Court filing
RESPONSE IN OPPOSITION -- (re: pldg. ( 1 in MDL No. 2950) ) Filed by Defendants… — Agent Fee Litigation (Dkt. 150)
Summary
An opposition of Regions Bank and Regions Financial Corporation to centralization of actions under 28 U.S.C. § 1407, filed June 17, 2020 as Document 150 before the United States Judicial Panel on Multidistrict Litigation in In re Paycheck Protection Program (PPP) Agent Fees Litigation, MDL No. 2950. It argues the underlying suits are futile because neither the CARES Act nor the PPP regulations provide a private cause of action. It also argues the claims are unripe or moot because the interim final rule at 85 Fed. Reg. 20811 provides that agent fees are paid by the lender out of the fees the lender receives from the SBA, and states the bank had not received lender fees when served and intends to pay documented agent fees. The 15-page filing points to transfer under 28 U.S.C. § 1404 as a preferable alternative to centralization.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 1 of 15
BEFORE THE UNITED STATES JUDICIAL
PANEL ON MULTIDISTRICT LITIGATION
)
)
IN RE PAYCHECK PROTECTION )
PROGRAM (PPP) AGENT FEES ) MDL No. 2950
LITIGATION )
)
)
REGIONS BANK AND REGIONS FINANCIAL CORPORATION’S
OPPOSITION TO CENTRALIZATION OF ACTIONS UNDER 28 U.S.C. § 1407
Regions Bank1 opposes centralization. All the lawsuits underlying Alliant’s Motion
to Transfer — the twelve identified there and any tag-alongs in which plaintiffs allege that
they are entitled to “agent fees” from banks that participated in the PPP — are futile. The
CARES Act and the PPP regulations do not provide a private cause of action for alleged
violations of the PPP. Centralizing more than a dozen cases, all of which rest on a theory
for which federal law provides no private cause of action, would be a great waste of
resources. Besides that, the plaintiffs jumped the gun, making the lawsuits against Regions
and certain other banks non-justiciable. The law says that any agent fees will be paid “out
of” the “lender fees” received from the SBA, so the banks are unable to do anything on
agent fees until they receive their lender fees. Although the SBA in the past few days has
begun to disburse lender fees, most of the banks (including Regions) had not received any
1
Regions Financial Corporation is named as a defendant in the Northern District
of Alabama case and thus here in Alliant’s Motion to Transfer, but Regions Financial
Corporation is a holding company, not a bank, and had no involvement with the PPP.
Therefore, as set out in its Motion to Dismiss in the Northern District of Alabama case,
Regions Financial Corporation has been sued improperly. Regions Financial Corporation
nevertheless joins in this opposition.
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 2 of 15
lender fees when they were served with the complaints. And Regions, like at least some of
the other banks, fully intends to proceed with paying agent fees to those agents who have
properly documented their services. Thus, the plaintiffs’ claims were unripe to start, and
soon the banks’ payments of the agent fees will moot the claims for good. These cases will
need no discovery. The banks who may choose not to pay agent fees perhaps are differently
situated, but Regions and others like it should not be heaped in with them in an MDL.
Even if one of the plaintiffs somehow made it past the pleadings stage, the ensuing
discovery would be case-specific. The relevant documents and witnesses in one action
would have nothing to do with any of the others. Beyond the existence of the PPP, the
actions encompassed by the Motion to Transfer are distinct: different banks, borrowers,
and agents, and no alleged facts that tie together the various banks’ PPP operations. The
record here therefore contains nothing to overcome the Panel’s usual reluctance to
centralize actions against many different defendants in one MDL.
Centralization under 28 U.S.C. § 1407 would only drive up costs for the parties and
misuse the transferee court’s time.
