa.”41 10 Wells Fargo terminated the CPI Program effective September 30, 2016.42 11 4. 12 13 Between 2005 and 2016, Defendants force-placed more than 2.9 million CPI certificates on Wells Fargo’s auto loan borrowers.43 14 15 The CPI Program Was Lucrative for Defendants Between 2005 and 2016, the CPI Program generated over in net written premiums for National General and its predecessors.44 16 Between October 2005 and 2017, the CPI Program generated more than $72 17 million in commissions and more than $71 million in interest on force-placed CPI premiums 18 for Wells Fargo.45 On information and belief, Wells Fargo generated tens of millions of 19 20 21 22 40 WFCPI_00008981 at 982. 41 WFCPI_00052015 at 016. 42 WFCPI_00051954. 23 43 24 National General Defendants’ Response to Plaintiffs’ Second Set of Interrogatories to All Defendants, Response to Interrogatory Nos. 6(a), dated June 15, 2018. 25 44 26 27 National General Defendants’ Response to Plaintiffs’ Second Set of Interrogatories to All Defendants, Response to Interrogatory Nos. 6(c), dated June 15, 2018. 45 Defendants’ Supplemental Responses and Objections to Plaintiffs’ Interrogatories – Set Two, Supplemental Responses to Interrogatory No. 6(e) and 6(f), dated July 13, 2018. 28 75946874.1 22 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 27 of 111 Page ID #:3302 1 dollars in late fees, NSF fees, repossession fees, reinstatement fees, and other charges in 2 connection with the CPI Program. 3 Even in the waning months of the CPI Program, Wells Fargo acknowledged 4 that there had been “minimal changes to pricing or structure of [the] program since 5 inception.”46 6 Between March 2002 and September 2005, the CPI Vendor paid to WestFin a 7 commission of 15 percent of net written premium on CPI force-placed on individual 8 borrowers’ accounts under the GAA. 9 Between October 1, 2005 and December 15, 2005, the parties executed various 10 addenda to the GAA, setting the rate of commission paid to WestFin at 17.2 percent, 17.25 11 percent, and 17.3 percent of net written premium on CPI placed on individual borrowers’ 12 accounts. The parties settled on a commission of 17.3 percent of net written premium, 13 which was paid to WestFin, on CPI placed on individual borrowers’ accounts between 14 December 15, 2005 and February 20, 2013.47 15 Effective February 20, 2013, Wells Fargo and QBEF terminated the GAA, 16 eliminating the commission paid to WestFin.48 However, as described below, Wells Fargo 17 deliberately chose not to pass on the full savings from the elimination of the commission 18 to its customers. Instead, Wells Fargo retained a portion of that money, in essence 19 pocketing another kickback. 20 That WestFin stopped accepting commissions in February 2013 further 21 demonstrates that the commissions it had accepted were in fact kickbacks. Had WestFin 22 been providing essential and valuable services to the CPI Vendor, WestFin could not (and 23 would not) have continued to perform those services without compensation. 24 25 46 WFCPI_00055693 at 697. 26 47 WFCPI_00003367 at 389-97. 27 48 WFCPI_00003367 at 368. 28 75946874.1 23 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 28 of 111 Page ID #:3303 1 Between March 2002 and February 2013, Wells Fargo and its predecessors 2 paid a Tracking Fee of 3 Services.49 4 The parties amended the IAA to reduce the Tracking Fee to 5 6 to the CPI Vendor for Tracking effective March 1, 2013.50 After this time, the CPI Vendor provided the same service for the same CPI Program as it had before the Tracking Fee had been reduced.51 7 That Defendants cut the Tracking Fee at the same time they eliminated 8 commissions was not coincidental. Wells Fargo sought to offset the loss of income from 9 the commissions by reducing the cost of Tracking Fee. While the elimination of the 10 commission also reduced the CPI premium, not all of that savings was passed on to the 11 borrower. As Dawn Martin Harp, Head of Wells Fargo Dealer Services explained, “an 12 alternative to reducing the 17.3 [percent commission] entirely is to offset a portion of that 13 to pay for tracking and [have] the remaining go to the customer.”52 14 Consistent with Ms. Harp’s statement, an internal Wells Fargo presentation 15 from July 2012 explained that rather than pass to the customer the full savings from the 16 elimination of the commission, the bank would instead “[e]liminate commission and split 17 savings between consumer and WFDS.”53 18 Following the elimination of the commission and reduction in Tracking Fee, 19 CPI premiums were reduced, but not by 17.3 percent. Instead, the average annual CPI 20 premium dropped by only 10.7 percent, from 21 in the second quarter of 2013.54 Wells Fargo pocketed the remaining 6.6 percent of the 22 in the first quarter of 2013 to 49 McLawhorn Dep. at 216:12-19. 50 WFCPI_00015256 at 265. 24 51 McLawhorn Dep. at 216:19-217:25. 25 52 WFCPI_00047065 at 067; see also McLawhorn Dep. at 222:7-22. 26 53 WFCPI_00017004 at 010 (emphasis added). 27 54 WFCPI_00045980 at p. 2. 23 28 75946874.1 24 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case Document 182 Filed 11/05/18 Page 29 of 111 Page ID #:3304 costs that were ?saved? by eliminating the commission, amounting to another kickback to Wells Fargo. 92. Although Wells Fargo terminated the CPI Program in September 2016, National General continued to provide Tracking Services to Wells Fargo, and Wells Fargo continued to pay Tracking Fees to National General. In fact, National General demanded that the Tracking Fee increase from - --55 93. Although the Tracking Fees pertained to every eligible loan in Wells Fargo?s indirect auto lending portfolio, Wells Fargo did not apply those fees to all auto loan borrowers. Rather, Wells Fargo passed-on the entire cost of the Tracking Fees only to those borrowers on whom it force-placed CPI. Forcing borrowers to pay the cost of the Tracking Fees associated with servicing the entire loan portfolio was unlawful, because those expenses were not part of the cost to insure the individual borrower?s collateral and were not disclosed to borrowers. 5. Charges to Wells Fargo?s Auto Loan Borrowers Were Not Insurance Premiums 94. Charges for CPI that Wells Fargo assessed to borrowers were not insurance premiums and were not subject to state insurance rate regulation. Instead, CPI was a commercial insurance policy purchased by Wells Fargo from the CPI Vendor. Wells Fargo was both the policyholder and the insured.56 Throughout the duration of the CPI Program, Wells Fargo paid the premium for CPI to the CPI Vendor. 95. Wells Fargo then assessed charges to borrowers for CPI. As explained in an internal Wells Fargo presentation, Wells Fargo ?lends the Obligor [borrower] funds equivalent to the CPI premium and charges the Obligor interest at the same rate as appears 55 NatGen00237999. 56 McLawhom Dep. at 146:3-6. 2 5 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT 759468741 Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 30 of 111 Page ID #:3305 1 on their retail installment contract.”57 Although Wells Fargo purchased CPI in 12-month 2 terms, it assessed a full-year of premiums on borrowers’ accounts over a 9-month period. 3 Wells Fargo structured customers’ loan payments to maximize the interest 4 customers paid on CPI over the life of their automobile loan. Wells Fargo describes the 5 order in which it applies payments as follows: 6 Loan interest - the daily amount due on your loan; 7 Collateral Protection Insurance (CPI) Interest - the amount of interest on your insurance premium (if applicable); 8 9 Principal - the principal payment amount due on your loan; 10 CPI principal - the principal payment on your insurance premium (if applicable) 11 12 Payment variance - any amount remaining due from previous payments; 13 14 15 CPI variance - any amount remaining due from previous insurance premium payments (if applicable); and 16 Other charges - fees such as nonsufficient funds.58 17 18 Wells Fargo’s deliberate decision to structure payments in this order had the 19 predictable effect of increasing the overall interest customers paid to Wells Fargo on their 20 loans, because less of their payment went to the actual outstanding loan principal each 21 month. This increased the likelihood of underpayments, late payments, fees for insufficient 22 funds, and ultimately repossessions. 23 The payment structure was lucrative for Wells Fargo, in part because Wells 24 Fargo knew that the CPI Program disproportionately affected subprime borrowers with high 25 interest rates on their auto loans, and accordingly high CPI interest. 26 27 57 WFCPI_00002776 at 780. 58 See Understanding Your Auto Loan, supra at note 2 (emphasis added). 28 75946874.1 26 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Wells Fargo Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 31 of 111 Page ID #:3306 1 deliberately excluded super prime borrowers, expensive luxury vehicles, and Tesla owners 2 from the CPI Program,59 instead choosing to target subprime borrowers aggressively, 3 because their high interest rates and greater likelihood of delinquencies translated into more 4 revenue for the bank. As one National General executive explained, Wells Fargo was 5 “financing car loans from 0% to 29.99%. Considering they were adding a finance charge 6 to the loans, that would be killer to have a loan at 18.99%, then add the CPI insurance to 7 the car payment across 8 payments and the Finance Charge.”60 8 According to an internal Wells Fargo presentation dated February 2016, 9 Defendants were 10 times more likely to force-place CPI on subprime loans than on prime 10 loans: “High risk/non-prime loans have a much higher proportion of CPI than lower risk, 11 prime loans. (20% of highest risk loans have CPI vs. 2%-3% on lowest risk loans.)”61 12 Similarly, an internal Wells Fargo presentation dated June 2016 illustrates this fact: “CPI 13 is more prevalent among lower credit grade customers who may have difficulty obtaining 14 insurance through a major carrier, or refuses to secure such coverage.”62 15 Neither the CPI policy nor state insurance laws required Wells Fargo to assess 16 premium and interest charges to borrowers. In fact, lenders generally pay for CPI through 17 a “blanket policy” covering the collateral for an entire class of loans without assessing 18 19 20 21 22 23 24 25 59 Per the agreed-upon policies, practices, and procedures of Wells Fargo and its CPI Vendor, five types of loans were excluded from the CPI Program: (1) super prime (A0) loans, Tesla customers, and loans with balances greater than $75,000, on which Wells Fargo concluded the risk of loss was minimal; (2) loans made in Ohio and New Hampshire, which prohibited the use of collateral protection insurance by state law; (3) loans financing recreational vehicles, which were longer term loans and luxury items that Wells Fargo concluded were not beneficial to insure; (4) bankruptcy accounts, because the bankruptcy laws prevented the increase of funds owed to Wells Fargo; and (5) loans with balances less than $2,500, which Wells Fargo determined did not benefit the borrower and were low risk to the bank. See WFCPI_00052720 at 730. These loans were deemed “not eligible” for the CPI Program. All other loans in Wells Fargo’s indirect auto loan portfolio were deemed “eligible” for force-placement of CPI. 60 NatGen00033469 at 472 (emphasis in original). 26 61 WFCPI_00029418 at 421. 27 62 WFCPI_00052720 at 721. 28 75946874.1 27 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 32 of 111 Page ID #:3307 1 charges for the premium on borrowers, a fact well-known by Wells Fargo as it maintained 2 this type of blanket insurance on loans originated by motor vehicle dealers in Ohio, which 3 precludes the use of CPI.63 4 Wells Fargo’s baseline practice of conditioning auto loans on borrowers 5 paying Wells Fargo for CPI was not a customary industry banking practice—even when 6 isolated from the bank’s deceptive billing procedures and duplicative CPI placements. 7 Wells Fargo knew the CPI scheme was an industry outlier. According to an internal Wells 8 Fargo presentation entitled “CPI—Program Review Executive Summary” dated August 25, 9 2016, “WFDS is the only large auto finance company with a CPI program.”64 Similarly, in 10 an internal Wells Fargo email dated January 7, 2016, a member of Wells Fargo’s operational 11 risk team acknowledged that “none of the big banks or captives force place at the customer 12 level. We are a 55 billion dollar portfolio … we should be able to self-insure!!”65 13 While self-insuring would have been far more efficient, Wells Fargo chose not 14 to self-insure66 because doing so would have cost it money. Instead, Wells Fargo kept the 15 CPI Program in place to obtain lucrative kickbacks in the form of unearned commissions 16 and other compensation, inflated interest charges, and other fees and charges for late 17 payments, insufficient funds, and the like, all of which went straight to the bottom line as 18 essentially pure profit. 19 20 21 22 23 24 25 63 WFCPI_00015256 at 314-15; McLawhorn at 242:6-10 (“Q. Loans originated in Ohio. You understood those were exempt because of regulatory issues specific to Ohio law? A. Yeah. State of Ohio would not allow you to place CPI on loans originated in the State of Ohio.”). 26 64 WFCPI_00035207 at 214. 27 65 WFCPI_00050483 at 484. 28 66 McLawhorn Dep. at 169:21-23. 75946874.1 28 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 33 of 111 Page ID #:3308 1 6. 2 Wells Fargo and Its CPI Vendor Unlawfully Force-Placed CPI 3 Wells Fargo Obtained Borrowers’ Insurance Information from the Automobile Dealer at the Time of Sale 4 Throughout the duration of the CPI Program, consumers who purchased or 5 leased automobiles through a dealer either had financing approved directly from a lender in 6 advance of the transaction or worked with the dealer to obtain financing indirectly from a 7 lender, such as Wells Fargo. In the latter case, the financing contract was a standard form 8 agreement, called a Retail Installment Sale Contract (“RISC”). The financial obligations 9 under the RISC were later assigned to the lender. a. 10 The RISC was an integrated agreement that typically contained the following 11 language: “This contract contains the entire agreement between you and us relating to this 12 contract. Any change to the contract must be in writing and both you and we must sign it. 13 No oral changes are binding.”67 14 15 The RISC required the borrower to maintain physical damage insurance on the vehicle to protect the collateral. A standard disclosure in a RISC was as follows: 16 Insurance you must have on the vehicle. You agree to have physical damage insurance covering loss of or damage to the vehicle for the term of this contract. The insurance must cover our interest in the vehicle. If you do not have this insurance, we may, if we choose, buy physical damage insurance. If we decide to buy physical damage insurance, we may either buy insurance that covers your interest and our interest in the vehicle, or buy insurance that covers only our interest. If we buy either type of insurance, we will tell you which type and the charge you must pay. The charge will be the premium for the insurance and a finance charge equal to the Annual Percentage Rate shown on the front of this contract or, at our option, the highest rate the law permits. If the vehicle is lost or damaged, you agree that we may use any insurance settlement to reduce what you owe or repair the vehicle.68 17 18 19 20 21 22 23 24 25 26 27 67 WFCPI_00000045. 28 68 WFCPI_00000045 at 046. 75946874.1 29 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 34 of 111 Page ID #:3309 1 2 Throughout the duration of the CPI Program, Wells Fargo claimed it expected 3 that its indirect auto loan borrowers would learn about the collateral protection insurance 4 requirement from the dealer at the time of the transaction.69 Wells Fargo understood that 5 the dealer disclosed that requirement through the standardized RISC.70 Wells Fargo did not 6 customize the RISC for its own purposes.71 7 Wells Fargo relied on the dealer to verify that the borrower had adequate 8 insurance to satisfy the collateral protection insurance requirement at the time of the 9 transaction.72 The dealer typically photocopied the borrower’s proof of insurance 73 and 10 filled out a standard form document called, an “Agreement to Furnish Insurance (To Be 11 Used with Security Agreement on Sale of Vehicle),” which identified the borrower’s 12 insurance carrier, the carrier’s address and/or phone number, and policy number. 74 In the 13 Agreement to Furnish Insurance, the dealer also identified Wells Fargo (or its predecessor) 14 as the “Loss Payee,” i.e., the entity to which the claim from any loss should be paid.75 15 Upon completion of the transaction, the dealer submitted to Wells Fargo all 16 documents pertaining to the origination of the loan—including proof of insurance and the 17 Agreement to Furnish Insurance—either through U.S. mail, overnight mail or courier, or 18 19 20 21 69 McLawhorn Dep. at 41:2-10. 70 McLawhorn Dep. at 41:15-18, 44:7-15. 71 McLawhorn Dep. at 41:3-43:3. 24 72 McLawhorn Dep. at 50:2-11. 25 73 E.g., WFCPI_00000045 at 057. 26 74 E.g., WFCPI_00000045 at 053. 27 75 Id. 22 23 28 75946874.1 30 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 35 of 111 Page ID #:3310 1 electronic file transfer.76 Wells Fargo then saved electronic documents or imaged hard copy 2 documents in its imaging repository.77 Defendants Disregarded Borrowers’ Proof of Insurance 3 b. 4 Wells Fargo opened a loan file on a borrower after it received the loan 5 origination documents. Wells Fargo then electronically transferred a “Daily New Loan 6 File” to its CPI Vendor. That electronic transmission identified information about each 7 day’s new loan originations including the borrower’s name, address, vehicle, VIN number, 8 year, make, model, and other unique account identifiers.78 9 The CPI Vendor was responsible for identifying the insurance policy that 10 matched up with the borrower’s account.79 11 disregarded the available information about a borrower’s auto insurance—including the 12 borrower’s proof of insurance or Agreement to Furnish Insurance provided by the borrower 13 with the origination of the loan—in favor of force-placing CPI. Nonetheless, Defendants deliberately 14 The CPI Vendor performed Tracking Services either by receipt of paper files 15 from insurance carriers or, more generally, through an electronic data interchange (“EDI”) 16 throughout the duration of the CPI Program. EDI was an agreement among insurance 17 companies to share information electronically with the identified loss payee (or its third- 18 party vendor) whenever there was a change in the status of insurance on a vehicle, such as 19 the addition of a vehicle on an insurance policy or the cancellation of an insurance policy.80 20 Although the CPI Vendor received EDI information when there was a change 21 in the status of insurance on a vehicle, Wells Fargo chose not to obtain this data itself.81 22 76 McLawhorn Dep. at 54:14-55:25. 77 McLawhorn Dep. at 56:1-57:17. 24 78 McLawhorn Dep. at 66:24-67:20. 25 79 McLawhorn Dep. at 68:6-17. 26 80 McLawhorn Dep. at 68:18-73:1. 27 81 McLawhorn Dep. at 79:1-7. 23 28 75946874.1 31 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 36 of 111 Page ID #:3311 1 Nor did Wells Fargo attempt to obtain such information in hard copy.82 Wells Fargo instead 2 relied on the CPI Vendor to perform Tracking Services and did not independently confirm 3 the existence or non-existence of insurance on vehicles in its indirect auto loan portfolio.83 4 5 Defendants Sent False and Misleading “Insurance Request” Letters to Borrowers 6 Per the agreed-upon policies, practices, and procedures of Wells Fargo and its 7 CPI Vendor, the CPI Vendor sent via U.S. mail a first letter entitled “Insurance Request” to 8 any “eligible” borrower 42 days after a borrower appeared in the Daily New Loan File or 9 after the CPI Vendor received information reflecting that the borrower’s auto insurance had 10 expired or been cancelled.84 Regardless of whether a given borrower maintained adequate 11 auto insurance, and regardless of whether proof of that insurance was available to 12 Defendants, the Insurance Request invariably stated that proof of the borrower’s insurance 13 was lacking. c. 14 The Insurance Request was a standardized form letter sent to borrowers that 15 included the borrower’s contact, vehicle, and loan information.85 The Insurance Request 16 was written and sent by the CPI Vendor and reviewed and approved by Wells Fargo (or its 17 predecessors).86 18 attributable to both companies. As a result, the representations in the Insurance Request letter are 19 Although drafted by the CPI Vendor, the Insurance Request was placed on 20 Wells Fargo’s letterhead and signed by Wells Fargo.87 Wells Fargo approved the use of its 21 22 82 McLawhorn Dep. 79:1-4. 83 McLawhorn Dep.79:8-80:1. 84 WFCPI_00045980 at p.6. 85 See, e.g., NatGen00576109. 86 McLawhorn Dep. at 76:12-24. 87 McLawhorn Dep. at 75:19-22, 76:12-20; see also, e.g., NatGen00576109. 23 24 25 26 27 28 75946874.1 32 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 37 of 111 Page ID #:3312 1 letterhead.88 And, although the address beneath Wells Fargo’s logo was for the CPI Vendor, 2 the name of the CPI Vendor did not appear anywhere in the Insurance Request,89 leaving 3 the borrower to believe that he or she was receiving correspondence from Wells Fargo. 