United States District Court, D. South Dakota, Western Division
STEPHANIE ANDERSON, PHETSAMONE “MAO” DARY, MORIAH DEMERS, CHAD ENGELBY, THOMAS ENGLISH, DEANNA HOBBS, KEN JOHNSON, BRIAN KRUSCHKE, JEFFREY DALLMAN and JADE SAND, Plaintiffs,
WELLS FARGO BANK, N.A., Defendant.
JEFFREY L. VIKEN, CHIEF JUDGE
brought this civil action against defendant Wells Fargo Bank,
N.A. (“Wells Fargo”) invoking the court's
diversity jurisdiction under 28 U.S.C. §
1332. (Docket 29). Wells Fargo fired each
plaintiff in 2011 or 2012, claiming federal law and their
criminal histories required their termination. Plaintiffs
allege the terminations constitute fraud, deceit, promissory
estoppel, fraudulent inducement and fraudulent concealment
under state law. Most of them seek punitive damages.
defense motions are now pending before the court. (Dockets
45, 57, 68, 76 & 80). Three concern discovery disputes,
one seeks to exclude a plaintiffs' expert, and the last
is a motion for summary judgment. For the reasons given
below, the court grants summary judgment to Wells Fargo and
denies the other pending motions as moot.
following recitation consists of the material facts developed
from Wells Fargo's statement of undisputed material facts
(Docket 82), plaintiffs' response to those facts (Docket
91), Wells Fargo's reply (Docket 94) and other evidence
in the record where indicated. These facts are “viewed
in the light most favorable to the party opposing the
motion.” Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quotation
outset, the court notes two problems with plaintiffs'
response to Wells Fargo's statement of undisputed
material facts. First, plaintiffs often failed to properly
controvert Wells Fargo's facts. See,
e.g., Docket 91 at ¶¶ 14, 24 (denying fact
but failing to put forth evidence controverting the fact).
“A party asserting that a fact . . . is genuinely
disputed must support the assertion by citing to particular
parts of materials in the record[.]” Fed.R.Civ.P.
56(c)(1)(A). Second, plaintiffs repeatedly objected to Wells
Fargo's facts as irrelevant, but failed to explain why
they were irrelevant. See, e.g., Docket 91
at ¶¶ 23, 42. A bare relevance objection with no
explanation is insufficient to controvert a properly
supported fact. The court generally concludes facts subject
to improper objections are undisputed. Fed.R.Civ.P. 56(e)(2).
Fargo is a nationally-chartered bank insured by the Federal
Deposit Insurance Corporation (“FDIC”). (Docket
94 at ¶ 1). A federal statute, commonly referred to as
Section 19, requires Wells Fargo to investigate an
individual's criminal history before hiring them.
Id. at ¶ 5; see also 12 U.S.C. §
1829. Wells Fargo may not hire individuals convicted of
certain offenses without FDIC consent. 12 U.S.C. §
1829(a)(1). Individuals with disqualifying convictions may
apply for FDIC consent, received through a Section 19 waiver,
to work at Wells Fargo or other regulated banks. (Docket 94
at ¶ 6).
Fargo hired each of the ten plaintiffs in 2010 or earlier.
Id. at ¶¶ 41, 66, 93, 117, 140, 160, 184,
208, 230 & 254. Wells Fargo performed a “name-based
criminal background screening” on applicants until
March of 2010. Id. at ¶ 18. Most of the
plaintiffs' name-based background checks showed no
criminal convictions. Id. at ¶¶ 40, 92, 116,
159, 183, 207, 228, 253. A name-based background check is
“less robust” and would not show “many
older or non-public conviction records[.]” Id.
at ¶ 21.
and 2012, Wells Fargo decided to rescreen many employees
using a Federal Bureau of Investigation (“FBI”)
“comprehensive and inclusive . . . fingerprint-based
search[.]” Id. at ¶ 24. Wells Fargo's
merger with Wachovia, which screened potential employees
using a fingerprint-based search, and a newly-passed federal
law requiring fingerprint-based searches for some employees
were factors in its decision to rescreen employees.
Id. at ¶¶ 14-17. The FBI database was more
comprehensive and sophisticated. Id. at ¶ 21.
Each plaintiff consented to and participated in the rescreen.
Id. at ¶¶ 51-53, 74-76, 100-02, 124-26,
146, 166-67, 194-96, 214-17, 236-38 & 262-64. The
rescreens showed each plaintiff had a criminal history,
summarized in the chart below.
