No punitive damages in Wells Fargo caseby Martin Moylan, Minnesota Public Radio,
Madeleine Baran, Minnesota Public Radio,
Rupa Shenoy, Minnesota Public Radio
St. Paul, Minn. — Jurors in St. Paul decided not to impose any punitive damages on Wells Fargo on Thursday in a closely-watched securities case.
The decision comes one day after the Ramsey County District Court jury determined that Wells Fargo breached its fiduciary duty to four nonprofits and violated the Minnesota Consumer Fraud Act.
On Wednesday, the jury awarded $30 million in compensatory damages to the nonprofits --- much less than the approximately $400 million requested by the plaintiffs.
The Minneapolis Foundation, the Minnesota Medical Foundation, and two others claimed Wells Fargo invested their money in risky securities, and failed to disclose the deteriorating value of the investments until it was too late to get out, according to the lawsuit filed in 2008.
The jury reached its verdict on punitive damages Thursday afternoon after deliberating for less than two hours.
"I don't think there was a clear cut bad guy in this situation," said juror Susan Lundy. "We didn't feel like it was an extraordinary case [that would require] punishing them further."
Juror Danielle Penneau said she believes the company misrepresented its investments to the nonprofits.
"This is not a 'we lost money on a low risk investment, we're going to sue.'" Penneau said. "If that would've been the case I don't think I could've in good conscious awarded any money in this case."
In a statement released Thursday afternoon, Wells Fargo applauded the jury's decision not to award punitive damages.
"We believe the jury acted appropriately by not awarding punitive damages to the plaintiffs. However, we do not believe Wells Fargo has any liability in this matter and we will consider our legal options. Wells Fargo stands behind the firm's securities lending business and the quality of investments made on behalf of our clients, all of which were highly rated at the time of purchase," the statement said.
During Thursday's court hearing, Larry Hofmann, an attorney for Wells Fargo, told jurors that the plaintiffs have been more than amply rewarded. Hofmann said the nonprofits have already received more than what he said were the $14.1 million losses they suffered.
"You have amply rewarded the plaintiffs, not just for compensatory damages, but an amount in excess of that," he said.
Hofmann said that further damages are not appropriate and that the plaintiffs are seeking a second bite at the same apple. He warned the jurors not to hold Wells Fargo's success against it.
"There's no reason they should be more liable because they are big," Hofmann said.
Wells Fargo earned a record $12.3 billion in 2009. The bank has a market value of about $150 billion.
Michael Ciresi, the nonprofits' attorney, told the jury that Wells Fargo had "lost its moral compass."
He urged the jury to send a message to discourage other companies from acting in a similar way.
"The financial world is watching this courtroom," he said. "They want to know what's going to happen."
Ciresi said that given the size and net worth of Wells Fargo, the punitive damages should total at least $100 million.
"Anything less than $100 million will send no signal at all," he said. "You have to send a message if you want to deter this kind of conduct, not just by Wells Fargo, but by others."
(Bloomberg News contributed to this report.)
Martin Moylan is a business and economics reporter for MPR News.
Madeleine Baran is a general assignment reporter for MPR News.