Rosell et al v. Wells Fargo Bank, N.A.

Filing 34

ORDER by Judge Hamilton denying 26 Motion for Leave to File (pjhlc1, COURT STAFF) (Filed on 8/1/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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JON ROSELL, et al.,
Plaintiffs,

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No. C 12-6321 PJH

v.

ORDER DENYING MOTION FOR
LEAVE TO AMEND COMPLAINT

WELLS FARGO BANK,

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For the Northern District of California

United States District Court

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Defendant.
_______________________________/

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The motion of plaintiffs Jon Rosell and Jane Rosell for leave to amend the complaint

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to add class allegations came on for hearing before this court on July 10, 2013. Plaintiffs

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appeared by their counsel Matthew Mellen, and defendant Wells Fargo Bank (“Wells

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Fargo”) appeared by its counsel Michael Rapkine. Having read the parties’ papers and

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carefully considered their arguments and the relevant legal authority, the court hereby

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DENIES the motion as follows.

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BACKGROUND

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On February 15, 2007, plaintiffs obtained a $772,000 loan from Wells Fargo's

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predecessor, World Savings Bank, FSB. The loan was evidenced by a promissory note

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secured by a written deed of trust on certain real property located in Pleasanton, California.

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Plaintiffs allege that in October 2009, they contacted Wells Fargo about “financing

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options” after seeking an advertisement regarding mortgage financing. They claim that

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Wells Fargo informed them that they could be candidates for a loan modification with a

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better interest rate or monthly mortgage payment and that they should submit certain

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financial documents.

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They assert that while they repeatedly submitted the required financial paperwork to

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Wells Fargo, Wells Fargo closed their loan modification file, indicating that it was “unable to

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process their request due to non-receipt of required documentation or information.”

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Consequently, plaintiffs contend, because they never completed the loan modification

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application, they never completed or signed any final loan modification documents.

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Wells Fargo asserts that in mid-2010, plaintiffs requested a loan modification, at

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which time Wells Fargo assigned a Home Preservation Specialist to conduct the

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modification review and to deal directly with plaintiffs. On December 14, 2010, the Home

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Preservation Specialist informed plaintiffs that certain documentation needed to be sent to

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the bank’s Loss Mitigation Department in order to proceed with the modification review
process. In January 2011, Wells Fargo sent plaintiffs a letter stating that the

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documentation needed to finalize the loan modification review had not been received.

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Plaintiffs responded with a letter stating that all documentation had been sent in two weeks

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previously.

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Wells Fargo contends that on January 28, 2011, it sent plaintiffs a letter informing

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them that because a loan modification request had been made, an escrow account had

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been established, and that the account would be required “for the life of the loan.” On

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February 4, 2011, Wells Fargo informed plaintiff that because the property taxes had not

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been paid, it had advanced the payment for delinquent taxes and any accrued penalties

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and interest. Wells Fargo ultimately determined that the plaintiffs did not qualify for a loan

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modification.

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Plaintiffs claim, however, that beginning in early 2010, Wells Fargo began returning

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portions of their monthly payments which were in excess of the minimum required payment.

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According to plaintiffs, the returns were “sporadic” and “impossible to track on statements,”

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thereby making it impossible for plaintiffs to understand the problem. Thus, plaintiffs

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assert, they continued submitting their monthly payments as before.

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Plaintiffs allege that Wells Fargo has a policy of automatically opening an escrow

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account when a residential loan borrower seeks a loan modification. According to plaintiffs,

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in February 2011, a “mysterious” escrow account appeared for the first time on their
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monthly statement. The statement indicated there was a balance of approximately

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$8,055.39 in the account. Around the same time, plaintiffs received a letter from Wells

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Fargo which indicated that Wells Fargo had attempted to pay plaintiffs’ property taxes and

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discovered that the taxes were already paid.

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Plaintiffs contend that they had always paid their own property taxes in a timely

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manner and had never requested that Wells Fargo pay the taxes on their behalf. Two

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subsequent letters indicated that Wells Fargo had charged plaintiffs’ account for the taxes

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and then refunded what appeared to be the tax amount.

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Plaintiffs allege that when they contacted Wells Fargo to resolve the “accounting
error,” they were informed for the first time that Wells Fargo was taking the position that the

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loan had been modified, and that the escrow account had been created when plaintiffs

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modified their loan in or around October 2009. According to plaintiffs, they were “shocked”

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because they had never completed the loan modification application process and their

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payment had not changed. Plaintiffs informed Wells Fargo of that fact and instructed Wells

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Fargo to remove the escrow account since plaintiffs had not consented to it.

