Court filing
Memorandum of Points and Authorities in Support of Motion to Dismiss — Agent Fee Litigation (Dkt. 27.1)
Summary
A memorandum of points and authorities supporting a motion to dismiss, filed May 18, 2020 by specially appearing defendant Citigroup Inc. and defendant Citibank, N.A. in American Video Duplicating, Inc. v. Citigroup Inc., No. 2:20-cv-03815-ODW-AGR, in the U.S. District Court for the Central District of California. It argues the claims against them should be dismissed under Fed. R. Civ. P. 12(b)(1) for lack of standing and ripeness, under Rule 12(b)(6) for failure to state a claim, and, as to Citigroup, under Rule 12(b)(2) for lack of personal jurisdiction. It describes claims arising from the Paycheck Protection Program created by the CARES Act, Pub. L. 116-136, and a complaint naming more than a dozen financial institutions plus 4,975 unnamed Doe defendants. It addresses three causes of action: declaratory relief, a UCL claim and unjust enrichment. The filing runs 32 pages.
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No. 2:20-cv-03815-ODW-AGR · Doc. 27-1 · Docket on CourtListener
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Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 1 of 32 Page
ID #:101
1 MAYER BROWN LLP
BRONWYN F. POLLOCK (SBN 210912)
2 bpollock@mayerbrown.com
350 South Grand Avenue, 25th Floor
3 Los Angeles, CA 90071-1503
4 Telephone: (213) 229-9500
Facsimile: (213) 625-0248
5
MAYER BROWN LLP
6 LUCIA NALE (Admitted Pro Hac Vice)
lnale@mayerbrown.com
7 THOMAS V. PANOFF (Admitted Pro Hac Vice)
tpanoff@mayerbrown.com
8 CHRISTOPHER S. COMSTOCK (Admitted Pro Hac Vice)
ccomstock@mayerbrown.com
9 ANDREW J. SPADAFORA (Admitted Pro Hac Vice)
aspadafora@mayerbrown.com
10 71 South Wacker Drive
Chicago, IL 60606-7463
11 Telephone: (312) 782-0600
Facsimile: (312) 701-7711
12
Attorneys for Specially Appearing Defendant CITIGROUP, INC. and
13 Defendant CITIBANK, N.A.
14 UNITED STATES DISTRICT COURT
15 CENTRAL DISTRICT OF CALIFORNIA
16 AMERICAN VIDEO DUPLICATING, Case No. 2:20-cv-03815-ODW-
17 INC., a California corporation; TUSH LAW AGR
LTD., a California limited partnership, and
18 KENNETH M. HAHN, a sole proprietor, MEMORANDUM OF POINTS
AND AUTHORITIES IN
19 DBA CAL STATE FINANCIAL, SUPPORT OF MOTION TO
individually and on behalf of a class of DISMISS BY SPECIALLY
20 similarly situation businesses and individuals, APPEARING DEFENDANT
CITIGROUP INC. AND
21 DEFENDANT CITIBANK,
Plaintiffs, N.A. [Fed. R. Civ. P. 12(b)(1),
22 12(b)(6), & 12(b)(2)]
v.
23 Date: June 22, 2020
CITIGROUP INC., CITIBANK, N.A.; U.S. Time: 1:30
24 BANCORP., U.S. BANK, N.A.; Judge: Hon. Otis D. Wright II
JPMORGAN CHASE & CO., JPMORGAN Court: Courtroom 5D
25 CHASE BANK, N.A., WELLS FARGO & First Street Courthouse
CO., WELLS FARGO N.A.; BANK OF 350 W. 1st Street
26 AMERICA CO., BANK OF AMERICA Los Angeles, CA 90012
N.A.; MUFG BANK LTD., MUFG UNION
27 BANK N.A.; LIVE OAK BANKSHARES Complaint Filed: April 27, 2020
INC., LIVE OAK BANKING COMPANY;
28
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 2 of 32 Page
ID #:102
PAYPAL HOLDINGS, INC.; NEWTEK
1 BUSINESS SERVICES, INC.; HAVEST
SMALL BUSINESS FINANCE; and; DOE
2 LENDERS 1 to 4,975, inclusive,
3 Defendants.
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 3 of 32 Page
ID #:103
TABLE OF CONTENTS
1 Page
2 I. INTRODUCTION .......................................................................................... 1
II. BACKGROUND AND FACTUAL ALLEGATIONS .................................. 4
3
A. Background of the CARES Act and PPP ............................................. 4
4 B. Plaintiffs’ Allegations........................................................................... 5
5 III. ARGUMENT .................................................................................................. 7
A. Plaintiffs’ Claims Should Be Dismissed Under Rule 12(b)(1). ........... 7
6
1. The named Plaintiffs lack standing to assert claims
7 against the Citi Defendants. ....................................................... 7
2. Any claims by the named Plaintiffs against the Citi
8 Defendants are not yet ripe. .....................................................10
9 B. Plaintiffs’ Claims Should Be Dismissed Under Rule 12(b)(6). .........12
1. The Complaint does not contain a “short and plain”
10 statement of a claim against either Citi Defendant, as
required by Rule 8(a). ..............................................................13
11
2. Each of Plaintiffs’ three causes of action fail as a matter
12 of law........................................................................................14
a. Plaintiffs’ Declaratory Relief claim should be
13 dismissed (Count I). .......................................................14
14 b. Plaintiffs’ UCL claim should be dismissed (Count
II). ..................................................................................17
15 c. Plaintiffs’ unjust enrichment claim should be
dismissed (Count III). ....................................................18
16
C. Plaintiffs’ Claims Against Citigroup Should Be Dismissed
17 Under Rule 12(b)(2). ..........................................................................20
IV. CONCLUSION.............................................................................................23
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i
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 4 of 32 Page
ID #:104
1 TABLE OF AUTHORITIES
2 Page(s)
3 Cases
4
Aetna Life Ins. Co. of Hartford, Conn. v. Haworth,
5 300 U.S. 227 (1937) ............................................................................................ 15
6 AngioScore, Inc. v. TriReme Med., LLC,
7 70 F. Supp. 3d 951 (N.D. Cal. 2014) .................................................................. 18
8 Ashcroft v. Iqbal,
9 556 U.S. 662 (2009) ......................................................................................12, 19
10 Assoc. of Am. R.R. v. Cal. Office of Spill Prevention and Resp.,
113 F. Supp. 3d 1052 (E.D. Cal. 2015) .............................................................. 10
11
12 Astiana v. Hain Celestial Gp., Inc.,
783 F.3d 753 (9th Cir. 2015) ........................................................................18, 19
13
Axiom Foods, Inc. v. Acerchem Int’l, Inc.,
14 874 F.3d 1064 (9th Cir. 2017) ............................................................................ 22
15
Bains v. Pac. Gas and Elec. Comp. PG and E,
16 2016 WL 6071130 (C.D. Cal. Sept. 9, 2016) ..................................................... 13
17 Baker v. U.S.,
18 722 F.2d 517 (9th Cir. 1983) ................................................................................ 8
19 Bell Atl. Corp. v. Twombly,
20 550 U.S. 544 (2007) ............................................................................................ 12
21 Borchenko v. L’Oreal USA, Inc.,
389 F. Supp. 3d 769 (C.D. Cal. 2019) ................................................................ 12
22
23 Boschetto v. Hansing,
539 F.3d 1011 (9th Cir. 2008) ............................................................................ 20
24
Bruaner v. Muscle Pharm Corp.,
25
2015 WL 4747941 (C.D. Cal. Aug. 11, 2015) ................................................... 20
26
In re Carrier IQ, Inc.,
27 78 F. Supp. 3d 1051 (N.D. Cal. 2015) .................................................................. 8
28
ii
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 5 of 32 Page
ID #:105
TABLE OF AUTHORITIES
1 (CONTINUED)
2 Page(s)
3 Cel-Tech Comms. Inc. v. L.A. Cellular Tel. Co.,
4 20 Cal.4th 163, 83 Cal. Rptr. 2d 548, 973 P.2d 527 (1999) .........................17, 18
5 Chandler v. State Farm Mut. Auto. Ins. Co.,
6 598 F.3d 1115 (9th Cir. 2010) ............................................................................ 10
7 CollegeSource, Inc. v. AcademyOne, Inc.,
653 F.3d 1066 (9th Cir. 2011) ............................................................................ 22
8
9 Crandal v. Ball, Ball & Brosamer, Inc.,
99 F.3d 907 (9th Cir. 1996) ................................................................................ 16
10
CRV Imperial-Worthington, LP v. Gemini Ins. Co.,
11 770 F. Supp. 2d 1070 (S.D. Cal. 2011)............................................................... 15
12
Daimler AG v. Bauman,
13 571 U.S. 117 (2014) ............................................................................................ 21
14 Dallas Cnty, Tex. v. MERSCORP, Inc.,
15 2 F. Supp. 3d 938 (N.D. Tex. 2014) ................................................................... 17
16 Davis v. HSBC Bank Nev., N.A.,
17 691 F.3d 1152 (9th Cir. 2012) ............................................................................ 17
18 Durell v. Sharp Healthcare,
183 Cal. App. 4th 1350, 108 Cal. Rptr. 3d 682 (2010) ...................................... 19
19
20 Easter v. Am. West. Fin.,
381 F.3d 948 (9th Cir. 2004) ................................................................................ 8
21
Goodyear Dunlop Tires Operations, S.A. v. Brown,
22 564 U.S. 915 (2011) ............................................................................................ 21
23
Helicopteros Nacionales de Colombia, S.A. v. Hall,
24 466 U.S. 408 (1984) ............................................................................................ 21
25
Henry v. Circus Circus Casinos, Inc.,
26 223 F.R.D. 541 (D. Nev. 2004) ............................................................................ 8
27
28 iii
DEFENDANT CITIMORTGAGE, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN
SUPPORT OF ITS MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT;
CASE NO. 8:16-CV-01142-CJC-KES
