The City of Farmington Hills Employees Retirement System v. Wells Fargo Bank N.A.

Filing 633

ORDER. 1. Plaintiff's Motion in Limine No. 1 to Exclude Evidence of Non-Wells Fargo Securities Lending Programs (Doc. No. 457 ) is GRANTED as follows: a. The Court concludes that such evidence is presumptively inadmissible pursuant to Article 4 as well as Rule 104 of the Federal Rules of Evidence on foundational grounds. Moreover, consistent with the Court's ruling in Blue Cross & Blue Shield of Minn. v. Wells Fargo Bank, N.A., Doc. No. 485 at 4 (D. Minn. June 14, 2013), the Court fin ds specifically that the evidence of Non-Wells Fargo securities lending programs does not survive a Rule 403 analysis. b. Absent further order of the Court, the Court concludes that such evidence has no direct or probative relationship to Wells Fargo's Securities Lending Program ("SLP"). (See Order for additional Motion in Limine rulings.) (Written Opinion). Signed by Judge Donovan W. Frank on 4/3/2014. (BJS)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

The City of Farmington Hills Employees
Retirement System and The Board of
Trustees of the Arizona State Carpenters
Pension Trust Fund and The Arizona State
Carpenters Defined Contribution Trust
Fund, Individually and on Behalf of All
Others Similarly Situated,

Civil No. 10-4372 (DWF/JJG)

Plaintiffs,
v.

ORDER

Wells Fargo Bank, N.A.,
Defendant.
_______________________________________________________________________
David M. Cialkowski, Esq., Carolyn G. Anderson, Esq., June Pineda Hoidal, Esq., and
Brian C. Gudmundson, Esq., Zimmerman Reed, P.L.L.P.; Peter A. Binkow, Esq., Kara
M. Wolke, Esq., Kevin Ruf, Esq., Leanne E. Heine, Esq., Casey E. Sadler, Esq.,
Elizabeth M. Gonsiovowski, Esq., Jill Duerler, Esq., and Robin Bronzaft Howald, Esq.,
Glancy Binkow & Goldberg LLP; Thomas C. Michaud, Esq., Vanoverbeke, Michaud &
Timmony P.C.; Avraham N. Wagner, Esq., The Wagner Firm; and Christopher D. Kaye,
Esq., E. Powell Miller, Esq., Jayson E. Blake, Esq., and Sharon S. Almonrode, Esq., The
Miller Law Firm, P.C., counsel for Plaintiffs.
Bart H. Williams, Esq., Elizabeth V. Kniffen, Esq., Erin J. Cox, Esq., and Manuel F.
Cachan, Esq., Munger Tolles & Olson LLP; John N. Sellner, Esq., Justin H. Jenkins,
Esq., Brooks F. Poley, Esq., and William A. McNab, Esq., Winthrop & Weinstine, PA;
and Lawrence T. Hoffman, Esq., Richard M. Hagstrom, Esq., Rory D. Zamansky, Esq.,
Lindsey A. Davis, Esq., Daniel J. Millea, Esq., Michael R. Cashman, Esq., Zelle
Hofmann Voelbel & Mason LLP, counsel for Defendant.
_______________________________________________________________________

This matter came before the Court for pretrial hearings on March 18, 2014 and
March 19, 2014. Consistent with, and in addition to the Court’s remarks from the bench,
and based upon the memoranda, pleadings, and arguments of counsel, and the Court
having reviewed the contents of the file in this matter and being otherwise duly advised
in the premises, the Court hereby enters the following:
ORDER
1.

Plaintiff’s Motion in Limine No. 1 to Exclude Evidence of

Non-Wells Fargo Securities Lending Programs (Doc. No. [457]) is GRANTED as
follows:
a.

The Court concludes that such evidence is presumptively

inadmissible pursuant to Article 4 as well as Rule 104 of the Federal Rules
of Evidence on foundational grounds. Moreover, consistent with the
Court’s ruling in Blue Cross & Blue Shield of Minn. v. Wells Fargo Bank,
N.A., Doc. No. 485 at 4 (D. Minn. June 14, 2013), the Court finds
specifically that the evidence of Non-Wells Fargo securities lending
programs does not survive a Rule 403 analysis.
b.

