Wells Fargo has asked a court to block a shareholder lawsuit that seeks
to punish the company for lying when it promised to promptly and
completely disclose any new scandals; Wells Fargo claims that the
promise was obvious “puffery,” a legal concept the FTC has allowed to
develop in which companies can be excused for making false claims if it
should be obvious that they are lying (as when a company promises that
they make “the best-tasting juice in America).
The lawsuit stems from Wells Fargo’s crooked car-loan program
that used deceptive tactics to defraud 800,000 customers, ultimately
stealing 25,000 of their cars through fraudulent repossessions.
The shareholders argue that when Wells Fargo CEO Tim Sloan misled
investors in 2016, when he said that he was “not aware” of lurking sales
scandals (this was four years after the company’s internal
investigations revealed the car ripoffs and a year before they were made
public after a leak to the New York Times).
The company argue that Sloan was making “generic statements…on which
no reasonable investor could rely” and thus the shareholders should not
be able to sue for the losses they suffered when the scandal became
public.
In other words, as the LA Times’s Michael Hiltzik puts it, “We can’t be sued because no one believed us anyway.”