4 According to Wells Fargo’s Rule 30(b)(6) witness, the Insurance Request was on Wells 5 Fargo letterhead because, “it’s a Wells Fargo Dealer Services account, and the customer 6 knows Wells Fargo Dealer Services and does not know the vendor.”90 7 Wells Fargo’s Rule 30(b)(6) witness admitted that Wells Fargo reviewed and 8 approved the Insurance Request letters sent to borrowers, but did nothing to confirm their 9 accuracy.91 10 Nor did the CPI Vendor do anything to determine whether a vehicle had auto 11 insurance for the seven-week period from the time it had received a Daily New Loan File 12 on an account until it sent the Insurance Request, despite the fact that such insurance 13 information was generally available. Wells Fargo’s Rule 30(b)(6) witness testified as 14 follows: 15 16 Q. And do you know what the CPI vendor as of this time did to determine whether [Plaintiff] Ms. Moskus had insurance on the vehicle? A. So I would say up – up at the time of this letter drafting, they probably haven’t taken any action on this account. They haven’t received any insurance information, so that’s what’s prompting this letter to go out to the customer.92 17 18 19 20 21 22 23 88 McLawhorn Dep. at 76:25-77:4. 89 See, e.g., NatGen00576109; see also McLawhorn Dep. at 80:18-20. 25 90 McLawhorn Dep. at 82:6-11. 26 91 McLawhorn Dep. at 79:16-22. 27 92 McLawhorn Dep. at 78:4-11. 24 28 75946874.1 33 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 38 of 111 Page ID #:3313 1 The Insurance Request falsely stated, “Please be advised that we have not 2 received insurance information for your financed vehicle.”93 Of course, that statement 3 contained a false or misleading representation of material fact, as Wells Fargo had received 4 proof of the borrower’s insurance from the dealer at the time of the purchase transaction. 5 Insurance information was also available through EDI. 6 The Insurance Request further falsely stated, “If we do not receive evidence of 7 adequate insurance with an effective date on or before [42 days prior to the date on the 8 Insurance Request], we may buy insurance to protect our interest in your vehicle.” 94 This 9 statement was false or misleading as Wells Fargo knew at the time that it did not need to 10 purchase insurance to protect its interest in the borrower’s vehicle. The Insurance Request 11 also identified the cost of the annual insurance premium and provided the approximate 12 amount by which the borrower’s monthly payment would increase.95 13 Letters issued before February 2013 also falsely stated that “the insurance 14 agency, which is an affiliate of Wells Fargo Dealer Services [or its predecessors], will earn 15 a commission if this insurance is purchased.”96 This statement contained a false or 16 misleading representation of material fact. At no point during the CPI Program was the 17 commission “earned” by Wells Fargo’s insurance agent affiliate, WestFin. As described 18 above, WestFin did nothing to earn the commission it received. WestFin did not sell, 19 market or promote CPI to borrowers; collect insurance premiums; communicate with 20 borrowers or the CPI Vendor; assist the policyholder in determining her insurance needs; 21 shop the market for the insurance product that meets the policyholder’s needs; or seek the 22 most competitive price for the product. The commission that Wells Fargo’s affiliate 23 received was an unlawful kickback for the placement of CPI on borrowers’ accounts. 24 25 93 NatGen00576109. 26 94 Id. 27 95 Id. 28 96 See, e.g., id. 75946874.1 34 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 39 of 111 Page ID #:3314 Wells Fargo internally acknowledged that WestFin did not “earn” a 1 2 commission for producing CPI business. 3 WestFin’s receipt of a commission because WFDS incurred expenses to administer the CPI 4 Program: “Commissions are obtained as part of the WFDS CPI program with QBE in order 5 to offset the expenses WFDS incurs as a result of the program. WFDS still has to maintain 6 management oversight, handle inbound and outbound calls with QBE, customers and 7 insurance agencies, provide QBE with support related to uninsured accounts, cliams [sic] 8 processing, inspections, and many other associated tasks.”97 But nothing within the RISC 9 permitted Wells Fargo to charge borrowers for administrative fees to run the CPI Program, 10 and Wells Fargo concealed from borrowers that they were being charged for these 11 administrative fees. None of the communications Wells Fargo sent to consumers disclosed 12 such charges. 13 Instead, Wells Fargo attempted to justify Many letters issued between October 2005 and February 2013 also stated that 14 the commission was “15% of the premium.” 98 15 misleading representation of material fact. No commissions during that time period were 16 15 percent of the premium. Under the GAA and its addenda, the commissions for the vast 17 majority of this time period were 17.3 percent, and ranged from 17.2 to 17.25 percent for 18 CPI force-placed during a few months in late 2005. 19 That statement contained a false or The Insurance Request included specified means by which the borrower could The borrower’s options included an 20 provide information in response to the letter. 21 “Insurance Service Center” post office box, toll-free telephone number, fax number, and 22 the website www.ihaveinsurance.com.99 Although the CPI Vendor owned each of these 23 points of contact, the Insurance Request never identified the CPI Vendor by name. 100 As a 24 25 26 27 97 WFPI_00017004 at 016 (emphasis added). 98 See, e.g., NatGen00576109. 99 See id. 100 See id. 28 75946874.1 35 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 40 of 111 Page ID #:3315 1 result, a borrower who engaged with any of these points of contact would have reasonably 2 believed that he or she was communicating directly with Wells Fargo. The CPI Vendor 3 never identified itself when answering inbound telephone calls from Wells Fargo’s auto 4 loan borrowers, and instead began calls, “Thank you for calling the Insurance Service 5 Center.”101 6 7 Wells Fargo reviewed and approved the scripts the CPI Vendor devised for its customer services representatives to respond to borrowers.102 8 9 Wells Fargo Had No Practice of Monitoring the CPI Vendor’s Telephone Calls to Borrowers 10 Per the agreed-upon policies, practices, and procedures of Wells Fargo and its 11 CPI Vendor, the CPI Vendor used the facilities of the U.S. wires by placing outbound 12 telephone calls to the borrower, the borrower’s insurance agent (if known), or the 13 borrower’s insurance company (if known), 63 days after a borrower appeared in the Daily 14 New Loan File or after the CPI Vendor received information reflecting that the borrower’s 15 auto insurance had expired or been cancelled.103 d. 16 The CPI Vendor satisfied this obligation if it merely attempted to make one 17 outbound telephone call. Nothing required the CPI Vendor to speak with the borrower 18 before force-placing CPI.104 19 The CPI Vendor was required to make notations of these outbound telephone 20 calls and borrowers’ responses in its online database, Client Source. Wells Fargo had access 21 to Client Source to verify that the CPI Vendor had in fact made those telephone calls in 22 order to ensure that its borrowers’ interests were protected. However, Wells Fargo had no 23 24 101 NatGen00563655 at p.5. 25 102 McLawhorn Dep. at 81:16-82:5. 26 103 McLawhorn Dep. at 85:25-86:19; WFCPI_00045980 at p.6. 27 104 McLawhorn Dep. at 91:2-16. 28 75946874.1 36 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 41 of 111 Page ID #:3316 1 practice of doing so at any time during the CPI Program, instead only reviewing Client 2 Source on an “as needed” basis.105 3 In fact, Wells Fargo’s Rule 30(b)(6) witness designated to testify on the topic 4 could not identify any internal controls over the CPI Program that Wells Fargo had in place 5 during the program’s operation.106 6 e. 7 Defendants Sent False and Misleading “Coverage Issued” Letters to Borrowers 8 Per the agreed-upon policies, practices, and procedures of Wells Fargo and its 9 CPI Vendor, the CPI Vendor sent via U.S. mail a second letter entitled “Coverage Issued” 10 to the borrower 77 days after a borrower appeared in the Daily New Loan File or after the 11 CPI Vendor received information reflecting that the borrower’s auto insurance had expired 12 or been cancelled.107 13 Like the Insurance Request, the Coverage Issued Letter was a standardized 14 form letter sent to borrowers that included the borrower’s contact, vehicle, and loan 15 information.108 The Coverage Issued Letter was written and sent by the CPI Vendor and 16 reviewed and approved by Wells Fargo (or its predecessors).109 17 representations in the Coverage Issued Letter are attributable to both companies. As a result, the 18 Like the Insurance Request, the Coverage Issued Letter was placed on Wells 19 Fargo’s letterhead and signed by Wells Fargo.110 Wells Fargo approved the use of its 20 letterhead. Although the address beneath Wells Fargo’s logo was for the CPI Vendor, the 21 22 105 McLawhorn Dep. at 86:20-89:11. 106 Rule 30(b)(6) Deposition of Mark Turner dated Aug. 16, 2018 (“Turner Dep.”) at 62:15-63:13. 107 McLawhorn Dep. at 89:18-90:1; WFCPI_00045980 at p.6. 108 See, e.g., NatGen00576035. 109 McLawhorn Dep. at 90:14-18. 110 McLawhorn Dep. at 90:19-20; see also, e.g., NatGen00576035. 23 24 25 26 27 28 75946874.1 37 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 42 of 111 Page ID #:3317 1 name of the CPI Vendor did not appear anywhere in the Coverage Issued Letter,111 leaving 2 the borrower to believe that he or she was receiving correspondence from Wells Fargo. 3 The Coverage Issued Letter falsely stated, “Our records indicate an absence of 4 required insurance coverage since [77 days prior to the date on the Coverage Issued Letter].” 5 This statement contained a false or misleading representation of material fact. In fact, Wells 6 Fargo had received proof of the borrower’s insurance from the dealer at the time of the 7 purchase transaction. Wells Fargo maintained that proof of insurance in its records. 8 Moreover, such proof existed through electronic records. 9 The Coverage Issued Letter further falsely stated, “Since we have not received 10 proof of the required coverage, we have exercised our contractual right to purchase 11 insurance coverage at your expense to protect our interest in your financed vehicle.”112 This 12 statement was likewise false or misleading as Wells Fargo knew it did not need to purchaser 13 insurance coverage to protect its interest in the vehicle. 14 The Coverage Issued Letter falsely represented that Defendants were 15 exercising their “contractual right to purchase coverage” at the borrower’s expense. 16 Nothing in the RISC disclosed to borrowers that Defendants would charge borrowers for a 17 commission, the cost of administering the CPI Program, or the cost to pay for Tracking 18 Services for Wells Fargo’s indirect auto loan portfolio. Also, nothing in the RISC disclosed 19 to borrowers that Defendants would force place a CPI policy without verifying that the 20 borrower failed to maintain adequate collateral insurance. 21 The Coverage Issued Letter also identified the cost of the annual insurance 22 premium, finance charge, and the amount by which the borrower’s monthly payment would 23 24 25 26 27 111 See, e.g., NatGen00576035. 112 Id. 28 75946874.1 38 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 43 of 111 Page ID #:3318 1 increase.113 Per the IAA, the CPI Vendor’s force-placement of CPI on these accounts was 2 114 3 The Coverage Issued Letter was also false or misleading as it omitted to 4 disclose the material fact that the identified premium included an unearned commission 5 paid to WestFin for CPI issued during the period from March 2002 to February 2013.115 As 6 Wells Fargo’s Rule 30(b)(6) witness explained: 7 8 Q. There’s no disclosure in [the Coverage Issued Letter] about the commission though? A. Correct. Q. That was a decision that was made by Wells and the CPI vendor, to eliminate that sentence that I showed you from [the Insurance Request] in the notice that goes out in [the Coverage Issued letter]. Right? A. Correct, it would have been a decision – agreed-upon decision not to include that sentence.116 9 10 11 12 13 14 15 16 Throughout the duration of the CPI Program, the Coverage Issued Letter was 17 also false or misleading as it indicated that CPI was forced-placed effective on the date a 18 borrower appeared in the Daily New Loan File or after the CPI Vendor received information 19 reflecting that the borrower’s auto insurance had expired or been cancelled.117 In other 20 words, Defendants back-dated the force-placed CPI by 77 days. However, Defendants 21 chose not to do anything to determine the condition of the vehicle before force-placing 22 23 113 24 See id. 114 WFCPI_00015256 at 300; McLawhorn Dep. at 280:17-22. 25 115 McLawhorn Dep at 93:3-9. 26 116 McLawhorn Dep. at 96:1-9. 27 117 E.g., NatGen00576111; McLawhorn Dep. at 97:18-98:3. 28 75946874.1 39 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 44 of 111 Page ID #:3319 1 CPI.118 As a result, Defendants collected payments for two and one-half months of CPI 2 premiums for which they knew the likelihood they would have to pay claims was minimal. 3 This was not the only way in which Defendants employed the CPI Program to 4 minimize the likelihood of paying claims. As explained above, Wells Fargo admitted that 5 Defendants force-placed duplicative and unnecessary CPI on the accounts of hundreds of 6 thousands of borrowers who already had adequate auto insurance of their own. In the event 7 a claim was made on a vehicle with duplicative CPI and private insurance coverage, the 8 CPI Vendor would forward the claim to the private insurance carrier, thus avoiding having 9 to for claims on CPI for which borrowers had been charged.119 Moreover, borrowers who 10 maintained private insuarnce coverage were less likely to place a claim through CPI in the 11 first place, because their first recourse generally was to place a claim with their own auto 12 insurance company. 13 Wells Fargo also employed the CPI Program to avoid losses on repossessed, 14 damaged vehicles in its auto loan portfolio that lacked insurance at the time of damage. 15 Upon discovering that such a vehicle had been repossessed, Wells Fargo purchased CPI for 16 that vehicle, which the CPI Vendor backdated to cover the claim. Then Wells Fargo 17 included the cost of the premium as an expense to the borrower’s account post- 18 repossession.120 This practice minimized the risk to Wells Fargo, enabling the bank to pass 19 costs for CPI to the borrower who had never received disclosures that they would be so 20 charged. 21 7. 22 Wells Fargo Sent Admittedly Deceptive Account Statements to Borrowers 23 Per the agreed-upon policies, practices, and procedures of Wells Fargo and its 24 CPI Vendor, the CPI Vendor billed Wells Fargo for the placement of CPI, and Wells Fargo 25 118 McLawhorn Dep. at 98:10-18. 26 119 McLawhorn Dep. at 99:8-100:10. 27 120 McLawhorn Dep. at 228:17-229:10. 28 75946874.1 40 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 45 of 111 Page ID #:3320 1 added CPI premiums and interest charges to the borrower’s account, 100 days after a 2 borrower appeared in the Daily New Loan File or after the CPI Vendor received information 3 reflecting that the borrower’s auto insurance had expired or been cancelled.121 4 However, Wells Fargo concealed CPI charges—for premium, interest, and 5 commissions—on borrowers’ billing statements at all times between inception of the CPI 6 Program in March 2002 and September 2016, less than one month before Wells Fargo 7 terminated the CPI Program. An internal Wells Fargo audit in August 2015 concluded in 8 its own words that the bank’s CPI billing practices were “deceptive”: 9 Current billing statement does not provide an itemized break down of charges including CPI that makes up the total due balance. As a result the monthly statements do not clearly identify monthly payment requirements, payment allocation, and charges and fees. Customers may not be aware that CPI charges are included and balance due has increased and are negatively impacted with potential NSF and late fees. 10 11 12 13 14 Risks: Negative impact to customer (deceptive) and violation of regulations (CFBP) 15 16 Note: There is a statement re-design project that doesn’t address the issue [emphasis added.]122 17 18 When confronted with the results of the audit, Wells Fargo Rule 30(b)(6) 19 20 witness admitted that Wells Fargo’s CPI billing practices had been deceptive: 21 22 Q. And what was your conclusion? Did that observation have merit? A. Yes. 23 24 * 25 * * 26 27 121 WFCPI_00045980 at p.6. 28 122 WFCPI_00048650; see also WFCPI_00006404. 75946874.1 41 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 46 of 111 Page ID #:3321 1 Q. What does “deceptive” mean to you? 2 A. Deceiving. 3 * 4 You agreed with the conclusion that the conduct that’s being described here was deceptive to customers? A. I think I agreed with the conclusion that the information listed above that, you know, probably needed some changes made to it, yes. 7 8 * 9 10 A. To my knowledge, since the inception of the program. * * * Q. No one at the bank in 13 years decided that it was a good idea to have a CPI charge as a separate line item on a statement to a customer? A. Apparently not. The change hadn’t been made until now [late summer 2016].123 15 16 17 * How long had the practice that’s being described above been underway? 13 14 * Q. 11 12 * Q. 5 6 * 18 19 Wells Fargo’s deceptive billing practices harmed borrowers including 20 Plaintiffs and Class members. Wells Fargo’s failure to disclose on customer billing 21 statements the addition of charges for CPI premiums and interest increased the likelihood 22 that borrowers would suffer adverse consequences such as underpayments, late payments, 23 fees for insufficient funds, and repossessions. Wells Fargo’s deliberate decision to omit 24 CPI charges on customer billing statements decreased the likelihood that borrowers would 25 call to complain or notice that their payments were deficient. Defendants’ actions also 26 caused significant damage to the credit reports of thousands of auto loan borrowers. 27 28 123 McLawhorn Dep. at 135:25-143:23. 75946874.1 42 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 47 of 111 Page ID #:3322 1 For borrowers who did discover increased charges due to CPI, working with 2 Defendants to remove the CPI was typically futile. Many borrowers who sent proof of their 3 independent insurance policies to Defendants had no success in getting the unnecessary 4 force-placed CPI removed. In other cases, the CPI charges would stop for a month or two 5 and then inexplicably be reinstated with no explanation or notice. Defendants generally 6 refused to fix the problem, or even grant leniency to borrowers whose vehicles were 7 wrongfully repossessed. 8 8. 9 Wells Fargo Identified Other Features of the CPI Program That Harmed Borrowers 10 By 2016, Wells Fargo finally admitted that other aspects of the CPI Program, 11 which had been in place throughout the duration of the CPI Program, caused great harm to 12 its own customers. 13 Defendants recognized two types of CPI cancellations: “flat cancels” and 14 “partial cancels.” Flat cancellations referred to a borrower’s submitting to Defendants proof 15 of adequate auto insurance covering the entire time for which they had force-placed CPI. 16 Borrowers who flat cancelled CPI were supposed to receive full refunds of all charges for 17 CPI premiums and interest they paid. Partial cancellations referred to a borrower’s 18 submitting to Defendants proof of adequate auto insurance covering a portion, but not all, 19 of the time for which they had force-placed CPI. Borrowers who partially cancelled CPI 20 would not receive refunds of charges for CPI premiums and interest they paid for the period 21 when Defendants concluded they needed CPI. 22 Defendants knew that most force-placed CPI certificates were either fully or 23 partially cancelled. The CPI Vendor calculated CPI cancellation trends and five-year 24 cancellation averages, and reported these statistics to Wells Fargo in their quarterly business 25 report decks. The high cancellation rates were also apparent within Wells Fargo’s own 26 system of record because it processed refunds when force-placed CPI certificates were 27 cancelled and reported those cancellations back to the CPI Vendor. 28 75946874.1 43 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 48 of 111 Page ID #:3323 1 On average over the period 2005 to 2016, nearly 70 percent of force-placed 2 CPI certificates were flat or partially cancelled.124 Between January and May 2016 alone, 3 National General determined that over 88,000 CPI certificates were flat cancelled due to 4 duplicative coverage.125 5 But cancellation did not end the harm to borrowers. In January 2016, a Wells 6 Fargo operational risk review revealed that borrowers who flat cancelled their force-placed 7 CPI after having a CPI-related delinquency reported to the credit bureaus were unable to 8 remove that delinquency. “If the policy is flat cancelled, there is no process in place to 9 remove the delinquency from the bureaus. Probably one of the biggest complaints! And 10 keep in mind, there is an extremely high percentage of premiums that eventually get flat 11 cancelled.” [Emphasis added.]126 This practice had been in place and harming borrowers 12 since inception of the CPI Program in 2002.127 Wells Fargo had no process in place to 13 remove CPI-related delinquencies reported to credit bureaus for partial cancels either.128 14 Wells Fargo’s Rule 30(b)(6) witness testified: 15 Q. Well, has the bank ever taken any steps to address any negative impact to a customer’s credit as a result of the CPI program? A. We did not implement any systemic or automated process to do that.129 16 17 18 19 20 The same January 2016 operational risk review identified the false placement of CPI as a harmful practice to borrowers: “False placement of insurance … insurance is 21 22 23 124 National General Defendants’ Response to Plaintiffs’ Second Set of Interrogatories to All Defendants, Response to Interrogatory Nos. 6(g) and 6(h), dated June 15, 2018. 