Federal Court Rejects Wells Fargo’s Defense for Firing Whistleblower

As a regional bank executive for Wells Fargo, John Sotoodeh oversaw hundreds of branches in California and throughout the Southwest region. During his time at the multinational financial institution, a major scandal erupted regarding the company’s sales practices. One of the most serious allegations was that millions of accounts were opened without authorization from their purported owners.

Among the various reactions to the disclosure about Wells Fargo’s actions, was an investigation from the Securities and Exchange Commission (SEC). Shortly before he was scheduled to be interviewed by the SEC regarding the allegations, Wells Fargo fired Sotoodeh. Subsequently, he sued the bank for wrongful termination and violation of his rights as a whistleblower. 

Wells Fargo attempted to dismiss Sotoodeh’s claim by citing the provisions of the National Banking Act (NBA) regarding directors’ powers to dismiss an officer previously appointed by the board “at pleasure.” However, Judge Donna Ryu of the Northern District of California rejected the bank’s summary judgment motion, holding that Sotoodeh was not appointed as an officer in a manner that would allow the NBA to pre-empt his right to file a wrongful termination suit. Judge Ryu cited language that the “at pleasure” clause is a “broad and unique exemption from state wrongful discharge law.” Therefore, banks seeking to cite that clause must demonstrate that each element of the law has been satisfied. 

Sotoodeh’s lawsuit is not the only whistleblower case stemming from questionable practices at Wells Fargo. A manager from the Chicago area who was terminated after repeatedly complaining about violations of financial laws received $22 million in 2022. In that case, the fired employee was not in as high a position in the company as Sotoodeh, so there was no question regarding application of the NBA’s provision relating to officers. 

There are many ways that companies try to avoid being held accountable for the adverse job actions they take against whistleblowers. Whether it’s citing a law that supposedly excuses a retaliatory firing or claiming that an employee was actually an independent contractor, you should speak with a knowledgeable attorney at Kardell Law Group who can give you straightforward advice regarding your rights.