Absent further order of the Court, the Court concludes that

such evidence has no direct or probative relationship to Wells Fargo’s
Securities Lending Program (“SLP”).

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2.

Plaintiff’s Motion in Limine No. 2 to Exclude Evidence of Wells Fargo’s

Irrelevant Attacks on its Own Customers (Doc. No. [464]) is GRANTED IN PART and
DENIED IN PART as follows:
a.

Wells Fargo’s “attacks” on its customers shall be prohibited.

The Court makes this decision based upon Article 4 including Rule 403.
The evidence does not survive a Rule 403 analysis with one exception
below.
b.

To the extent proper foundation is laid and the offered

testimony goes to the limited issue of Plaintiffs’ sophistication as it relates
to Wells Fargo’s duty to disclose material facts and information, it shall be
presumptively admissible for that limited purpose.
3.

Plaintiff’s Motion in Limine No. 3 to Exclude Evidence of Plaintiffs’

Investments Outside the Wells Fargo’s SLP (Doc. No. [469]) is GRANTED as follows:
a.

The Court concludes that such evidence is presumptively

inadmissible pursuant to its Article 4 analysis.
b.

Absent further order of the Court, the Court concludes that

such evidence has no direct or probative relationship to Wells Fargo’s SLP.
Moreover, the ruling of the Court is consistent with the ruling the
Court made in Blue Cross & Blue Shield v. Wells Fargo, Doc. No. 485 at 2,
and, for the same reasons enunciated in that case, the Court finds that the
issues raised by Plaintiffs and Defendant in this motion are not factually or

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legally distinguishable from the issues presented in Blue Cross on this
subject.
4.

Plaintiff’s Motion in Limine No. 4 to Exclude Comparisons Between the

Performance of the SLP and the Performance of the Equity Markets (Doc. No. [474]) is
GRANTED IN PART and DENIED IN PART as follows:
a.

On the record before the Court, and assuming proper

foundation is laid, subject to objections during trial, the Court finds that
testimony with respect to the generalized condition of the “financial
markets” necessarily includes the “equity” or stock markets and survives an
Article 4 analysis, including the Court’s Rule 403 analysis. To that extent,
such testimony shall be presumptively admissible.
b.

However, to the extent the primary purpose of the utilization

of such evidence by the Defendant is to suggest that they are the same type
of investment with the same investment guidelines, such comparisons shall
be presumptively inadmissible. Such comparisons do not survive the
Court’s Article 4 analysis, absent further order of this Court. The Court,
however, reserves the right to revisit this issue at trial, outside the presence
of the jury.
5.

Plaintiff’s Motion in Limine No. 5 to Exclude Evidence Relating to the

Investigation of, and Subsequent Criminal Charges Filed Against, Former Credit Suisse

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Employees, Including the Business Partner of Plaintiffs’ Expert, Fiachra O’Driscoll (Doc.
No. [482]) is GRANTED IN PART and DENIED IN PART as follows:
a.

Evidence regarding Fiachra O’Driscoll’s experience with

SIVs, portfolio management, and the market conditions of 2007 and 2008 is
presumptively admissible pursuant to the Court’s Article 4 analysis.
b.

The following evidence will be presumptively inadmissible

pursuant to the Court’s Article 4 analysis:
(i)

Evidence relating to the SEC investigation.

(ii)

Evidence relating to subsequent criminal

charges filed against former Credit Suisse employees,
including the business partner of Plaintiffs’ expert, Fiachra
O’Driscoll.
(iii)

Evidence relating to specific allegations of

conspiracy against former Credit Suisse employees, including
Kareem Serageldim.
Absent further order of the Court or an additional offer of proof
pursuant to Rule 104, the Court concludes that such evidence does not
survive a Rule 403 analysis except to the extent that the Court allows
evidence relating to the financial condition of Credit Suisse as set forth in
Plaintiffs’ Motion in Limine No. 6 and Fiachra O’Driscoll’s knowledge of
that financial condition.