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 6 of 32 Page
ID #:106
TABLE OF AUTHORITIES
1 (CONTINUED)
2 Page(s)
3 Hoai Dang v. Samsung Elec. Co., Ltd.,
4 2018 WL 6308738 (N.D. Cal. Dec. 3, 2018)...................................................... 17
5 Int’l Shoe Co. v. Washington,
6 326 U.S. 310 (1945) ............................................................................................ 21
7 Jogani v. Superior Court,
165 Cal. App. 4th 901, 81 Cal. Rptr. 3d 503 (2008) .......................................... 19
8
9 Jones v. Hobbs,
745 F. Supp. 2d 886 (E.D. Ark. 2010)................................................................ 17
10
Konopasek v. Ten Assocs., LLC,
11 2018 WL 6177249 (C.D. Cal. Oct. 22, 2018) ...................................................... 9
12
Korea Supply Co. v. Lockheed Martin Corp.,
13 29 Cal. 4th 1134 (2003) ................................................................................18, 20
14 Leadsinger, Inc. v. BMG Music Pub.,
15 512 F.3d 522 (9th Cir. 2008) .............................................................................. 15
16 Lectrodyer v. SeoulBank,
17 77 Cal. App. 4th 723, 91 Cal. Rptr. 2d 881 (2000) ............................................ 19
18 Mangindin v. Washington Mut. Bank,
637 F. Supp. 2d 700 (N.D. Cal. 2009) ................................................................ 19
19
20 MAO-MSO Recovery II, LLC v. Farmers Ins. Exchange,
2018 WL 2106467 (C.D. Cal. May 7, 2018) ................................................7, 8, 9
21
Mavrix Photo, Inc. v. Brand Techs., Inc.,
22 647 F.3d 1218 (9th Cir. 2011) ............................................................................ 20
23
McKell v. Wash. Mut., Inc.,
24 142 Cal. App. 4th 1457 (2006) ........................................................................... 17
25
MedImmune, Inc. v. Genentech, Inc.,
26 549 U.S. 118 (2007) ............................................................................................ 15
27
28 iv
DEFENDANT CITIMORTGAGE, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN
SUPPORT OF ITS MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT;
CASE NO. 8:16-CV-01142-CJC-KES
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 7 of 32 Page
ID #:107
TABLE OF AUTHORITIES
1 (CONTINUED)
2 Page(s)
3 Millenium Laboratories, Inc. v. Universal Oral Fluid Laboratories,
4 LLC,
2012 WL 12905083 (M.D. Fla. Apr. 25, 2012).................................................. 17
5
6 N. Cnty. Commc’ns Corp. v. Cal. Catalog & Tech.,
594 F.3d 1149 (9th Cir. 2010) ............................................................................ 16
7
Nat’l Park Hospitality Ass’n v. DOI,
8 538 U.S. 803 (2003) ............................................................................................ 10
9
Nationwide Mut. Ins. Co. v. Liberatore,
10 408 F.3d 1158 (9th Cir. 2005) ............................................................................ 16
11 Nibbi Bros., Inc. v. Brannan Street Inv.,
12 205 Cal. App. 3d 1415, 253 Cal. Rptr. 289 (1988) ............................................ 19
13 Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev.
14 Comm’n,
461 U.S. 190 (1983) ............................................................................................ 10
15
Prem v. Access Servs., Inc.,
16 2011 WL 351670 (C.D. Cal. Aug. 10, 2011) ..................................................... 13
17
Profiles, Inc. v. Bank of Am. Corp.,
18 2020 WL 1849710 (D. Md. Apr. 13, 2020) ........................................................ 16
19 Rutherford Holdings, LLC v. Plaza Del Rey,
20 223 Cal. App. 4th 221, 166 Cal. Rptr. 3d 864 (2014) ........................................ 19
21 Safe Air for Everyone v. Meyer,
22 373 F.3d 1035 (9th Cir. 2004) .............................................................................. 7
23 Schilling v. Rogers,
363 U.S. 666 (1960) ............................................................................................ 15
24
25 Schneider v. CitiMortgage, Inc.,
2018 WL 4491244 (D. Kan. Sept. 19, 2018) ...................................................... 22
26
Shomaker v. GMAC Morg. LLC,
27
2012 WL 13020070 (C.D. Cal. Mar. 7, 2012).................................................... 15
28 v
DEFENDANT CITIMORTGAGE, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN
SUPPORT OF ITS MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT;
CASE NO. 8:16-CV-01142-CJC-KES
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 8 of 32 Page
ID #:108
TABLE OF AUTHORITIES
1 (CONTINUED)
2 Page(s)
3 Siegler v. Sorrento Therapeutics, Inc.,
4 2019 WL 581719 (S.D. Cal. Feb. 13, 2019) ...........................................20, 21, 22
5 Siofele v. Duncan,
6 2009 WL 10674359 (C.D. Cal. Sept. 14, 2009) ................................................... 7
7 Spokeo, Inc. v. Robins,
---U.S.---, 136 S. Ct. 1540 (2016)..................................................................... 7, 8
8
9 Texas v. U.S.,
523 U.S. 296 (1998) ............................................................................................ 10
10
Thomas v. Union Carbide Agr. Prods. Co.,
11 473 U.S. 568 (1985) ............................................................................................ 10
12
Vargas v. JP Morgan Chase Bank, N.A.,
13 2014 WL 3435628 (C.D. Cal. July 11, 2014)................................................. 9, 18
14 Walden v. Fiore,
15 571 U.S. 277 (2014) ......................................................................................21, 22
16 Williams v. Yamaha Mot. Co.,
17 851 F.3d 1015 (9th Cir. 2017) ......................................................................20, 22
18 Wilton v. Seven Falls Co.,
515 U.S. 277 (1995) ............................................................................................ 15
19
20 Winebarger v. Penn. Higher Ed. Assist. Agency,
411 F. Supp. 3d 1070 (C.D. Cal. 2019) ..................................................10, 11, 12
21
Statutes
22
23 15 U.S.C. § 636 .......................................................................................................... 4
24 15 U.S.C. § 642 ........................................................................................................ 13
25 15 U.S.C. § 645 ........................................................................................................ 16
26
15 U.S.C. § 650 ........................................................................................................ 16
27
28 vi
DEFENDANT CITIMORTGAGE, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN
SUPPORT OF ITS MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT;
CASE NO. 8:16-CV-01142-CJC-KES
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 9 of 32 Page
ID #:109
TABLE OF AUTHORITIES
1 (CONTINUED)
2 Page(s)
3 28 U.S.C. § 2201(a) ................................................................................................. 15
4
Cal. Bus. & Prof. Code § 17200 ............................................................................ 2, 6
5
CARES Act, Pub. L. 116-136 ................................................................................ 1, 4
6
7 Other Authorities
8 13 C.F.R. Parts 103 and 120 .................................................................................... 13
9 13 C.F.R. § 120.1400 ............................................................................................... 16
10 13 C.F.R. § 120.1500 ............................................................................................... 16
11
13 C.F.R. § 120.1600 ............................................................................................... 16
12
85 Fed. Reg. 20811 .................................................................................................... 4
13
14 85 Fed. Reg. 20816 .................................................................................................... 4
15 85 Fed. Reg. 26321 .................................................................................................... 3
16 85 Fed. Reg. 26323 .............................................................................................. 5, 11
17 C.D. Cal. Local Rule 19-1 ......................................................................................... 1
18
Fed. R. Civ. P. 8 .................................................................................................12, 13
19
Fed. R. Civ. P. 12 ..............................................................................................passim
20
21
22
23
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25
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28 vii
DEFENDANT CITIMORTGAGE, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN
SUPPORT OF ITS MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT;
CASE NO. 8:16-CV-01142-CJC-KES
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 10 of 32 Page
ID #:110
1 I. INTRODUCTION
2 Specially appearing Defendant Citigroup Inc. (“Citigroup”)1 and Defendant
3 Citibank, N.A. (“Citibank,” and together, the “Citi Defendants”) respectfully
4 submit this Memorandum of Points and Authorities in Support of their Motion to
5 Dismiss the claims against them in Plaintiffs’ Complaint (Dkt. # 1). As shown
6 below, Plaintiffs’ Complaint fails on multiple grounds and should be dismissed as
7 a matter of law in its entirety. The Complaint alleges no plausible basis for even
8 naming the Citi Defendants in this case, and neither is alleged to have had any
9 dealings whatsoever with Plaintiffs or their alleged businesses. Plaintiffs’ shotgun
10 pleading effort to drag the Citi Defendants into this matter should be rejected.
