NOTICE OF CLASS ACTION, PROPOSED SETTLEMENT AGREEMENT, AND SETTLEMENT FAIRNESS HEARING

Transcription

1 United States District Court for the Northern District of Illinois NOTICE OF CLASS ACTION, PROPOSED SETTLEMENT AGREEMENT, AND SETTLEMENT FAIRNESS HEARING If you are African American and worked for Wells Fargo Advisors, LLC ( WFA ) as a Financial Advisor or licensed Financial Advisor Trainee in the United States in the Private Client Group or the WFA bank brokerage channel between September 4, 2009 and December 31, 2016, you could get a payment from a class action settlement. A federal court has authorized this notice. This is not a solicitation from a lawyer. The proposed settlement would provide a fund of $35.5 million for a class of African American Financial Advisors ( FAs ) and licensed Financial Advisor Trainees ( FA Trainees ), as well as programmatic relief to increase opportunities for current employees who are African American. Your Legal Rights and Options in this Settlement: Submit a Claim Form Do Nothing Exclude Yourself (Opt Out) Comment or Object The only way to be eligible to receive money from the Settlement. Receive no money from the Settlement. Give up rights to sue Wells Fargo separately for the legal claims covered by the Settlement. Receive no money from the Settlement Fund. Keep any rights you might have to sue Wells Fargo separately for the legal claims covered by this Settlement. Write to the Court about your view on the Settlement or why you don t think the Settlement is fair to the class. If you are a Settlement Class Member, your legal rights are affected whether you act or not. Read this Notice carefully. For additional information, contact Class Counsel or the Claims Administrator listed below, or go to or These rights and options and the deadlines to exercise them are explained in this notice. The Court in charge of this lawsuit still has to decide whether to approve the Settlement. Payments will be made if the Court approves the Settlement and after appeals are resolved. Please be patient. What This Notice Contains TABLE OF CONTENTS Page 1. Purpose of this Notice Background: About the Lawsuit Settlement Class Definition Summary of Settlement Terms How Will Settlement Awards be Calculated? Are There Tax Consequences For Any Money I Might Get? How to Proceed: Your Options Release The Lawyers and Named Plaintiffs Representing You and the Settlement Class The Settlement Fairness Hearing Getting More Information

2 1. Purpose of this Notice The purpose of this Notice is to inform you about this lawsuit, the Settlement and Settlement Class definition that the Court has preliminarily approved, and your rights in connection with the Settlement and a hearing to be held before the Court on May 4, 2017 to consider the fairness, reasonableness, and adequacy of the Settlement and related matters. This Notice also describes the steps to be taken by those who wish to be excluded from the Settlement Class or to object to the Settlement, and for those who remain Settlement Class Members, the steps necessary to seek a share of the Settlement Fund if the Court approves the Settlement. 2. Background: About the Lawsuit In 2013, Lance W. Slaughter, an African American Financial Advisor employed by Wells Fargo, retained Class Counsel to investigate claims of firm-wide race discrimination in employment against African Americans. On September 5, 2013, Slaughter filed a lawsuit against Wells Fargo in federal court in Chicago. Additional Named Plaintiffs Erika Williams, Michael Smith, Lucien Philippe, Katrina Everett, and Keith Spelmon later joined the lawsuit. Together these individuals are called Named Plaintiffs because they brought the lawsuit seeking to represent a group or class of similarly situated African American FAs and FA Trainees. Plaintiffs allege that Wells Fargo maintained policies that had an unlawful disparate impact against African American Financial Advisors and Financial Advisor Trainees, and that Wells Fargo engaged in a pattern or practice of racial discrimination against African American Financial Advisors and Financial Advisor Trainees with respect to, among other things, Wells Fargo s company-wide teaming, account distribution, and territory and banking support assignment policies and practices. You can read all of the Plaintiffs claims in the Plaintiffs Third Amended Complaint, which can be found at or The Settlement resolves all claims of race employment discrimination and retaliation, including those brought under Title VII of the Civil Rights Act of 1964, as amended, and 42 U.S.C This Settlement also resolves any and all individual, non-class claims the Named Plaintiffs made or could have made in the Third Amended Complaint or in their EEOC charges. Wells Fargo denies that it discriminated against African American FAs and FA Trainees, that its policies had a discriminatory effect on African American FAs and FA Trainees, or that it otherwise did anything wrong. The Court has not made and will not make any finding or determination on the merits of this matter. By entering into the proposed Settlement, Wells Fargo does not admit any wrongdoing. The Court has reviewed the Settlement and has preliminarily approved it as being fair, adequate, and reasonable. Before deciding whether to give the Settlement final approval, the Court wishes to inform the Settlement Class of the general terms of the Settlement and of the right of Settlement Class Members to comment on it or to opt out of (be excluded from participating in) the Settlement. 3. Settlement Class Definition You are a member of the Settlement Class affected by the Settlement if you fit within this definition: All African Americans who are or were employed as Financial Advisors or licensed Financial Advisor Trainees by Wells Fargo Advisors, LLC, and who worked in the United States in the Private Client Group or in the Wells Fargo Advisors bank brokerage channel at any time between September 4, 2009 and December 31, If you received this Notice in a mailing addressed to you, then Wells Fargo s records show that you are a Settlement Class Member, i.e., that you fit the definition above. You have legal rights and options that you may exercise before the Court finally approves the Settlement. 4. Summary of Settlement Terms What are the Terms of the Settlement? The Settlement requires Wells Fargo to establish a Settlement Fund in the amount of $35.5 million and to implement changes to its policies and practices, which are called programmatic relief. The programmatic relief will last for four years following the Effective Date of this Settlement. 2