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6.

Plaintiff’s Motion in Limine No. 6 to Exclude Evidence Relating to Losses

Suffered by Credit Suisse and Fiachra O’Driscoll’s Termination of Employment from
Credit Suisse (Doc. No. [489]) is GRANTED IN PART and DENIED IN PART as
follows:
a.

Evidence relating to losses suffered by Credit Suisse shall be

presumptively inadmissible. However, to the extent that Defendant claims
that Plaintiffs have “opened the door” through the testimony of Fiachra
O’Driscoll on issues related to losses suffered by Credit Suisse, the Court
reserves the right to revisit this issue at trial, outside the presence of the
jury. The parties are precluded from referencing the Securities Exchange
Commission investigation and the assertions of a conspiracy or criminal
convictions of Credit Suisse employees as such testimony does not survive
the Court’s Rule 403 analysis.
b.

Evidence relating to the circumstances under which Fiachra

O’Driscoll’s employment ended with Credit Suisse shall be presumptively
admissible. This decision of the Court is made pursuant to Articles 4 and 7,
with the same limitation that, absent further ruling of the Court, references
to criminal charges, a conspiracy, or the Securities Exchange Commission
investigation, shall be presumptively inadmissible. Those topics, as noted
in Plaintiffs’ Motion in Limine No. 5, do not survive the Court’s Rule 403
analysis.

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7.

Plaintiff’s Motion in Limine No. 7 to Exclude Irrelevant Attacks on

Plaintiffs’ Expert, Bernard Black, Relating to Black’s Work with Kookmin Bank (Doc.
No. [502]) is GRANTED based upon the stipulation of the parties (Doc. No. 612). The
parties appear to have reached an agreement at the pretrial hearing on this issue. The
Plaintiffs stated to the Court that Defendant does not oppose the relief requested in
Plaintiffs’ motion.
8.

Plaintiff’s Motion in Limine No. 8 to Exclude Argument that Declaration of

Trust Alters Fiduciary Duties (Doc. No. [510]) is GRANTED IN PART and DENIED
IN PART as follows:
a.

Evidence as to the interpretation and intent of the Declaration

of Trust shall be presumptively admissible on the issue of the contractual
rights of the parties and whether a breach of contract occurred as it relates
to Business Trust class members. This ruling of the Court is made pursuant
to the Court’s Article 4 analysis of the case. The Court will reserve the
right to entertain motions relating to limiting instructions to the jury with
respect to the applicability of the Declaration of Trust to Business Trust
class members. 1

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See also Court’s ruling relating to Defendant’s Motion in Limine No. 1.

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b.

The scope, the nature, and the extent of Wells Fargo’s

fiduciary responsibilities, and whether they were breached, are issues of
fact for the jury, as is the nature of the fiduciary relationship itself.
c.

However, the existence of a fiduciary duty is a question of

law for the Court to decide. Consequently, absent further order of the
Court, the parties are prohibited from arguing during opening statements or
presenting testimony that the Declaration of Trust eliminated, limited, or
otherwise modified Defendant’s fiduciary duties and responsibilities as an
agent and trustee for the Plaintiffs.
9.

Plaintiff’s Motion in Limine No. 9 to Preclude Argument that the

Declaration of Trust Limits Plaintiffs’ Recovery to Trust Assets (Doc. No. [524]) is
GRANTED pursuant to the stipulation of the parties. The Court entered an order
pursuant to that stipulation on March 20, 2014 (Doc. No. 616).
Further, the Court, noting the Defendant’s objection, GRANTS Plaintiffs’ motion
to redact paragraph 4.6(b). This decision is made pursuant to Article 4.
10.

Plaintiff’s Motion in Limine No. 10 to Exclude Evidence or Testimony

Relating to Any Individual Plaintiff’s Understanding of Legal Theories and Contentions
of Which They Have No Personal Knowledge (Doc. No. [535]) is GRANTED IN PART
and DENIED IN PART as follows:
a.