11 Plaintiffs have filed this lawsuit against over a dozen named financial
12 institutions, as well as 4,975 unnamed “Doe” Defendants.2 This lawsuit is just one
13 in series of nearly identical copy-cat lawsuits around the country filed by the same
14 Plaintiffs’ counsel.3 Plaintiffs’ claims relate to the Paycheck Protection Program
15 (“PPP”), a small business lending program that was established by the recently
16 passed Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L.
17
18 1
Defendant Citigroup Inc. enters a special appearance to challenge this
Court’s jurisdiction over it. Citigroup Inc. is not an entity that processes loans
19 under the CARES Act. Instead, Citigroup Inc. is a financial holding company
20 under section 4(k) and (1) of the Bank Holding Company Act of 1956. Plaintiffs
have not alleged any facts whatsoever as to why Citigroup Inc., the financial
21 holding company, is a proper Defendant or subject to any order here.
2
22 Plaintiffs’ Complaint violates C.D. Cal. Local Rule 19-1, which limits
complaints to including no more than ten (10) Doe or fictitiously named parties.
23 3
See, e.g., A.D. Sims, LLC v. Wintrust Fin. Corp., et al., No. 20-cv-02644
24 (N.D. Ill. filed Apr. 30, 2020); David S. Lowry, CPA, Ltd. v. U.S. BANCORP, et
al., No. 20-cv-00348 (S.D. Ohio filed Apr. 30, 2020); Am. Video Duplicating, Inc.
25 v. Royal Bank of Canada, et al., No. 20-cv-04036-JFW-JPR (C.D. Cal. filed May
1, 2020); Panda Group, P.C. v. Bank of Am., et al. No. 4:20-cv-00045 (D. Utah
26 filed May 11, 2020); Alliant CPA Group, LLC v. Bank of Am., et al., No. 1:20-cv-
27 02026 (N.D. Ga. filed May 11, 2020); ImpAcct LLC v. JPMorgan Chase Co., et
al., No. 1:20-cv-01344 (D. Colo. filed May 12, 2020).
28
1
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 11 of 32 Page
ID #:111
1 116-136. Under the PPP, eligible borrowers can receive loans through lenders that
2 are authorized by the Small Business Administration (“SBA”) to make such loans.
3 Plaintiff American Video Duplicating, Inc. (“AVD”) apparently is a video
4 duplicating store. The President of AVD is alleged to be David M. Wohl (“Mr.
5 Wohl”), who is alleged to be a licensed CPA. Compl. ¶ 1. Mr. Wohl and the
6 named Plaintiffs allegedly provided consulting, accounting, legal, and tax services
7 to their clients. Compl. ¶¶ 1-3. Plaintiffs allege that they assisted some of their
8 clients in preparing applications for PPP loans and that they are entitled to certain
9 “agent fees” for that work. Id. ¶¶ 41-48. According to Plaintiffs, under the PPP,
10 lenders will receive certain “processing fees” from the SBA after funding the PPP
11 loans, and lenders allegedly must pay agents fees out of the processing fees they
12 receive from the SBA. Id. ¶¶ 33-36. Plaintiffs allege that Defendants “funded
13 loans” under the PPP and that Defendants owe Plaintiffs certain agent fees. Id.
14 ¶¶ 38-39. Plaintiffs bring claims for: (1) Declaratory Relief (id. ¶¶ 60-64),
15 (2) Violation of the “Unfair” Prong of California’s Unfair Competition Law
16 (“UCL”), Cal. Bus. & Prof. Code §§ 17200, et seq. (id. ¶¶ 65-72), and (3) Unjust
17 Enrichment (id. ¶¶ 73-77). Plaintiffs seek to represent a putative class of agents
18 who allegedly assisted borrowers in applying for PPP loans. Id. ¶¶ 40, 52.
19 Despite seeking nearly $4 billion in purported damages, Plaintiffs do not
20 identify any specific applicant they assisted in applying for PPP loans.4 Nor do
21 Plaintiffs allege that they assisted any applicant who actually submitted an
22 application to either of the Citi Defendants. Plaintiffs do not even allege that they
23 asked either Citi Defendant to pay any agent fees or that either Citi Defendant
4
24 Given Plaintiffs’ failure to plead even basic information demonstrating any
purported tie to the Citi Defendants, one is unable to determine, for example,
25 whether Plaintiffs’ claims might be subject to mandatory arbitration or a
prohibition on joining a class action. To the extent Plaintiffs later plead sufficient
26 information to demonstrate a connection to the Citi Defendants, the Citi
27 Defendants hereby reserve their rights to seek to compel arbitration and enforce
any class action prohibition, if applicable.
28
2
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 12 of 32 Page
ID #:112
1 refused to pay any such fees upon request. Indeed, the SBA has not yet disbursed
2 processing fees to lenders and only recently published rules describing the forms
3 and processes for the disbursement of such processing fees. See Interim Final Rule
4 on Disbursements, 85 Fed. Reg. 26321 (Apr. 28, 2020) (“Disbursement IFR”).5
5 Plaintiffs’ bare-bones claims against the Citi Defendants should be
6 dismissed in their entirety for at least three independent reasons. First, the claims
7 should be dismissed under Fed. R. Civ. P. (“Rule”) 12(b)(1) for lack of subject
8 matter jurisdiction. Because there are no allegations at all demonstrating any
9 connection between any of the named Plaintiffs and either of the Citi Defendants,
10 let alone any specific factual allegations, Plaintiffs lack standing to maintain any
11 claims against the Citi Defendants. In addition, Plaintiffs’ claims are not yet ripe
12 for adjudication.
13 Second, Plaintiffs’ claims against the Citi Defendants should be dismissed
14 under Rule 12(b)(6) because Plaintiffs fail to plead a “short and plain statement” of
15 a claim against either Citi Defendant, and Plaintiffs cannot allege facts that support
16 a plausible claim for relief under any of their three purported causes of action.
17 Third, Plaintiffs’ claims against Citigroup should be dismissed under Rule
18 12(b)(2) because Citigroup is not subject to personal jurisdiction in this Court.
19 The Court therefore should dismiss the claims against the Citi Defendants in
20 their entirety.
21
22
23
24
25
26
5
27 Available at: https://home.treasury.gov/system/files/136/Interim-Final-Rule-
on-Disbursements.pdf
28
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 13 of 32 Page
ID #:113
1 II. BACKGROUND AND FACTUAL ALLEGATIONS6
2 A. Background of the CARES Act and PPP
3 On March 27, 2020, Congress passed, and the President signed, the CARES
4 Act, Pub. L. 116-136, to provide emergency assistance for individuals, families,
5 and businesses affected by the coronavirus pandemic. Section 1102 of the Act
6 amends the Small Business Act, 15 U.S.C. § 636, to create the PPP, a $349 billion
7 loan program. CARES Act § 1102(a)(2). The CARES Act articulates an
8 eligibility floor for borrower participation in the PPP, as well as permissible uses
9 of loan proceeds. Id. “For the purpose of making covered loans” as described in
10 the CARES Act, certain lending institutions “shall be deemed to have been
11 delegated authority by the [SBA] to make and approve covered loans.” Id. The
12 SBA will fully guarantee PPP loans applied for prior to June 30, 2020. Id.7
13 On April 2, 2020, the SBA posted an interim final rule implementing the
14 PPP. See SBA Interim Final Rule, 85 Fed. Reg. 20811 (Apr. 2, 2020) (“First
15 IFR”).8 Among other things, the First IFR explains that the “SBA will pay lenders
16 fees for processing PPP loans” and sets forth the amounts for such processing fees.