125 NatGen00201645 at 646. 24 126 WFCPI_00050483 at 484. 25 127 McLawhorn Dep. at 166:23-167:2. 26 128 WFCPI_00048472-474. 27 129 McLawhorn Dep. at 193:21-25. 28 75946874.1 44 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 49 of 111 Page ID #:3324 1 added when the customer sent in valid proof but due to our error in system, insurance gets 2 added anyway.”130 This problem of falsely-placed duplicative and unnecessary CPI has 3 turned out to affect hundreds of thousands of Wells Fargo’s auto loan borrowers. 4 In June 2016, a Wells Fargo compliance and operational risk review found 5 additional ways in which the CPI Program caused inappropriate delinquencies. For 6 instance, the review determined that approximately 25 percent of customers with CPI- 7 related delinquencies paid their bills at a Wells Fargo bank branch, but the “[b]ankers cannot 8 see the correct amount due when there is an increase due to the addition of CPI.”131 Wells 9 Fargo’s Rule 30(b)(6) witness acknowledged that this problem had existed since inception 10 of the CPI Program in 2002.132 Worse, the issue had been raised prior to 2016 but had not 11 been corrected.133 12 The same compliance and operational risk review found that “accounts were 13 charged late fees due to the addition of CPI and were not corrected after the flat 14 cancellation.”134 When asked whether Wells Fargo had a practice of refunding late 15 payments that were placed on customers’ accounts as a result of a flat-cancelled CPI policy, 16 Wells Fargo’s Rule 30(b)(6) witness testified, “There was no automated process in place or 17 systemic process in place that would automatically reverse late charges or late fees on a 18 customer’s account … [f]rom inception.”135 19 20 21 22 130 WFCPI_00050483 at 484. 131 WFCPI_00019260 at 261. 24 132 McLawhorn Dep. at 176:12-17. 25 133 McLawhorn Dep. at 176:18-177:17. 26 134 WFCPI_00019260 at 262. 27 135 McLawhorn Dep. at 189:21-190:5. 23 28 75946874.1 45 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 50 of 111 Page ID #:3325 1 9. 2 Defendants Knowingly Ignored and Failed to Track Consumer Complaints About CPI 3 Defendants deliberately ignored and failed to track consumer complaints 4 despite having force-placed CPI on hundreds of thousands of borrowers and having known 5 that most of CPI certificates were flat or partially cancelled. 6 Prior to 2015, Wells Fargo only tracked borrower complaints concerning CPI 7 or the CPI Program if they came through a Better Business Bureau, state or federal 8 regulator, or attorney general.136 Only these complaints were escalated for review to the 9 Office of the President at WFDS and statistically tracked.137 10 Although Wells Fargo had the capability to track customer complaints that 11 were not escalated to the Office of the President, it chose not to do so. Wells Fargo’s Rule 12 30(b)(6) witness could not identify any report of statistical information concerning non- 13 escalated customer complaints during the period 2002-2015.138 14 In fact, if a borrower had called Wells Fargo to dispute CPI charges during the 15 period 2002–2015 but did not mention the Better Business Bureau, a regulator, or an 16 attorney general, Wells Fargo would not have even considered the call to be a complaint.139 17 Wells Fargo did not keep track of the complaints that the CPI Vendor received 18 before 2015.140 Nor did Wells Fargo’s Rule 30(b)(6) witness know whether Wells Fargo 19 and the CPI Vendor shared complaint tracking statistics with each other during that time 20 period.141 21 22 23 136 Videotaped Deposition of Rule 30(b)(6) Witness Kimberly A. Dee dated July 18, 2018 (“Dee Dep.”) at 18:2-24. 137 Id. 24 138 Dee Dep. at 27:15-20, 28:5-22. 25 139 Dee Dep. at 32:13-22. 26 140 Dee Dep. at 35:18-23. 27 141 Dee Dep. at 40:4-41:1. 28 75946874.1 46 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 51 of 111 Page ID #:3326 1 In or around 2015, National General began tracking CPI-related consumer 2 complaints and reporting them to Wells Fargo for the first time.142 National General used 3 a broad definition of “complaint” in its tracking process: 4 5 6 7 8 .143 9 10 Once National General began to track complaints under this definition, it not 11 surprisingly recognized thousands of consumer complaints about the deceptive CPI scheme. 12 13 14 15 .146 16 17 18 This was not an indication of customer service improvements 19 for the CPI Program. Rather, Wells Fargo and National General intentionally altered their 20 counting procedures to reduce the number of complaints counted. 21 22 23 142 NatGen00370224 at 227. 24 143 NatGen00295965 at p. 28. 25 144 NatGen00295965 at p. 30. 26 145 NatGen00295965 at p. 29. 27 146 NatGen00255795 at p. 31. 28 75946874.1 47 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 52 of 111 Page ID #:3327 1 147 In other words, Defendants knew that the CPI Program 2 was fraudulent, but rather than fix it, they intentionally changed their internal processes to 3 give the appearance that only a limited number of borrowers were complaining. 4 Thus, Defendants’ policy and practice for the vast majority of the CPI Program 5 was to ignore customer complaints and avoid tracking complaint trends so they never had 6 to address them. In this way, Defendants could perpetuate the force-placed CPI scheme to 7 their own financial benefit at their customers’ expense. 8 C. Wells Fargo’s Management, Risk Officers, and Board of Directors Knew That the CPI Program Harmed Its Customers 9 10 WFDS personnel reported on issues concerning the CPI Program to Wells 11 Fargo Bank’s Executive Risk Management Committee (“ERMC”) in April and July 12 2012.148 The ERMC was comprised of some of Wells Fargo’s most senior executives 13 including Pat Callahan (former Chief Administrative Officer), Kenneth Zimmerman 14 (former Executive Vice President, Deposit Products Group), James Strother (former 15 Executive Vice President and General Counsel), David Julian (Chief Auditor), Michael 16 Loughlin (former Chief Risk Officer), Kevin Mosse (former Head of Home Equity Lending, 17 Diversified Products Group), and others. 18 The ERMC were briefed on numerous critical issues related to the structure 19 and operation of the CPI Program including the bank’s potential loss exposure under the 20 CPI Program versus an alternative product, the total premium paid, cost comparisons to 21 other insurance products, Wells Fargo’s failure to conduct an RFP for vendors since 22 inception of the program in 2002, the commission structure, the payment hierarchy for 23 borrowers, the backdating of CPI certificates, and other matters.149 Notwithstanding that 24 concerns with the CPI Program were brought to the attention of senior management in 2012, 25 26 27 28 147 NatGen00255795 at p. 31. 148 WFCPI_00017004. 149 Id. 75946874.1 48 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 53 of 111 Page ID #:3328 1 the force-placed CPI scheme remained in place with “[m]inimal changes to pricing or 2 structure of [the] program since inception” for four more years.150 3 Following a deluge of customer complaints about the deceptive CPI Program, 4 Wells Fargo scrambled to address the issue. In June and July 2016, WFDS and the Wells 5 Fargo Risk Team identified and escalated three issues concerning the CPI Program to Tim 6 Sloan (Wells Fargo’s Chief Executive Officer), Michael Loughlin (Wells Fargo’s former 7 Chief Risk Officer), the Operating Committee, the ERMC, and the Board of Directors.151 8 Those issues were: 9  Inadequacy of a 3rd party vendor’s process to validate customer had their own insurance, resulting in unnecessary CPI placement; 10 11 12  Resulting impact on a borrower’s delinquency status leading to potentially adverse credit reporting impacts which were corrected on a reactive rather than proactive basis; and 13 14  Potential repossession based solely on past due CPI amounts, contrary to [line of business] policy.152 15 16 17 In August 2016, Wells Fargo senior executives began contemplating 18 terminating the CPI Program, because “[k]eeping the program could lead to reputational 19 risk and potential legal exposure.”153 20 Defendants discontinued their unusual practice of force-placing CPI on Wells 21 Fargo’s auto loan borrowers’ accounts effective September 30, 2016. Nonetheless, Wells 22 23 24 25 150 WFCPI_00045980 at p.2. 26 151 WFCPI_00062871 at 872. 152 Id. 153 WFCPI_00035207 at 208. 27 28 75946874.1 49 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 54 of 111 Page ID #:3329 1 Fargo chose to continue assessing CPI charges on borrowers for whom it had previously 2 force-placed CPI.154 3 In October 2016, Wells Fargo formed a Steering Committee of executive 4 leaders from four teams—Consumer Lending, Risk Management, Legal and Audit—to 5 identify and address legal and reputational issues and to devise proposals to mitigate further 6 harm to borrowers on whose accounts Defendants had force-placed CPI.155 The Steering 7 Committee communicated about CPI issues with Wells Fargo’s CEO Tim Sloan.156 8 In November 2016, Wells Fargo hired outside counsel, McGlinchey Stafford, 9 and outside consulting firm, Oliver Wyman, to investigate the CPI Program and develop a 10 “remediation plan” to address the harm Defendants had caused to the bank’s auto loan 11 borrowers.157 Wells Fargo established a Working Group of executives who, along with 12 McGlinchey Stafford and Oliver Wyman, conducted a large number of interviews to 13 understand how the CPI Program worked, but the Working Group never even bothered to 14 interview any of the hundreds of thousands of customers who were defrauded.158 15 Following reviews by the Steering Committee of executive leaders and outside 16 advisors, on June 27, 2017, Franklin Codel, Wells Fargo’s former Senior Executive Vice 17 President of Consumer Lending, reported to the Board of Directors the following “key 18 findings” and “weaknesses” about the CPI Program: 19  Placement of insurance followed a limited insurance verification process outsourced to a vendor. 20 21  Until September 2016, CPI amounts assessed were not itemized on periodic statements, making it difficult for 22 23 24 154 WFCPI_00062871 at 872. 155 Id. 26 156 Turner Dep. at 97:15-20. 27 157 WFCPI_00062871 at 872. 28 158 Turner Dep. at 38:10-40:8. 25 75946874.1 50 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 55 of 111 Page ID #:3330 customers to understand that CPI was the cause of payment increase. 1 2  Customer complaints reflect that customers were required to submit proof of insurance multiple times to achieve cancellation of unneeded coverage. 3 4 5  The complaint groups were not sufficiently staffed to handle complaint volume, resulting in a backlog and delay in getting customers’ concerns addressed. 6 7  There was limited attempt to look holistically at complaint trends and identify root causes both with respect to internal complaints and complaints made to National General. 8 9 10  Customer payments were allocated to CPI interest prior to loan principal, resulting in delinquency if customers continued to make their scheduled principal and interest payments without additional CPI amounts owed. 11 12 13  Interest charges related to the pro-rated premiums refunded were not always reversed when CPI was partially cancelled. 14 15  Late fees resulting from CPI were not always refunded adequately. 16 17  When CPI was cancelled, credit reporting may not have been updated to remove delinquency marks caused by charges for unneeded CPI coverage unless affirmatively requested by consumer.159 18 19 20 Nonetheless, Wells Fargo refused to publicly acknowledge the CPI scheme 21 22 23 24 25 26 27 28 until information about it was leaked to the press. D. The New York Times Exposes Defendants’ Force-Placed CPI Scheme Defendants’ fraudulent CPI scheme finally came to light on July 27, 2017, when The New York Times ran an investigative report on the scandal.160 The Times report, 159 WFCPI_00062871 at 873. 160 Gretchen Morgenson, The New York Times, Wells Fargo Forced Unwanted Auto Insurance on Borrowers, July 27, 2017, available at https://www.nytimes.com/2017/07/27/business/wells-fargounwanted-auto-insurance.html. 75946874.1 51 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 56 of 111 Page ID #:3331 1 was based on a copy of the internal report commissioned by and prepared for Wells Fargo 2 by consulting firm Oliver Wyman that detailed the scheme (the “Oliver Wyman Report”). 3 The Oliver Wyman Report was commissioned in 2016 and completed in 4 February 2017—five months before it was leaked to the press. The Oliver Wyman Report 5 investigated Defendants’ CPI practices, but only between January 2012 and July 2016. It 6 found that Defendants charged roughly 800,000 consumers for CPI they did not need, with 7 an estimated 274,000 becoming delinquent on their account. 8 vehicles were wrongfully repossessed as a result of Defendants’ CPI practices. The report 9 estimated Wells Fargo owed $73 million to its customers.161 Approximately 25,000 10 But, the scheme began well before 2012, and Wells Fargo’s borrowers 11 sustained financial damages far beyond the costs of the insurance.162 The harm also 12 included repossession costs, late fees, charges for insufficient funds, time spent dealing with 13 overdrafts, unfair charges, bank account deficiencies, attempts to reverse the Defendants’ 14 wrongful charges, and damage to consumers’ credit reports. 15 In a press release posted to its Dealer Services website on the same day the 16 Times story first ran, Wells Fargo announced a purported “remediation” program: “In total, 17 approximately $64 million of cash remediation will be sent to customers in the coming 18 months, along with $16 million of account adjustments, for a total of approximately $80 19 million in remediation.”163 20 21 161 22 23 Id. The Oliver Wyman Report See WFCPI_00030101 at 103. 162 24 25 26 27 The New York Times reported that the scheme began as early as 2006. Id. But, after a subsequent Times article questioned the time period of Wells Fargo’s study, Wells Fargo subsequently admitted that the CPI scheme began as early as 2005. See Wells Fargo, SEC and Other Regulatory Filings, Q3 2017 Form 10-Q, at p.3, November 3, 2017, available at https://www08.wellsfargomedia.com/assets/pdf/about/investor-relations/sec-filings/2017/third-quarter10q.pdf. As detailed herein, the scheme began in March 2002. 163 See Wells Fargo Announces Plan to Remediate Customers for Auto Insurance Coverage, supra at n.1. 28 75946874.1 52 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 57 of 111 Page ID #:3332 1 2 The core decisions concerning the nationwide remediation program were made by Wells Fargo from it California offices and headquarters. 3 But, Wells Fargo’s “remediation” program is not what it purports to be. Wells 4 Fargo has not offered consumers remediation of the financial harm they suffered. Rather, 5 Wells Fargo has informed borrowers that if they submit proof of insurance, they “may be 6 eligible for a refund.” Wells Fargo offers no “remediation” for its scheme to apply 7 unnecessary, unauthorized and inflated CPI premiums, and Wells Fargo’s remediation 8 program offers no relief for the lucrative kickbacks it received in the form of unearned 9 commissions.164 10 Moreover, the Wells Fargo executive tasked with designing a remediation 11 program immediately recognized that the CPI business unit was incapable of assisting, 12 because “1) they are not independent enough (too close to the issues to make proper 13 judgment) and 2) [there were] not enough people around with a customer service mindset 14 to err on the side of the customer.”165 15 Wells Fargo’s announced “remediation” program drew criticism from federal 16 regulators. On October 20, 2017, The New York Times ran a follow-up article after having 17 reviewed a preliminary report on the CPI scandal prepared by the Office of the Comptroller 18 of the Currency (“OCC”). 19 underestimated how much it would cost to reimburse harmed customers.166 The OCC found 20 that Wells Fargo’s claimed $80 million fund to compensate consumers was not enough 21 money to properly reimburse consumers, nor did the money sufficiently cover all of the The report stated that Wells Fargo had most likely 22 23 24 25 26 27 164 WFCPI_00030101 at 113; Turner Dep. at 107:6-9, 108:10-13 (“Q. And 2 A says customers that paid higher premiums for CPI due to commissions charged. Do you see that? A. Yes. … Q. And it was a business decision of the bank’s not to include that category in the remediation plan; right? A. The – yes.”). 165 WFCPI_00060786. 166 Gretchen Morgenson, The New York Times, Regulator Blasts Wells Fargo for Deceptive Auto Insurance Program, October 20, 2017, available at https://www.nytimes.com/2017/10/20/business/wellsfargo-auto-insurance-comptroller.html. 28 75946874.1 53 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 58 of 111 Page ID #:3333 1 consumers impacted. The OCC also found that Wells Fargo used “an overly complicated 2 reimbursement methodology, which lacked clear support for addressing all the customer 3 costs incurred,” according to the report. 4 As noted by the Times, “[t]he report paints a damning picture of a bank that 5 didn’t monitor its contractors, that lacked the impetus to correct problems once they were 6 uncovered and that proved unresponsive to complaints from its customers.” 167 7 Whereas Wells Fargo initially claimed that Defendants’ force-placed CPI 8 practices affected only 570,000 borrowers between January 2012 and 2016 and would 9 require $80 million in remediation, Wells Fargo’s 2017 3rd Quarter Form 10-Q, filed on 10 November 3, 2017, paints a different picture. Wells Fargo then admitted that “[t]he time 11 period in which customers may be eligible to claim or otherwise receive remediation 12 compensation for certain CPI placements has now been extended back to October 15, 13 2005.”168 14 Defendants’ fraudulent practices, Wells Fargo increased its estimate to approximately $130 15 million.169 Again, this proposed remediation is insufficient. And, whereas Wells Fargo originally pledged $80 million to remediate 16 Soon after the Times reported on the OCC’s report, Senator Sherrod Brown, a 17 member of the Senate Banking Committee, bluntly noted during a Congressional hearing 18 on Wells Fargo’s various scandals: “The company pure and simple lied to this committee— 19 and lied to the public.”170 Senator Brown was referring to the fact that Wells Fargo said it 20 first became aware of the CPI debacle a year earlier, in July 2016. Yet, former Wells Fargo 21 CEO John Stumpf did not disclose the CPI scheme to Congress during a hearing in 22 September 2016 concerning millions of fake bank accounts that Wells Fargo created. And 23 24 167 See id. 25 168 Q3 2017 Form 10-Q, supra at n.161, at p. 5. 26 169 Id. 27 28 170 Matt Egan, CNN, Wells Fargo accused of lying to Congress about auto insurance scandal, October 3, 2017, available at http://money.cnn.com/2017/10/03/investing/wells-fargo-lie-congress-hearing-autoinsurance/index.html. 75946874.1 54 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 59 of 111 Page ID #:3334 1 of course, Wells Fargo failed to acknowledge that the bank’s senior executives on the 2 ERMC had been briefed on issues with the CPI Program in 2012. 3 In written questions following the 2016 fake account hearings, the Senate 4 Banking Committee specifically asked Wells Fargo executives if they were “confident that 5 this type of fraudulent activity does not exist” elsewhere in the bank. Lawmakers also asked 6 whether Wells Fargo “discovered other types of misconduct.” Wells Fargo responded in 7 November 2016, saying: “We believe that the activity at issue here was limited to certain” 8 employees working in the company’s community banking division. Wells Fargo did not 9 mention the auto insurance scandal, which was rooted in its auto dealer services 10 department.171 11 Recently, the Honorable John Tigar, United States District Judge for the 12 Northern District of California, rejected similar claims of lack of corporate knowledge or 13 involvement in the “fake accounts” scandal also plaguing Wells Fargo. “Just as it is 14 implausible that the director defendants were unaware of the account-creation scheme given 15 the extent of the alleged fraud and the number of red flags,” Judge Tigar wrote, “it is 16 implausible that Wells Fargo’s senior management, involved in the day-to-day operations 17 of the bank and with greater access to the underlying cross-sell metrics and employee 18 whistle-blower complaints than independent board members, was unaware of the alleged 19 fraud.”172 20 In a now-familiar theme, Wells Fargo’s 2017 3rd quarter 10-Q filing notes that 21 “a former team member has alleged retaliation for raising concerns regarding automobile 22 lending practices.”173 23 24 25 26 27 28 171 Id. 172 Gretchen Morgenson, The New York Times, Bringing Accountability to the Wells Fargo Boardroom, November 3, 2017, available at https://www.nytimes.com/2017/11/03/business/wells-fargo-board.html; see also In re Wells Fargo & Company Shareholder Derivative Litig. 