To the extent that the form of the question calls for an answer

relating to “any individual plaintiff’s understanding of the legal theories

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and contentions of which they have no personal knowledge,” Plaintiffs’
motion is GRANTED. Such evidence, absent further order of the Court
and an offer of proof pursuant to Rule 104, shall be presumptively
inadmissible. This decision of the Court is made pursuant to Rule 104 on
foundational grounds, as well as Article 4.
b.

However, to the extent that the form of the question addresses

the issue of the Plaintiffs’ understanding of their respective obligations
imposed by governing contracts, subject to proper foundation being laid
pursuant to Rule 104 and Rule 701, such inquiries shall be presumptively
admissible.
The Court will entertain objections at the time of the testimony at
trial from both parties.
11.

Plaintiff’s Motion in Limine No. 11 to Preclude Argument on Adequacy of

Class Representative Under Rule 23(a) or Predominance Under Rule 23(b) (Doc.
No. [542]) is GRANTED as follows:
a.

Absent further order of the Court, evidence relating to the

adequacy of the Class Representative or the issue of predominance shall be
presumptively inadmissible. This decision of the Court is made pursuant to
Rule 104 and Article 4.
The Court will entertain any objections and will rule on those
objections at trial if there are fact issues related to the Class Representative

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or class members. However, Rule 23 issues, including those of a Class
Representative or predominance are issues of law for the Court, not the
jury.
12.

Wells Fargo Bank, N.A.’s Motion in Limine No. 1 to Exclude

Non-Common Evidence Which is Irrelevant to a Finding of Classwide Liability, Unduly
Prejudicial Under F.R.E. 403, and Constitutes Impermissible Propensity Evidence Under
F.R.E. 404 as Applied to the Separately Managed Account Class Members (Doc.
No. [460]) is GRANTED IN PART and DENIED IN PART as follows:
a.

On the record before the Court, and assuming proper

foundation is laid, subject to objections during the trial, the Court finds that
testimony relating to Declaration of Trust and Business Trust specific
evidence shall be presumptively admissible. This evidence survives an
Article 4 analysis, including the Court’s Rule 403 analysis. Such testimony
shall be presumptively admissible to the extent that it is being admitted for
one of the following:
(i)

Corporate state of mind;

(ii)

As circumstantially relevant to safety of

principal and liquidity; or
(iii)

As probative of SLP procedures or lack of any

procedures, including the presence or absence of procedures
relating to the recalculation of the NAV.

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b.

However, to the extent the primary purpose of the admission

of such evidence by the Plaintiffs is to suggest a propensity on the part of
the Defendant to behave in a certain manner, such evidence offered for that
purpose shall be presumptively inadmissible. This decision of the Court is
based upon the Court’s Article 4 analysis, including not only Rule 403, but
Rule 404. Rule 404 applies in the context of the probative value, if any, of
such evidence to the separately managed account class members.
The Court expects that it will have to take some of these issues up on
an exhibit-by-exhibit basis or analysis subject to Rule 104 offers of proof.
The Court will reserve the right to entertain motions relating to limiting
instructions to the jury regarding the purpose for which the evidence is
received and the applicability of the evidence to either the Declaration of
Trust or the Business Trust class members vis-à-vis separately managed
account class members.
13.

Wells Fargo Bank, N.A.’s Motion in Limine No. 2 to Preclude Plaintiffs

from Arguing or Introducing Evidence that Wells Fargo “Sued Itself” (Doc. No. [477]) is
GRANTED as follows:
a.