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Plaintiffs assert that Wells Fargo did not close the escrow account – and in addition,

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claim that Wells Fargo began transferring $0.02 per month from plaintiffs’ payment to this

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“mysterious” escrow account. The balance of the escrow account allegedly changed

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monthly, with the highest being $9,255.84 and the lowest being $5,132.83.

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Plaintiffs allege that Wells Fargo’s application of a portion of their monthly payment

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into the escrow account continued until April 20, 2012, when the entire $3,700.00 payment

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was “mysteriously” not applied to their account pursuant to the loan agreement. Plaintiffs

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claim that this time, instead of applying the payment to the principal and interest on the

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loan, Wells Fargo failed to apply the payment to any account. Rather, as indicated on the

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statement for that month, plaintiffs’ payment was categorized as “Unapplied Funds” and

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plaintiffs were still considered due for their April 2012 payment. Thus, plaintiffs assert,

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Wells Fargo considered the April payment to have not been made, and applied a late

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charge of $181.28 to the balance due.
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Plaintiffs claim that in May 2012, their $3,625.63 payment was again categorized as

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“Unapplied Funds” rather than being applied to the principal and interest. At the same time,

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Wells Fargo allegedly withdrew an amount from the “Unapplied Funds” and applied it to

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plaintiffs’ April 2012 payment it considered due and also made a $665.64 escrow payment.

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Once again, Wells Fargo charged plaintiffs a $181.28 late fee. Plaintiffs assert that this

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continued to occur each month thereafter, and that in July 2012, they began receiving

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“Notices of Intent to Foreclose,” and that beginning in November 2012, Wells Fargo began

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refusing to accept plaintiffs’ regular monthly payment.

causes of action – breach of contract, breach of the implied covenant, conversion, and

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For the Northern District of California

Plaintiffs filed the present individual action on December 13, 2012, alleging four

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United States District Court

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“unlawful, unfair, and/or fraudulent business practices” under California Business &

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Professions Code § 17200.

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On January 8, 2013, Wells Fargo moved to dismiss the complaint. The court

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granted the motion, with leave to amend, and plaintiffs filed the first amended complaint on

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April 3, 2013. Wells Fargo filed an answer on April 29, 2013. On May 9, 2013, the court

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conducted a telephonic case management conference, at which time plaintiffs indicated

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their intention to seek leave to amend the complaint to add class allegations. The court

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indicated that it would defer entering a pretrial schedule until the pleadings were settled.

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Plaintiffs now move for leave to file a second amended complaint (“SAC”), to include

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class allegations against Wells Fargo. Plaintiffs claim that at the March 6, 2013 hearing on

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the motion to dismiss the original complaint, they learned for the first time that Wells Fargo

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has a “policy” of creating an escrow account whenever a borrower seeks a loan

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modification. It is based on this alleged “policy” that they now seek leave to amend the

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complaint to add class allegations.

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The proposed SAC defines the proposed class as “[a]ll persons who had an escrow

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account set up by Wells Fargo as a result of applying for a loan modification who then had

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a portion of their monthly mortgage payments, or a portion thereof, applied to the escrow

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account.” Plaintiffs allege that “[t]he case presented herein satisfies all the prerequisites for
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class treatment under FRCP 23(a).” However, they do not indicate the subsection of Rule

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23(b) under which they seek certification. In addition, the definition of the proposed class

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does not provide a beginning date.
DISCUSSION

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A.

Legal Standard
Under Federal Rule of Civil Procedure 15(a), a party may amend its complaint “once

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as a matter of course at any time before a responsive pleading is served.” Fed. R. Civ. P.

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15(a). Thereafter, a party may amend only by leave of the court or by written consent of

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the adverse party. Id. Rule 15(a), however, instructs that “leave shall be freely given when
justice so requires.” Id. See also Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048,

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For the Northern District of California

United States District Court

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1051 (9th Cir. 2003).

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Leave to amend should be granted where there is no “undue delay, bad faith or

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dilatory motive on the part of the movant, repeated failure to cure deficiencies by

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amendments previously allowed, undue prejudice to the opposing party by virtue of

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allowance of the amendment, [or] futility of the amendment . . . .” Foman v. Davis, 371

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U.S. 178, 182 (1962); Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir.

