Blue Cross Blue Shield of Minnesota et al v. Wells Fargo Bank, N.A.

Filing 485

ORDER. 1. Plaintiffs' Motion in Limine to Exclude Evidence Regarding the Declaration of Trust (Doc. No. 316 ) is GRANTED IN PART and DENIED IN PART as follows: (see Order for details). (Written Opinion). Signed by Judge Donovan W. Frank on 6/14/2013. (BJS)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Blue Cross and Blue Shield of Minnesota, as
Administrator of the Blue Cross and Blue
Shield of Minnesota Pension Equity Plan;
CentraCare Health System, on Behalf of
Itself and the Sisters of the Order of Saint
Benedict Retirement Plan; Supplemental
Benefit Committee of the International Truck
and Engine Corp. Retiree Supplemental
Benefit Trust, as Administrator of the
International Truck and Engine Corp. Retiree
Supplemental Benefit Trust; Jerome
Foundation; Meijer, Inc., as Administrator of
the Meijer OMP Pension Plan and Meijer
Hourly Pension Plan, Participants in the
Meijer Master Pension Trust; Nebraska
Methodist Health System, Inc., on Behalf of
Itself, and as Administrator of the Nebraska
Methodist Hospital Foundation, the Nebraska
Methodist Health System Retirement
Account Plan, and the Jennie Edmundson
Memorial Hospital Employee Retirement
Plan; North Memorial Health Care; The
Order of Saint Benedict, as the St. John’s
University Endowment and the St. John’s
Abbey Endowment; The Twin Cities
Hospitals-Minnesota Nurses Association
Pension Plan Pension Committee, as
Administrator of the Twin Cities HospitalsMinnesota Nurses Association Pension Plan,
Plaintiffs,
v.
Wells Fargo Bank, N.A.,
Defendant.

Civil No. 11-2529 (DWF/JJG)

ORDER

_______________________________________________________________________
Michael V. Ciresi, Esq., Munir R. Meghjee, Esq., Stephen F. Simon, Esq., Vincent J.
Moccio, Esq., and Brock J. Specht, Esq., Robins Kaplan Miller & Ciresi LLP, counsel for
Plaintiffs.
Lawrence T. Hofmann, Esq., Michael R. Cashman, Esq., Daniel J. Millea, Esq., James S.
Reece, Esq., Lindsey A. Davis, Esq., Richard M. Hagstrom, Esq., and Rory D.
Zamansky, Esq., Zelle Hofmann Voelbel & Mason LLP; Brooks F. Poley, Esq. and
William A. McNab, Esq., Winthrop & Weinstine, PA, counsel for Defendant.
_______________________________________________________________________

This matter came before the Court for pretrial hearings on June 5, 2013 and
June 12, 2013. Consistent with, and in addition to the Court’s rulings and 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.

Plaintiffs’ Motion in Limine to Exclude Evidence Regarding the

Declaration of Trust (Doc. No. [316]) 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.
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.
2

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 Wells Fargo’s fiduciary duties and responsibilities as an
agent and trustee for the Plaintiffs.
2.

Plaintiffs’ Motion in Limine to Exclude Evidence of Plaintiffs’ Investments

Outside of the Wells Fargo Securities Lending Program (“SLP”) (Doc. No. [318]) 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.
3.

Plaintiffs’ Motion in Limine to Exclude Evidence of Wells Fargo’s

Irrelevant Attacks on its Own Customers (Doc. No. [320]) 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

3

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 subject to proper
foundation being laid.
4.

Plaintiffs’ Motion in Limine to Exclude Evidence of Non-Wells Fargo

Securities Lending Programs (Doc. No. [322]) is GRANTED as follows:
a.

The Court concludes that such evidence is presumptively

inadmissible pursuant to Article 4.
b.

Absent further order of the Court, the Court concludes that

such evidence has no direct or probative relationship to Wells Fargo’s SLP.
5.

Plaintiffs’ Motion in Limine to Exclude Evidence Regarding the Borrower

Securities Loan Agreements (“BSLAs”) (Doc. No. [324]) is GRANTED IN PART and
DENIED IN PART as follows:
a.

The Court concludes that such evidence is relevant only with

respect to the breach of contract claims.
b.

