MN jury decides not to impose punitive damages against Wells Fargo after hitting bank for $30M

Wells Fargo jury decides against punitive damages

ST. PAUL, Minn. — A jury decided not to impose punitive damages against Wells Fargo on Thursday, a day after those jurors awarded $29.9 million to four nonprofits after finding the bank had breached its fiduciary duty and engaged in fraud.

Those nonprofits lost money in what the bank pitched as a safe investment program. The Star Tribune reports the final verdict came less than two hours after Wells Fargo attorney Larry Hofmann argued that Wednesday’s damage award was more than double the nonprofits’ losses.

“Enough is enough,” Hofmann said. “You’ve more than fully compensated the clients for their losses.”

Ramsey County District Judge M. Michael Monahan allowed the nonprofits to plea for punitive damages based on the 10-member jury’s unanimous initial verdict. Jurors took a day to reach that verdict after a six-week trial.

Nine jurors deliberated the punitive damages request. One juror was excused for personal reasons and did not participate.

Hofmann told jurors their earlier finding “has been heard at Wells Fargo, at the highest level,” but that “zero is the correct number here” for punitive damages.

Plaintiffs attorney Mike Ciresi had argued Tuesday for more than $400 million in damages for several alleged wrongs, including intentional fraud, breach of contract and negligent misrepresentation. The jury found none of them.

But the jury did find Wells Fargo breached its fiduciary duty to its clients. During jury instructions, the judge told jurors that fiduciary duty meant the bank must operate in the best interests of its clients and with full disclosure.

Of the damages, $16 million was awarded for violation of the Minnesota Consumer Fraud Act. The jury was asked, “Did Defendant Wells Fargo provide false information or use a deceptive practice in the course of selling the securities lending services?” Jurors answered yes on the verdict form.

Wells Fargo claimed partial victory in a statement. “We are pleased that the jury denied the plaintiffs the amount of damages they were seeking,” the bank said. It said the verdict “validated” its position that there was no breach of contract.

The plaintiffs had sought more than $400 million in damages. Similar disputes have been settled out of court; this was the first such case to go to trial.

The plaintiffs are the Minneapolis Foundation, the Minnesota Medical Foundation, the Robins Kaplan Miller & Ciresi Foundation for Children and the Minnesota Workers’ Compensation Reinsurance Association.

Wells Fargo attorney Robert Weinstine said in closing arguments that the bank shouldn’t pay any damages, even though the nonprofits were down $14.1 million. He said the loss was a consequence of the recession and credit crisis that hit three years ago.

At the trial’s core was a low-profile investment technique called securities lending. While these investments usually are considered conservative and safe, the nonprofits claimed that Wells Fargo adopted a risky strategy that proved vulnerable during the credit crisis.

Information from: Star Tribune, www.startribune.com