Aug 6 (Reuters) - Wells Fargo ( WFC ) won't have to face

class-action claims it systematically discriminated against

hundreds of thousands of Black and Hispanic mortgage applicants,

a federal judge ruled.

U.S. District Judge James Donato in San Francisco decided on

Tuesday that the applicants could not sue as a group because

they failed to show their claims were similar enough. Individual

lawsuits are the alternative, he said.

The decision spares the fourth-largest U.S. bank from a

potentially larger payout, which the plaintiffs said could reach

billions of dollars, than it might owe borrowers who could

afford to sue one by one.

Wells Fargo ( WFC ) was accused of "digital redlining" through its

use of an automated underwriting system known as CORE, short for

Common Opportunities Results Experiences, whose "race-infected

lending algorithms" deemed minority applicants a higher risk.

The plaintiffs said this caused the San Francisco-based

bank's to disproportionately deny mortgage and mortgage

refinancing applications from minorities, while offering better

terms to similarly qualified white applicants.

Donato, however, found no explanation for how CORE might

have caused statistically significant disparities in approval

rates, citing the plaintiffs' concession that even Wells Fargo ( WFC )

didn't know.

"Plaintiffs wish to sue about hundreds of thousands of home

loan decisions at once," Donato wrote.

"Without some glue holding the alleged reasons for all those

decisions together," he continued, "it will be impossible to say

that examination of all the class members' claims for relief

will produce a common answer to the crucial question[:] why was

I denied."

The plaintiffs are represented by civil rights lawyer Ben

Crump and several other law firms.

Lawyers for the plaintiffs did not immediately respond to

requests for comment on Wednesday. Wells Fargo ( WFC ) declined to

comment.

Donato ruled two months after the Federal Reserve lifted a

seven-year-old asset cap it imposed after a series of scandals

over how Wells Fargo ( WFC ) treated customers. The central bank said

Wells Fargo ( WFC ) has improved its risk management and governance.

The case is In re Wells Fargo Mortgage Discrimination

Litigation, U.S. District Court, Northern District of

California, No. 22-00990.