282 F. Supp. 3d 1074, 1099–1100 (N.D. Cal. Oct. 4, 2017). 173 See Wells Fargo Q3 2017 Form 10-Q, supra at n. 161. 75946874.1 55 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 60 of 111 Page ID #:3335 1 Federal regulators finally recognized that Wells Fargo’s explanations and 2 excuses had been insufficient. In a pair of Consent Orders announced on April 20, 2018, 3 the Consumer Financial Protection Bureau and the OCC found that Wells Fargo’s CPI 4 practices violated multiple federal statutes and warranted some of the largest fines in recent 5 memory. Wells Fargo agreed to pay $1 billion to federal regulators in part to settle claims 6 it improperly charged auto loan customers for duplicative, unnecessary, and overpriced 7 CPI.174 8 All of this paints a picture of a company—Wells Fargo—driven entirely by 9 profit and its willing co-conspirator—National General—who together rigged an already 10 abusive insurance practice for their own ill-gotten gain. 11 VI. 12 Plaintiff Angelina Camacho 13 14 PLAINTIFFS’ EXPERIENCES On January 25, 2014, Plaintiff Angelina Camacho purchased a used 2011 Mazda CX-9 from Maxon Mazda in Union, New Jersey. 15 To finance her purchase, Ms. Camacho signed a form RISC that required her 16 to make fixed monthly payments of $595.00. The RISC also included a standard provision 17 that required her to maintain physical damage insurance protecting the seller’s collateral in 18 the vehicle. If Ms. Camacho failed to maintain physical-damage insurance, the RISC gave 19 the seller the option of purchasing insurance for itself and charging Ms. Camacho for the 20 premiums. 21 Wells Fargo’s documents reflect that the dealerships verified that Ms. 22 Camacho, and other Plaintiffs, had the required insurance before turning the vehicle over 23 to her. Ms. Camacho provided the dealership with a copy of her insurance card, which 24 included her policy number and the contact information for her insurance agent. 25 26 27 28 174 See In the Matter of Wells Fargo Bank, No. 2018-BCFP-0001 (April 20, 2018), available at https://files.consumerfinance.gov/f/documents/cfpb_wells-fargo-bankna_consent-order_2018-04.pdf; In the Matter of Wells Fargo Bank, N.A., No. AAEC-2018-16, (April 20, 2018), available at https://www.occ.gov/static/enforcementactions/ea2018-026.pdf. 56 75946874.1 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 61 of 111 Page ID #:3336 1 On or around January 9, 2015, Wells Fargo added a $1,282.00 CPI charge to 2 Mr. Camacho’s outstanding balance. About a year later, on February 1, 2016, Wells Fargo 3 added another CPI charge to Ms. Camacho’s account—this time in the amount of 4 $1,037.00. Wells Fargo added these CPI charges even though Ms. Camacho had provided 5 evidence of the required insurance when she purchased her vehicle, and even though Ms. 6 Camacho continued to maintain the required insurance. 7 According to Ms. Camacho’s billing statements, the balance for her loan 8 increased by nearly $1,000 for the period ending January 22, 2015, despite the fact that she 9 had made her regular monthly payment. The January bill separately calls out Ms. 10 Camacho’s monthly payment and even a $10 late charge that Wells Fargo charged her since 11 the last statement, but nowhere does Wells Fargo disclose that it added a CPI charge to Ms. 12 Camacho’s loan. 13 14 Ms. Camacho did not learn that Wells Fargo had charged her for CPI coverage until after vehicle was repossessed late in the evening on August 29, 2016. 15 When Ms. Camacho finally learned about the CPI charges from Wells Fargo’s 16 representative, she was promptly able to provide the representative with her policy number 17 and Wells Fargo was able to verify through her insurance company that Ms. Camacho did 18 indeed maintain the required insurance. Ms. Camacho’s vehicle was then returned to her 19 and Wells Fargo cancelled her CPI coverage. However, Ms. Camacho continues to be 20 harmed from the erroneous CPI charges, since her Wells Fargo loan payments continue to 21 be marked as late. 22 Defendants’ policies, practices, and procedures were to make other false and 23 misleading statements to Plaintiffs, including Ms. Camacho, by inflating the outstanding 24 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 25 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 26 insurance and was exercising its contractual right to add CPI fees in good faith, when in 27 fact Defendants had Plaintiffs’ insurance information. 28 75946874.1 57 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 62 of 111 Page ID #:3337 1 Plaintiff Camacho reviewed documents that were made available to her in 2 connection with her auto loan. Had the CPI scheme been disclosed, Plaintiff Camacho 3 would have seen and been aware of it and would not have would not have obtained an auto 4 loan from Wells Fargo, would not have paid the CPI charges, and/or would have disputed 5 the CPI charges and demanded full compensation. 6 Plaintiff Odis Cole 7 8 On January 17, 2015, Plaintiff Odis Cole purchased a used 2011 Cadillac DTS from Driven Auto Sales in Burbank, Illinois. 9 To finance his purchase, Mr. Cole signed a form RISC that required him to 10 make fixed monthly payments of $330.37. The RISC also included a standard provision 11 that required him to maintain physical-damage insurance protecting the seller’s collateral 12 in the vehicle. If Mr. Cole failed to maintain physical-damage insurance, the RISC gave 13 the seller the option of purchasing insurance for itself and charging Mr. Cole for the 14 premiums. 15 Wells Fargo’s documents reflect that the dealerships verified that Mr. Cole, 16 and other Plaintiffs, had the required insurance before turning the vehicle over. In this 17 regard, Mr. Cole further provided the dealership with a signed “Agreement to Provide 18 Physical Damage Insurance,” which reiterated his obligation to maintain the required 19 insurance. 20 On or around November 10, 2015, Wells Fargo added a $1,116 CPI charge to 21 Mr. Cole’s outstanding loan balance. Wells Fargo did so even though Mr. Cole had provided 22 evidence of the required insurance when he purchased his vehicle, and it did so even though 23 Mr. Cole continued to maintain the required insurance. 24 On or around November 23, 2015, Wells Fargo partially refunded Mr. Cole in 25 the amount of $842 for the CPI charge erroneously placed on his account. On or around 26 July 6, 2016, Wells Fargo added a second $1,082 CPI charge to Mr. Cole’s outstanding loan 27 balance. 28 75946874.1 58 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 63 of 111 Page ID #:3338 1 After Mr. Cole asked his insurer to provide Wells Fargo with another copy of 2 his insurance, Wells Fargo partially refunded Mr. Cole $569 for the CPI charge erroneously 3 placed on his account on or around September 19, 2016. Wells Fargo did not fully refund 4 Mr. Cole for the CPI charges he had already paid. 5 Defendants’ policies, practices, and procedures were to make other false and 6 misleading statements to Plaintiffs, including Mr. Cole, by inflating the outstanding balance 7 on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 days after 8 loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ insurance 9 and was exercising its contractual right to add CPI fees in good faith, when in fact 10 Defendants had Plaintiffs’ insurance information. 11 Plaintiff Cole reviewed documents that were made available to him in 12 connection with his auto loan. Had the CPI scheme been disclosed, Plaintiff Cole would 13 have seen and been aware of it and would not have would not have obtained an auto loan 14 from Wells Fargo, would not have paid the CPI charges, and/or would have disputed the 15 CPI charges and demanded full compensation. 16 Plaintiff Nyle Davis 17 18 On September 18, 2014, Plaintiff Nyle Davis purchased a used 2013 Dodge Grand Caravan from Griffith Motor Company in Neosho, Missouri. 19 To finance his purchase, Mr. Davis signed a form RISC that required him to 20 make fixed monthly payments of $369.44. The RISC also included a standard provision 21 that required him to maintain physical damage insurance protecting the seller’s collateral in 22 the vehicle. If Mr. Davis failed to maintain physical-damage insurance, the RISC gave the 23 seller the option of purchasing insurance for itself and charging Mr. Davis for the premiums. 24 Wells Fargo’s documents reflect that the dealerships verified that Mr. Davis, 25 and other Plaintiffs, had the required insurance before turning the vehicle over. In this 26 regard, Mr. Davis provided Griffith Motor Company with proof of his insurance through 27 Progressive. 28 75946874.1 59 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 64 of 111 Page ID #:3339 1 On or around February 27, 2015, Wells Fargo added a $988.00 CPI charge to 2 Mr. Davis’ outstanding loan balance. Wells Fargo did so even though Mr. Davis had 3 provided evidence of the required insurance when he purchased his vehicle, and it did so 4 even though Mr. Davis continued to maintain the required insurance. Wells Fargo also 5 added a CPI charge of $933.00 on April 12, 2016 and a charge of $208.99 on October 21, 6 2016—even though Mr. Davis had the required insurance during those periods. 7 On or around April 21, 2015, Mr. Davis noticed that the amount owing on his 8 loan was higher than it should have been. In fact, the principal Mr. Davis owed was less 9 than what appeared in the balance Wells Fargo reported to him. 10 In late 2016, Mr. Davis’ vehicle was repossessed. The repossession company 11 told Mr. Davis that he was purportedly late on his Wells Fargo auto loan payments, and the 12 bank had ordered repossession of his vehicle. Mr. Davis ultimately had to pay $1,200 to 13 recover his vehicle from the repossession company. 14 Defendants’ policies, practices, and procedures were to make other false 15 and misleading statements to Plaintiffs, including Mr. Davis, by inflating the outstanding 16 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 17 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 18 insurance and was exercising its contractual right to add CPI fees in good faith, when in 19 fact Defendants had Plaintiffs’ insurance information. 20 Plaintiff Davis reviewed documents that were made available to him in 21 connection with his auto loan. Had the CPI scheme been disclosed, Plaintiff Davis would 22 have seen and been aware of it and would not have would not have obtained an auto loan 23 from Wells Fargo, would not have paid the CPI charges, and/or would have disputed the 24 CPI charges and demanded full compensation. 25 Plaintiff Duane Fosdick 26 27 On June 28, 2014, Plaintiff Duane Fosdick purchased a used 2008 BMW 3Series vehicle from Courtesy Motors Auto Center in Chico, California. 28 75946874.1 60 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 65 of 111 Page ID #:3340 1 To finance his purchase, Mr. Fosdick signed a form RISC that required him to 2 make fixed monthly payments of $359.74. The RISC also included a standard provision 3 that required him to maintain physical damage insurance protecting the seller’s collateral in 4 the vehicle. If Mr. Fosdick failed to maintain the required insurance, the RISC gave the 5 seller the option of purchasing insurance for itself and charging Mr. Fosdick for the 6 premiums. 7 Wells Fargo’s documents reflect that the dealerships verified that Mr. Fosdick, 8 and other Plaintiffs, had the required insurance before turning the vehicle over. In this 9 regard, Mr. Fosdick provided the dealership with proof of insurance, as well as a signed 10 “Agreement to Furnish Insurance Policy” that listed the name of Mr. Fosdick’s insurance 11 company (National General, as it turned out), his insurance agent, policy number, and his 12 insurance agent’s address. 13 The tellers at the Wells Fargo branch where he tendered his monthly payment 14 did not inform him that, on or about October 7, 2014, Wells Fargo added a $1,423.00 CPI 15 charge to his account and his monthly payments had therefore increased. As a result, Wells 16 Fargo began charging Mr. Fosdick late fees—which were also added to his outstanding 17 balance—and reporting to credit bureaus that Mr. Fosdick had past-due loan payments. 18 Even after Mr. Fosdick proved to Wells Fargo that he was wrongly charged 19 for CPI coverage, Wells Fargo added another CPI charge to Mr. Fosdick’s loan balance on 20 October 7, 2015—this time in the amount of $1,393.00. Once again, Wells Fargo did so 21 even though Mr. Fosdick had provided evidence of the required insurance (both when he 22 purchased his vehicle, and again when he called to complain about the first wrongly-placed 23 CPI policy), and it did so even though Mr. Fosdick continued to maintain the required 24 insurance. 25 On August 15, 2016, Wells Fargo mailed Mr. Fosdick a letter advising him 26 that they had cancelled the CPI coverage previously purchased for his vehicle and would 27 be removing the CPI charges previously added to his loan balance. Wells Fargo did not 28 75946874.1 61 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 66 of 111 Page ID #:3341 1 remove the late charges incurred as a result of the CPI charges or correct the adverse credit 2 reports that resulted from the CPI charges. 3 Defendants’ policies, practices, and procedures were to make other false and 4 misleading statements to Plaintiffs, including Mr. Fosdick, by inflating the outstanding 5 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 6 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 7 insurance and was exercising its contractual right to add CPI fees in good faith, when in 8 fact Defendants had Plaintiffs’ insurance information. 9 10. Plaintiff Fosdick reviewed documents that were made available to him 10 in connection with his auto loan. Had the CPI scheme been disclosed, Plaintiff Fosdick 11 would have seen and been aware of it and would not have would not have obtained an auto 12 loan from Wells Fargo, would not have paid the CPI charges, and/or would have disputed 13 the CPI charges and demanded full compensation. 14 Plaintiff Regina Gonzalez 15 16 On March 22, 2014, Plaintiff Regina Gonzalez purchased a used Chevrolet HHR station wagon from Inver Grove Ford Lincoln in Inver Grove Heights, Minnesota. 17 To finance her purchase, Ms. Gonzalez signed a form RISC that required her 18 to make monthly payments of $284.21 for 72 months. The RISC also included a standard 19 provision that required her to maintain physical-damage insurance protecting the seller’s 20 collateral in the vehicle. If Ms. Gonzalez failed to maintain the required insurance, the 21 RISC gave the seller the option of purchasing insurance for itself and charging her for the 22 premiums. 23 Wells Fargo’s documents reflect that the dealerships verified that Ms. 24 Gonzalez, and other Plaintiffs, had the required insurance before turning the vehicle over. 25 In this regard, while at the dealership, Ms. Gonzalez provided the dealership with a copy of 26 her insurance card. Ms. Gonzalez provided the dealership with a signed “Agreement to 27 Provide Insurance,” which reiterated her obligation to maintain the required insurance, and 28 75946874.1 62 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 67 of 111 Page ID #:3342 1 listed the name of her insurance company, her policy number, and her insurance agent’s 2 name and telephone number. 3 On or around March 10, 2015, Wells Fargo added a $1,343 CPI charge to Ms. 4 Gonzalez’s outstanding loan balance. Wells Fargo did so even though Ms. Gonzalez had 5 provided evidence of the required insurance when she purchased her vehicle, and it did so 6 even though Ms. Gonzalez continued to maintain the required insurance. 7 In a letter sent by U.S. Mail dated February 26, 2015, Wells Fargo informed 8 Ms. Gonzalez that CPI had been placed on her account for the period between November 9 29, 2014 and November 29, 2015 but stated that it had cancelled this force-placed CPI for 10 the period from February 19, 2015 to November 29, 2015 because of “duplicate coverage.” 11 The letter erroneously maintained that Ms. Gonzalez had not provided proof of insurance 12 for the time period of November 29, 2014 to February 29, 2015 but implicitly acknowledged 13 that she had provided proof of insurance for the remaining time period. On or around March 14 11, 2015, Wells Fargo partially refunded Ms. Gonzalez in the amount of $1,041 for the CPI 15 charge erroneously placed on her account. 16 On or around June 1, 2015, Wells Fargo added a second $1,303 CPI charge to 17 Ms. Gonzalez’s outstanding loan balance. Wells Fargo did so even though Ms. Gonzalez 18 had provided evidence of the required insurance when she purchased her vehicle and 19 continued to maintain the required insurance—and despite the fact that Wells Fargo had 20 acknowledged in its February 26, 2015 letter that CPI was “duplicate coverage” because 21 she already maintained the required insurance. 22 Ms. Gonzalez generally made loan payments by deposit at a Wells Fargo drive- 23 through or with a teller inside her local Wells Fargo branch. She knew the amount of her 24 regular monthly loan payments and did not notice that Wells Fargo had unilaterally and 25 unlawfully increased her outstanding loan balance. 26 In or around August 2015, Ms. Gonzalez received a billing statement by U.S. 27 Mail and discovered that the amount owing on her loan was higher than it should have been. 28 In fact, the principal Ms. Gonzalez owed was less than what appeared in her balance. 75946874.1 63 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 68 of 111 Page ID #:3343 1 Unbeknownst to Ms. Gonzalez, Wells Fargo had been applying portions of her monthly 2 payment toward the CPI charge and interest on that CPI charge—rather than toward the 3 principal amount owing on Ms. Gonzalez’s loan. 4 Ms. Gonzalez informed Wells Fargo representatives over the phone that she 5 already had insurance, but Wells Fargo continued to charge her for insurance. Beginning 6 in or around December 2015, she received letters from Wells Fargo by U.S. Mail stating 7 that she had failed to make full monthly payments of $485.62 (reflecting both her agreed 8 upon monthly loan payment of $284.21 as well as the unlawful CPI charges) and that her 9 vehicle would be repossessed if she did not pay a purportedly past due amount. On or 10 around February 16, 2016, Wells Fargo repossessed Ms. Gonzalez’s vehicle. 11 Defendants’ policies, practices, and procedures were to make other false and 12 misleading statements to Plaintiffs, including Ms. Gonzalez, by inflating the outstanding 13 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 14 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 15 insurance and was exercising its contractual right to add CPI fees in good faith, when in 16 fact Defendants had Plaintiffs’ insurance information. 17 Plaintiff Gonzalez reviewed documents that were made available to her in 18 connection with her auto loan. Had the CPI scheme been disclosed, Plaintiff Gonzalez 19 would have seen and been aware of it and would not have would not have obtained an auto 20 loan from Wells Fargo, would not have paid the CPI charges, and/or would have disputed 21 the CPI charges and demanded full compensation. 22 Plaintiff Brandon Haag 23 24 On November 14, 2013, Plaintiff Brandon Haag purchased a used 2008 BMW 5 Series from Dahl Automotive La Crosse in La Crosse, Wisconsin. 25 To finance his purchase, Mr. Haag signed a form RISC that required him to 26 make fixed monthly payments of $484.50. The RISC also included a provision that required 27 him to maintain physical-damage insurance protecting the seller’s collateral in the vehicle. 28 75946874.1 64 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 69 of 111 Page ID #:3344 1 If Mr. Haag failed to maintain physical-damage insurance, the RISC gave the seller the 2 option of purchasing insurance for itself and charging Mr. Haag for the premiums. 3 Wells Fargo’s documents reflect that the dealerships verified that Mr. Haag, 4 and other Plaintiffs, had the required insurance before turning the vehicle over. In this 5 regard, while at the dealership, Mr. Haag signed an “Agreement to Provide Insurance,” 6 which reiterated his obligation to maintain the required insurance, and listed the name of 7 his insurance company (Geico), his policy number, the effective date of the policy, and 8 comprehensive and collision deductibles under the policy. 9 On or around October 9, 2014, Wells Fargo added a $1,423.00 CPI charge to 10 Mr. Haag’s outstanding loan balance. Wells Fargo did so even though Mr. Haag had 11 provided evidence of the required insurance when he purchased his vehicle, and it did so 12 even though Mr. Haag continued to maintain the required insurance. 13 Wells Fargo continued to charge Mr. Haag for the CPI policy and deducted 14 sums from his monthly loan payment to pay for the CPI premium. As a result of such 15 deductions, Mr. Haag was erroneously deemed to be delinquent under his loan agreement 16 and was charged late fees. 17 Defendants’ policies, practices, and procedures were to make other false and 18 misleading statements to Plaintiffs, including Mr. Haag, by inflating the outstanding 19 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 20 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 21 insurance and was exercising its contractual right to add CPI fees in good faith, when in 22 fact Defendants had Plaintiffs’ insurance information. 