Saxena White Wins Motion to Dismiss Against Wells Fargo’s Board of Directors
On May 4, 2017, the Honorable Jon S. Tigar of the U.S. District Court for the Northern District of California denied in large part Defendants’ motion to dismiss in the Wells Fargo & Co. Shareholder Derivative Litigation. Shaev v. Baker, et al., Case No. 16-cv-05541-JST (N.D. Cal.). Saxena White is serving as Co-Lead Counsel on behalf of two institutional investors in this action.
In its Order, the Court concluded that demand was "futile because the allegations in the Complaint create a reasonable doubt as to whether a majority of the Director Defendants face a substantial likelihood of liability as to Plaintiffs'" breach of fiduciary duty, securities, and derivative claims. In so holding, the Court determined that a majority of Wells Fargo’s Directors knew about the widespread "illegal activity and consciously disregarded their fiduciary duties to oversee and monitor the company." The Court emphasized that Wells Fargo’s Directors consciously disregarded their fiduciary obligations because "Wells Fargo’s success was dependent upon cross-selling, which was in turn dependent upon the same strict sales quotas that drove employees to create fake accounts."