Freeman v. Wells Fargo & Company

Background

Shelley Freeman sued Wells Fargo & Company and Wells Fargo Bank, N.A., which the opinion refers to together as Wells Fargo. Freeman alleged defamation, a claim under California Labor Code section 1050, and invasion of privacy. The claims arose from statements Wells Fargo made after Freeman’s February 2017 termination and in connection with the company’s investigation of retail-banking sales practices.

The challenged statements included Wells Fargo’s announcement that Freeman had been terminated “for cause,” a statement by Wells Fargo’s chief executive that Freeman was responsible for improper sales practices in Los Angeles, and statements in an April 2017 Board Report. Freeman alleged that the statements were false and defamatory and that they harmed her employment prospects.

Wells Fargo filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to state a legally recognized claim. It also filed a special motion to strike under California’s anti-SLAPP law, which permits early challenges to claims arising from protected speech or petitioning activity. The parties agreed that Wells Fargo’s anti-SLAPP motion raised only legal, rather than factual, challenges, so the court analyzed it under the same pleading standard as the dismissal motion.

Defamation claim

The court denied Wells Fargo’s motion to dismiss the defamation claim. It held that Freeman adequately identified the substance of the statement allegedly made by the chief executive during a February 21, 2017 telephone call: that Freeman was one of the people responsible for improper sales practices in Los Angeles.

The court also denied Wells Fargo’s argument concerning Board Report statements that did not expressly name Freeman. Wells Fargo’s argument was not sufficiently developed, and the court could not analyze an argument that counsel had not adequately explained.

The court further held that Freeman sufficiently alleged falsity. In context, the statement that Freeman was terminated “for cause” could reasonably be understood to imply that an investigation had found her responsible for misconduct related to the sales-practices scandal. The court explained that whether readers or listeners actually understood the statement in a defamatory way was a question for a jury. Wells Fargo’s arguments that Freeman might bear some responsibility challenged the factual merits of the claim rather than the adequacy of the complaint at this stage.

California Labor Code section 1050 claim

The court denied dismissal of Freeman’s claim under California Labor Code section 1050. That law addresses misrepresentations made after an employee’s discharge that prevent or attempt to prevent the former employee from obtaining work.

The court rejected Wells Fargo’s argument that the law could not apply because Freeman lived and worked in Florida. The court stated that the relevant question was where the conduct creating potential liability occurred, not simply where the employee lived or worked. The complaint alleged that the press release was issued in San Francisco, that Wells Fargo’s principal place of business was in San Francisco, and that substantial events giving rise to the claim occurred in the district.

The court also held that the allegations supported a reasonable inference that Wells Fargo made the statements knowing they would likely interfere with Freeman’s ability to obtain employment, at least in banking. The court noted that it was far from clear whether Freeman would ultimately prove the claim, but held that she had stated it adequately at the pleading stage.

Invasion-of-privacy claim

The court dismissed Freeman’s invasion-of-privacy claim with leave to amend. The complaint did not clearly identify the legal basis for the claim. Freeman referred to a constitutional privacy right and, in opposition to the motion, discussed the common-law tort of intrusion, but the complaint did not clearly plead an intrusion claim or allege facts supporting its required elements.

The court directed that any amended privacy claim specify whether it was based on the California Constitution, common law, or both, and allege facts supporting the necessary elements. The court did not finally bar Freeman from amending this claim.

Anti-SLAPP motion and other requests

Because the court found that the complaint adequately stated the defamation and section 1050 claims, it held that Wells Fargo had not satisfied the required showing for striking those claims under California’s anti-SLAPP law. The court denied the anti-SLAPP motion without reaching whether those claims arose from protected speech.

As to the privacy claim, the court denied the anti-SLAPP motion and Wells Fargo’s related request for attorney fees and costs without prejudice. If Freeman filed an amended privacy claim, Wells Fargo could renew its anti-SLAPP motion as to that claim if appropriate.

The court treated Wells Fargo’s request for judicial notice of the Board Report and press release under the incorporation-by-reference doctrine. It denied as moot the request concerning a state-court anti-SLAPP decision and Freeman’s financial-industry report because the court did not rely on those materials.

Disposition

The motion to dismiss was granted in part and denied in part: the invasion-of-privacy claim was dismissed with leave to amend, while the defamation and California Labor Code section 1050 claims survived. The anti-SLAPP motion was denied without prejudice as to the invasion-of-privacy claim and otherwise denied. Any amended complaint had to be filed within 14 days of the order.