23 Plaintiff Haag reviewed documents that were made available to him in 24 connection with his auto loan. Had the CPI scheme been disclosed, Plaintiff Haag would 25 have seen and been aware of it and would not have would not have obtained an auto loan 26 from Wells Fargo, would not have paid the CPI charges, and/or would have disputed the 27 CPI charges and demanded full compensation. 28 75946874.1 65 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 70 of 111 Page ID #:3345 1 Plaintiff Paul Hancock 2 3 On February 8, 2016, Plaintiff Paul Hancock purchased a used 2006 Chrysler PT Cruiser from Hubler Ford Center in Shelbyville, Indiana 4 To finance his purchase, Mr. Hancock signed a form RISC that required him 5 to make fixed monthly payments of $119.67. The RISC also included a provision that 6 required him to maintain physical-damage insurance protecting the seller’s collateral in the 7 vehicle. If Mr. Hancock failed to maintain physical-damage insurance, the RISC gave the 8 seller the option of purchasing insurance for itself and charging Mr. Hancock for the 9 premiums. 10 Wells Fargo’s documents reflect that the dealerships verified that Mr. 11 Hancock, and other Plaintiffs, had the required insurance before turning the vehicle over. 12 In this regard, Mr. Hancock provided the dealership with a signed “Agreement to Provide 13 Insurance,” which reiterated his obligation to maintain the required insurance, and listed his 14 policy number and his insurance agent’s address and telephone number. 15 On or around May 18, 2016, Wells Fargo added a $598.00 CPI charge to Mr. 16 Hancock’s outstanding loan balance. Wells Fargo did so even though Mr. Hancock had 17 provided evidence of the required insurance when he purchased his vehicle, and it did so 18 even though Mr. Hancock continued to maintain the required insurance. 19 Wells Fargo increased the amount owing on Mr. Hancock’s loan without 20 explanation beginning in May 2016. On or around May 20, 2016, Wells Fargo sent Mr. 21 Hancock a bill by U.S. mail with a current payment due of $180.69. The statement 22 increased his monthly payment due from $119.67 without no stated reason. The bill also 23 reflects a total loan balance of $5,222—an unexplained increase from the $4,903 due on his 24 loan as of February 18, 2016. 25 Only beginning on or around September 2016 did Wells Fargo disclose the 26 CPI charges that had been imposed on Mr. Hancock, sending him statements that included 27 itemized entries for CPI and CPI interest. A Wells Fargo bill dated September 19, 2016 28 75946874.1 66 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 71 of 111 Page ID #:3346 1 and sent by U.S. mail reflects that Mr. Hancock paid $75.63 towards CPI and $1.38 towards 2 CPI interest in an earlier payment made on September 13, 2016. 3 Wells Fargo mailed Mr. Hancock letters on November 30, 2016 and December 4 2, 2016 notifying him that it was discontinuing its force placed CPI program. But Wells 5 Fargo still billed Mr. Hancock for CPI and CPI interest in a mailed statement dated January 6 20, 2017. Furthermore, Wells Fargo did not refund Mr. Hancock for the CPI charges he 7 had already paid. 8 Defendants’ policies, practices, and procedures were to make other false and 9 misleading statements to Plaintiffs, including Mr. Hancock, by inflating the outstanding 10 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 11 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 12 insurance and was exercising its contractual right to add CPI fees in good faith, when in 13 fact Defendants had Plaintiffs’ insurance information. 14 Plaintiff Hancock reviewed documents that were made available to him in 15 connection with his auto loan. Had the CPI scheme been disclosed, Plaintiff Hancock 16 would have seen and been aware of it and would not have would not have obtained an auto 17 loan from Wells Fargo, would not have paid the CPI charges, and/or would have disputed 18 the CPI charges and demanded full compensation. 19 Plaintiff Dustin Havard 20 21 On April 3, 2012, Plaintiff Dustin Havard purchased a used Ford F150 truck from Watson Quality Ford in Jackson, Mississippi. 22 To finance his purchase, Mr. Havard signed a form RISC that required him to 23 make fixed monthly payments of $396.52. The RISC also included a standard provision 24 that required him to maintain physical damage insurance protecting the seller’s collateral in 25 the vehicle. If Mr. Havard failed to maintain physical damage insurance, the RISC gave 26 the seller the option of purchasing insurance for itself and charging Mr. Havard for the 27 premiums. 28 75946874.1 67 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 72 of 111 Page ID #:3347 1 Wells Fargo’s documents reflect that the dealerships verified that Mr. Havard, 2 and other Plaintiffs, had the required insurance before turning the vehicle over. HavardIn 3 this regard, Mr. Havard provided the dealership with a signed “Agreement to Furnish 4 Insurance Policy,” which reiterated his obligation to maintain the required insurance, and 5 listed the name of his insurance company, his insurance agent’s name and phone number, 6 and the expiration date of his current policy. 7 On or around July 12, 2012, Wells Fargo added a $1,200.00 CPI charge to Mr. 8 Havard’s outstanding loan balance. It added another CPI charge, this time for $975.00, on 9 September 16, 2014, and a third CPI charge for $954.00 on January 13, 2016. 10 Shortly after the first CPI charge was added to Mr. Havard’s account, he was 11 online checking his account and noticed that his outstanding balance had increased. This 12 was because Wells Fargo was unlawfully charging him for CPI coverage. 13 Mr. Havard repeatedly provided Wells Fargo with evidence that he maintained 14 the required insurance, yet Wells Fargo continued to place CPI charges on Mr. Havard’s 15 accounts and apply his monthly loan payments toward the CPI charges and interest on those 16 charges. As a result, Mr. Havard was charged late fees, deemed to be delinquent under his 17 loan agreement, and his vehicle was wrongly repossessed and held for two weeks. 18 Defendants’ policies, practices, and procedures were to make other false and 19 misleading statements to Plaintiffs, including Mr. Havard, by inflating the outstanding 20 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 21 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 22 insurance and was exercising its contractual right to add CPI fees in good faith, when in 23 fact Defendants had Plaintiffs’ insurance information. 24 Plaintiff Havard reviewed documents that were made available to him in 25 connection with his auto loan. Had the CPI scheme been disclosed, Plaintiff Havard would 26 have seen and been aware of it and would not have would not have obtained an auto loan 27 from Wells Fargo, would not have paid the CPI charges, and/or would have disputed the 28 CPI charges and demanded full compensation. 75946874.1 68 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 73 of 111 Page ID #:3348 1 Plaintiff Brian Miller 2 3 On October 31, 2014, Plaintiff Brian Miller purchased a used 2005 Chevrolet Avalanche from Desoto Auto Sales in Olive Branch, Mississippi. 4 To finance his purchase, Mr. Miller signed a form RISC that required him to 5 make fixed monthly payments of $367.11. The RISC also included a standard provision 6 that required him to maintain physical damage insurance protecting the seller’s collateral in 7 the vehicle. If Mr. Miller failed to maintain the required insurance, the RISC gave the seller 8 the option of purchasing insurance for itself and charging Mr. Miller for the premiums. 9 Wells Fargo’s documents reflect that the dealerships verified that Mr. Miller, 10 and other Plaintiffs, had the required insurance before turning the vehicle over. In this 11 regard, the dealership reviewed and kept a copy of Mr. Miller’s insurance card, which 12 included the name of his insurance company, his policy number, his insurance agent, and 13 contact information for both the insurance company and agent. Both the dealership and Mr. 14 Miller also signed an “Agreement to Provide Insurance,” which confirmed Mr. Miller had 15 “arranged for the required insurance through the insurance company shown” and stated that 16 Wells Fargo “reserve[d] the right to contact your agent and verify the insurance information 17 provided.” The insurance information was not filled in on the form because the dealership 18 instead took a copy of Mr. Miller’s insurance card. 19 On or around December 22, 2015, Wells Fargo added a $862.00 CPI charge to 20 the amount owed under Mr. Miller’s RISC. Wells Fargo did so even though Mr. Miller had 21 provided evidence of the required insurance when he purchased his vehicle, and it did so 22 even though Mr. Miller continued to maintain the required insurance. 23 Mr. Miller had set up an automatic bill pay so his fixed monthly payment 24 would be deducted from his Wells Fargo bank account each month. Once Wells Fargo 25 added a $862.00 CPI charge to his outstanding balance, it began applying a portion of his 26 monthly payments toward the CPI charge and interest on the CPI charge. As a result, under 27 Wells Fargo’s false internal accounting, Mr. Miller’s monthly payments were insufficient, 28 75946874.1 69 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 74 of 111 Page ID #:3349 1 and Wells Fargo began charging him late fees—which were also added to the outstanding 2 balance on Mr. Miller’s loan—and reporting negative information to the credit bureaus. 3 Mr. Miller did not learn that Wells Fargo had force-placed CPI on his account, 4 imposed late charges, or reported delinquencies to credit bureaus until on or about July 29, 5 2016. While trying to buy his wife a car, he discovered that his credit score had dropped 6 and was told the reason was six late payments reported by Wells Fargo. 7 Mr. Miller again provided his insurance information to Wells Fargo (which 8 remained unchanged from the information Wells Fargo already had). About a week later, 9 Wells Fargo removed the CPI coverage from Mr. Miller’s account. Wells Fargo has not, 10 however, refunded the late charges incurred as a result of its unlawful CPI charges or 11 corrected the negative credit information it provided to the credit bureaus. 12 Defendants’ policies, practices, and procedures were to make other false and 13 misleading statements to Plaintiffs, including Mr. Miller, by inflating the outstanding 14 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 15 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 16 insurance and was exercising its contractual right to add CPI fees in good faith, when in 17 fact Defendants had Plaintiffs’ insurance information. 18 Plaintiff Miller reviewed documents that were made available to him in 19 connection with his auto loan. Had the CPI scheme been disclosed, Plaintiff Miller would 20 have seen and been aware of it and would not have would not have obtained an auto loan 21 from Wells Fargo, would not have paid the CPI charges, and/or would have disputed the 22 CPI charges and demanded full compensation. 23 Plaintiff Analisa Moskus 24 25 On May 31, 2008, Plaintiff Analisa Moskus purchased a used 2007 Toyota 4Runner from Hawthorne Motors in Lawndale, California. 26 To finance her purchase, Ms. Moskus signed a form RISC that required her to 27 make fixed monthly payments of $327.32. The RISC also included a standard provision 28 that required her to maintain physical damage insurance protecting the seller’s collateral in 75946874.1 70 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 75 of 111 Page ID #:3350 1 the vehicle. If Ms. Moskus failed to maintain physical damage insurance, the RISC gave 2 the seller the option of purchasing insurance for itself and charging Ms. Moskus for the 3 premiums. 4 Wells Fargo’s documents reflect that the dealerships verified that Ms. 5 Moskus, and other Plaintiffs, had the required insurance before turning the vehicle over. In 6 this regard, Ms. Moskus provided the dealership with a signed “Agreement to Furnish 7 Insurance Policy,” which reiterated her obligation to maintain the required insurance, and 8 listed the name of her insurance company, her policy number, and her insurance agent’s 9 phone number. 10 Ms. Moskus provided Defendants with evidence that she already had insurance 11 through AAA on multiple occasions. But on January 23, 2013, Wells Fargo nonetheless 12 billed Ms. Moskus for CPI, adding $798.00 to her outstanding loan balance. 13 Wells Fargo continued to charge Ms. Moskus for CPI, even after she called to 14 complain, and wrongfully applied portions of Ms. Moskus’s monthly loan payment toward 15 the CPI charge and interest on that charge. 16 deemed to be delinquent under her loan agreement and Wells Fargo reported that 17 delinquency to credit agencies. As a result, Ms. Moskus was erroneously 18 Defendants’ policies, practices, and procedures were to make other false and 19 misleading statements to Plaintiffs, including Ms. Moskus, by inflating the outstanding 20 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 21 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 22 insurance and was exercising its contractual right to add CPI fees in good faith, when in 23 fact Defendants had Plaintiffs’ insurance information. 24 Plaintiff Moskus reviewed documents that were made available to her in 25 connection with her auto loan. Had the CPI scheme been disclosed, Plaintiff Moskus would 26 have seen and been aware of it and would not have would not have obtained an auto loan 27 from Wells Fargo, would not have paid the CPI charges, and/or would have disputed the 28 CPI charges and demanded full compensation. 75946874.1 71 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 76 of 111 Page ID #:3351 1 Plaintiff Keith Preston 2 3 On September 30, 2007, Plaintiff Keith Preston purchased a new 2008 Mazda3 from Great Valley Chrysler Jeep in Sacramento, California. 4 To finance his purchase, Mr. Preston signed a form RISC that required him to 5 make fixed monthly payments of $364.10. The RISC also included a standard provision 6 that required him to maintain physical damage insurance protecting the seller’s collateral in 7 the vehicle. If Mr. Preston failed to maintain physical damage insurance, the RISC gave 8 the seller the option of purchasing insurance for itself and charging Mr. Preston for the 9 premiums. 10 Wells Fargo’s documents reflect that the dealerships verified that Mr. Preston, 11 and other Plaintiffs, had the required insurance before turning the vehicle over. In this 12 regard, Mr. Preston purchased insurance at the dealership from an insurance agent referred 13 by the dealership, and the dealership received copies of the insurance paperwork. Mr. 14 Preston also signed an “Agreement to Furnish Insurance Policy,” which listed the name of 15 Mr. Preston’s insurance company, his policy number, his insurance agent, and the agent’s 16 address and phone number. 17 On or about May 1, 2008, Wachovia added a $1,583.00 CPI charge to the 18 amount owed on Mr. Preston’s loan. Wachovia did so even though Mr. Preston had 19 provided evidence of the required insurance when he purchased his vehicle, and it did so 20 even though Mr. Preston continued to maintain the required insurance. 21 Two weeks after Wachovia added the CPI charge, it cancelled the CPI policy 22 it had added to Mr. Preston’s account. It reduced—but did not eliminate—the CPI charge 23 that had been added to Mr. Preston’s account. The amount remaining on the account was 24 $398.00. 25 The unlawful CPI charge that Wachovia added to Mr. Preston’s account 26 resulted in a higher monthly payment, which Mr. Preston struggled to meet. The CPI charge 27 caused or contributed to late charges incurred by Mr. Preston, as well as to a monthly fee 28 that Wachovia charged Mr. Preston for paying his bill by phone. Because of the CPI charge, 75946874.1 72 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 77 of 111 Page ID #:3352 1 the monthly payment Wachovia insisted that Mr. Preston pay varied from month to month, 2 and Mr. Preston needed to call the bank to be sure he was paying the correct amount. 3 Defendants’ policies, practices, and procedures were to make other false and 4 misleading statements to Plaintiffs, including Mr. Preston, by inflating the outstanding 5 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 6 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 7 insurance and was exercising its contractual right to add CPI fees in good faith, when in 8 fact Defendants had Plaintiffs’ insurance information. 9 Plaintiff Preston reviewed documents that were made available to him in 10 connection with his auto loan. Had the CPI scheme been disclosed, Plaintiff Preston would 11 have seen and been aware of it and would not have would not have obtained an auto loan 12 from Wells Fargo, would not have paid the CPI charges, and/or would have disputed the 13 CPI charges and demanded full compensation. 14 Plaintiff Victoria Reimche 15 16 On December 27, 2010, Plaintiff Victoria Reimche purchased a used 2008 Saturn VUE from Go Buick GMC Park Meadows in Lone Tree, Colorado. 17 To finance her purchase, Ms. Reimche signed a form RISC that required her 18 to make fixed monthly payments of $352.84. The RISC also included a standard provision 19 that required her to maintain physical damage insurance protecting the seller’s collateral in 20 the vehicle. If Ms. Reimche failed to maintain physical damage insurance, the RISC gave 21 the seller the option of purchasing insurance for itself and charging Ms. Reimche for the 22 premiums. 23 Wells Fargo’s documents reflect that the dealerships verified that Ms. 24 Reimche, and other Plaintiffs, had the required insurance before turning the vehicle over to 25 her. Ms. Reimche provided the dealership with a signed “Confirmation of Accidental 26 Physical Damage Insurance,” which reiterated her obligation to maintain the required 27 insurance. 28 75946874.1 73 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 78 of 111 Page ID #:3353 1 On or around April 6, 2011, Wells Fargo added a $1,036.00 CPI charge to Ms. 2 Reimche’s outstanding loan balance. Wells Fargo did so even though Ms. Reimche had 3 provided evidence of the required insurance when she purchased her vehicle, and it did so 4 even though Ms. Reimche continued to maintain the required insurance. 5 6 On or around June 21, 2011, Wells Fargo partially refunded Ms. Reimche in the amount of $ 551.00 for the CPI charge erroneously placed on her account. 7 On or around May 22, 2012, Wells Fargo added a second $977.00 CPI charge 8 to Ms. Reimche’s outstanding loan balance. Wells Fargo did so even though Ms. Reimche 9 had continued to maintain the required insurance. 10 11 On or around May 23, 2012, Wells Fargo partially refunded Ms. Reimche in the amount of $761.00 for the second CPI charge erroneously placed on her account. 12 Ms. Reimche paid her loan with Wells Fargo in full on or around August 25, 13 2015. Because of the wrongfully charged CPI policies placed on her loan, Ms. Reimche’s 14 final billing statement was false and paid Wells Fargo more than it was owed. 15 Defendants’ policies, practices, and procedures were to make other false and 16 misleading statements to Plaintiffs, including Ms. Reimche by inflating the outstanding 17 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 18 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 19 insurance and was exercising its contractual right to add CPI fees in good faith, when in 20 fact Defendants had Plaintiffs’ insurance information. 21 Plaintiff Reimche reviewed documents that were made available to her in 22 connection with her auto loan. Had the CPI scheme been disclosed, Plaintiff Reimche 23 would have seen and been aware of it and would not have would not have obtained an auto 24 loan from Wells Fargo, would not have paid the CPI charges, and/or would have disputed 25 the CPI charges and demanded full compensation. 26 Plaintiff Dennis Small 27 28 On September 29, 2014, Plaintiff Dennis Small purchased a used 2012 Ford F350 truck from AutoNation Ford Memphis in Memphis, Tennessee. 75946874.1 74 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 79 of 111 Page ID #:3354 1 To finance his purchase, Mr. Small signed a form RISC that required him to 2 make fixed monthly payments of $674.24. The RISC also included a standard provision 3 that required him to maintain physical-damage insurance protecting the seller’s collateral 4 in the vehicle. If Mr. Small failed to maintain physical damage insurance, the RISC gave 5 the seller the option of purchasing insurance for itself and charging Mr. Small for the 6 premiums. 7 Wells Fargo’s documents reflect that the dealerships verified that Mr. Small, 8 and other Plaintiffs, had the required insurance before turning the vehicle over. In this 9 regard, while at the dealership, Mr. Small added the vehicle to his existing comprehensive 10 insurance policy, printed out confirmation that he maintained the required coverage, and 11 provided that evidence of insurance to the dealership. Mr. Small provided the dealership 12 with a signed “Agreement to Provide Insurance,” which reiterated his obligation to maintain 13 the required insurance, and listed the name of his insurance company, his policy number, 14 and his insurance company’s address and telephone number. 