17 Id. at 20816. In addition, the First IFR states that “Agent fees will be paid by the
18 lender out of the fees the lender receives from SBA” and that “Agents may not
19 collect fees from the borrower or be paid out of the PPP loan proceeds.” Id. The
6
20 Plaintiffs’ factual allegations are taken as true only for purposes of the Citi
Defendants’ Motion to Dismiss. The Citi Defendants reserve their rights to
21 challenge any factual allegations at any appropriate time in the future. To the
extent that other Defendants file motions to dismiss that raise additional bases for
22 dismissal applicable to the Citi Defendants as well, those additional bases are
23 hereby adopted and incorporated by the Citi Defendants.
7
This is a modification of the pre-existing SBA lending model under 15
24 U.S.C. § 636. Under the pre-existing model, small businesses apply for an SBA-
25 guaranteed loan through a financial institution; the financial institution provides
the loan; and the SBA guarantees a portion of a loan issued under the statute. The
26 PPP modifies this regime by guaranteeing all of a loan issued pursuant to the PPP.
8
27 Available at: https://www.sba.gov/sites/default/files/2020-
04/PPP%20Interim%20Final%20Rule_0.pdf.
28
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 14 of 32 Page
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1 First IFR also set forth limits on the total amounts an agent may collect for
2 assisting in preparing a PPP loan application. Id.
3 On April 24, 2020, the President signed the Paycheck Protection Program
4 and Health Care Enhancement Act (“PPPEA”), which added an additional $310
5 billion in PPP funding. Meanwhile, the SBA continued to publish additional rules
6 regarding the PPP on April 3 (Second IFR), April 14 (Third IFR), April 24 (Fourth
7 IFR), and April 28, 2020 (Fifth IFR, i.e., the Disbursement IFR).9
8 In the Disbursement IFR, issued on April 28, 2020, the SBA described the
9 forms and processes for the disbursement of processing fees. 85 Fed. Reg. at
10 26323. Specifically, the SBA stated that it “will make available a specific SBA
11 Form 1502 reporting process through which PPP lenders will report on PPP loans
12 and collect the processing fee on fully disbursed loans to which they are entitled.”
13 Id. Lenders must upload SBA Form 1502 information within 20 calendar days
14 after a PPP loan is approved by the SBA or by May 18, 2020 for loans approved
15 before the availability of SBA Form 1502. Id. The lender must report whether it
16 has fully disbursed PPP loan proceeds, and lenders will not receive a processing
17 fee: (1) prior to full disbursement of the PPP loan, (2) if the PPP loan is cancelled
18 before disbursement, or (3) if the PPP loan is cancelled or voluntarily terminated
19 and repaid after disbursement. Id.
20 B. Plaintiffs’ Allegations
21 Plaintiffs filed their Complaint on April 27, 2020, the day before the SBA
22 posted its Disbursement IFR. In the Complaint, Plaintiffs allege that they provide
23 9
See Apr. 3, 2020 Second IFR (https://www.sba.gov/document/policy-
24 guidance--ppp-affiliation-interim-final-rule); Apr. 14, 2020 Third IFR
(https://www.sba.gov/document/policy-guidance--ppp-interim-final-rule-
25 additional-eligibility-criteria-requirements-certain-pledges-loans); Apr. 24, 2020
Fourth IFR (https://www.sba.gov/document/policy-guidance--ppp-interim-final-
26 rule-promissory-notes-authorizations-affiliation-eligibility); Apr. 28, 2020 Fifth
27 IFR (Disbursement IFR) (https://www.sba.gov/document/policy-guidance--ppp-
interim-final-rule-disbursements).
28
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 15 of 32 Page
ID #:115
1 consulting, accounting, legal, and tax services to their clients. Compl. ¶¶ 1-3.
2 Plaintiffs allege that they assisted their clients in preparing applications for PPP
3 loans and that they are entitled to certain agent fees for that work. Id. ¶¶ 41-48.
4 Plaintiffs named over a dozen financial institutions as Defendants. Id. ¶¶ 4-
5 21. However, Plaintiffs do not set forth any specific allegations about any
6 particular Defendant other than alleging the jurisdictions in which each Defendant
7 allegedly is headquartered and does business. Id. Instead, Plaintiffs generically
8 lump all Defendants together and assert undifferentiated and general allegations
9 against all “Defendants.” See, e.g., id. ¶ 39 (alleging generically and “on
10 information and belief” that “Defendants received approval from the SBA and
11 funded loans for numerous businesses, yet failed to issue compensation to
12 Plaintiffs . . .”). Plaintiffs allege that Defendants “funded loans” under the PPP.
13 Id. ¶¶ 38-39. According to Plaintiffs, Defendants owe them agent fees but “are
14 refusing to pay or are willing to pay only a partial percentage of the monies owed.”
15 Id. ¶ 39. However, Plaintiffs do not allege that they assisted any particular
16 applicant who actually submitted a PPP loan application to either of the Citi
17 Defendants or that any such loans were actually approved and funded. Nor do
18 Plaintiffs allege that they asked either Citi Defendant to pay any agent fees or that
19 either Citi Defendant refused any such request.
20 Plaintiffs bring claims for: (1) Declaratory Relief (id. ¶¶ 60-64),
21 (2) Violation of the “Unfair” Prong of the UCL, Cal. Bus. & Prof. Code §§ 17200,
22 et seq. (id. ¶¶ 65-72), and (3) Unjust Enrichment (id. ¶¶ 73-77). Plaintiffs seek to
23 represent a putative class of agents who assisted borrowers in applying for PPP
24 loans and seek over $3.8 billion in damages. Id. ¶¶ 40, 52.10
25
10
Plaintiffs’ allegations do not support the certification of the putative class
26 alleged in the Complaint. The Citi Defendants oppose any attempt to certify a
27 class in this case and reserve their rights to oppose any request for class
certification.
28
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 16 of 32 Page
ID #:116
1 III. ARGUMENT
2 As explained in detail below, Plaintiffs’ claims against the Citi Defendants
3 should be dismissed in their entirety for at least three independent reasons. First,
4 Plaintiffs’ claims should be dismissed under Rule 12(b)(1) because Plaintiffs lack
5 standing to bring their claims against the Citi Defendants, and Plaintiffs’ claims are
6 not yet ripe. Second, Plaintiffs’ claims should be dismissed under Rule 12(b)(6)
7 because they have not pled a “short and plain statement” of a claim and they
8 cannot plead facts to state a plausible claim for relief under any of their three
9 causes of action. Third, Plaintiffs’ claims against Citigroup should be dismissed
10 under Rule 12(b)(2) because this Court lacks personal jurisdiction over Citigroup.
11 A. Plaintiffs’ Claims Should Be Dismissed Under Rule 12(b)(1).
12 A party may move to dismiss for lack of subject matter jurisdiction under
13 Rule 12(b)(1). “A motion to dismiss for lack of subject matter jurisdiction under
14 [Rule] 12(b)(1) may challenge jurisdiction either on the face of the pleadings or by
15 presenting extrinsic evidence for the court’s consideration.” Siofele v. Duncan,
16 2009 WL 10674359, at *1 (C.D. Cal. Sept. 14, 2009) (Wright, J.) (citing Safe Air
17 for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004)). In this case, the face
18 of the Complaint demonstrates that subject matter jurisdiction is lacking because
19 Plaintiffs lack standing and their claims are not yet ripe for adjudication.
20 1. The named Plaintiffs lack standing to assert claims against the
21 Citi Defendants.
22 “To satisfy the ‘irreducible constitutional minimum’ of Article III standing,
23 a ‘plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the
24 challenged conduct of the defendant, and (3) that is likely to be redressed by a
25 favorable judicial decision.’” MAO-MSO Recovery II, LLC v. Farmers Ins. Exch.,
26 2018 WL 2106467, at *6 (C.D. Cal. May 7, 2018) (quoting Spokeo, Inc. v. Robins,
27 ---U.S.---, 136 S. Ct. 1540, 1547 (2016)). “Plaintiffs, as the parties invoking
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 17 of 32 Page
ID #:117
1 federal jurisdiction, bear the burden of establishing the elements of Article III
2 standing, and at the pleading stage, must ‘clearly allege . . . facts demonstrating’
3 each element.” MAO-MSO, 2018 WL 2106467, at *6 (quoting Spokeo, 136 S. Ct.
