A federal judge has approved an $85 million payment by Wells Fargo to settle a class-action lawsuit alleging it engaged in “sham” diversity hiring practices, roughly one week after the bank agreed to a $110 million settlement related to similar issues.
The settlement, which the bank will pay without admitting liability, is “fair and reasonable,” U.S. District Judge Trina Thompson of the U.S. District Court for the Northern District of California wrote Thursday.
A Wells spokesperson said that the bank is “pleased to have reached a settlement.”
The lawsuit originated in 2022. Hiring managers, according to plaintiffs, conducted “sham” interviews with diverse candidates for roles that were already filled.
Among other things, plaintiffs were challenged to prove to the court that the issue was “widespread.”
“Plaintiffs engaged in extensive fact and expert discovery and settled just months before the trial,” Thompson wrote in her settlement approval. “Plaintiffs served and responded to discovery requests, exchanged expert reports, conducted or defended 25 depositions, and analyzed over 620,000 pages of documents.”
After attorneys’ fees ($21.25 million), litigation costs ($3.08 million), class representative awards (roughly $36,750) and administrative costs ($950,000 to $1.2 million) are deducted from the settlement, roughly $59 million will be available to pay class members.
If all who are eligible participate in the settlement, the estimated average recovery is $.056 per share of Wells common stock.
Thereafter, class members “will be permanently barred and enjoined from bringing any action against all Defendants” related to the lawsuit’s claims, according to court documents.
The now-settled 2022 lawsuit is similar to, but not the same as, a class-action lawsuit that alleged Wells Fargo conducted fake interviews with diverse candidates and also approved less than 50% of Black homeowners refinancing applications.
San Francisco-based Wells agreed to pay $110 million to shareholders in the latter suit last week.