Figure 1: Plaintiffs' Criminal Histories
Theft - Minn. Stat. § 609.52
Pretrial diversion; sentenced to 3 years probation;
probation continued 2 years; charge dismissed in
Theft - Iowa Code § 714.2
Conviction; sentenced to 5 years prison, suspended,
and 2 years probation.
3rd Degree Burglary - Iowa Code § 713.6A
Deferred judgment, 2 years probation.
Theft - Mo. Rev. Stat. § 570.030
Conviction, suspended imposition of sentence; 6
months probation; charge dismissed in 2005.
Theft - Minn. Stat. § 609.52
Conviction; sentenced to 10 days jail and 6 months
Theft of Motor Vehicle - Minn. Stat. § 609.52
Pretrial diversion; 1 year program; charge
dismissed in 1995.
Theft - Mont. Code Ann. § 45-6-301
Deferred judgment, 3 years; charge dismissed in
Theft - Minn. Stat. § 609.52
Conviction; sentenced to 5 years probation,
imposition of sentence stayed.
Theft - Ariz. Rev. Stat. § 13-1802
Conviction; sentenced to 2 years probation; felony
reduced to misdemeanor in 1991; judgment of guilt
vacated and charges dismissed in 1998.
Theft of Motor Vehicle - Minn. Stat. § 609.52
Conviction; sentenced to 365 days with 335 days
suspended and 2 years probation.
See Dockets 47-1 at pp. 1-2, 83-20 at p. 6, 83-32 at
pp. 1-2. 83-44 at p. 3, 83-58 at p. 3, 83-70 at p. 3, 84-11
at p. 3; 84-25 at p. 5, 84-40 at p. 3, 84-50 at p. 2 &
84-63 at pp. 1-2; see also Docket 94 at ¶¶
54, 77, 103, 127, 147, 168, 197, 218, 239 & 265.
Fargo fired each of the plaintiffs after receiving the
results of the rescreens. (Docket 94 at ¶¶ 59, 84,
107, 133, 151, 172, 200, 222, 243 & 270). Wells Fargo
concluded Section 19 forbade it from continuing to employ
plaintiffs. Id. At the time of their terminations,
no plaintiff had a Section 19 waiver from the
FDIC. Id. at ¶¶ 58, 81-83,
108, 131, 153, 176, 201, 223, 245 & 272.
Federal Rule of Civil Procedure 56(a), a movant is entitled
to summary judgment if the movant can “show that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). Once the moving party meets its burden,
the nonmoving party may not rest on the allegations or
denials in the pleadings, but rather must produce affirmative
evidence setting forth specific facts showing that a genuine
issue of material fact exists. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 256 (1986). Only disputes over facts
which might affect the outcome of the case under the
governing substantive law will properly preclude summary
judgment. Id. at 248. “[T]he mere existence of
some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for
summary judgment; the requirement is that there be no
genuine issue of material fact.”
Id. at 247-48 (emphasis in original).
dispute about a material fact is genuine, that is, if the
evidence is such that a reasonable jury could return a
verdict for the nonmoving party, then summary judgment is not
appropriate. Id. However, the moving party is
entitled to judgment as a matter of law if the nonmoving
party failed to “make a sufficient showing on an
essential element of her case with respect to which she has
the burden of proof.” Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). In such a case,
“there can be ‘no genuine issue as to any
material fact,' since a complete failure of proof
concerning an essential element of the nonmoving party's
case necessarily renders all other facts immaterial.”
Id. at 323.
determining whether summary judgment should issue, the facts
and inferences from those facts must be viewed in the light
most favorable to the nonmoving party. Matsushita,
475 U.S. at 587-88. The key inquiry is “whether the
evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.”
Anderson, 477 U.S. at 251-52.
Fargo raises two threshold arguments in favor of summary
judgment. First, it argues two recent decisions by the United
States Court of Appeals for the Eighth Circuit
“command” summary judgment. (Docket 81 at pp.
11-13) (citing Williams et al. v. Wells Fargo Bank,
N.A., 901 F.3d 1036 (8th Cir. 2018); Eggers v. Wells
Fargo Bank, N.A., 899 F.3d 629 (8th Cir. 2018)). Second,
it contends federal law preempts any attempt by plaintiffs to
impose state law liability for the terminations, which it
asserts were required by Section 19. Id. at pp.