4 at 1547); see also Baker v. United States, 722 F.2d 517, 518 (9th Cir. 1983) (“The
5 facts to show standing must be clearly apparent on the face of the complaint.”).
6 As courts in this district have explained, “one of the elements of standing is
7 ‘traceability, i.e., a causal connection between the injury and the actions’ about
8 which a plaintiff complains.” MAO-MSO, 2018 WL 2106467, at *9 (quoting
9 Easter v. Am. West. Fin., 381 F.3d 948, 961-62 (9th Cir. 2004)). “In
10 multidefendant class actions, the named plaintiffs must show that each defendant
11 has harmed at least one of them.” MAO-MSO, 2018 WL 2106467, at * 9 (quoting
12 William B. Rubenstein, Newberg on Class Actions § 2.5 (5th ed. 2017)).
13 To establish Article III standing in a class action, at least one named
14 plaintiff must have standing in his own right to assert a claim against
15 each named defendant before he may purport to represent a class
16 claim against that defendant. This is not to say that each named
17 plaintiff must have a claim against each named defendant . . . Rather,
18 what is required is that for every named defendant, there be at least
19 one named plaintiff who can assert a claim directly against that
20 defendant.
21 MAO-MSO, 2018 WL 2106467, at * 9 (quoting Henry v. Circus Circus Casinos,
22 Inc., 223 F.R.D. 541, 544 (D. Nev. 2004) (alterations in MAO-MSO)); see also In
23 re Carrier IQ, Inc., 78 F. Supp. 3d 1051, 1068-69 (N.D. Cal. 2015) (“[F]or a class
24 action to proceed between the named parties, each named plaintiff must have
25 standing to sue at least one named defendant; to hold each defendant in the case,
26 there must be at least one named plaintiff with standing to sue said defendant.”).
27
28
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 18 of 32 Page
ID #:118
1 Plaintiffs’ Complaint falls far short of this constitutional standard. It does
2 not allege any facts to demonstrate that any of the named Plaintiffs have standing
3 to sue the Citi Defendants. Plaintiffs do not allege that any of the named Plaintiffs
4 assisted any particular applicant who actually submitted an application to either of
5 the Citi Defendants and received a loan. Nor do Plaintiffs allege that they asked
6 either Citi Defendant to pay any agent fees or that either Citi Defendant refused
7 any such request. Indeed, Plaintiffs have made no factual allegations as to the Citi
8 Defendants whatsoever.
9 At most, the Complaint includes generic allegations that attempt to lump all
10 of the “Defendants” together. See, e.g., Compl. ¶¶ 37-39 (generically alleging that
11 “Defendants” funded loans under the PPP and “are refusing to pay or are willing to
12 pay only a partial percentage of the monies owed to Agents”). These generic,
13 boilerplate allegations fall far short of the requirement to “clearly allege . . . facts
14 demonstrating” that at least one of the named Plaintiffs suffered an injury in fact
15 caused by the Citi Defendants and that can be redressed through this lawsuit.
16 MAO-MSO, 2018 WL 2106467, at *6 (dismissing claims for lack of standing
17 where the named plaintiffs failed to allege any facts “tying any claim by one or
18 more of the [plaintiffs] to any specific named defendant”); see also Konopasek v.
19 Ten Assocs., LLC, 2018 WL 6177249, at *4 (C.D. Cal. Oct. 22, 2018) (dismissing
20 claims where the “allegations generally lump all of the Defendants together”
21 without specific factual allegations about each defendant); Vargas v. JP Morgan
22 Chase Bank, N.A., 2014 WL 3435628, at *5 (C.D. Cal. July 11, 2014) (Wright, J.)
23 (dismissing claims premised on “egregious use of lump pleading”).
24 Because the named Plaintiffs fail to meet their burden to clearly allege facts
25 demonstrating that at least one named Plaintiff has standing to sue the Citi
26 Defendants, the Court should dismiss all of the claims against the Citi Defendants.
27
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 19 of 32 Page
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1 2. Any claims by the named Plaintiffs against the Citi Defendants
2 are not yet ripe.
3 Even if Plaintiffs could somehow satisfy the traceability element for
4 standing—and as shown above, they cannot—their claims should still be dismissed
5 on standing grounds because they are not ripe because there is no injury. “A
6 court’s subject matter jurisdiction is limited to matters ‘ripe’ for adjudication, and
7 if a case is not ripe, the court should dismiss it.” Assoc. of Am. R.R. v. Cal. Office
8 of Spill Prevention and Response, 113 F. Supp. 3d 1052, 1056 (E.D. Cal. 2015)
9 (citing Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1121, 1122 (9th
10 Cir. 2010)). “The ripeness doctrine is ‘drawn both from Article III limitations on
11 judicial power and from prudential reasons for refusing to exercise jurisdiction.’”
12 Assoc. of Am. R.R., 113 F. Supp. 3d at 1057 (quoting Nat’l Park Hospitality Ass’n
13 v. DOI, 538 U.S. 803, 808 (2003)). “The basic rationale behind the ripeness
14 doctrine ‘is to prevent the courts, through premature adjudication, from entangling
15 themselves in abstract disagreements,’ when those ‘disagreements’ are premised
16 on ‘contingent future events that may not occur as anticipated, or indeed may not
17 occur at all.’” Assoc. of Am. R.R., 113 F. Supp. 3d at 1057 (quoting Thomas v.
18 Union Carbide Agr. Prods. Co., 473 U.S. 568, 580-81 (1985)).
19 “A claim is not ripe for judicial resolution ‘if it rests upon contingent future
20 events that may not occur as anticipated, or indeed may not occur at all.’”
21 Winebarger v. Penn. Higher Ed. Assistance Agency, 411 F. Supp. 3d 1070, 1087-
22 88 (C.D. Cal. 2019) (quoting Texas v. United States, 523 U.S. 296, 300 (1998)).
23 “Courts consider two factors in the ripeness analysis: (1) whether delayed review
24 of the issue would cause hardship to the parties and (2) whether the issues are fit
25 for judicial decision or would benefit from further factual development.”
26 Winebarger, 411 F. Supp. 3d at 1088 (citing Pac. Gas & Elec. Co. v. State Energy
27 Res. Conservation & Dev. Comm’n, 461 U.S. 190, 201 (1983)).
28
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 20 of 32 Page
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1 Here, Plaintiffs allege that they are entitled to receive certain agent fees out
2 of the processing fees that the SBA allegedly will pay to Defendants who funded
3 PPP loans. Compl. ¶¶ 36-40. First and foremost, as noted above, no such claim
4 could exist here because there is no alleged connection between Plaintiffs and
5 either Citi Defendant. But even putting that aside, it was only recently, on April
6 28, 2002, that the SBA issued its Disbursement IFR, in which it described the
7 forms and processes for the disbursement of processing fees to PPP lenders. 85
8 Fed. Reg. at 26323. Under the Disbursement IFR, lenders will be required to use
9 SBA Form 1502 to provide information to the SBA about the PPP loans they
10 funded. Id. The lenders are not required to finalize and upload these forms until
11 20 calendar days after a PPP loan is approved by the SBA or by May 18, 2020 for
12 loans approved before the availability of the SBA Form 1502. Id. A lender will
13 not receive a processing fee: (1) prior to full disbursement of the PPP loan, (2) if
14 the PPP loan is cancelled before disbursement, or (3) if the PPP loan is cancelled
15 or voluntarily terminated and repaid after disbursement. Id.
16 All of Plaintiffs’ claims (none of which have an alleged connection to the
17 Citi Defendants) are contingent on the Defendants—including the Citi
18 Defendants—first being paid processing fees under the PPP and then refusing to
19 pay all or part of the agent fees that Plaintiffs are allegedly owed out of those
20 processing fees. Compl. ¶¶ 36-40. Those events may not occur as Plaintiffs
21 anticipate or indeed may not occur at all. See Winebarger, 411 F. Supp. 3d at
22 1087-88. For example, a Defendant may not receive processing fees for a
23 particular loan because the loan is never fully disbursed or is cancelled. In
24 addition, a Defendant may agree to pay Plaintiffs or other agents certain agent fees
25 for a particular loan once they receive processing fees for that loan. Thus,
26 Plaintiffs’ claims are contingent on events that may not occur and therefore are not
27 yet ripe for adjudication.