3 A portion of the Settlement Fund will be distributed to eligible Named Plaintiffs and Settlement Class Members who submit Claim Forms to compensate them for the claims asserted in this lawsuit. The remainder of the Settlement Fund will be used to reimburse costs and expenses of the litigation, to pay Class Counsel s fee and Named Plaintiffs Service Awards as awarded by the Court, and to pay for the administration of the settlement process. What Does Wells Fargo Have to Do Under the Settlement? In addition to establishing a Settlement Fund of $35.5 million, Wells Fargo has agreed to implement various revisions to its policies and practices and to take action designed to enhance opportunities for employment, earnings, and advancement of African American Financial Advisors and Financial Advisor Trainees, and to provide a workplace that promotes fairness for all employees. Below is a summary of the actions Wells Fargo has agreed to take during the four-year period of this Settlement: A. No Mandatory Arbitration or Class Action Waiver For the duration of the Settlement, Wells Fargo will not seek to enforce any mandatory arbitration or class action waiver agreements against Settlement Class Members for claims of race discrimination. B. Elimination of PCG Financial Advisor Training Costs Obligations Wells Fargo will end the practice of seeking to obligate New Financial Advisors or Financial Advisor Trainees for any cost of their training, a practice challenged in the lawsuit Williams v. Wells Fargo Advisors, LLC, Case No. 14-cv (N.D. Ill.). Wells Fargo will end any efforts to collect such training costs. C. Recruiting Wells Fargo will appoint a person whose primary responsibility will be the recruitment of African American Financial Advisors and Financial Advisor Trainees. Wells Fargo will give such recruits the opportunity to speak with a current African American Financial Advisor. D. Financial Advisor Coaches Wells Fargo will create two Coach positions whose primary responsibility will be to work with African American Financial Advisors and Financial Advisor Trainees, to assist such Financial Advisors and Financial Advisor Trainees in the areas of networking and building relationships, maximizing resources to help increase productivity, and business and career development. The Coaches will periodically provide feedback to the Leadership Teams established by the Settlement. E. Leadership Teams Wells Fargo will create a private client group ( PCG ) Leadership Team and a wealth brokerage services ( WBS ) Leadership Team, comprised of senior business leaders within the respective business channels, including African American leaders. The Leadership Teams will explore ideas and initiatives designed to increase the representation, productivity, retention, and teaming opportunities of African American Financial Advisors and to address the assignment of store locations for WBS Financial Advisors. The Leadership Teams will be provided a diversity presentation by a highly regarded expert, Professor Frank Dobbin, and will receive input and feedback from Financial Advisor Focus Groups and the Coaches established in this Settlement. The Leadership Teams will meet at least semi-annually and will review data, reports, and analysis regarding Financial Advisor diversity efforts, progress, and results. F. Focus Groups Wells Fargo will establish a PCG Focus Group and a WBS Focus Group consisting of African American Financial Advisors and Trainees which shall meet at least semi-annually for the purpose of providing feedback to and dialogue with the Leadership Teams in the areas described 3