BACKGROUND2
I. The PPP Authorized Private Lenders to Fund SBA-Backed Loans to Small
Businesses in Response to the COVID-19 Pandemic
Congress created the PPP through the CARES Act. The PPP requires participating
private lenders, such as Regions, to determine borrowers’ eligibility and then provide the
2
Regions currently is a defendant in two cases: No. 2:20-cv-591 (N.D. Ala.), in
which it is the only defendant, and No. 1:20-cv-22339 (S.D. Fla.), in which it is one of
twenty. The complaints are attached as Exhibits A and B, respectively. Regions’ Motion
to Dismiss in the Northern District of Alabama is attached as Exhibit C. Regions intends
to move to sever and transfer the claims in the Southern District of Florida to the Northern
District of Alabama, but as of this filing, Regions has not even been served.
2
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 3 of 15
capital to fund the loans. See, e.g., Interim Final Rule (“IFR”), 85 Fed. Reg. 20811, 20812
(effective April 15, 2020).3 The SBA will forgive the loans for borrowers who spend the
money the right way.
A. The SBA Shall Pay Lender Fees
The CARES Act creates a way to compensate lenders who participate in the PPP.
See 15 U.S.C. § 636(a)(36)(P)(i) (the SBA “shall reimburse a lender authorized to make a
covered loan” at fee rates of 1%, 3%, or 5%, depending on the amount of the loan).
Subsequent guidance confirmed the steps that lenders must take to receive those fees.4
Regions followed the SBA’s rules. Upon filing its Motion to Dismiss in the
Northern District of Alabama, Regions had not yet received any lender fees. [Motion to
Dismiss, Ex. C, ¶ 9.] During the week of June 15, Regions received its first tranche of
lender fees, representing only a portion of the amount Regions is owed. As of this filing,
Regions has not received all the lender fees due from the SBA. The SBA has not provided
a schedule for subsequent tranches of lender fees.
B. The Agent Fees Will Be Paid Out of the Lender Fees
The PPP also contemplates some borrowers’ uses of agents to assist with
applications. The IFR set out how agent fees, if any, would be paid: “Agent fees will be
3
Regions has funded approximately 44,000 loans, or $4.8 billion in capital. More
than 5,000 lenders have funded more than $500 billion in PPP loans. Regions does not
appear to be among the ten largest PPP lenders. The largest PPP lender has extended more
than $28.6 billion in 254,000 loans. See SBA, Paycheck Protection Program Report,
Summary of PPP Approved Lending (May 30, 2020), available at https://bit.ly/2AwiwfL.
4
Each lender must submit a report, labeled Form 1502, that details the lender’s PPP
loans and the fees due thereon. See SBA, Procedural Notice, No. 5000-20028 (May 21,
2020), available at https://bit.ly/2XW27tO.
3
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 4 of 15
paid by the lender out of the fees the lender receives from SBA.” 85 Fed. Reg. 20811,
20816 (emphasis added). The fee rates of 0.25%, 0.50%, and 1%, depending on the amount
of the loan, follow from “the fees that lenders receive for making PPP loans.” Id.
To be eligible for agent fees, each agent must provide to the lender certain
information about the services performed for the borrower.5 Then, after the lender receives
the lender fees, the lender will be able to pay agent fees to those agents who have properly
followed the rules. This means that, after Regions has received the lender fees on a
particular borrower’s loan, Regions intends promptly to pay fees to the agent, if any, as
long as the agent properly documented its services. [Motion to Dismiss, Ex. C, ¶ 12.] The
process of paying agent fees therefore is ongoing for the loans for which Regions has
received the lender fees (i.e., those included in the first tranche). As a matter of law,
Regions cannot yet pay all agent fees because it has not yet received all lender fees.
II. The False Claims That Regions Refuses to Pay Agent Fees Are Not Viable
A. The Northern District of Alabama Is Likely to Dismiss the Claims
Against Regions
In the Northern District of Alabama case, plaintiff Leigh, King, Norton &
Underwood, LLC (“LKNU”), alleges that Regions is engaging in an “on-going,” “uniform
and calculated” “pattern and practice” of failing to pay fees to agents who prepare PPP loan
applications. [Complaint, Ex. A, ¶ 27.] Not so. The plain language of the SBA regulation
reflects that Regions cannot pay agent fees until it has received the lender fees; the
undisputed facts show that Regions had not received the lender fees when it was served
with the Complaint; and the clear statements from Regions itself establish that Regions
5
The agent must file a report, labeled Form 159, that contains the information that
the SBA requires before the payment of agent fees. See SBA Form 159, Fee Disclosure
and Compensation Agreement, available at https://bit.ly/2MYxRsa.