15 On or around March 22, 2016, Wells Fargo added a $1,282.00 CPI charge to 16 Mr. Small’s outstanding loan balance. Wells Fargo did so even though Mr. Small had 17 provided evidence of the required insurance when he purchased his vehicle, and it did so 18 even though Mr. Small continued to maintain the required insurance. 19 Mr. Small had set up auto-pay with Wells Fargo, so that his loan payments 20 would be transferred from his debit account automatically each month, and at first, because 21 the monthly payments were in the same amount, he did not notice that Wells Fargo had 22 unilaterally and unlawfully increased his outstanding loan balance. 23 In or around October 2016, however, Mr. Small was online checking his 24 balances when he noticed that the amount owing on his loan was higher than it should have 25 been. In fact, the principal Mr. Small owed was less than what appeared in his balance. 26 Unbeknownst to Mr. Small, Wells Fargo had been applying portions of his monthly 27 payment toward the CPI charge and interest on that CPI charge—rather than toward the 28 principal amount owing on Mr. Small’s loan. 75946874.1 75 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 80 of 111 Page ID #:3355 1 Defendants’ policies, practices, and procedures were to make other false and 2 misleading statements to Plaintiffs, including Mr. Small, by inflating the outstanding 3 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 4 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 5 insurance and was exercising its contractual right to add CPI fees in good faith, when in 6 fact Defendants had Plaintiffs’ insurance information. 7 Plaintiff Small reviewed documents that were made available to him in 8 connection with his auto loan. Had the CPI scheme been disclosed, Plaintiff Small would 9 have seen and been aware of it and would not have would not have obtained an auto loan 10 from Wells Fargo, would not have paid the CPI charges, and/or would have disputed the 11 CPI charges and demanded full compensation. 12 Plaintiff Bryan Tidwell 13 14 On March 9, 2016, Plaintiff Bryan Tidwell purchased a used 2012 Subaru Outback from Fremont Motor Cody Inc. in Cody, Wyoming. 15 To finance his purchase, Mr. Tidwell signed a form RISC that required him to 16 make fixed monthly payments of $189.96. The RISC also included a provision that required 17 him to maintain physical-damage insurance protecting the seller’s collateral in the vehicle. 18 If Mr. Tidwell failed to maintain physical-damage insurance, the RISC gave the seller the 19 option of purchasing insurance for itself and charging Mr. Tidwell for the premiums. 20 Wells Fargo’s documents reflect that the dealerships verified that Mr. Tidwell 21 and other Plaintiffs, had the required insurance before turning the vehicle over to him. Mr. 22 Tidwell provided evidence of that insurance while he was at the dealership. Mr. Tidwell 23 also provided the dealership with a signed “Agreement to Provide Insurance,” which 24 reiterated his obligation to maintain the required insurance, and listed the name of his 25 insurance company (Progressive), as well as Progressive’s address and telephone number. 26 On or around June 17, 2016, Wells Fargo added a $1,398.00 CPI charge to 27 Mr. Tidwell’s outstanding loan balance. Wells Fargo did so even though Mr. Tidwell had 28 75946874.1 76 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 81 of 111 Page ID #:3356 1 provided evidence of the required insurance when he purchased his vehicle, and it did so 2 even though Mr. Tidwell continued to maintain the required insurance. 3 4 Mr. Tidwell had set up monthly automatic payments for his loan. When Wells Fargo added CPI, it cancelled his auto payment, causing Mr. Tidwell to incur a late fee. 5 Defendants’ policies, practices, and procedures were to make other false and 6 misleading statements to Plaintiffs, including Mr. Tidwell, by inflating the outstanding 7 balance on Plaintiffs’ loans in billing statements and mailing letters to Plaintiffs 42 and 77 8 days after loan origination that falsely stated that Wells Fargo lacked evidence of Plaintiffs’ 9 insurance and was exercising its contractual right to add CPI fees in good faith, when in 10 fact Defendants had Plaintiffs’ insurance information. 11 Plaintiff Tidwell reviewed documents that were made available to her in 12 connection with her auto loan. Had the CPI scheme been disclosed, Plaintiff Tidwell would 13 have seen and been aware of it and would not have would not have obtained an auto loan 14 from Wells Fargo, would not have paid the CPI charges, and/or would have disputed the 15 CPI charges and demanded full compensation. 16 17 VII. A. Discovery Rule 18 19 STATUTE OF LIMITATIONS The discovery rule tolls any statutes of limitation otherwise-applicable to any claims asserted herein. 20 Plaintiffs and Class members did not discover, and could not have discovered 21 through the exercise of reasonable diligence, that Defendants conspired to force-place 22 unnecessary CPI on hundreds of thousands of borrowers and refuse to honor proof of 23 insurance, when provided. 24 Defendants’ CPI scheme was elaborate and well-concealed. Despite having 25 received proof of insurance at loan origination, Defendants falsely represented that they had 26 never received such information. Moreover, Wells Fargo chose not to disclose CPI charges, 27 including premium, interest and unearned commissions, in its regular billing statements to 28 75946874.1 77 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 82 of 111 Page ID #:3357 1 consumers at any point between inception of the CPI Program in 2002 and just before 2 termination in September 2016.175 3 Indeed, an internal Wells Fargo audit in August 2015 concluded that the bank’s 4 CPI billing practices were deceptive because the billing statements did “not provide an 5 itemized break down of charges including CPI that makes up the total balance. … 6 Customers may not be aware that CPI charges are included and balance due has 7 increased and are negatively impacted with potential NSF and late fees. … Risks: 8 Negative impact to customer (deceptive)[.]176 9 It was not until Wells Fargo commissioned a report on Defendants’ conduct— 10 which was leaked to The New York Times—that Plaintiffs and Class members discovered 11 the fraud. Plaintiffs and Class members had no realistic ability to discover the true nature 12 of Defendants’ CPI practices until July 27, 2017 at the earliest. 13 B. Fraudulent Concealment Defendants’ affirmative and active concealment of their conduct also tolls any 14 15 otherwise-applicable statute of limitations to any claims asserted herein. 16 Under the fraudulent concealment doctrine, the causes of action alleged herein 17 did or will only accrue upon discovery of the true nature of the charges assessed against 18 borrowers’ accounts, as a result of Defendants’ concealment of the material facts. 19 Plaintiffs and members of the Class, as defined below, were kept ignorant by 20 Defendants of critical information required for the prosecution of their claims, without any 21 fault or lack of diligence on their part. Plaintiffs and members of the Class did not discover, 22 and could not have discovered through the exercise of reasonable diligence, the true nature 23 of the Defendants’ force-placed CPI scheme, including the kickbacks to Wells Fargo from 24 the CPI Vendor, until the publication of The New York Times article on July 27, 2017 at the 25 earliest. As described above, Wells Fargo recognized that its own billing practices were 26 27 175 WFCPI_00062871 at 873. 28 176 WFCPI_00048650; see also WFCPI_00006404. 75946874.1 78 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 83 of 111 Page ID #:3358 1 “deceptive” in that they deliberately concealed the CPI charges for all but one month of the 2 fourteen year CPI scheme. 3 Defendants are under a continuous duty to disclose, to Plaintiffs and Class 4 members, the true character, quality and nature of the charges they assess on borrowers’ 5 accounts. Defendants actively and affirmatively concealed the true character, quality, and 6 nature of their assessment of force-placed charges for CPI polices on borrowers’ accounts. 7 Defendants’ concealment includes their false and misleading statement and omissions of 8 material fact in their Insurance Request letters, Coverage Issued letters, billing statements, 9 customer service telephone calls, and elsewhere. Plaintiffs and members of the Class 10 reasonably relied on Defendants’ affirmative and active concealment. VIII. CLASS ACTION ALLEGATIONS 11 12 A. Class Definitions 13 14 Plaintiffs bring this action on behalf of themselves and a Nationwide Class and State Classes (collectively, the “Class”), defined as: 15 Nationwide Class: 16 All residents of the United States of America who obtained an auto loan through 17 Wells Fargo Bank, N.A., or its predecessors, subsidiaries or divisions, and who were 18 assessed charges for CPI and/or related fees on or after March 1, 2002. 19 California State Class: 20 All residents of the State of California who obtained an auto loan through Wells 21 Fargo Bank, N.A., or its predecessors, subsidiaries or divisions, and who were 22 assessed charges for CPI and/or related fees on or after March 1, 2002. 23 Colorado State Class: 24 All residents of the State of Colorado who obtained an auto loan through Wells Fargo 25 Bank, N.A., or its predecessors, subsidiaries or divisions, and who were assessed 26 charges for CPI and/or related fees on or after March 1, 2002. 27 Indiana State Class: 28 75946874.1 79 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 84 of 111 Page ID #:3359 1 All residents of the State of Indiana who obtained an auto loan through Wells Fargo 2 Bank, N.A., or its predecessors, subsidiaries or divisions, and who were assessed 3 charges for CPI and/or related fees on or after March 1, 2002. 4 Minnesota State Class: 5 All residents of the State of Minnesota who obtained an auto loan through Wells 6 Fargo Bank, N.A., or its predecessors, subsidiaries or divisions, and who were 7 assessed charges for CPI and/or related fees on or after March 1, 2002. 8 Mississippi State Class: 9 All residents of the State of Mississippi who obtained an auto loan through Wells 10 Fargo Bank, N.A., or its predecessors, subsidiaries or divisions, and who were 11 assessed charges for CPI and/or related fees on or after March 1, 2002. 12 Missouri State Class: 13 All residents of the State of Missouri who obtained an auto loan through Wells Fargo 14 Bank, N.A., or its predecessors, subsidiaries or divisions, and who were assessed 15 charges for CPI and/or related fees on or after March 1, 2002. 16 Wisconsin State Class: 17 All residents of the State of West Virginia who obtained an auto loan through Wells 18 Fargo Bank, N.A., or its predecessors, subsidiaries or divisions, and who were 19 assessed charges for CPI and/or related fees on or after March 1, 2002. 20 Wyoming State Class: 21 All residents of the State of Wyoming who obtained an auto loan through Wells Fargo 22 Bank, N.A., or its predecessors, subsidiaries or divisions, and who were assessed 23 charges for CPI and/or related fees on or after March 1, 2002. 24 Certification of Plaintiffs’ claims for classwide treatment is appropriate 25 because Plaintiffs can prove the elements of their claims regarding liability and entitlement 26 to damages on a classwide basis using the same evidence as would be used to prove those 27 elements in individual actions alleging the same claim. 28 75946874.1 80 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 85 of 111 Page ID #:3360 1 Plaintiffs reserve the right to amend the Class Definition if discovery and 2 further investigation reveal that the Class should be expanded or otherwise modified. 3 B. Class Certification Requirements: Federal Rule of Civil Procedure 23 4 This action is brought and properly may be maintained as a class action on 5 behalf of the Nationwide Class and/or State Classes proposed herein under the provisions 6 of Federal Rules of Civil Procedure 23(a)(1)-(4) and 23(b)(3), and satisfies the requirements 7 thereof. 8 Numerosity: While the exact number of members of the Class is unknown to 9 Plaintiffs at this time, and can only be determined by appropriate discovery, membership in 10 the Class is ascertainable based upon the records maintained by Defendants. At this time, 11 Plaintiffs are informed and believe that the Class includes at least 2 million members. 12 Therefore, the Class is sufficiently numerous that joinder of all members of the Class in a 13 single action is impracticable under Federal Rule of Civil Procedure Rule 23(a)(1), and the 14 resolution of their claims through a class action will be of benefit to the parties and the 15 Court. 16 Ascertainability: Names and addresses of members of the Class are available 17 from Defendants’ records. Notice can be provided to the members of the Class through 18 direct mailing, publication, or otherwise using techniques and a form of notice similar to 19 those customarily used in consumer class actions arising under California state law and 20 federal law. 21 Typicality: Plaintiffs’ claims are typical of the claims of the other members of 22 the Class which they seek to represent under Federal Rule of Civil Procedure 23(a)(3) 23 because Plaintiffs and each member of the Class have been subjected to the same unlawful, 24 deceptive, and improper practices and has been damaged in the same manner thereby. 25 Adequacy: Plaintiffs will fairly and adequately represent and protect the 26 interests of the Class as required by Federal Rule of Civil Procedure Rule 23(a)(4). Plaintiffs 27 are adequate representatives of the Class, because they have no interests which are adverse 28 to the interests of the members of the Class. Plaintiffs are committed to the vigorous 75946874.1 81 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 86 of 111 Page ID #:3361 1 prosecution of this action and, to that end, Plaintiffs have retained counsel who are 2 competent and experienced in handling class action litigation on behalf of consumers. 3 Superiority: A class action is superior to all other available methods of the fair 4 and efficient adjudication of the claims asserted in this action under Federal Rule of Civil 5 Procedure 23(b)(3) because: 6 a. The expense and burden of individual litigation make it economically 7 unfeasible for members of the Class to seek to redress their claims other than 8 through the procedure of a class action; 9 b. If separate actions were brought by individual members of the Class, the 10 resulting duplicity of lawsuits would cause members to seek to redress their 11 claims other than through the procedure of a class action; and 12 c. Absent a class action, Defendants likely would retain the benefits of their 13 wrongdoing, and there would be a failure of justice. 14 Common questions of law and fact exist as to the members of the Class, as 15 required by Federal Rule of Civil Procedure 23(a)(2), and predominate over any questions 16 which affect individual members of the Class within the meaning of Federal Rule of Civil 17 Procedure 23(b)(3). The common questions of fact include, but are not limited to, the 18 following: 19 a. Whether Defendants engaged in the unlawful conduct alleged herein: 20 b. Whether Defendants force-placed CPI on Wells Fargo auto loan customers 21 who maintained independent automobile insurance; 22 c. Whether Defendants assessed CPI charges to Plaintiffs and other Class 23 members including charges for premiums, interest, unearned commissions, 24 and other fees as a result of their force-placement of CPI; 25 d. Whether Defendants wrongfully threatened collections, repossessed vehicles, 26 and made adverse notations on credit reports of Plaintiffs and other Class 27 members as a result of their force-placement of CPI; 28 75946874.1 82 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 87 of 111 Page ID #:3362 1 e. Whether Defendants made misrepresentations and omissions of material fact 2 regarding their loans and their procedures for force-placing CPI; 3 f. Whether Wells Fargo received kickback payments in the form of unearned 4 commissions from the CPI Vendor for force-placing CPI and, as a result, 5 whether Plaintiffs and Class members were charged unlawfully inflated CPI 6 premiums; 7 g. Whether Defendants knew or should have known that they failed to properly 8 confirm whether borrowers had independent automobile insurance; h. Whether Defendants’ conduct violates RICO, the Bank Holding Company 9 10 Act, consumer protection statutes, and other causes of action herein; 11 i. Whether Plaintiffs and other Class members are entitled to equitable relief, 12 including but not limited to, restitution or injunctive relief; j. Whether such equitable relief includes Defendants’ remediation of Plaintiffs’ 13 and Class members’ credit reports; 14 15 k. Whether Plaintiffs and the other Class members are entitled to damages, 16 including treble damages, punitive damages, exemplary damages and statutory 17 damages (where allowed by state law) and other monetary relief and, if so, in 18 what amount; and 19 l. Whether Plaintiffs and members of the Class are entitled to an award of 20 reasonable attorneys’ fees, pre-judgment interest, and costs of this suit. 21 Plaintiffs are not aware of any difficulty which will be encountered in the 22 management of this litigation which should preclude its maintenance as a class action. 23 IX. RICO ALLEGATIONS 24 The following allegations pertain to Plaintiffs’ claim for relief under the 25 Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1962(c) and 26 1964, against all Defendants. 27 28 75946874.1 83 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 88 of 111 Page ID #:3363 1 Plaintiffs and the members of the Class are each “persons” as that term is 2 defined in 18 U.S.C. § 1961(3) who were injured in their business or property as a result of 3 Defendants’ wrongful conduct. 4 Defendants are, and at all relevant times were, “persons” within the meaning 5 of 18 U.S.C. § 1961(3) because they are entities capable of holding legal or beneficial 6 interest in property. 7 Section 1964(c) provides that “[a]ny person injured in his business or property 8 by reason of a violation of section 1962 of this chapter may sue therefore . . . and shall 9 recover threefold the damages he sustains and the cost of the suit, including a reasonable 10 attorney’s fee.” 18 U.S.C. § 1964(c). 11 Section 1962(c) makes it unlawful “for any person employed by or associated 12 with any enterprise engaged in, or the activities of which affect, interstate or foreign 13 commerce, to conduct or participate, directly or indirectly, in the conduct of such 14 enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.” 15 18 U.S.C. §1962(c). 16 RICO defines an enterprise as “any individual, partnership, corporation, 17 association, or other legal entity, and any union or group of individuals associated in fact 18 although not a legal entity.” 18 U.S.C. § 1961(4). An association-in-fact enterprise 19 generally has three structural features, including: (1) a purpose; (2) relationships among 20 those associated with the enterprise; and (3) longevity sufficient to permit those associates 21 to pursue the enterprise’s purpose. See Boyle v. United States, 556 U.S. 938, 946 (2009). 22 As alleged below and throughout this Complaint, the Wells Fargo and National 23 General companies orchestrated a scheme to extract millions of dollars from Plaintiffs and 24 members of the Class by force-placing inflated, unlawful, unnecessary and undisclosed CPI 25 in connection with automobile loans issued and held by Wells Fargo. Wells Fargo, National 26 General, and their predecessors conducted their business through an association-in-fact 27 enterprise in violation of section 1962(c) by a pattern of racketeering activity, including 28 mail and wire fraud, for the purpose of improperly profiting from unlawfully force-placed 75946874.1 84 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 89 of 111 Page ID #:3364 1 CPI. The CPI scheme enabled Wells Fargo to enjoy kickbacks in the form of unearned 2 commissions and other compensation for force-placing CPI. The CPI scheme also afforded 3 National General a captive audience of millions of accounts on which it could force-place 4 CPI, earning hundreds of millions of dollars in net written premium at a low risk of payout 5 on insurance claims. 6 Defendants’ endeavor had the desired effect. Defendants secured unlawful 7 profits during the pendency of the enterprises. And, as collateral damage, unsuspecting 8 borrowers were charged millions of dollars in excessive premiums, interest, overdraft fees, 9 late fees, and experienced negative credit occurrences and repossession as a result of 10 Defendants’ conduct. 11 CAUSES OF ACTION X. 12 FIRST CLAIM FOR RELIEF 13 Violations of the Racketeer Influenced and Corrupt Organizations Act 14 18 U.S.C. § 1962(c) 15 (Against All Defendants) 16 Plaintiffs incorporate by reference, in this claim for relief, each and every 17 allegation of the preceding paragraphs, with the same force and effect as though fully set 18 forth herein. 