4 in Section E above. Each Focus Group will have no more than 15 members, with a cross-section of length of service, production, and geographic location. Financial Advisors who will serve as members of the Focus Groups will be selected by Wells Fargo senior management, including 3 or a maximum of 20% of the total members to be selected by a random selection process. Each Focus Group shall include at least one of the Class Representatives, so long as at least one remains employed as a Financial Advisor. G. Business Development Fund Wells Fargo will establish a Business Development Fund that will be available to African American PCG and WBS Financial Advisors ( Eligible Financial Advisors ) to fund business development events or activities, which will be capped at $500,000 over the four years of the Settlement. Eligible Financial Advisors will submit business development proposals to their managers who, working with the Coaches, will determine whether the proposal satisfies the criteria established by Wells Fargo for use of the Business Development Fund. H. Teaming Wells Fargo will encourage diverse teams and will develop and maintain a database or system that stores business profile information for Financial Advisors and Financial Advisor Trainees who are interested in joining or forming a Team. Participation in the database will be optional for Financial Advisors who are interested in teaming. The Team Database may also be utilized by the Teams Department within each channel to help facilitate teaming discussions and opportunities. Wells Fargo will inform Financial Advisors that the decision to team or not to team with particular Financial Advisors may not be made on the basis of the individual s gender, race, national origin, religion, age, sexual orientation or gender identity, disability, marital status, veteran status, or any other legally protected characteristic. I. New Manager Selection Senior Management job opportunities will be posted on the Company s internal job bank for a minimum of five business days, excluding selection decisions made as part of a restructuring, consolidation, or reorganization. Wells Fargo will commit to having a diverse pool of candidates for posted Senior Management positions, where possible. Wells Fargo will also maintain its Branch Manager Assessment Center Program, which gives participants a formal process for development toward becoming non-producing complex managers. Wells Fargo will encourage a diverse pool of applicants for the Program and a diverse slate of evaluators. J. Assignment of WBS Financial Advisors to Banking Stores The WBS Leadership Team, with consultation from the Focus Group, will establish a process for WBS Financial Advisors to have the opportunity to indicate on a periodic basis an interest in a select number of stores to which they would be interested in moving should a Financial Advisor position become vacant. Before making store assignments or filling store vacancies, WBS management will review the store interest selections and consider the Financial Advisors who have indicated interest in that particular store as part of the pool for the assignment or vacancy, provided that the Financial Advisor meets minimum criteria. WBS management will retain the discretion to make store assignments or fill store vacancies based on business needs and in the best interest of WBS s clients. The Coaches also will have access to the database to assist in development discussions with Financial Advisors. For experienced Financial Advisor recruits and Trainees, WBS will provide information on the number of affluent households for the particular store to which the Financial Advisor would be assigned, along with appropriate disclaimers that store assignments may change at the discretion of WBS management and/or in the best interests of clients. 4

5 K. Monitoring, Reporting and Meeting with Class Counsel For the duration of the Settlement, Wells Fargo will meet with Class Counsel on an annual basis to discuss and confirm the Firm s compliance with the programmatic relief. Wells Fargo will provide information demonstrating the progress made with regard to the programmatic relief and to otherwise discuss equal opportunities for African Americans. Wells Fargo will also set forth any new programs and policies that were implemented to increase the representation and success of African American Financial Advisors and Financial Advisor Trainees and available information regarding the efficacy of those programs. 5. How Will Settlement Awards be Calculated? Each Settlement Class Member may be eligible for a monetary award from the Settlement Fund. In order to receive a monetary award, Settlement Class Members must fill out a Claim Form. The Claim Form must be completed in its entirety, including responses to questions about alleged race discrimination, financial losses, and emotional distress suffered. All Class Members who timely submit completed Claim Forms will have their claims reviewed by an independent, qualified third-party Neutral and will have the opportunity to meet with a Neutral for an interview session of up to 75 minutes in order to present aspects of his or her claims and answer questions from the Neutral(s). Class Counsel will be available to assist Settlement Class Members in the claims resolution process and will ensure an attorney is present at all interviews. You may also retain your own attorney to assist you in this process, at your own expense. The Neutral(s) will assess your claim and recommend a monetary award based on all available information and the individual facts and circumstances of your claim. All monetary awards will be reviewed and approved by a Special Master appointed by the Court to make sure they are fair and consistent. You will not have a right to challenge the allocation and distribution of the Settlement Fund determined by the claims resolution process and approved by the Special Master. All Monetary Awards are final, binding, and non-appealable. 6. Are There Tax Consequences For Any Money I Might Get? Yes, any award you receive from the Settlement Fund will have tax consequences for you. The Special Master will be responsible for allocating any monetary payments appropriately between different types of income (e.g., wages, interest, emotional distress). The Claims Administrator will be responsible for withholding, remitting, and reporting each Claimant s share of payroll tax withholding from the Settlement Fund, and for remitting Wells Fargo s share of taxes and costs, including FICA, FUTA, SUTA, and Medicare. Class Counsel are not tax advisors and cannot give you advice on any tax matters. Class Counsel urge you to consult your tax advisor for answers to any questions you may have about the tax implications of any potential award. 7. How to Proceed: Your Options You have three options. You must decide at this stage whether you want to (A) remain a Settlement Class Member and potentially seek a monetary award from the Settlement Fund; (B) opt out and exclude yourself from monetary relief from the Settlement; or (C) object to the Settlement, but you may only do so if you remain a Settlement Class Member. If you opt out of the Settlement, you may not object to the Settlement. Option A: Confirm you are a Settlement Class Member and Remain in Settlement If you do not request to be excluded, you will remain a part of the Settlement Class. The Court will hold the Settlement Fairness Hearing and you, as a Settlement Class Member, will be represented by Class Counsel at no cost to you. If the Court gives final approval to the Settlement, you will then have the opportunity to submit a Claim Form requesting a share of the Settlement Fund. In order to be eligible to receive a share of the Settlement Fund, you must fill out, sign, and submit a claim form, a Form W-4, and a Form W-9 to the Claims Administrator by the Claims Submission Deadline to be set by the Court after final approval of the Settlement. Each Settlement Class Member will release his or her race and color employment discrimination claims against Wells Fargo under federal, state, and local laws, arising up to and including the date of Preliminary Approval, as set forth in the Settlement, January 17,

