Sotoodeh v. Wells Fargo Bank, N.A.

Background

John Sotoodeh sued Wells Fargo Bank, N.A., alleging wrongful termination, retaliation under California Labor Code section 1102.5, wrongful termination in violation of public policy, and breach of contract. The court permitted phased discovery so the parties could first address Wells Fargo’s defense that the National Banking Act preempted some of Sotoodeh’s state-law claims.

Sotoodeh worked for Wells Fargo from 1990 until his termination in November 2017. In April 2017, Lisa Stevens appointed him Lead Regional President of the Mountain Midwest Region. Wells Fargo later argued that Sotoodeh was an officer covered by the National Banking Act’s provision allowing a national bank to dismiss certain officers “at pleasure.”

Motions and Legal Standard

The parties filed cross motions for partial summary judgment on preemption. Summary judgment is appropriate when there is no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law. Each cross-motion had to be considered separately, with reasonable inferences drawn in favor of the opposing party.

The court stated that Wells Fargo had to establish four elements to prove preemption under the National Banking Act: Wells Fargo had to be a national banking association; Sotoodeh had to be an officer covered by the Act; he had to have been appointed by the bank’s board of directors; and the board itself had to dismiss him or approve or ratify his discharge. The parties agreed that Wells Fargo satisfied the first two elements. The dispute concerned Sotoodeh’s appointment and the board’s involvement.

Court’s Analysis

The court rejected Sotoodeh’s argument that the National Banking Act never permits a bank’s board to delegate authority to appoint officers. The court explained that the Act permits appointment authority to be delegated and that the bank’s bylaws may regulate how officers are appointed.

The court nevertheless found that Wells Fargo had not shown that Sotoodeh was appointed through a delegation authorized by the bylaws. The relevant bylaw allowed an officer designated by the Director of Human Resources as the head of a business or staff group to appoint certain officers and allowed that designated officer to delegate the authority to another officer.

Wells Fargo did not provide evidence that the Director of Human Resources had designated Mary Mack as the head of a business or staff group as required by the bylaw. It also did not provide evidence that Mack had delegated appointment authority to Stevens. Mack referred to human-resources policies and practices, but Wells Fargo did not submit those policies or procedures. The court further rejected Wells Fargo’s argument that the bylaws themselves automatically delegated the authority to Stevens.

The court also rejected Wells Fargo’s argument that the board implicitly ratified Sotoodeh’s appointment because he served in the position with visibility to the bank and its board. Wells Fargo did not provide evidence that the board routinely confirmed officer appointments or otherwise support an inference of ratification.

Other Requests and Evidentiary Rulings

The court denied as moot Sotoodeh’s request for judicial notice of documents already filed on the court’s docket. It denied the request for judicial notice of a South Dakota business-corporations statute because the statute was a legislative fact and not an adjudicative fact subject to judicial notice under the cited rule.

The court declined to consider Sotoodeh’s separately filed chart of evidentiary objections because it violated the local rule requiring objections to appear in the opposition brief. The court denied Sotoodeh’s objections to Wells Fargo’s evidence as moot because it did not rely on the challenged evidence. It also denied Wells Fargo’s objections to portions of Sotoodeh’s declaration as moot for the same reason.

Disposition

The court held that Wells Fargo failed to establish the appointment element of its National Banking Act preemption defense and therefore could not obtain summary judgment on that defense. Sotoodeh’s motion for partial summary judgment on National Banking Act preemption was granted. Wells Fargo’s motion for partial summary judgment was denied. The court scheduled a further case-management conference for March 20, 2024.