19 Plaintiffs bring this claim for relief on behalf of themselves and the members 20 of the Nationwide Class pursuant to 18 U.S.C. §§ 1962(c) and 1964 of RICO against Wells 21 Fargo and National General (for purposes of this cause of action, “Defendants”). 22 A. The CPI Enterprise 23 Defendants Wells Fargo, National General, and their predecessors as detailed 24 throughout this Complaint, formed an association-in-fact enterprise, referred to as the “CPI 25 Enterprise.” The CPI Enterprise included: (a) Wells Fargo, its predecessors, subsidiaries, 26 employees, and agents including WFS, Wachovia, WestFin, and WFDS; and (b) National 27 General, its predecessors, subsidiaries, employees, and agents including Newport, 28 Meritplan, Balboa, and QBEF. 75946874.1 The CPI Enterprise was formed for the purpose of 85 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 90 of 111 Page ID #:3365 1 unlawfully extracting significant revenue and profits from Plaintiffs and the Class by force- 2 placing CPI on their automobile loans, and sharing kickbacks in the form of unearned 3 commissions and other payments between the members of the enterprise. 4 At all relevant times, each member of the CPI Enterprise was aware of the 5 enterprise’s purpose and conduct, and was a knowing, willing, and active participant in that 6 conduct. Each member of the enterprise reaped substantial profits from the conduct of the 7 enterprise. 8 Each member of the CPI Enterprise acquired, maintained control of, was 9 associated with, and conducted or participated in the conduct of the enterprise’s affairs. 10 But, at all relevant times, the enterprise, and each member thereof: (a) had an existence 11 separate and distinct from each of its members; (b) was separate and distinct from the 12 pattern of racketeering in which the Defendants engaged; and (c) was an ongoing and 13 continuing organization consisting of legal entities, including the Defendants, along with 14 other individuals and entities, including unknown third parties. 15 The members of the CPI Enterprise are systematically linked through 16 continually coordinated activities (including the transmission of the Daily New Loan File, 17 agreements to force-place CPI on borrowers, monthly management meetings, and quarterly 18 business reviews), financial ties (including daily payments of premium, refunds, and 19 commissions), and contractual business arrangements (including the IAAs and GAAs). The 20 CPI Enterprise was an ongoing and continuous enterprise from March 2002 to September 21 2016. 22 Defendants could not have accomplished the purpose of the CPI Enterprise 23 without the assistance of each other, and all Defendants profited financially from the 24 scheme. 25 The CPI Enterprise described above involved regular communications 26 between Wells Fargo and National General in which insurance and customer information, 27 and payments were exchanged to facilitate the goals of the enterprise. As described below, 28 such communications occurred through the mail and wire facilities of the United States. 75946874.1 86 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 91 of 111 Page ID #:3366 1 The members of the CPI Enterprise functioned as a continuing unit for the 2 purposes of implementing the scheme. All members agreed to take actions to hide the 3 existence of the scheme and the CPI Enterprise from others including Wells Fargo’s auto 4 loan borrowers. 5 The CPI Enterprise engaged in and affected interstate commerce because, inter 6 alia, it affected the price and terms of auto loans and/or CPI that was force-placed on 7 millions of Class members throughout the United States. The CPI Enterprise further 8 required that Class members make payments for CPI premiums, interest, and unearned 9 commissions in interstate commerce to Wells Fargo. 10 The effects of the CPI Enterprise are still felt today, as many Wells Fargo auto 11 loan customers continue to be damaged by CPI-related negative reports to credit reporting 12 agencies. 13 B. Conduct of the CPI Enterprise 14 During the Class Period, Wells Fargo, National General, and their 15 predecessors identified in this Complaint exerted control over the CPI Enterprise and 16 participated in the operation and management of its affairs, directly and indirectly. 17 Wells Fargo and its predecessors participated in the operation and management 18 of the enterprise as described throughout this Complaint, including but not limited to the 19 following ways: 20 a. Misrepresenting to customers, and failing to adhere to, the terms of its auto 21 loans at loan origination; 22 b. Transmitting borrower information to the CPI Vendor in the form of the Daily 23 New Loan File; c. Disregarding the borrowers’ proof of insurance provided at the time of loan 24 25 origination; 26 d. Misrepresenting the circumstances under which it would force-place CPI on borrowers’ accounts; 27 28 75946874.1 87 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 92 of 111 Page ID #:3367 1 e. Authorizing the issuance of false and misleading Insurance Request Letters 2 and Coverage Issued Letters to borrowers; 3 f. Force-placing unnecessary and undisclosed CPI on borrowers’ accounts; 4 g. Concealing CPI charges on borrowers’ billing statements, a practice which the bank itself deemed to be “deceptive”; 5 6 h. Receiving concealed kickbacks in the form of unearned commissions and other 7 compensation from the CPI Vendor for force-placing CPI; 8 i. Participating in monthly management review meetings and quarterly business 9 review meetings with the CPI Vendor, during which it discussed the high 10 percentage of flat and partial cancellations due to the force-placement of 11 duplicative and unnecessary CPI; 12 j. Paying CPI premiums to the CPI Vendor; 13 k. Assessing CPI charges and collecting monthly payments from Class members, 14 including premium charges and interest, which falsely represented that those 15 charges were due and owed; 16 l. Misrepresenting to credit agencies and to Class members that there were 17 delinquencies when CPI premiums and insurance were not paid; and 18 m. Misrepresenting to credit agencies, Class members, and the Courts that 19 repossession of Class members’ vehicles was authorized because Class 20 members were delinquent on their loan accounts. 21 Far from being a mere outside service provider, National General and its 22 predecessors also were knowing, willing, and active participants in the CPI Enterprise. 23 National General and its predecessors participated in and conducted the affairs of the CPI 24 Enterprise as described throughout this Complaint, including but not limited to the 25 following ways: 26 a. Underwriting CPI that Wells Fargo force-placed, with the knowledge and intent that it be used in the CPI Enterprise’s fraudulent scheme; 27 28 75946874.1 88 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 93 of 111 Page ID #:3368 1 b. Misrepresenting that it did or would search hard copy and electronic data to 2 determine whether borrowers maintained adequate insurance on their vehicles; 3 c. Issuing CPI certificates for loans it knew or should have known were secured 4 by sufficient automobile insurance; 5 d. Ignoring and/or disregarding proof of insurance submitted by borrowers after 6 they learned about force-placed CPI; 7 e. Accepting payments from Wells Fargo for premiums due on CPI; 8 f. Paying kickbacks in the form of unearned commissions and other 9 compensation to Wells Fargo for the force-placement of CPI; 10 g. Drafting and sending false and misleading Insurance Request Letters and 11 Coverage Issued Letters to borrowers; 12 h. Participating in monthly management review meetings and quarterly business 13 review meetings with the CPI Vendor, during which it discussed the high 14 percentage of flat and partial cancellations due to the force-placement of 15 duplicative and unnecessary CPI; and 16 i. Transmitting to Wells Fargo lists accounts on which CPI was force-placed or 17 18 removed. C. Pattern of Racketeering Activity 19 Defendants carried out their force-placed CPI scheme through a pattern of 20 racketeering activity that employed the use of United States mail and wire facilities. 21 Defendants accomplished this scheme by committing, conspiring to commit, and/or aiding- 22 and-abetting the commission of at least two predicate acts of racketeering activity (i.e. 23 violations of 18 U.S.C. §§ 1341 and 1343) within the past ten years. Defendants’ predicate acts of racketeering activity (18 U.S.C. § 1961(1)(B)) 24 25 26 including, but are not limited to:  27 Mail Fraud: Defendants violated 18 U.S.C. § 1341 by sending and/or receiving, or causing to be sent and/or received, materials via U.S. mail or 28 75946874.1 89 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 94 of 111 Page ID #:3369 1 commercial interstate carriers, for the purpose of executing the unlawful and 2 fraudulent scheme to profit from force-placed CPI. 3  Wire Fraud: Defendants violated 18 U.S.C. §1343 by transmitting and/or 4 receiving, or by causing to be transmitted and/or received, materials by wire 5 for the purpose of executing the unlawful and fraudulent scheme to profit from 6 force-placed CPI. 7 The CPI Enterprise’s pattern of racketeering involved thousands of separate 8 instances wherein the U.S. Mail or interstate wire facilities were knowingly and 9 intentionally used to further the enterprise’s pattern of racketeering activity, including mail 10 11 and wire fraud. These instances included but were not limited to the following: a. 12 13 Daily use of interstate wire facilities for the electronic transmission of the Daily New Loan File between members of the CPI Enterprise; b. Daily use of interstate wire facilities for the electronic transmission of lists 14 accounts on which CPI was force-placed or removed between members of the 15 CPI Enterprise; 16 c. 17 18 Daily use of interstate wire facilities between members of the CPI Enterprise to settle premium and refund payments. d. The CPI Vendor’s use of the U.S. mail to send false and misleading Insurance 19 Request Letters to Wells Fargo’s auto loan borrowers on or about 42 days after 20 a borrower appeared in the Daily New Loan file or after the CPI Vendor 21 received information reflecting that the borrower’s auto insurance had expired 22 or been cancelled; 23 e. The CPI Vendor’s use of interstate wire facilities to attempt to contact via 24 telephone the borrower, the borrower’s insurance agent (if known), or the 25 borrower’s insurance company (if known) on or about 63 days after a borrower 26 appeared in the Daily New Loan file or after the CPI Vendor received 27 information reflecting that the borrower’s auto insurance had expired or been 28 cancelled; 75946874.1 90 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 95 of 111 Page ID #:3370 1 f. The CPI Vendor’s use of the U.S. mail to send false and misleading Coverage 2 Issued Letters to Wells Fargo’s auto loan borrowers on or about 77 days after 3 a borrower appeared in the Daily New Loan file or after the CPI Vendor 4 received information reflecting that the borrower’s auto insurance had expired 5 or been cancelled; 6 g. Wells Fargo’s use of the U.S. mail and wire facilities to send billing statements 7 with charges for CPI premium, interest, and unearned commissions—which 8 an internal Wells Fargo audit acknowledged were deceptive—to borrowers on 9 or about 100 days after a borrower appeared in the Daily New Loan file or 10 after the CPI Vendor received information reflecting that the borrower’s auto 11 insurance had expired or been cancelled; 12 h. Use of interstate wire facilities for the electronic transmission of a “scorecard” 13 of metrics between members of the CPI Enterprise in advance of each monthly 14 management review meeting; and 15 i. Use of interstate wire facilities for the electronic transmission of quarterly 16 business review presentations between members of the CPI Enterprise in 17 advance of each quarterly business review meeting. 18 The CPI Enterprise also communicated by U.S. Mail, interstate facsimile, and 19 by interstate electronic mail with various other affiliates, regional offices, divisions, and 20 other third-party entities in furtherance of the CPI Enterprise’s mail and wire fraud. 21 Defendants knew, and intended that, Plaintiffs and the members of the Class 22 would be induced by their fraudulent scheme to pay for unnecessary and unlawful CPI 23 charges. Defendants further knew, and intended that, Plaintiffs and members of the Class 24 would rely on their false and misleading representations and omissions of material fact and 25 would incur increased costs as a result. Indeed, if Plaintiffs and the Class did not pay for 26 unnecessary and unlawful CPI, the CPI Enterprise could not succeed. 27 Each of these mailings and interstate wire transmissions constitutes 28 “racketeering activity” within the meaning of 18 U.S.C. § 1961(1)(B). Collectively, these 75946874.1 91 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 96 of 111 Page ID #:3371 1 violations constitute a “pattern of racketeering activity,” within the meaning of 18 U.S.C. § 2 1961(5), through which Defendants intended to and did defraud Plaintiffs, and members of 3 the Class. 4 Each instance of racketeering activity alleged herein was related, had similar 5 purposes, involved the same or similar participants and methods of commission, and had 6 similar results affecting similar victims, including Plaintiffs and the Class. 7 The pattern of racketeering activity alleged herein and the CPI Enterprise are 8 separate and distinct from each other. Likewise, Wells Fargo, National General, and their 9 predecessors, subsidiaries, and affiliates identified in this Complaint are distinct from the 10 CPI Enterprise. They each have separate existences from the CPI Enterprise, including 11 distinct legal statuses, different offices and roles, bank accounts, officers, directors, 12 employees, individual personhood, reporting requirements, and financial statements. Defendants’ final racketeering activity occurred within five years of the 13 14 commission of a prior incident of racketeering. 15 D. Damages 16 Defendants’ pattern of racketeering activity, directly and proximately caused 17 Plaintiffs and members of the Nationwide Class, injury in their business and property 18 because Plaintiffs paid charges for CPI—including premiums, interest, and unearned 19 commissions—that were inflated, unlawful, unnecessary and undisclosed, as well as 20 increased interest on their automobile loans, diminished credit scores and the costs of 21 repossession. 22 Plaintiffs are the most directly harmed individuals and entities and there are no 23 other Plaintiffs better suited to seek a remedy from Defendants for the economic harms at 24 issue here. 25 Any remediation program that Wells Fargo may implement will not provide 26 complete legal relief to all Plaintiffs and Class Members. Such remediation is unlikely to 27 compensate Plaintiffs and Class Members for their payment of kickbacks through unearned 28 commissions and other forms of compensation. Indeed, the Oliver Wyman Report, 75946874.1 92 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 97 of 111 Page ID #:3372 1 2 3 177 And according to Wells Fargo’s Rule 30(b)(6) witness, 4 5 178 Similarly, such remediation, even if it were to compensate Plaintiffs 6 and Class Members for single damages, would not satisfy their claims for treble damages 7 under RICO. Damages must be trebled under RICO first, before remediation payments, if 8 any, could be an offset. 9 Plaintiffs also seek all legal relief as allowed by law, including inter alia, 10 actual damages and treble damages. Plaintiffs seek equitable relief, including but not 11 limited to the elimination of adverse notations on their credit reports and remediating 12 reduced credit scores, as deemed proper by the Court. Plaintiffs also seek attorneys’ fees, 13 all costs and expenses of suit, and pre- and post-judgment interest pursuant to 18 U.S.C. § 14 1964(c). 15 SECOND CLAIM FOR RELIEF 16 Violation of the Bank Holding Company Act 17 12 U.S.C. § 1972 18 (Against Wells Fargo) 19 20 Plaintiffs incorporate by reference each and every allegation of the preceding paragraphs, with the same force and effect as though fully set forth herein. 21 Wells Fargo & Company and Wells Fargo Bank, N.A. are a “bank holding 22 companies” and “banks” within the meaning of 12 U.S.C. § 1971 and 12 U.S.C. § 1841(a) 23 and (c). Wells Fargo Bank, N.A. is a “subsidiary” of Wells Fargo & Company, as 24 25 defined in 12 U.S.C. § 1971 and 12 U.S.C. § 1841(d). 26 27 177 WFCPI_00030101 at 113. 28 178 Turner Dep. at 107:6-9, 108:10-13. 75946874.1 93 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 98 of 111 Page ID #:3373 Wells Fargo Dealers Services is a “subsidiary” of Wells Fargo Bank, N.A. and 1 2 Wells Fargo & Company as defined in 12 U.S.C. § 1971 and 12 U.S.C. § 1841(d). WestFin Insurance Agency, Inc. is a “subsidiary” of Wells Fargo Bank, N.A. 3 4 and Wells Fargo & Company as defined in 12 U.S.C. § 1971 and 12 U.S.C. § 1841(d). 5 The Bank Holding Company Act (“BHCA”) 12 U.S.C. § 1972 prohibits a bank 6 extending credit from requiring the borrower to obtain or provide some additional property 7 or service from the bank, the holding company of the bank, or a subsidiary of the holding 8 company of a bank. 9 Specifically, the BHCA states that “a bank shall not in any manner extend 10 credit, lease, or sell property of any kind, or furnish any service, or fix or vary the 11 consideration for any of the foregoing, on the condition or requirement . . . that the customer 12 shall obtain some additional credit, property, or service from [such bank or] a bank holding 13 company of such bank, or from any other subsidiary of such bank holding company . . . [or] 14 that the customer provide some additional credit, property, or service to [such bank] or a 15 bank holding company of such bank, or to any other subsidiary of such bank holding 16 company.” [Emphasis added.] 17 A claim under the BHCA requires (1) the banking practice to be unusual in the 18 banking industry, (2) the existence of an anti-competitive tying arrangement, and (3) the 19 practice to benefit the bank. 20 Unlike under general antitrust statutes, however, a violation of the BHCA does 21 not require one to establish the anti-competitive effects of the tie-in, the bank’s market 22 share, or any showing of coercion by the bank. This is because Congress perceived 23 conditional transactions involving credit as inherently anti-competitive and intended to 24 regulate banks’ credit-related transactions more stringently than the Supreme Court does 25 under other antitrust laws. Accordingly, the “anti-competitive” modifier in the above test 26 either drops out or is presumed to exist.179 27 28 179 S & N Equip. Co. v. Casa Grande Cotton Fin. Co., 97 F.3d 337, 346 (9th Cir. 1996). 75946874.1 94 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 99 of 111 Page ID #:3374 1 Here, Wells Fargo violated the BHCA because it “extended credit” and 2 “furnished a service” to Plaintiffs—auto loans—on the condition that Plaintiffs “provide 3 additional property” to Wells Fargo related to CPI and “obtain additional” “services” and 4 “credit” from Wells Fargo related to CPI. 5 Wells Fargo required Plaintiffs to “provide additional property” to Wells Fargo 6 by requiring Plaintiffs to make additional monetary payments to Wells Fargo for CPI 7 charges. Wells Fargo required Plaintiffs to “obtain additional services” from Wells Fargo’s 8 by requiring Plaintiffs to obtain Wells’ Fargo’s CPI-placement services. Wells Fargo 9 required Plaintiffs to “obtain additional credit” from Wells Fargo by billing Plaintiffs for 10 CPI charges that Wells Fargo made to CPI Vendors and passed-on to Plaintiffs. 11 These required additional payments, services, and credits related to CPI were 12 both de facto conditions of Wells Fargo’s initial extension of credit to Plaintiffs, as well as 13 explicit conditions of Wells Fargo’s ongoing extension of credit to Plaintiffs (i.e. 14 requirements for Plaintiffs to avoid foreclosure and/or additional fees). 15 These additional requirements were de facto conditions of Wells Fargo’s 16 initial extension of credit because each Plaintiff and Nationwide Class member who 17 obtained an auto loan from Wells Fargo was charged for CPI, regardless of whether they 18 maintained independent automobile insurance coverage. In other words, despite purporting 19 to allow Plaintiffs and members of the Nationwide Class to maintain their own auto 20 insurance in lieu of purchasing CPI, Wells Fargo in practice required all Plaintiffs and 21 members of the Nationwide Class to accept and pay for its CPI-related services as a basic 22 condition of their auto loan. 23 These additional CPI-related payments, services, and credits were also explicit 24 conditions of Wells Fargo’s ongoing extension of credit to Plaintiffs because Wells Fargo 25 conditioned its forbearance from foreclosing on existing loans on Plaintiffs’ payment of 26 CPI charges to Wells Fargo. When Plaintiffs did not make such CPI payments, Wells Fargo 27 threatened to—and often did—cease extending credit, repossess vehicles, and assess other 28 additional charges on Plaintiffs. These threats and actions to foreclose on or alter the 75946874.1 95 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 100 of 111 Page ID #:3375 1 conditions of Plaintiffs’ existing auto loans constitutes unlawful conduct under the 2 BHCA.180 3 Wells Fargo’s initial and ongoing extension of credit to Plaintiffs in the form 4 of auto loans constitutes the “tying” product. Wells Fargo’s CPI-related services, credit, 5 and associated demand for payment from Plaintiffs constitute “tied” products. Wells Fargo’s provision of auto loans and Wells Fargo’ CPI-related services 6 7 are separate products that engender separate consumer demand. 