28
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 21 of 32 Page
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1 In addition, delayed review of this issue would not cause any hardship to the
2 parties. Plaintiffs can wait until the lender processing particular PPP loans receives
3 processing fees for a particular PPP loan before seeking to recover agent fees for
4 that loan. In addition, the PPP is continuing to evolve and receive further
5 regulatory clarification and guidance. Indeed, the SBA already has published a
6 number of separate interim final rules on the PPP throughout April and May 2020.
7 The Department of the Treasury also has published an interim final rule. The
8 Court would benefit from allowing additional time for regulators to finalize the
9 rules and processes governing the PPP and for the program to continue to develop
10 as loans are funded.
11 Thus, Plaintiffs’ claims are not ripe and should be dismissed under Rule
12 12(b)(1). See Winebarger, 411 F. Supp. 3d at 1087-88 (dismissing unripe claims).
13 B. Plaintiffs’ Claims Should Be Dismissed Under Rule 12(b)(6).
14 Fed R. Civ. P. 8(a)(2) requires that any federal pleading contain “a short and
15 plain statement of the claim showing that the pleader is entitled to relief.” A party
16 may move to dismiss a complaint for failure to state a claim upon which relief can
17 be granted under Rule 12(b)(6). “To survive a motion to dismiss, a complaint must
18 contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
19 plausible on its face.’” Borchenko v. L’Oreal USA, Inc., 389 F. Supp. 3d 769, 772
20 (C.D. Cal. 2019) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl.
21 Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim is plausible if the plaintiff
22 alleges enough facts to draw a reasonable inference that the defendant is liable.”
23 Id. (citing Iqbal, 556 U.S. at 678). A plaintiff “must provide more than mere legal
24 conclusions.” Borchenko, 389 F. Supp. 3d at 772 (citing Twombly, 550 U.S. at
25 555). And “[t]hreadbare recitals of the elements of a cause of action, supported by
26 mere conclusory statements, do not suffice.” Borchenko, 389 F. Supp. 3d at 772
27 (citing Iqbal, 556 U.S. at 678).
28
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 22 of 32 Page
ID #:122
1 Plaintiffs’ claims against the Citi Defendants should be dismissed under
2 Rule 12(b)(6) for at least two independent reasons. First, the Complaint does not
3 include any allegations about the Citi Defendants and thus fails to contain a “short
4 and plain” statement of a claim under Rule 8(a). Second, Plaintiffs fail to allege
5 facts that give rise to a plausible claim against the Citi Defendants under any of
6 their three purported causes of action.
7 1. The Complaint does not contain a “short and plain” statement of
8 a claim against either Citi Defendant, as required by Rule 8(a).
9 As an initial matter, as explained in Argument Section (A)(1) above, other
10 than alleging that the Citi Defendants are headquartered and do business in certain
11 jurisdictions, Plaintiffs’ Complaint does not include any factual allegations as to
12 the Citi Defendants whatsoever. Thus, the Complaint fails to set forth a “short and
13 plain statement” of a claim against either Citi Defendant, as required by Rule 8(a).
14 For this reason alone, Plaintiffs fail to state a plausible claim against either Citi
15 Defendant, and their claims should be dismissed under Rule 12(b)(6). See, e.g.,
16 Prem v. Access Servs., Inc., 2011 WL 3516170, at *3 (C.D. Cal. Aug. 10, 2011)
17 (Wright, J.) (dismissing claims that failed to include allegation about any statute,
18 rule, or regulation that defendant allegedly violated for failure to include a “short
19 and plain statement”); see also Bains v. Pac. Gas and Elec. Comp. PG and E, 2016
20 WL 6071130, at *3 (C.D. Cal. Sept. 9, 2016) (dismissing complaint that “does not
21 contain a short and plain statement” of plaintiff’s claims against the defendant).
22 Even assuming for the sake of argument that the Complaint contained any
23 substantive allegations as to the Citi Defendants—as shown above, it does not—
24 Plaintiffs have not plausibly alleged that they complied with numerous agent
25 disclosure requirements, such as: (1) 15 U.S.C. § 642, which requires that a loan
26 applicant “certify to the…[SBA] the names of any attorneys, agents, or other
27 persons” who assisted with the application; or (2) 13 CFR Parts 103 and 120, and
28
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 23 of 32 Page
ID #:123
1 SBA’s Standard Operating Procedure 50 10 5(J), which govern agent disclosure
2 and compensation. Indeed, SBA Form 159, titled Fee Disclosure and
3 Compensation Agreement, is used to “identify Agents and the fees and/or
4 compensation paid to Agents by or on behalf of a small business applicant…for the
5 purpose of obtaining or expediting an application for a loan guaranteed by
6 the…[SBA].”11 But in paragraph 46 of their Complaint, Plaintiffs do not identify
7 Form 159 as one of the 19 forms and documents that they claim were submitted as
8 part of the PPP loan applications. Plaintiffs also fail to allege that the PPP loan
9 applications that they assisted with did not include waivers or limitations on paying
10 agent fees. Accordingly, far from pleading a plausible entitlement to relief,
11 Plaintiffs’ Complaint shows just the opposite in failing to allege even a basic level
12 of compliance with the statutory and regulatory requirements.
13 2. Each of Plaintiffs’ three causes of action fail as a matter of law.
14 As explained below, Plaintiffs fail to state a plausible claim for relief against
15 the Citi Defendants under any of their three causes of action: (1) Declaratory
16 Relief, (2) Violation of the UCL, or (3) Unjust Enrichment. Therefore, all three
17 claims against the Citi Defendants should be dismissed.
18 a. Plaintiffs’ Declaratory Relief claim should be dismissed
19 (Count I).
20 Plaintiffs’ first cause of action seeks a declaration that Defendants owe agent
21 fees to Plaintiffs under the PPP and the “SBA regulations.” Compl. ¶¶ 60-64. As
22 shown below, this claim is meritless and should be dismissed as a matter of law.
23 The Declaratory Judgment Act (“DJA”) authorizes federal courts, in cases of
24 “actual controversy,” to “declare the rights and other legal relations of any
11
25 Available at: https://www.sba.gov/sites/default/files/2018-
09/Form%20159%20-%20%28FINAL%29%209.10.18.pdf. To the extent that the
26 SBA, Treasury Department or federal government otherwise issues subsequent
27 rules or guidance applicable to this Motion, the Citi Defendants reserve their rights
to amend this Motion to incorporate the updated rules or guidance.
28
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 24 of 32 Page
ID #:124
1 interested party seeking such declaration, whether or not further relief is or could
2 be sought.” 28 U.S.C. § 2201(a). The DJA’s operation “is procedural only.”
3 Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 240 (1937). The
4 DJA does not create a substantive cause of action. See Schilling v. Rogers, 363
5 U.S. 666, 677 (1960) (“The Declaratory Judgment[] Act is not an independent
6 source of federal jurisdiction; the availability of such relief presupposes the
7 existence of a judicially remediable right.”).
8 “Federal courts do not have a duty to grant declaratory judgment.” CRV
9 Imperial-Worthington, LP v. Gemini Ins. Co., 770 F. Supp. 2d 1070, 1072-73 (S.D.
10 Cal. 2011) (citing Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 533 (9th
11 Cir. 2008)). “Therefore, it is within a district court’s discretion to dismiss an
12 action for declaratory judgment.” CRV Imperial-Worthington, LP, 770 F. Supp. 2d
13 at 1072-73 (citing Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995)). “[T]he
14 question in each case is whether the facts alleged, under all the circumstances,
15 show that there is a substantial controversy, between parties having adverse legal
16 interests, of sufficient immediacy and reality to warrant the issuance of a
17 declaratory judgment.” CRV Imperial-Worthington, LP, 770 F. Supp. At 1072-73
18 (quoting MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)).
19 Here, the Court should decline to entertain Plaintiffs’ declaratory judgment
20 claim and dismiss the claim for two independent reasons. First, as explained
21 directly below, Plaintiffs’ other two claims—for violation of the UCL and unjust
22 enrichment—fail as a matter of law. Plaintiffs cannot maintain a declaratory
23 judgment claim—which is purely procedural—in the absence of any substantive
24 causes of action. See, e.g., Shomaker v. GMAC Mortg. LLC, 2012 WL 13020070,
25 at *5 (C.D. Cal. Mar. 7, 2012) (dismissing declaratory judgment claim “[i]n the
26 absence of other claims” because “[a] request for declaratory judgment is a remedy
27
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 25 of 32 Page
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1 and, therefore, does not state a cause of action”) (citing Nationwide Mut. Ins. Co. v.