Absent further order of the Court, the Court concludes that

such evidence has no direct or probative relationship to the other claims or
defenses in this case.
6.

Plaintiffs’ Motion in Limine to Exclude Inquiry into Plaintiffs’ Expert Fees

Unless Wells Fargo Discloses the Billings of Analysis Group (Doc. No. [326]) is

4

DENIED AS MOOT. The parties appear to have reached an agreement at the pretrial
hearing on June 5, 2013, as to the scope of examination on this issue.
7.

Wells Fargo Bank, N.A.’s Motion in Limine to Preclude Plaintiffs’ Expert

Christopher Geczy from Providing a Factual Narrative of Record Evidence, and
Otherwise Testifying as an Overview Witness (Doc. No. [328]) is DENIED as follows:
a.

The motion is DENIED WITHOUT PREJUDICE as

premature.
b.

However, to the extent Plaintiffs’ expert Christopher Geczy’s

testimony is an overview or narrative that is outside 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.
8.

Wells Fargo Bank, N.A.’s Motion in Limine to Exclude Testimony from

Plaintiffs’ Expert Christopher Geczy, Ph.D. on (1) Legal Matters and (2) State of Mind,
Intent, and Motive (Doc. No. [337]) is GRANTED IN PART and DENIED IN PART
as follows:
a.

The motion is GRANTED to the extent Christopher Geczy

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

Christopher Geczy’s testimony, the motion is DENIED.

5

9.

Wells Fargo Bank, N.A.’s Motion in Limine to Exclude Testimony from

Plaintiffs’ Expert Christopher Geczy, Ph.D., that (1) Wells Fargo Failed to Allocate
Sufficient Resources to the SLP; (2) Wells Fargo Overstated the NAV of the Business
Trust; and (3) Wells Fargo’s SLP had an Incentive to take Excessive Risk (Doc.
No. [354]) 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 testimony of
Christopher Geczy on the issues of sufficient resources to the SLP and the
value of the NAV shall be presumptively admissible. This decision of the
Court is made pursuant to Articles 4 and 7.
b.

While the Court will permit testimony on the fees

Wells Fargo imposed, testimony as to motive or incentive to do so shall not
be permitted absent further order of the Court.
10.

Wells Fargo Bank, N.A.’s Motion in Limine to Exclude Evidence of the

Securities and Exchange Commission’s Consent Order with Wells Fargo Brokerage
Services (Doc. No. [360]) is GRANTED as follows:
a.

Consistent with the Court’s ruling from the bench, the SEC

Consent Order and No Action Letter are inadmissible.
b.

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

outside the presence of the jury, if either party “opens the door.”

6

11.

Wells Fargo Bank, N.A.’s Motion in Limine to Exclude Evidence,

Testimony and References to Other Litigation Against Wells Fargo (Doc. No. [367]) is
GRANTED IN PART and DENIED IN PART as follows:
a.

References to the prior trial or other litigation shall be

presumptively inadmissible. The witnesses for both parties should use the
phrase “prior testimony” or “prior hearing” and not “prior trial.”
b.

The Court will reserve ruling on any issues that arise during

trial regarding the use of prior discovery or prior testimony. In the event
either party feels that the other has “opened the door” during trial, or that
such references to any other litigation should be admissible, counsel must
approach the Court outside the presence of the jury.
12.

Wells Fargo Bank, N.A.’s Motion in Limine to Exclude References or

Testimony Relating to Wells Fargo’s Role in the Subprime Mortgage Lending Business
(Doc. No. [375]) 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
presumptively inadmissible pursuant to the Court’s Article 4 analysis,
including Rule 403. For example, the statement of Plaintiffs’ expert,
Christopher Geczy, quoted on page 5 of Plaintiffs’ memorandum, will not
be permitted. It does not survive the Court’s Rule 403 analysis. The Court

7

makes the same ruling with respect to the statements attributed to Chairman
Kovacevich on page 5 of Plaintiffs’ brief.
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, as well as the nature of Wells Fargo’s business at relevant times,
such evidence is presumptively admissible. That testimony survives the
Court’s Article 4 analysis.
13.

Wells Fargo Bank, N.A.’s Motion in Limine 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. [382]) 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 a servicer of mortgages caused or contributed to the
subprime crisis as described above.

8

14.