Absent further order of the Court or an additional offer of

proof pursuant to Rule 104, the Court concludes such evidence does not
survive a Rule 403 analysis except to the extent that the Court will allow
the parties or the Court to inquire at voir dire as to whether any of the

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potential jurors are employed by, familiar with, or have any interest in any
of the five entities set forth in Plaintiffs’ motion. The five entities are: (1)
Wells Fargo Advantage Funds; (2) Wells Fargo Diversified Investment
Funds for Personal Trusts; (3) Wells Fargo Collective Fund; (4) the Wells
Fargo Foundation, Sirius Finance, LLC; and (5) and Montgomery U.S.
Core Fixed Income Fund. In all other respects, Defendant’s motion is
GRANTED, absent further order of this Court.
14.

Wells Fargo Bank, N.A.’s Motion in Limine No. 3 to Exclude Testimony

from Plaintiffs’ Expert Bernard Black on (1) Legal Matters and (2) State of Mind, Intent
and Motive (Doc. No. [481]) is GRANTED IN PART and DENIED IN PART as
follows:
a.

The motion is GRANTED to the extent Professor Bernard

Black intends to give legal conclusions and render opinions regarding state
of mind, motive, or intent. Such testimony is presumptively inadmissible.
b.

To the extent the motion seeks to otherwise exclude Professor

Bernard Black’s testimony, the motion is DENIED WITHOUT
PREJUDICE to the parties making any appropriate trial objections. This
decision of the Court assumes that the evidence will be offered after a
proper foundation has been established pursuant to Rule 104 and that the
evidence offered will be within the evidentiary parameters of Article 4, and

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Article 7, including Rule 703 and Rule 704. The Court will entertain
objections at the time of testimony at trial.
15.

Wells Fargo Bank, N.A.’s Motion in Limine No. 4 to Preclude Plaintiffs’

Expert Bernard Black from Providing a Factual Narrative of Record Evidence (Doc.
No. [490]) is DENIED WITHOUT PREJUDICE as follows:
a.

The motion is DENIED WITHOUT PREJUDICE as

premature. However, to the extent that Plaintiffs’ expert Professor Bernard
Black’s testimony is an overview or narrative that is outside of the
evidentiary parameters of Rule 102, Article 4, and Article 7, including Rule
703, the Court will entertain objections at the time of the testimony at trial.
16.

Wells Fargo Bank, N.A.’s Motion in Limine No. 5 to Preclude

Plaintiffs from Using Prejudicial Phrases like “Ponzi Scheme” or “Enron” (Doc.
No. [497]) is GRANTED as follows:
a.

The parties shall not use phrases such as “Ponzi Scheme,”

“Enron,” or “Petters.” Such descriptions shall be presumptively
inadmissible.
b.

Absent further order of the Court, Plaintiffs, through any

witness, including Plaintiff’s expert Professor Bernard Black, are prohibited
from making any comparisons between the case before the Court and
Professor Bernard Black’s involvement in the Enron case. Such a
comparison does not survive the Court’s Rule 403 analysis. However, for

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the limited purpose of the Plaintiffs establishing the prior experience of
Professor Bernard Black, the fact that he worked on the Enron case or was
involved in the case will be presumptively admissible for that limited
purpose.
c.

The Court reserves the right to revisit the issue at trial,

outside the presence of the jury, if either party asserts the other has “opened
the door.”
17.

Wells Fargo Bank, N.A.’s Motion in Limine No. 6 to Preclude Plaintiffs

from Introducing, Displaying, or Referencing During Trial News Articles Written in
Hindsight (Doc. No. [503]) is GRANTED IN PART and DENIED IN PART as
follows:
a.

The Court prohibits the parties from introducing, displaying,

or referencing the news articles at issue during opening statements.
b.

The Court reserves the right to revisit the issue of the

admissibility of news articles at trial, outside the presence of the jury.
18.

Wells Fargo Bank, N.A.’s Motion in Limine No. 7 to Exclude References

or Testimony Relating to Wells Fargo’s Role in the Subprime Mortgage Lending
Business (Doc. No. [514]) is GRANTED IN PART and DENIED IN PART as follows:
a.

The Court concludes that evidence of Wells Fargo’s asserted

role in the subprime mortgage lending business or so-called crisis shall be

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presumptively inadmissible pursuant to the Court’s Article 4 analysis,
including Rule 403.
b.

