Background
Wells Fargo settled consolidated class actions alleging that it placed customers’ mortgages into COVID-19 forbearance without authorization or adequate informed consent. After nearly four and a half years of litigation, the district court approved a settlement covering approximately 400,000 class members, none of whom raised a substantive objection.
Kenneth and Kayla Rogers learned of the settlement shortly after its approval and contended that they had been wrongly excluded. Kayla’s Wells Fargo-serviced mortgage entered forbearance in April 2020, but Kenneth was not a borrower on the mortgage. After class counsel maintained that the exclusion was proper, the Rogerses moved to intervene as of right under Federal Rule of Civil Procedure 24(a)(2) and requested an evidentiary hearing. The district court denied both requests.
The Court’s Holding
The Sixth Circuit affirmed. It held that the Rogerses could not intervene as of right because they were not members of the settlement class and therefore lacked the required substantial legal interest in the litigation. Kayla was excluded under the settlement’s definition because the record showed that extensions were requested during her forbearance and that no mortgage payments were applied during the forbearance period. Kenneth was independently ineligible because he was not a borrower on the Wells Fargo-serviced mortgage.
The court also concluded that the settlement did not impair the Rogerses’ ability to protect any claims they might have because, as non-class members who had released no claims, they remained free to pursue separate litigation against Wells Fargo. Existing class representation was irrelevant to their interests for the same reason. Although the court identified compelling reasons why their post-settlement intervention request may also have been untimely, it did not decide that issue because the remaining Rule 24 requirements were unsatisfied.
The district court did not abuse its discretion by denying an evidentiary hearing. Wells Fargo submitted sworn declarations addressing the mortgage, the forbearance extensions, and the absence of payments, while the Rogerses supplied no contrary evidence and relied only on speculation about records that might exist. Rule 23(e) likewise afforded no relief because it permits class members to object to settlements, not non-class-member proposed intervenors to collaterally attack an approved agreement.
Key Takeaways
- A proposed intervenor must satisfy every element of Rule 24(a)(2), including a direct and substantial interest that may be impaired without intervention.
- Borrowers excluded by an approved settlement’s class definition cannot establish the necessary interest merely by asserting that they should have been included.
- A district court may deny an evidentiary hearing when sworn declarations resolve the relevant facts and the proposed intervenors offer no evidence creating a genuine factual dispute.
Why It Matters
The decision reinforces the difficulty of intervening in a class action after settlement approval, particularly when payments have begun and intervention would require revisiting the negotiated class definition. A proposed intervenor’s relative diligence after learning of the settlement may not overcome the litigation’s advanced stage or the failure to satisfy Rule 24’s substantive requirements.
The ruling also distinguishes exclusion from a settlement class from loss of an underlying claim. Because the Rogerses were not class members and had not released their claims, the settlement did not bind them or prevent them from pursuing a separate action, although the court expressed no view on whether such claims would succeed.