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2009).

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Ultimately, the grant or denial of an opportunity to amend is within the discretion of

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the district court. Foman, 371 U.S. at 182 (district court may properly deny leave to amend

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but outright refusal to grant leave without any justifying reason is not an exercise of

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discretion”); Eminence Capital, 316 F.3d at 1051-52 (underlying purpose of Rule 15 is to

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“facilitate decision on the merits, rather than on the pleadings or technicalities”). The

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district court has particularly broad discretion to deny leave to amend where plaintiff has

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previously amended the complaint. Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th

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Cir. 1990).

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B.

Plaintiffs’ Motion

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Plaintiffs seek leave to amend the complaint to add class allegations. Emphasizing

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that motions for leave to amend are liberally granted, they contend that their motion is not
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brought for an improper purpose and is not futile, and that they did not delay unduly in

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seeking leave to amend, as they filed the motion shortly after they discovered the potential

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for class claims during oral argument on the first motion to dismiss.

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Plaintiffs also contend that transforming this individual action into a class action will

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not prejudice Wells Fargo, because the proposed SAC alleges the same conduct

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complained of in the original complaint. Plaintiffs claim that no disparate issues will be

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interjected into the case, that the main lawsuit will not be obfuscated, and that the nature of

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the lawsuit will not be dramatically altered. Hence, they argue, Wells Fargo will not be

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unfairly surprised nor prejudiced because it is already a defendant in this action.
In opposition, Wells Fargo concedes that there has been no undue delay, and states

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For the Northern District of California

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that it “will not cast aspersions on plaintiffs’ motives in bringing the motion.” Wells Fargo

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argues, however, that the proposed amendment would be futile, and contends that granting

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the motion would result in significant prejudice, in light of the fact that filing the proposed

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SAC would be futile.

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With regard to futility, Wells Fargo asserts that plaintiffs cannot establish common

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issues or fact or law, or that their claims are typical of those of the proposed class. First,

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Wells Fargo asserts that there are few common questions of fact or law, because the

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putative class members hold different security instruments, because there are choice-of-

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law issues, and because damages cannot be adjudicated on a class wide basis. Wells

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Fargo argues that the type of loan that the plaintiffs have represents “just a fraction of the

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loans that Wells Fargo currently owns and services,” and contends that variation among

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putative class members’ contracts can defeat the commonality element for a class action

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suit. In addition, Wells Fargo notes that the plaintiffs’ World Savings deed of trust contains

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an express provision that allows a lender to set up an escrow account at any time.

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Wells Fargo also contends that the proposed class allegations raise overwhelming

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individual questions of state law, which would militate against the creation of a nationwide

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class. Wells Fargo notes that it uses a standard “governing law” provision, whereby many

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of its contracts will state that to the extent Federal law does not apply, the applicable law
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will be the law of the jurisdiction in which the property is located. Thus, Wells Fargo

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argues, this provision would require loan-specific inquiries to determine the proper state law

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and its applicability. Wells Fargo contends that such individualized inquiries would render a

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class action improper.

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In addition, Wells Fargo asserts that there would be problems with assessing

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damages, as the court would have to review the financial records of every class member to

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determine whether they could prove damages, as each class member would be at a

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different stage of the loan, and some would even not qualify for damages.

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Wells Fargo argues further that the plaintiffs are atypical of the putative class,
because the deed of trust that secures their loan differs from those held by other class

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For the Northern District of California

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members, and because plaintiffs are subject to laws and defenses unique to them. For

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example, California law would apply to the plaintiffs’ claims, though not to a large

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percentage of the class, and the Home Owners’ Loan Act preempts the plaintiffs’ claims,

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but will not apply to many other class members. In addition, Wells Fargo contends that

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plaintiffs possess a higher level of sophistication than others in the putative class, as they

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have considerable experience in real estate and law and previous experience with home

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loans. Because of such experiences, Wells Fargo argues that plaintiffs have received

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adequate notice regarding the establishment of the escrow account.

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Wells Fargo asserts further that plaintiffs are not adequate class representatives,

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because they acted in bad faith by overstating their income on the loan application (which

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Wells Fargo considers to be fraud). Wells Fargo now questions whether the plaintiffs were

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able to afford their loan and escrow payments in the first place, and argues that the

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plaintiffs’ weakened claim for damages renders them poorly suited to represent the class.