2 Liberatore, 408 F.3d 1158, 1161 (9th Cir. 2005)).
3 Second, Plaintiffs’ claim under the DJA fails because it asks the Court to
4 interpret and declare the parties’ rights and obligations under the CARES Act and
5 the Small Business Act, both of which lack a private right of action. Specifically,
6 Plaintiffs ask the Court to declare that the “SBA guidance”—which is issued under
7 the CARES Act and the Small Business Act—requires Defendants to pay certain
8 agent fees to the Plaintiffs. Compl. ¶ 64.
9 Neither the CARES Act nor the Small Business Act contain a private right
10 of action for agents to bring suit seeking fees from lenders. See, e.g., Crandal v.
11 Ball, Ball & Brosamer, Inc., 99 F.3d 907, 909 (9th Cir. 1996) (“Other circuits that
12 have considered the question have unanimously agreed that the Small Business Act
13 does not create a private right of action in individuals.”) (collecting cases from
14 other circuits); Profiles, Inc. v. Bank of Am. Corp., 2020 WL 1849710, at *4-7 (D.
15 Md. Apr. 13, 2020) (in the only published decision to consider the issue to date,
16 holding that the CARES Act does not include an express or implied private right of
17 action). The Small Business Act, of which the operative sections of the CARES
18 Act are now a part, includes a robust criminal and civil enforcement regime by
19 which government regulators—not private plaintiffs—can hold borrowers and
20 lenders accountable for any violations. See, e.g., 15 U.S.C. §§ 645, 650, 13 C.F.R.
21 §§ 120.1400, 1500, 1600.
22 Where a party lacks a private right of action to bring claims under a federal
23 or state statute, the party cannot use the DJA as an “end-run” around the lack of a
24 private right of action. See, e.g., N. Cty. Commc’ns Corp. v. Cal. Catalog & Tech.,
25 594 F.3d 1149, 1162 (9th Cir. 2010) (affirming dismissal of DJA claim where the
26 plaintiff sought a declaration of rights under the Federal Communications Act
27 (“FCA”) because the FCA does not create a private right of action); see also
28
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 26 of 32 Page
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1 Dallas Cty, Tex. v. MERSCORP, Inc., 2 F. Supp. 3d 938, 946 (N.D. Tex. 2014)
2 (dismissing DJA claim seeking declaration under statute without a private right of
3 action because “a plaintiff cannot use the [DJA] to create a private right of action
4 where none exists”); Millenium Labs., Inc. v. Universal Oral Fluid Labs., LLC,
5 2012 WL 12905083, at *4 (M.D. Fla. Apr. 25, 2012) (collecting cases and
6 explaining that “[m]any courts . . . have held that a claim for declaratory relief
7 must be dismissed where there is no private right of action available for an alleged
8 statutory violation.”); Jones v. Hobbs, 745 F. Supp. 2d 886, 893 (E.D. Ark. 2010)
9 (the DJA does not authorize actions to decide whether a statute has been violated
10 where there is no private right of action).
11 For these reasons, Plaintiffs’ first claim for declaratory relief should be
12 dismissed as a matter of law as against the Citi Defendants.
13 b. Plaintiffs’ UCL claim should be dismissed (Count II).
14 Plaintiffs’ second cause of action asserts that Defendants violated the
15 “unfair” prong of the California UCL. Compl. ¶¶ 65-72. “The unfair prong of the
16 UCL prohibits a business practice that ‘violates established public policy or if it is
17 immoral, unethical, oppressive or unscrupulous and causes injury to consumers
18 which outweighs its benefits.” Hoai Dang v. Samsung Elec. Co., Ltd., 2018 WL
19 6308738, at *9 (N.D. Cal. Dec. 3, 2018) (quoting McKell v. Wash. Mut., Inc., 142
20 Cal. App. 4th 1457, 1473 (2006)). Courts have held that a finding of unfairness
21 must be “tethered to some legislatively declared policy” or include “proof of some
22 actual or threatened impact on competition.” Davis v. HSBC Bank Nev., N.A., 691
23 F.3d 1152, 1169-70 (9th Cir. 2012) (quoting Cel-Tech Commc’ns. Inc. v. L.A.
24 Cellular Tel. Co., 20 Cal. 4th 163 (1999)).
25 Plaintiffs cannot allege facts to support a plausible claim under the “unfair”
26 prong of the UCL. Plaintiffs have not alleged any acts or practices by either Citi
27 Defendant that would offend an established public policy or would be immoral,
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
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1 unethical, oppressive, unscrupulous, or substantially injurious. Nor have Plaintiffs
2 alleged that either Citi Defendant violated a declared policy or threatened
3 competition. Indeed, the Complaint does not include any specific allegations about
4 the Citi Defendants at all other than listing jurisdictions in which they allegedly are
5 headquartered and in which they do business. Compl. ¶¶ 4-5. To the extent
6 Plaintiffs merely “lump” the Citi Defendants together with the other Defendants
7 and attempt to assert generic allegations against all Defendants, their pleading falls
8 far short of stating a plausible UCL claim. See, e.g., Vargas, 2014 WL 3435628, at
9 *5 (dismissing UCL claim premised on “lump” or “group” allegations).
10 In addition, plaintiffs who prevail on a UCL claim are generally limited to
11 recovering “injunctive relief and restitution.” Cel-Tech, 20 Cal. 4th at 179. In this
12 context, restitution involves a claim “to restore the status quo by returning to the
13 plaintiff funds in which he or she has an ownership interest.” Korea Supply Co. v.
14 Lockheed Martin Corp., 29 Cal. 4th 1134, 1149 (2003). Here, Plaintiffs have not
15 alleged, and cannot allege, that they are seeking a return of any funds in which they
16 have “an ownership interest.” Therefore, Plaintiffs are not entitled to injunctive
17 relief or restitution, and their UCL claim fails because they cannot seek available
18 relief under the UCL. See, e.g., AngioScore, Inc. v. TriReme Med., LLC, 70 F.
19 Supp. 3d 951, 962-63 (N.D. Cal. 2014) (dismissing UCL claim that sought
20 damages that are not available under the UCL).
21 Accordingly, Plaintiffs’ second claim for violation of the “unfair” prong of
22 the UCL should be dismissed against the Citi Defendants.
23 c. Plaintiffs’ unjust enrichment claim should be dismissed
24 (Count III).
25 Plaintiffs’ third cause of action alleges unjust enrichment. Compl. ¶¶ 73-77.
26 Under California law, “there is not a standalone cause of action for ‘unjust
27 enrichment.’” Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir.
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 28 of 32 Page
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1 2015) (citing Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350 (2010); Jogani v.
2 Super. Ct., 165 Cal. App. 4th 901 (2008)). Instead, California courts construe
3 unjust enrichment claims “as a quasi-contract claim seeking restitution.” Astiana,
4 783 F.3d at 762 (quoting Rutherford Holdings, LLC v. Plaza Del Rey, 223 Cal.
5 App. 4th 221 (2014)).
6 “To plead a claim for unjust enrichment, a plaintiff must allege that [the]
7 defendant (1) received a benefit that was (2) unjustly retained at the expense of
8 another.” Mangindin v. Washington Mut. Bank, 637 F. Supp. 2d 700, 711 (N.D.
9 Cal. 2009) (citing Lectrodyer v. SeoulBank, 77 Cal. App. 4th 723, 726 (2000)).
10 “Ordinarily, a plaintiff must show that the benefit was conferred on the defendant
11 through mistake, fraud[,] or coercion.” Mangindin, 637 F. Supp. 2d at 711 (citing
12 Nibbi Bros., Inc. v. Brannan Street Inv., 205 Cal. App. 3d 1415, 1422 (1988)).
13 Here, Plaintiffs cannot plead any facts to support a plausible claim that the
14 Citi Defendants were unjustly enriched at the Plaintiffs’ expense. Plaintiffs do not
15 allege that they assisted any particular applicant in preparing a PPP loan
16 application that was submitted to either Citi Defendant. Nor do Plaintiffs allege
17 that they requested that either Citi Defendant pay them any agent fees or that either
18 Citi Defendant denied any such request. To the contrary, the Complaint does not
19 include any specific allegations about the Citi Defendants other than listing
20 jurisdictions in which they allegedly are headquartered and do business. Compl.
21 ¶¶ 4-5. To the extent Plaintiffs simply “lump” the Defendants together and attempt
22 to assert generic allegations against all Defendants, such “[t]hreadbare recitals of
23 the elements of a cause of action, supported by mere conclusory statements, do not
24 suffice” to state a claim for unjust enrichment. Iqbal, 556 U.S. at 678.