6 Whether or not you submit a Claim Form, and unless you opt out, all claims covered by this Settlement through January 17, 2017, will be barred by this Settlement. If you did not opt out, you remain eligible to object to the Settlement pursuant to Option C below, whether or not you submit a Claim Form. Option B: Opt Out and Exclude Yourself from the Settlement You may request to opt out, or be excluded, from the monetary relief provided in this Settlement. If you opt out, you will not be eligible for any monetary award as part of this Settlement. Any Settlement Class Member who wishes to opt out must mail a written, signed statement that he/she is opting out of the Settlement to the Claims Administrator, at the address listed below. To be effective, this opt out statement must be postmarked on or before March 27, 2017, and must include the following language: I hereby opt out of the class action settlement in the lawsuit Slaughter v. Wells Fargo Advisors, LLC, Case No. 13-cv (N.D. Ill.). I understand that, by requesting to be excluded from the monetary settlement in this case, I will receive no money from the Settlement Fund created under the Settlement Agreement. I understand that I may bring a separate legal action seeking damages, but I might receive nothing or less than what I would have received if I had filed a claim under the class monetary award procedure in this case. The address of the Claims Administrator is: Slaughter v. Wells Fargo Advisors, LLC Claims Administrator P.O. Box Providence, RI Settlement Class Members who file opt outs may rescind their opt outs (i.e., you may change your mind and stay in the Settlement Class). To be effective, such rescissions must be in writing and received by the Claims Administrator at least one day before the Settlement Fairness Hearing. Settlement Class Members who submit timely and valid requests for exclusion will have no right to object to the Settlement in Court and will no longer be represented by Class Counsel. You may not opt out of the programmatic relief to be provided as part of this Settlement. Option C: Comment on or Object to the Settlement The Court must assess the overall fairness and reasonableness of the Settlement to the Settlement Class. Settlement Class Members who have not opted out of the monetary relief portion of the Settlement may comment on or object to the Settlement, regardless of whether they submit a Claim Form. In order to have your comment or objection to the Settlement considered by the Court or to speak at the Settlement Fairness Hearing, you must submit to the Court a written comment or objection to the Settlement. Objections must be in writing, signed, filed with the Court (with copies served on Class Counsel and Counsel for Wells Fargo, at the addresses listed below), must include a detailed description of the basis of the comment or objection, indicate whether you intend to appear at the Settlement Fairness Hearing, and must be filed and postmarked no later than March 27, You do not need to be represented by separate counsel to comment on or object to the Settlement. The address of Class Counsel is: Linda D. Friedman Suzanne E. Bish George S. Robot STOWELL & FRIEDMAN, LTD. 303 W. Madison, 26th floor Chicago, Illinois Telephone: (312) lfriedman@sfltd.com sbish@sfltd.com grobot@sfltd.com 6