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Finally, Wells Fargo argues that allowing plaintiffs to amend the complaint to add

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class allegations would create manageability problems, as the court would have to conduct

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a loan-by-loan review to determine the applicable state law and the circumstances of each

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class member – including determining what deed of trust was signed by each borrower,

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whether each borrower received adequate notice that an escrow account was being
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established in conformity with the security instrument that they signed, whether each class

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member was financially capable of meeting his/her contractual obligations but for the

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purported confusion created by the escrow account, whether any particular claims are

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time-barred, and whether each claim might be subject to other affirmative defenses,

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including federal preemption under HOLA and/or the National Bank Act. Thus, Wells Fargo

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argues, the effect on judicial economy would render the proposed amendment futile.

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reply, plaintiffs argue that they are not challenging the “creation” of an escrow account, but

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rather are challenging what they claim was the unlawful application of money from the

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monthly mortgage payment into an escrow account.
Plaintiffs argue that the commonality requirement is satisfied, because the

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In

allegations center on classwide policies and practices that are common to the class.

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Plaintiffs contend that Wells Fargo has mischaracterized the proposed SAC when it argues

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that there is no commonality because the members of the proposed class utilize different

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security instruments. Plaintiffs claim that their allegations are focused on Wells Fargo’s

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“misappropriation of payments” after the creation of the escrow accounts, and assert that

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each member of the proposed class was therefore subjected to Wells Fargo’s policy –

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which they appear to have identified as “holding borrowers in default after misappropriating

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the borrowers’ loan payments.” Plaintiffs contend that variation in loan terms does not

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defeat commonality where the variations contain the same basic terms.

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Plaintiffs argue further that their relative sophistication is irrelevant to the “policy”

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they are challenging here, as their claims are based on the misapplication of payments into

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an escrow account, not on whether plaintiffs can honestly say they did not receive notice of

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the creation of the escrow account. For similar reasons, plaintiffs assert, the argument that

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the Bank has defenses unique to the plaintiffs is unavailing. Plaintiffs contend that HOLA is

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a primary defense brought by Wells Fargo and overruled by the courts in a majority of the

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mortgage related suits brought against Wells Fargo, and that Wells Fargo is well aware of

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this occurrence. Plaintiffs also contend that Wells Fargo’s attempt to argue what plaintiffs

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claim are disputed questions of fact regarding plaintiffs’ loan application is improper at this
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stage of the proceedings.
Finally, plaintiffs concede that their claims are California-specific and agree that the

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class should be limited to borrowers in California (rather than being defined as a nation-

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wide class). Thus, plaintiffs request that the court either read their motion as modified to

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limit the class to California borrowers, or deny the motion, without prejudice, to allow

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plaintiffs an opportunity to bring a new motion with the appropriate amendment.

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The court finds that the motion must be DENIED. The proposed class definition is

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unworkable, as it is not limited by time, and it in no way reflects what plaintiffs claim is the

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basis of their suit – that Wells Fargo “misappropriated” their loan payments or a portion of
their loan payments. In addition, plaintiffs have failed to identify the subsection of Rule

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For the Northern District of California

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23(b) under which they seek certification.

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With regard to the Foman factors, it does not appear that plaintiffs delayed unduly in

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seeking leave to amend, or that the proposed amendment is being sought in bad faith or for

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some impermissible purpose. The main problem with the proposed amendment is that it is

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futile.

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In general, courts determine the legal sufficiency of a proposed amendment using

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the same standard as applied on a Rule 12(b)(6) motion. See Miller v. Rykoff-Sexton, Inc.,

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845 F.2d 209, 214 (9th Cir. 1988)). Thus, a futile amendment would be one that would not

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survive a motion to dismiss for failure to state a claim. Moore v. Kayport Package Exp.,

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Inc., 885 F.2d 531, 538 (9th Cir. 1989).

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To survive a motion to dismiss for failure to state a claim, a complaint generally must

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satisfy only the minimal notice pleading requirements of Rule 8, which requires that a

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complaint include a “short and plain statement of the claim showing that the pleader is

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entitled to relief.” Fed. R. Civ. P. 8(a)(2). The court is to “accept all factual allegations in

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the complaint as true and construe the pleadings in the light most favorable to the

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nonmoving party.” Outdoor Media Group, Inc. v. City of Beaumont, 506 F.3d 895, 899-900

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(9th Cir. 2007). However, legally conclusory statements, not supported by actual factual

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allegations, need not be accepted. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).
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The allegations in the complaint “must be enough to raise a right to relief above the

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speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and

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quotations omitted). “[W]here the well-pleaded facts do not permit the court to infer more

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than the mere possibility of misconduct, the complaint has alleged – but it has not ‘show[n]’

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– that the pleader is entitled to relief.’” Iqbal, 556 U.S. at 679.