25 In addition, a prevailing plaintiff on an unjust enrichment claim may only
26 recover in restitution. See, e.g., Astiana, 783 F.3d at 762. As explained in
27 Argument Section (B)(2)(b) above, a claim for restitution seeks “to restore the
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 29 of 32 Page
ID #:129
1 status quo by returning to the plaintiff funds in which he or she has an ownership
2 interest.” Korea Supply, 29 Cal. 4th at 1149. Here, Plaintiffs have not alleged, and
3 cannot allege, that they are seeking a return of any funds in which they have “an
4 ownership interest.” Therefore, Plaintiffs are not entitled to restitution, and their
5 unjust enrichment claim fails for this additional reason. See Bruaner v.
6 MusclePharm Corp., 2015 WL 4747941, at *13 (C.D. Cal. Aug. 11, 2015)
7 (dismissing standalone unjust enrichment claim and limiting plaintiff to seeking
8 restitution under other claims).
9 Accordingly, Plaintiffs’ third claim for unjust enrichment should be
10 dismissed as a matter of law against the Citi Defendants.
11 C. Plaintiffs’ Claims Against Citigroup Should Be Dismissed Under Rule
12 12(b)(2).
13 A party may move to dismiss for lack of personal jurisdiction under Rule
14 12(b)(2). “In opposing a defendant’s motion to dismiss for lack of personal
15 jurisdiction, the plaintiff bears the burden of establishing that jurisdiction is
16 proper.” Siegler v. Sorrento Therapeutics, Inc., 2019 WL 581719, at *17 (S.D.
17 Cal. Feb. 13, 2019) (citing Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir.
18 2008)). “Personal jurisdiction may either be authorized by federal statute or
19 permissible to the extent provided under state law.” Siegler, 2019 WL 581719, at
20 *17. With respect to the latter, “the district court applies the law of the state in
21 which the court sits.” Id. (quoting Mavrix Photo, Inc. v. Brand Techs., Inc., 647
22 F.3d 1218, 1223 (9th Cir. 2011)).
23 “Under California law, courts may exercise jurisdiction ‘to the full extent
24 that such exercise comports with due process.’” Siegler, 2019 WL 581719, at *17.
25 (quoting Williams v. Yamaha Motor Co., 851 F.3d 1015, 1020 (9th Cir. 2017)). As
26 a result, “the jurisdictional analyses under state law and federal due process are the
27 same.” Siegler, 2019 WL 581719, at *17 (quoting Mavrix, 647 F.3d at 1223).
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 30 of 32 Page
ID #:130
1 “Due process ‘constrains a State’s authority to bind a nonresident defendant to a
2 judgment of its courts.’” Siegler, 2019 WL 581719, at *17 (citing Walden v.
3 Fiore, 571 U.S. 277, 283 (2014)). A nonresident of a state generally must have
4 “certain minimum contacts . . . such that the maintenance of the suit does not
5 offend traditional notions of fair play and substantial justice.” Siegler, 2019 WL
6 581719, at *17 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
7 “Minimum contacts come in two flavors: via-a-vis general jurisdiction or specific
8 jurisdiction.” Siegler, 2019 WL 581719, at *17. (citing Daimler AG v. Bauman,
9 571 U.S. 117, 127 (2014)).
10 “General jurisdiction is established when a party’s ‘affiliations with the state
11 are so ‘continuous and systematic’ as to render them essentially at home in the
12 forum state.” Siegler, 2019 WL 581719, at *18 (quoting Goodyear Dunlop Tires
13 Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). “General jurisdiction
14 imposes a high standard, requiring affiliations with a forum state that approximates
15 physical presence.” Siegler, 2019 WL 581719, at *18 (citing Helicopteros
16 Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415 (1984)). The Supreme
17 Court has held that the paradigm forum for the exercise of general jurisdiction over
18 a corporation is its “place of incorporation and principal place of business.”
19 Siegler, 2019 WL 581719, at *18 (quoting Daimler, 571 U.S. at 137).
20 As Plaintiffs concede, Citigroup is a Delaware corporation with its principal
21 place of business in New York. Compl. ¶ 4. Thus, Citigroup is neither
22 incorporated in California nor has its principal place of business in California.
23 Accordingly, Citigroup is not subject to general personal jurisdiction in this Court.
24 See, e.g., Siegler, 2019 WL 581719, at *18 (corporation that is incorporated
25 outside of California and has principal place of business outside California is not
26 subject to general personal jurisdiction in California federal courts).
27
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 31 of 32 Page
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1 Specific jurisdiction “focuses on the relationship among the defendant, the
2 forum, and the litigation.” Id. (citing Walden, 571 U.S. at 283-84). “Three things
3 must apply before the Court can exert specific jurisdiction: (1) the defendant either
4 ‘purposefully direct[s]’ its activities or ‘purposefully avails’ itself of the benefits
5 afforded by the forum’s laws; (2) the plaintiff’s claim ‘arises out of or relates to the
6 defendant’s forum-related activities; and (3) the exercise of jurisdiction []
7 comport[s] with fair play and substantial justice, i.e., it [is] reasonable.’” Siegler,
8 2019 WL 581719, at *19 (quoting Yamaha Motor Co., 851 F.3d at 1023). “The
9 burden is on the plaintiff to establish the first two prongs.” Siegler, 2019 WL
10 581719, at *19 (citing Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064,
11 1068 (9th Cir. 2017)). “If the plaintiff satisfies the first two prongs then the
12 defendant must present a ‘compelling case’ that exercise of jurisdiction would not
13 be reasonable.” Siegler, 2019 WL 581719, at *19 (quoting CollegeSource, Inc. v.
14 AcademyOne, Inc., 653 F.3d 1066, 1076 (9th Cir. 2011)).
15 Plaintiffs have not pled any facts suggesting that Citigroup “purposefully
16 directed” its activities to California or “purposefully availed” itself of California’s
17 laws. Nor has Plaintiff alleged any facts suggesting that its claims “arise out of or
18 relate to” Citigroup’s activities in California. Indeed, the Complaint does not
19 include any allegations of any specific Citigroup activities in California. This is
20 not surprising. Citigroup is a financial holding company and does not make PPP
21 loans directly. See, e.g., Schneider v. CitiMortgage, Inc., 2018 WL 4491244, at
22 *15 (D. Kan. Sept. 19, 2018) (noting that “Citigroup . . . operates as a holding
23 company for other entities or affiliates”). As such, Plaintiffs fail to meet their
24 burden on the first two prongs of the analysis. Because of the lack of any alleged
25 California activities by Citigroup, it would be unreasonable for this Court to
26 exercise specific jurisdiction over Citigroup in this case. See, e.g., Siegler, 2019
27 WL 581719, at *20 (not reasonable to exercise specific jurisdiction over
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
Case 2:20-cv-03815-ODW-AGR Document 27-1 Filed 05/18/20 Page 32 of 32 Page
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1 nonresident without alleged activities in California). Thus, Citigroup is not subject
2 to specific personal jurisdiction in this case.
3 Because Citigroup does not have minimum contacts with California under a
4 general or specific jurisdiction analysis, the Court lacks personal jurisdiction over
5 Citigroup, and Citigroup should be dismissed under Rule 12(b)(2).
6 IV. CONCLUSION
7 For the reasons stated above, Plaintiffs’ claims against the Citi Defendants
8 should be dismissed under Rule 12(b)(1) for lack of standing and lack of ripeness
9 and under Rule 12(b)(6) for failure to state a claim. Both Citi Defendants should
10 therefore be dismissed from this case. In addition, Citigroup should be dismissed
11 from this case for lack of personal jurisdiction under Rule 12(b)(2).
12
Dated: May 18, 2020 MAYER BROWN LLP
13
By: /s/ Bronwyn F. Pollock
14 Bronwyn F. Pollock (SBN 210912)
15 Lucia Nale (Admitted Pro Hac Vice)
Thomas V. Panoff (Admitted Pro Hac Vice)
16 Christopher S. Comstock (Admitted Pro Hac Vice)
Andrew J. Spadafora (Admitted Pro Hac Vice)
17
Attorneys for Specially Appearing Defendant
18 CITIGROUP INC. and Defendant CITIBANK, N.A.
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS BY
SPECIALLY APPEARING DEFENDANT CITIGROUP INC. AND DEFENDANT CITIBANK, N.A.;
CASE NO. 2:20-CV-03815-ODW-AGR
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