7 The addresses of Counsel for Wells Fargo are: Grace E. Speights MORGAN LEWIS & BOCKIUS LLP 1111 Pennsylvania Avenue N.W. Washington, D.C Telephone: (202) Release Kenneth J. Turnbull MORGAN LEWIS & BOCKIUS LLP 101 Park Avenue New York, NY Telephone: (212) If the Court grants final approval of the Settlement, then all Settlement Class Members who do not timely opt out will release Wells Fargo from all claims of race discrimination in employment from September 4, 2009 until January 17, To release a claim means that you cannot sue Wells Fargo for any of the claims covered by the release. Unless you opt out of the lawsuit, you will be covered by the release if you belong to the Settlement Class, even if you do not submit a Claim Form for a monetary award. 9. The Lawyers and Named Plaintiffs Representing You and the Settlement Class As a Class Member, you are represented in this litigation by Class Counsel: Linda D. Friedman Suzanne E. Bish George S. Robot STOWELL & FRIEDMAN, LTD. 303 W. Madison, 26th floor Chicago, Illinois Telephone: (312) lfriedman@sfltd.com sbish@sfltd.com grobot@sfltd.com Settlement Class Members will continue to be represented by Class Counsel in connection with the implementation and monitoring of the monetary and programmatic relief provisions of the Settlement at no cost to members of the Settlement Class. If you opt out of the monetary provisions of the Settlement, Class Counsel will not represent you as to the monetary relief provisions of the Settlement, but will continue to represent you as to the programmatic relief provisions of the Settlement. Although it is not necessary, you may, if you wish, retain your own attorney at your own expense. How Will the Lawyers Be Paid? Class Counsel have pursued these claims on behalf of the Named Plaintiffs and the Settlement Class without receiving any compensation for their services or reimbursement of the litigation expenses they incurred. If you are a Settlement Class Member and receive an award from the Settlement Fund, you will not owe any fees or expenses to the lawyers who have represented you as part of the Settlement Class. Class Counsel will ask the Court to award them attorneys fees of not more than 25% of the Settlement Fund, plus reimbursement of their reasonable litigation expenses. The Court will decide how much to award Class Counsel for fees and expenses, which will be paid from the Settlement Fund. How Will the Named Plaintiffs Be Paid? As a Class Member, you have also been represented in this litigation by Named Plaintiffs Lance Slaughter, Michael Smith, Erika Williams, Lucien Philippe, Katrina Everett, and Keith Spelmon. The Named Plaintiffs will participate in the Settlement claims process just like any other Settlement Class Member. In addition, Class Counsel will ask the Court to grant service awards up to $175,000 for each of the Named Plaintiffs. This recognizes the benefits the Named Plaintiffs achieved for the class, the risks they faced in bringing the case, and the time they spent pursuing it. 7

8 10. The Settlement Fairness Hearing The Court will hold the Settlement Fairness Hearing on the Settlement at 9:30 a.m. on May 4, 2017, in the courtroom of the Honorable Harry D. Leinenweber at the United States District Court for the Northern District of Illinois, Everett McKinley Dirksen United States Courthouse, 219 South Dearborn Street, Chicago, IL At this hearing, the Court will determine whether the proposed Settlement is fair, reasonable, and adequate and whether it should be approved. The Court will also consider the amount of fees and expenses to award to Class Counsel and the amount of the service awards to grant to the Named Plaintiffs, and whether, in accordance with the Settlement, an order and judgment should be entered bringing the lawsuit to an end. Do I Have to Come to the Settlement Fairness Hearing? No. You are not required to appear at the hearing, but you are welcome to come at your own expense. Class Counsel will appear at the hearing on behalf of all Settlement Class Members, at no cost to you. If you file an objection, you don t have to come to Court to talk about it. As long as you are a member of the Settlement Class, you did not opt out, and you filed your written objection on time, the Court will consider it. You may also pay your own lawyer to attend, but it s not necessary. If the Court gives final approval to this Settlement, the Court s judgment will be final and binding on all Settlement Class Members who have not timely opted out. 11. Getting More Information If you have further questions or still are not sure whether you are included in the Settlement Class, you can get free help at by calling the Claims Administrator at , or by calling or writing to Class Counsel in this case at the contact numbers/address listed in section 9 and the website This notice contains only a summary of the terms of the Settlement and related matters. For further information, the Settlement Agreement (which includes the complete terms of the Settlement), and numerous other documents connected with the Settlement are available for review and/or downloading at Again, the important deadlines are: Last Day To Opt Out Of The Settlement Class: March 27, 2017 Last Day To Object To The Settlement: March 27, 2017 Settlement Fairness Hearing: May 4, 2017 at 9:30 a.m. PLEASE DO NOT CALL OR CONTACT THE COURT, THE OFFICE OF THE CLERK OF COURT, OR DEFENDANTS WITH QUESTIONS REGARDING THIS NOTICE 8