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Applying this standard, the court finds that the proposed amendment to add class

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allegations is futile because it does not allege facts sufficiently plausible to suggest that the

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requirements of Rule 23 can be met. As noted above, neither plaintiffs’ motion nor the

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proposed SAC specifies the subsection of Rule 23(b) under which plaintiffs hope to obtain
certification. That alone is enough to doom plaintiffs’ effort. Apart from that however,

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plaintiffs have not proposed a class that is subject to common treatment under Rule 23(a),

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and have not alleged facts showing that their claims are typical of those of the absent class

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members.

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Commonality requires that there be questions of law or fact common to the class.

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Fed. R. Civ. P. 23(a)(2); Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2550-51 (2011).

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Commonality requires that the class members' claims “depend upon a common contention”

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such that “determination of its truth or falsity will resolve an issue that is central to the

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validity of each [claim] in one stroke.” Id. at 2551. The plaintiff must demonstrate “the

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capacity of classwide proceedings to generate common answers” to common questions of

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law or fact that are “apt to drive the resolution of the litigation.” Id. (quotation omitted). To

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share sufficient factual commonality to satisfy the minimal requirements of Rule 23(a)(2),

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the common contention “must be of such a nature that it is capable of classwide resolution

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– which means that determination of its truth or falsity will resolve an issue that is central to

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the validity of each one of the claims in one stroke.” Id.

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Here, the plaintiffs assert that the putative class includes only those California

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borrowers who had a portion of their monthly mortgage payment applied to their escrow

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account, set up by Wells Fargo as a result of applying for a loan modification. Plaintiffs

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have conceded that the creation of a nationwide class would pose complex choice-of-law
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issues, but even a California class will not prove manageable. The only “common” practice

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asserted is the alleged “policy” pursuant to which Wells Fargo sets up escrow accounts for

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any borrower who seeks a loan modification.
Because the members of the proposed class hold varying types of security

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instruments, the deeds of trust signed by the putative class members will differ with respect

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to whether there is a provision governing the establishment of escrow accounts. Plaintiffs’

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deed of trust was granted by World Savings, which was later acquired by Wells Fargo, but

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such deeds of trust represent only a fraction of the loans that Wells Fargo owns and

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services. In addition, as Wells Fargo pointed out in its opposition, some borrowers may
have been placed in default for reasons other than the alleged policy, raising further

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individual issues of causation.

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Plaintiffs argue that Wells Fargo’s contention about the uncommon nature of the

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contracts that establish such escrow accounts is outweighed by the common practices

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alleged in the proposed amended complaint. Plaintiffs also contend that variation in loan

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terms is allowed if they involve the same basic terms, and that Wells Fargo has no

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contractual authority for the alleged practice of misappropriation. However, not only have

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plaintiffs failed to identify or explain what those “basic terms” might be, the proposed SAC

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is plainly based on the language of the specific deed of trust that secures plaintiffs’ own

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loan.

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For example, in the first cause of action for breach of contract, plaintiffs allege that

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Wells Fargo breached “Covenant 2B,” “Covenant 3,” and “Covenant 7” of the deed of trust,

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and also breached “Section 28.” These allegations demonstrate that plaintiffs’ claims are

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individualized. Similarly, the argument regarding “contractual authority” raises additional

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individualized issues, also defeating commonality.