Wells Fargo Bank, N.A.’s Motion in Limine to Exclude Irrelevant and

Misleading Evidence Relating to Public Safety of Arizona and Alleged Misapplication of
Accounting and Valuation Policies (Doc. No. [391]) 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.
15.

Wells Fargo Bank, N.A.’s Motion in Limine to Preclude Plaintiffs’ from

Using Prejudicial Phrases like “Ponzi Scheme” or “Enron” (Doc. No. [401]) is
GRANTED as follows:
a.

Consistent with the Court’s ruling from the bench, the parties

shall not use phrases such as “Ponzi Scheme,” “Enron,” or “Petters.” Such
statements shall be presumptively inadmissible.
b.

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

outside the presence of the jury, if either party “opens the door.”
16.

Wells Fargo Bank, N.A.’s Motion in Limine to Exclude Evidence of

Wells Fargo’s Capital Support Agreements with Wells Fargo Advantage Mutual Funds
and Short Term Investment Funds (Doc. No. [405]) is DENIED as follows:

9

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.

The motion is DENIED WITHOUT PREJUDICE to the

parties making any appropriate trial objections.
17.

Wells Fargo Bank, N.A.’s Motion in Limine to Exclude Statements of

Messrs. Stumpf and Kovacevich (Doc. No. [413]) is GRANTED IN PART and
DENIED IN PART as follows:
a.

The Court finds that, subject to its review of the depositions

and any objections sustained or redactions made by the Court pursuant to
the Rules of Evidence, the deposition testimony of John Stumpf and
Richard Kovacevich shall be presumptively admissible. The testimony,
subject to any objections sustained and redactions made by the Court based
upon its evidentiary rulings, survives a Rule 104, Article 4, Article 6, and
Article 8 analysis. Given the important and respective roles that John
Stumpf and Richard Kovacevich played within Wells Fargo, their
knowledge or lack of knowledge regarding the nature of the business
policies and responsibilities of Wells Fargo are probative on issues of
liability. The objections raised by Wells Fargo go to the weight to be
accorded the evidence, not to its admissibility.

10

b.

The Court cautions the parties, especially with reference to

the Plaintiffs’ expert, that the Court will entertain objections at trial
regarding reliance upon or reference to statements made by John Stumpf
and Richard Kovacevich (separate from their deposition testimony), and
whether the evidence survives an Article 4 and Article 7 analysis, including
Rule 703.
c.

There shall be no reference, in opening statements or

otherwise in front of the jury, to articles in which John Stumpf and Richard
Kovacevich were quoted, unless and until proper offers of proof are made
to the Court, which establish appropriate foundation, provided that the
statements survive the Court’s Article 4, Article 6, and Article 8 analysis.
18.

Wells Fargo Bank, N.A.’s Motion in Limine to Exclude Gratuitous

References or Testimony Relating to Plaintiffs’ Charitable and Non-Profit Statuses,
Missions or Purposes (Doc. No. [422]) 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, or is otherwise of
probative value, such evidence shall be presumptively admissible, subject
to any trial objections the defense may have. The testimony survives the
Court’s Article 4 analysis.

11

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.
19.

Wells Fargo Bank, N.A.’s Motion in Limine to Preclude Plaintiffs from

Introducing, Displaying, or Referencing News Articles Written in Hindsight During Trial
(Doc. No. [429]) 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 at trial,

outside the presence of the jury.
20.

Wells Fargo Bank, N.A.’s Motion in Limine to Bifurcate Punitive Damages

and to Exclude Evidence or Testimony Relating to Wells Fargo Bank, N.A.’s or Wells
Fargo & Company’s Income, Net Worth and Financial Condition (Doc. No. [434]) is
GRANTED IN PART and DENIED IN PART as follows:
a.

Plaintiffs do not dispute Wells Fargo’s request to bifurcate

punitive damages. As such, the motion is DENIED AS MOOT in that
respect.
b.

With respect to Wells Fargo’s request to exclude evidence of

net worth and financial condition, the motion is DENIED WITHOUT
PREJUDICE to other trial objections. Based on the representations of

12

Plaintiffs’ counsel, the Court assumes that such evidence will relate to the
marketing materials and representations made by Wells Fargo.
Opening Statements
21.

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

statements.

Dated: June 14, 2013

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

13