13-17. Plaintiffs resist both arguments, arguing
Williams and Eggers are distinguishable and
Section 19 did not require the terminations. (Docket 90 at
court finds Williams and Eggers persuasive
but not controlling authority in the circumstances of this
case. However, the court agrees with Wells Fargo that Section
19 required it to terminate plaintiffs' employment and
concludes Section 19 preempts plaintiffs' state law
claims. The court then finds each plaintiff was ineligible
for banking employment under Section 19 and holds Wells Fargo
was complying with federal law in terminating them. Because
plaintiffs cannot maintain their chosen causes of action in
the face of contrary federal law, the court need not reach
the parties' arguments about the merits of
Williams & Eggers
Eighth Circuit recently rejected two attempts to impose
liability on Wells Fargo for Section 19-mandated
terminations. In Eggers, the plaintiff alleged Wells
Fargo violated the Age Discrimination in Employment Act
“by (1) refusing to sponsor Section 19 waivers and by
(2) failing to provide job applicants and employees with
pre-screening notice of the opportunity to obtain
waivers.” 899 F.3d at 632. The plaintiff's theory
was “that these two practices created a disparate
impact against older workers.” Id. The Eighth
Circuit did not decide whether Section 19 barred
plaintiff's claim, but concluded her claim could not
survive because she “failed to present statistical
evidence of any kind that the two challenged
policies created a disparate impact among Wells Fargo
employees older than 40.” Id. at 635 (emphasis
Williams, the plaintiffs alleged “Wells
Fargo's policy of summarily terminating or withdrawing
offers of employment to any individual with a Section 19
disqualification” constituted race-based employment
discrimination. 901 F.3d at 1039. The Eighth Circuit held
“summary employment exclusion following a Section 19
disqualification is a business necessity” justifying
the racially disparate outcomes created by the terminations.
Id. at 1040. The court also rejected the
plaintiffs' arguments that Wells Fargo could have
provided advance notice of the waiver requirement or helped
employees obtain waivers in order to “ameliorate the
disparate impact.” Id. at 1041.
cases, the Eighth Circuit noted, in dicta, that Section 19
required Wells Fargo to terminate employees with criminal
convictions “involving dishonesty or a breach of
trust.” Eggers, 899 F.3d at 631 (quoting 12
U.S.C. § 1829(a)(1)(A)); see also Williams, 901
F.3d at 1038. Both decisions also rely on the premise that
Wells Fargo acted lawfully in terminating Section 19
disqualified employees. Eggers, 899 F.3d at 635
(“[F]ederal law-not company policy―triggers
disqualification from employment.”); Williams,
901 F.3d at 1041 (“[T]he bank's decision to comply
with [Section 19's] command is a business
necessity[.]”). And in both cases, the Eighth Circuit
declined to endorse the plaintiffs' arguments that Wells
Fargo should have aided employees in obtaining waivers.
Eggers, 899 F.3d at 635; Williams, 901 F.3d
here are correct that Eggers and Williams
do not squarely answer the question presented in this
case-whether Section 19 preempts their state law claims. As
they note, this is neither a race nor age discrimination
case. (Docket 90 at pp. 15-16). But Eggers and
Williams make clear the Eighth Circuit recognizes
the necessity of terminating Section 19 disqualifying bank
employees. This holding fatally undermines plaintiffs'
argument that Wells Fargo was not required to terminate their
employment. Id. at p. 16 (arguing Section 19 did not
“require that [plaintiffs] be
terminated.”) (emphasis in original).
Supremacy Clause invalidates state laws that interfere with,
or are contrary to, federal law.” Qwest Corp. v.
Minn. Pub. Utils. Comm'n., 684 F.3d 721, 726 (8th
Cir. 2012) (citations and quotations omitted).
“Conflict preemption occurs when compliance with both
federal and state laws is impossible, and when a state law
‘stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of
Congress.' ” Keller v. City of Fremont, 719
F.3d 931, 940 (8th Cir. 2013) (quoting Arizona v. United
States, 567 U.S. 387, 399 (2012)). “What is a
sufficient obstacle is a matter of judgment, to be informed
by examining the federal statute as a whole and identifying
its purpose and intended effects[.]” Crosby v.
Nat'l. Foreign Trade Council, 530 U.S. 363, 373
(2000). “In preemption analysis, courts should assume
that the historic police powers of the States are not
superseded unless that was the clear and manifest purpose of
Congress.” Arizona, 567 U.S. at 400 (internal
Purpose of Section 19
whether Section 19 preempts the state law claims plaintiffs
bring requires a close examination of the “purpose and
intended effects” of the statute, considered “as