8 Wells Fargo’s practice of conditioning its auto financing on customers 9 obtaining and paying for additional CPI services was unusual and not traditional in the 10 banking industry in several respects. 11 Auto lenders typically do not require borrowers to purchase CPI, even when Wells Fargo’s internal documents 12 borrowers lack independent auto insurance. 13 acknowledge that “WFDS is the only large auto finance company with a CPI program,”181 14 and that other than Wells Fargo, “none of the big banks or captives force place at the 15 customer level. We are a 55 billion dollar portfolio … we should be able to self-insure!!”182 16 Also unusual and not traditional in the banking industry was Wells Fargo’s 17 practice of profiting from its CPI program through the generation of kickbacks from CPI 18 Vendors, which inflated the true cost of CPI to borrowers. 19 It is similarly unusual and not traditional in the banking industry for auto 20 lenders to require borrowers to pay for duplicative and unnecessary CPI, even when they 21 maintain independent auto insurance coverage. Wells Fargo’s related practice of repeatedly 22 re-assessing duplicative charges, threatening collections, and repossessing vehicles despite 23 customers’ objections was similarly unusual and not traditional in the banking industry. 24 25 26 180 Akiki v. Bank of Am., N.A., 632 Fed. Appx. 965, 969 (11th Cir. 2015). 27 181 WFCPI_00035207 at 214. 28 182 WFCPI_00050483 at 484. 75946874.1 96 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 101 of 111 Page ID #:3376 1 As set forth above, Wells Fargo’s extension of credit under these conditions— 2 including its forbearance from collecting on existing loan—constituted an anticompetitive 3 tying arrangement in violation of 12 U.S.C. § 1972(1). 4 Wells Fargo’s extension of credit on these terms benefited Wells Fargo 5 because the force-placed CPI generated revenue for Wells Fargo as kickbacks in the form 6 of unearned commissions and other compensation from the CPI Vendor, increased interest 7 payments, and fees, among other methods. Wells Fargo’s provision of CPI to Plaintiffs and members of the National Class 8 9 constituted both a “service” and “credit” under 12 U.S.C. § 1972(A) and (B). Plaintiffs’ and National Class Members’ payments to Wells Fargo for CPI 10 11 charges and related fees constituted “property” under 12 U.S.C. § 1972(C) and (D). 12 As a direct and proximate result of Wells Fargo’s violation of 12 U.S.C. § 13 1972(1), Plaintiffs have suffered damage and are entitled to treble damages pursuant to 12. 14 U.S.C. § 1975. 15 Any remediation program that Wells Fargo may implement will not provide 16 complete legal relief to all Plaintiffs and Class Members. Such remediation is unlikely to 17 compensate Plaintiffs and Class Members for their payment of kickbacks through unearned 18 commissions and other forms of compensation. Indeed, the Oliver Wyman Report, 19 20 21 183 And according to Wells Fargo’s Rule 30(b)(6) witness, 22 23 24 184 Similarly, such remediation, even if it were to compensate Plaintiffs and Class Members for single damages, would not satisfy their claims for treble damages 25 26 27 183 WFCPI_00030101 at 113. 28 184 Turner Dep. at 107:6-9, 108:10-13. 75946874.1 97 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 102 of 111 Page ID #:3377 1 under the BHCA. Damages must be trebled under BHCA first, before remediation 2 payments, if any, could be an offset. 3 THIRD CLAIM FOR RELIEF 4 Violation of the California Unfair Competition Law 5 Cal. Bus. & Prof. Code § 17200 et seq. 6 (Against All Defendants) 7 8 Plaintiffs incorporate by reference each and every allegation of the preceding paragraphs with the same force and effect as though fully set forth herein. 9 Plaintiffs bring this claim for relief on behalf of themselves, the Nationwide 10 Class, and, in the alternative, on behalf the California State Class (for purposes of this claim, 11 the “Class”). 12 California’s Unfair Competition Law (“UCL”), Business and Professions 13 Code § 17200 et seq., prohibits any “unlawful, unfair, or fraudulent business act or 14 practices.” Defendants have engaged in unlawful, fraudulent, and unfair business acts and 15 practices in violation of the UCL. 16 Defendants’ practice of force-placing CPI and charging customers for inflated 17 premiums due to kickbacks in the form of unearned commissions and other compensation, 18 and interest on those policies, as alleged herein, constitutes unfair business acts or practices 19 because Defendants’ conduct was injurious to consumers, offended public policy, and was 20 unethical and scrupulous. Defendants’ unfair business acts and practices caused harm to 21 consumers in California and nationwide. The gravity of the harm suffered by hundreds of 22 thousands of consumers greatly outweighs the utility of force-placing unnecessary CPI. 23 Defendants’ practice of force-placing CPI and charging customers for inflated 24 premiums due to kickbacks in the form of unearned commissions and other compensation, 25 and interest on those policies, as alleged herein, constitute unlawful business acts or 26 practices because they violate multiple state, federal and common laws, including, but not 27 limited to: 18 U.S.C. §§ 1341, 1341; 18 U.S.C. § 1962; 12 U.S.C. § 1972, et seq.; Cal Civ. 28 Code §§ 1572, 1573; Tenn. Code § 56-49-113, et seq.; Wash. RCW 448.22.115, et seq.; 75946874.1 98 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 103 of 111 Page ID #:3378 1 Miss. Code § 83-54-25, et seq.; Mich. Comp. Laws § 500.1625, et seq.; AR Code § 23-101- 2 113, et seq.; and the common law. 3 Defendants’ practice of force-placing CPI and charging customers for inflated 4 premiums due to kickbacks in the form of unearned commissions and other compensation, 5 and interest on those policies, as alleged herein, also constitutes a fraudulent business act 6 or practice. Defendants’ representations regarding CPI, including the statements regarding 7 charges, and omissions of material fact regarding its pattern and practice of force-placing 8 unnecessary CPI were false, misleading, and likely to deceive the public, including 9 Plaintiffs and members of the Class. 10 Plaintiffs and the other Class members relied on the reasonable expectation 11 that Defendants comply with the law. Plaintiffs and the Class also relied on Defendants’ 12 representations that the force-placed CPI charges were lawful, not inflated, and necessary 13 and required to maintain their loans in good standing, and to avoid repossession. 14 Accordingly, Plaintiffs and the other Class members have suffered 15 ascertainable loss and actual damages as a direct and proximate result of Defendants’ 16 misrepresentations and their concealment of and failure to disclose material information. 17 Plaintiffs requests that this Court enter such orders or judgments as may be 18 necessary to enjoin Defendants from continuing its unfair, unlawful, and/or deceptive 19 practices and to restore to Plaintiffs and members of the Class any money it acquired by 20 unfair competition, including restitution and/or restitutionary disgorgement, as provided in 21 Cal. Bus. & Prof. Code § 17203 and Cal. Bus. & Prof. Code § 3345; and for such other 22 relief set forth below. 23 FOURTH CLAIM FOR RELIEF 24 Fraud by Concealment 25 (Against All Defendants) 26 27 Plaintiffs incorporate by reference each and every allegation of the preceding paragraphs with the same force and effect as though fully set forth herein. 28 75946874.1 99 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 104 of 111 Page ID #:3379 1 Plaintiffs bring this claim for relief on behalf of themselves and the Nationwide 2 Class, and, in the alternative, on behalf of the California State Class (for purposes of this 3 claim, the “Class”). 4 Each Defendant committed fraud through their scheme to force-placing 5 unlawful, unnecessary and undisclosed CPI on the automobile loans of the Plaintiffs and 6 Class members. Defendants concealed from Plaintiffs and the Class members that they 7 engaged in a pattern of practice of force-placing CPI on borrowers’ automobile loans and 8 sharing in kickbacks in the form of unearned commissions and other compensation for the 9 force-placed CPI, without regard for the insurance policies already maintained by Plaintiffs 10 and the Class members. 11 Wells Fargo began requiring insurance on automobile loans as early as March 12 2002. In conjunction with the insurance requirement, Wells Fargo represented to Plaintiffs 13 and Class members that they needed to maintain active comprehensive and collision 14 insurance naming Wells Fargo as a loss payee, and that proof of insurance was required. 15 Force-placed CPI was not applicable unless the Plaintiffs or Class members 16 did not maintain insurance on their vehicles. 17 representations, it intentionally concealed, suppressed, omitted and failed to disclose the 18 material facts that Wells Fargo, National General, and their predecessors force-placed CPI 19 polices without regard for the insurance Plaintiffs or Class members maintained on their 20 vehicle. Wells Fargo intentionally concealed, suppressed, omitted and failed to disclose the 21 material fact that it received kickbacks in the form of unearned commissions and other 22 compensation from the CPI Vendor for force-placing CPI, all of which resulted in excessive 23 charges or premiums, all of which resulted in excessive charges or premiums. But, when Wells Fargo made these 24 National General and its predecessors represented to Plaintiffs and Class 25 members that premiums for the force-placed CPI were necessary and proper because they 26 were required by Wells Fargo. National General and its predecessors also represented that 27 they would not force-place CPI if the Plaintiffs and Class members maintained insurance 28 on their vehicles. But National General and its predecessors intentionally concealed, 75946874.1 100 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 105 of 111 Page ID #:3380 1 suppressed, omitted, and failed to disclose the material facts that they, in conjunction Wells 2 Fargo, force-placed CPI without regard for the insurance Plaintiffs or Class members 3 maintained on their vehicle. National General and its predecessors intentionally concealed, 4 suppressed, omitted, and failed to disclose the material fact they paid kickbacks in the form 5 of unearned commissions and other compensation to Wells Fargo for force-placing CPI. 6 A reasonable consumer who maintained the insurance coverage required by 7 Defendants would not have expected to be charged premiums or interest for force-placed 8 CPI, or to contribute to the kickbacks between Wells Fargo and its CPI Vendor. Plaintiffs 9 and the members of the Class did not know of the facts which were concealed from them 10 by Defendants. Moreover, as consumers, Plaintiffs and the members of the Class did not, 11 and could not, unravel the deception on their own. 12 Defendants had a duty to disclose that they had a pattern and practice of force- 13 placing CPI without regard for the insurance policies maintained by Plaintiffs or the Class 14 members, and sharing kickbacks in the form of unearned commissions and other 15 compensation for force-placing CPI. Defendants had such a duty because they had superior 16 knowledge. The true facts were known only to them and they knew that these facts were 17 not known to or reasonably discoverable by Plaintiffs or members of the Class. Defendants 18 also had a duty to disclose the true nature of their CPI scheme because they actively 19 concealed the truth from Plaintiffs and the members of the Class. 20 Finally, Defendants had a duty to disclose the true nature of their fraudulent 21 CPI scandal in light of their statements and partial representations about the circumstances 22 under which they would force-place CPI, the validity of their CPI practices, and the charges 23 for CPI premiums, interest, and unearned commissions, as alleged herein. 24 volunteered to provide information to Plaintiffs and the Class members, Defendants had the 25 duty to disclose the whole truth. Having 26 Plaintiffs and the Class members reviewed documents that were made 27 available to them in connection with their auto loans. Wells Fargo also intentionally 28 concealed CPI charges on borrowers’ billing statements, a practice which the bank itself 75946874.1 101 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 106 of 111 Page ID #:3381 1 deemed to be “deceptive.”185 Had the truth concerning the CPI scheme been disclosed, 2 Plaintiffs and the Class members would have seen and been aware of it, and would not have 3 obtained an auto loan from Wells Fargo, would not have paid the CPI charges, and/or would 4 have disputed the CPI charges and demanded full compensation. Defendants should have 5 disclosed this material information in the RISC, Insurance Request Letters, telephone calls 6 with borrowers, Coverage Issued Letters, and billing statements. 7 Plaintiffs and members of the Class sustained damages because they were 8 forced to pay inflated premiums and insurance for unlawful, unnecessary and undisclosed 9 CPI. Plaintiffs and members of the Class also sustained damages when the incurred late 10 fees, insufficient funds fees, damage to their credit scores, and repossession of their 11 vehicles. Accordingly, Defendants are liable to Plaintiffs and the members of the Class for 12 damages in an amount to be proven at trial. 13 Defendants’ acts were done wantonly, maliciously, oppressively, deliberately, 14 with intent to defraud; in reckless disregard of the rights of Plaintiffs; and to enrich 15 themselves. Defendants’ misconduct warrants an assessment of punitive damages in an 16 amount sufficient to deter such conduct in the future, which amount shall be determined 17 according to proof at trial. 18 FIFTH CLAIM FOR RELIEF 19 Unjust Enrichment 20 (Against All Defendants) 21 Plaintiffs incorporate by reference, in this cause of action, each and every 22 allegation of the preceding paragraphs with the same force and effect as though fully set 23 forth herein. 24 25 Plaintiffs bring this Claim for Relief on behalf of themselves and the Class (for purposes of this Claim identified herein) as follows: 26 27 28 185 WFCPI_00048650; WFCPI_00006404; McLawhorn Dep. at 135:25-143:23. 75946874.1 102 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 107 of 111 Page ID #:3382 1 a. Plaintiffs Duane Fosdick, Analisa Moskus, and Keith Preston bring this 2 Claim for Relief on behalf of themselves and on behalf of the Nationwide 3 Class, or in the alternative, the California State Class under California law; 4 b. 5 Plaintiff Nyle Davis brings this Claim for Relief on behalf of himself and on behalf of the Missouri State Class under Missouri law; 6 c. 7 Plaintiff Regina Gonzales brings this Claim for Relief on behalf of herself and on behalf of the Minnesota State Class under Minnesota law; 8 d. 9 Plaintiff Brandon Haag brings this Claim for Relief on behalf of himself and on behalf of the Wisconsin State Class under Wisconsin law; 10 e. 11 Plaintiff Paul Hancock brings this Claim for Relief on behalf of himself and on behalf of the Indiana State Class under Indiana law; 12 f. Plaintiffs Dustin Havard and Brian Miller bring this Claim for Relief on 13 behalf of themselves and on behalf of the Mississippi State Class under 14 Mississippi law; 15 g. 16 Plaintiff Victoria Reimche brings this Claim for Relief on behalf of herself and on behalf of the Colorado State Class under Colorado law; and 17 h. 18 Plaintiff Bryan Tidwell brings this Claim for Relief on behalf of himself and on behalf of the Wyoming State Class under Wyoming law. 19 Defendants force-placed unnecessary and undisclosed CPI on Plaintiffs and 20 the Class members’ automobile loan accounts, resulting in the payment of CPI premium, 21 interest, late fees, and other charges to Defendants. 22 Defendants were unjustly enriched at the expense of Plaintiffs and the Class 23 members. Money and property belonging to the Plaintiffs and members of the Class were 24 unjustly taken by Defendants. 25 26 It would be inequitable and unconscionable for Defendants to retain the profit, benefit and other compensation they obtained from the conduct alleged herein. 27 28 75946874.1 103 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 108 of 111 Page ID #:3383 1 Plaintiffs and Class members seek restitution from Defendants, and an order 2 disgorging all profits, benefits, and other compensation obtained by Defendants from their 3 unlawful practice of force-placing unlawful, unnecessary and undisclosed CPI. 4 In the alternative, Plaintiffs and Class members seek an order establishing a 5 constructive trust over all money or property wrongfully obtained by the Defendants’ 6 conduct alleged herein. 7 XI. PRAYER FOR RELIEF 8 WHEREFORE, Plaintiffs, individually and on behalf of members of the Nationwide 9 Class and State Classes, respectfully request that the Court grant certification of the 10 proposed Nationwide Class and State Classes, including the designation of Plaintiffs as the 11 named representatives of the Nationwide Class and respective State Classes, the 12 appointment of the undersigned as Class Counsel, and the designation of any appropriate 13 issue classes and/or subclasses, under the applicable provisions of Fed. R. Civ. P. 23, and 14 that the Court enter judgment in their favor and against Defendants, as follows: 15 A. A declaration that any applicable statute of limitations are tolled under the 16 discovery rule or due to the fraudulent concealment alleged in this Complaint, and that 17 Defendants are estopped from relying on any statutes of limitation as a defense; 18 19 20 B. An order enjoining, temporarily and permanently, from continuing the unlawful, deceptive, fraudulent and unfair business practices alleged in this Complaint; C. Injunctive and equitable relief in the form of a comprehensive program to fully 21 reimburse and make whole all Class members for all costs and economic losses, including 22 credit repair and the costs of vehicle repossession; 23 D. Costs, restitution, compensatory damages for economic loss and out-of-pocket 24 costs, treble damages under RICO and the BHCA, multiple damages under applicable 25 states’ laws, punitive and exemplary damages under applicable law; 26 27 E. Rescission of all force-placed CPI, including reimbursement of and/or compensation for the full cost of CPI, including any interest, taxes, license and other fees; 28 75946874.1 104 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 109 of 111 Page ID #:3384 1 2 F. A determination that Defendants are financially responsible for all Class notice and administration of Class relief; 3 G. Any and all applicable statutory and civil penalties; 4 H. An order requiring Defendants to pay both pre- and post-judgment interest on 5 any amounts awarded; 6 I. An award of attorneys’ fees and costs, including expert costs; 7 J. Leave to amend this Complaint to conform to the evidence produced in 8 9 10 discovery and at trial; and K. Such other or further relief as the Court may deem appropriate, just and equitable. 11 12 13 XII. DEMAND FOR JURY TRIAL Plaintiffs demand a trial by jury of any and all issues in this action so triable by right, pursuant to Federal Rule of Civil Procedure 38(b). 14 15 Dated: August 17, 2018 16 Respectfully submitted, By: 17 18 /s/ Roland Tellis Roland Tellis BARON & BUDD, P.C. 15910 Ventura Boulevard, Suite 1600 Encino, California 91436 Telephone: (818) 839-2333 Facsimile: (818) 986-9698 19 20 21 22 By: 23 24 /s/ Aaron M. Sheanin Aaron M. Sheanin Roman M. Silberfeld (SBN 62783) rsilberfeld@robinskaplan.com ROBINS KAPLAN LLP 2049 Century Park East, Suite 3400 Los Angeles, California 90067 Telephone: (310) 552-0130 25 26 27 28 75946874.1 105 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 110 of 111 Page ID #:3385 1 Facsimile: (310) 229-5580 2 Aaron M. Sheanin (SBN 214472) asheanin@robinskaplan.com ROBINS KAPLAN LLP 2440 W. El Camino Real, Suite 100 Mountain View, California 94040 Telephone: (650) 784-4040 Facsimile: (650) 784-4041 3 4 5 6 7 Plaintiffs’ Co-Lead Counsel 8 GIBBS LAW GROUP LLP Eric H. Gibbs (SBN 178658) Michael L. Schrag (SBN 185832) 505 14th Street, Suite 1110 Oakland, California 94612 Telephone: (510)-350-9700 Facsimile: (510 350-9701 9 10 11 12 13 14 Levin Sedran & Berman Charles E. Schaffer (Pro Hac Vice) 510 Walnut Street, Suite 500 Philadelphia, Pennsylvania 19106 Telephone: (215) 592 1500 Facsimile: (215) 592-4663 15 16 17 18 23 WEITZ & LUXENBERG, P.C. Paul F. Novak (Pro Hac Vice) Chrysler House 719 Griswold, Suite 620 Detroit, Michigan 48226 Telephone: (313) 800-4170 Facsimile: (646) 293-7992 24 Plaintiffs’ Steering Committee 19 20 21 22 25 CASEY GERRY SCHENK FRANCAVILLA BLATT & PENFIELD, LLP David S. Casey, Jr. (SBN 060768) Gayle M. Blatt (SBN 122048) 26 27 28 75946874.1 106 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 8:17-ml-02797-AG-KES Document 182 Filed 11/05/18 Page 111 of 111 Page ID #:3386 3 110 Laurel Street San Diego, California Telephone: (619) 238-1811 Facsimile: (619) 544-9232 4 Plaintiffs’ Liaison Counsel 1 2 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 75946874.1 107 AMENDED CONSOLIDATED CLASS ACTION COMPLAINT