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It is undisputed that Wells Fargo has a policy of setting up escrow accounts when an

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application for loan modification is made. However, notwithstanding that the proposed SAC

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refers to “a policy” of opening “unwanted escrow accounts for all borrowers who apply for

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loan modifications,” Proposed SAC ¶ 2; that it refers to the imposition of “unauthorized
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escrow accounts,” id. ¶ 7; and that it refers to “the fraudulent escrow account,” id. ¶ 27; and

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that it also includes an entire section under the heading “Facts Regarding the Unauthorized

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Escrow Account,” see id. ¶¶ 16-27, plaintiffs now take the position that they do not

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challenge the legality of the creation of these escrow accounts (and indeed, the court notes

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that plaintiffs’ own deed of trust authorizes the creation of such an account). Instead,

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plaintiffs contend, what they challenge is the alleged “misappropriation” of funds.”1

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However, the only “policy” the plaintiffs allege is the policy of setting up escrow

they became aware of at the hearing on the last motion to dismiss. Now, they argue that

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the common factual and legal question turns on whether Wells Fargo “misappropriated”

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For the Northern District of California

accounts for borrowers who apply for loan modifications. This is the “policy” they claim

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United States District Court

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loan payments and misapplied them into escrow accounts. However, given the lack of any

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clarity as to what this alleged “policy” consisted of, the proposed SAC does not sufficiently

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allege commonality.

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Wells Fargo also argues that plaintiffs are atypical of the members of the putative

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class because their deed of trust is different from those of the others in the class, because

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they have real estate and legal experience, and because they are subject to laws and

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defenses unique to them. The commonality and typicality requirements of Rule 23(a) “tend

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to merge,” but they “[b]oth serve as guideposts for determining whether under the particular

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circumstances maintenance of a class action is economical and whether the named

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plaintiff's claim and the class claims are so interrelated that the interests of the class

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members will be fairly and adequately protected in their absence.” Dukes, 131 S.Ct. at

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2551 n.5 (quotations and citation omitted).

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Typicality exists if the named plaintiffs' claims are “reasonably coextensive” with

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1

In their reply to Wells Fargo’s opposition to the present motion, plaintiffs state that
they are seeking to “amend their underlying lawsuit to assert class allegations for [d]efendant’s
policy in misappropriating monthly mortgage payments and then placing a borrower into default
as a result of the misappropriation.” However, that is not what is alleged in the proposed SAC,
which in addition defines the proposed class as “[a]ll persons who had an escrow account set
up by Wells Fargo as a result of applying for a loan modification who then had a portion of their
monthly mortgage payments, or a portion thereof, applied to the escrow account.” Proposed
SAC ¶ 33.
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those of absent class members. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir.

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1998). To be considered typical for purposes of class certification, the named plaintiff need

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not have suffered an identical wrong. Id. Rather, the class representative must be part of

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the class and possess the same interest and suffer the same injury as the class members.

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See General Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 156 (1982).

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Generally, the arguments used to support typicality resemble those used to support

members would presumably be borrowers who were placed in default as a result of Wells

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Fargo’s policy. Thus, the plaintiffs would have suffered the same or similar injury as the

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other members in the putative class. However, as explained above, the proposed SAC

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For the Northern District of California

commonality. Thus, in this case, if a “policy” of misappropriation did exist, the other class

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United States District Court

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does not allege any facts showing a “policy” of misappropriation. Moreover, since each of

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the proposed class members may be subject to a different contract, and since certain

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members of the class may not have been placed in default or suffered injury as a result of

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the alleged “policy,” but as a result of their own conduct, plaintiffs’ claims cannot be

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considered typical of the claims of the proposed class.

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By its very nature, any “misapplication” of loan payments would necessarily be done

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on an individualized basis. Because there are no facts alleged showing that Wells Fargo

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had a common “policy” of misappropriating loan payments and “misapplying” them to

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escrow accounts – only facts showing that Wells Fargo has a “policy” of establishing

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escrow accounts for borrowers who seek loan modifications – there are no facts showing

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that plaintiffs’ claims are “typical.”

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CONCLUSION
In accordance with the foregoing, plaintiffs’ motion is DENIED. At the hearing on the

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present motion, plaintiffs’ counsel referred to the alleged misappropriation as an

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“accounting glitch.” He then went on to say, “I don’t know if there’s a class here,” but that

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he wanted “to put them on notice” and then “do some discovery to see” whether Wells

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Fargo has been “siphoning off” $0.02 from each loan payment. He added that “discovery

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will determine the shape of the class allegations.”
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Plainly, by counsel’s own admission, plaintiffs lack a factual basis for the class

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allegations. In the event that plaintiffs learn in discovery that there is a factual basis for

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class allegations, the denial of the present motion is without prejudice for plaintiffs to again

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seek leave to amend.

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IT IS SO ORDERED.

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Dated: August 1, 2013
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PHYLLIS J. HAMILTON
United States District Judge

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For the Northern District of California

United States District Court

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