Plaintiffs are also prohibited from asserting that Wells Fargo

caused or contributed to the subprime crisis.
c.

However, to the extent the primary purpose of Plaintiffs’

proffered evidence is to address issues of Wells Fargo’s knowledge and
notice of the so-called crisis, as well as the nature of Wells Fargo’s business
at relevant times, such evidence is presumptively admissible. This
testimony survives the Court’s Article 4 analysis.
19.

Wells Fargo Bank, N.A.’s Motion in Limine No. 8 to Exclude References

or Testimony that Wells Fargo Bank, N.A. Served as an Originator or Servicer of
Mortgages Underlying Securities Purchased by Cheyne and Victoria (Doc. No. [515]) is
GRANTED IN PART and DENIED IN PART as follows:
a.

Evidence relating to Wells Fargo Bank as an originator or

servicer of mortgages underlying securities purchased by Cheyenne and
Victoria shall be presumptively admissible, based upon the Court’s
Article 4 analysis and assuming proper foundation is laid.
b.

Plaintiffs are prohibited, however, from asserting that Wells Fargo’s

role as an originator or servicer of mortgages caused or contributed to the
subprime crisis as described above.

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20.

Wells Fargo Bank, N.A.’s Motion in Limine No. 9 to Exclude Evidence of

the Securities and Exchange Commission’s Consent Order With Wells Fargo Brokerage
Services (Doc. No. [529]) is GRANTED as follows:
a.

The SEC Consent Order shall be presumptively inadmissible

pursuant to the Court’s Article 4 analysis, including Rule 403.
b.

The Court reserves the right to revisit the issue at trial,

outside the presence of the jury, if either party asserts that the other has
“opened the door.”
21.

Wells Fargo Bank, N.A.’s Motion in Limine No. 10 to Exclude Gratuitous

References or Testimony Relating to the Named Plaintiffs’ or any Class Member’s
Pension, Retirement, Charitable and Non-Profit Statuses, Missions, or Purposes (Doc.
No. [526]) is GRANTED IN PART and DENIED IN PART as follows:
a.

To the extent that testimony regarding Plaintiffs’ charitable

and nonprofit status is descriptive of any Plaintiff entity, such evidence
shall be presumptively admissible, subject to any trial objections the
defense may have. Such testimony survives the Court’s Article 4 analysis.
b.

However, absent further order of the Court, Plaintiffs shall be

prohibited from discussing the alleged effect of the SLP losses on the
operations of their entities, including any effect on the specific endowments
for charitable purposes.

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22.

Wells Fargo Bank, N.A.’s Motion in Limine No. 11 to Exclude Evidence of

Wells Fargo’s Capital Support Agreements with Wells Fargo Advantage Mutual Funds
and Short Term Investment Funds (Doc. No. [530]) is DENIED as follows:
a.

Evidence of the Capital Support Agreements with

Wells Fargo Advantage Mutual Funds and Short Term Investment Funds
shall be presumptively admissible, assuming that proper foundation is laid.
Such evidence survives the Court’s Article 4 analysis, including Rule 403.
b.

However, the motion is DENIED WITHOUT PREJUDICE

to the parties making any appropriate trial objections.
23.

Wells Fargo Bank, N.A.’s Motion in Limine No. 12 to Exclude Evidence

Relating to Public Safety of Arizona and Alleged Misapplication of Accounting and
Valuation Policies for Entities Exiting from the Securities Lending Program (Doc.
No. [551]) is DENIED as follows:
a.

Assuming that proper foundation is laid, this evidence

survives the Court’s Article 4 analysis. Such evidence shall be
presumptively admissible.
b.

The Court finds and concludes that such evidence, subject to

any trial objections that Wells Fargo may make, is relevant to the scope,
nature, and extent of Wells Fargo’s fiduciary duties and whether they were
breached.

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Opening Statements
24.

Plaintiffs and Wells Fargo shall each be allotted 90 minutes for opening

statements.

Dated: April 3, 2014

s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge

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