4
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 5 of 15
intends to pay agent fees, barring further guidance from the SBA, as long as the agents
have properly documented their services. [See Motion to Dismiss, Ex. C.] In fact, now that
Regions has begun receiving lender fees from the SBA, Regions will begin paying agent
fees promptly. In any case, neither the CARES Act nor the PPP regulations give a plaintiff
a right to sue.
Regions thus filed the Motion to Dismiss on June 4, and under the court’s order,
the parties will complete briefing on the Motion to Dismiss before the end of June.
B. The Southern District of Florida Is Likely to Dismiss the Claims
Against Regions or Transfer Them to the Northern District of Alabama
The day after Regions moved to dismiss the Regions Action, Full Compliance,
LLC, sued Regions and nineteen other banks in the Southern District of Florida. Like
LKNU, Full Compliance fails to understand how the PPP works and further misstates
Regions’ position on agent fees. [Complaint, Ex. B, ¶¶ 50 & 51 (“Defendants funded PPP
loans for Borrowers represented by Plaintiffs and the Class, received their Lender Fees
from the Federal Government, and failed to pay the Agent Fees earned by the Plaintiffs
and Class out of the Lender Fees received”; “Defendants have either failed and refused to
pay, or are willing to pay only a partial percentage of, the monies owed in Agent Fees to
Plaintiffs and the Class, thus retaining for themselves all of the statutory fees allotted by
the Government for Agents as part of the PPP.” (emphasis added)).] This is false because
Regions had not received any lender fees when the suit was filed and because Regions fully
intends to pay agent fees, as stated above.
Like the Northern District of Alabama, the Southern District of Florida is likely to
dispose of this case under Fed. R. Civ. P. 12. Regions plans to move, in the alternative, to
sever and transfer the claims against Regions to the Northern District of Alabama under 28
5
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 6 of 15
U.S.C. § 1404. The prior pending action there and the presence of Regions’ headquarters
in Birmingham (within the District) favor transferring the claims, so the Northern District
of Alabama can handle the claims against Regions in one fell swoop.
III. Alliant’s Motion to Transfer Similarly Reflects an Unviable Theory
Like LKNU’s and Full Compliance’s complaints, Alliant’s Motion to Transfer
misapprehends the PPP process, contending that the “Lender Fees that the Lenders have
been paid by the Federal Government to date is [sic] approximately $20 billion.” [Motion
to Transfer, at 3 (emphasis added).] Alliant also says, with no supporting authority, that
“the defendants . . . each received their Lender Fee from the Federal Government pursuant
to the SBA Regulations.” [Id. at 8 (emphasis added).] As for agent fees, Alliant argues that
“[a]ll of the Related Actions allege that defendants have either failed to pay at all or failed
to pay the full fee owed to plaintiffs [i.e., agents], damaging plaintiffs and the PPP Agents
nationwide.” [Id. (emphasis added).] The fundamental premise of the Motion to Transfer
therefore is deeply flawed. Regions and at least some other banks fully intend to pay agent
fees but, as a matter of law, were unable to do so prior to receipt of the lender fees.
ARGUMENT
Alliant has not carried — and no other party will be able to carry — the burden to
show that transfer “will further the purposes of Section 1407.” In re Cable Tie Pat. Litig.,
487 F. Supp. 1351, 1354 (J.P.M.L. 1980). Centralization would conflict with those
purposes for two reasons. First, it would disrupt the original forum courts’ opportunities to
resolve straightforward motions to dismiss. Regions’ Motion to Dismiss is not the first or
the last of its kind. Centralizing cases with clear legal grounds for dismissal would
unnecessarily increase the time and expense required to resolve this case. Second, even if
6
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 7 of 15
the cases proceeded to discovery, an MDL would be anything but convenient and efficient,
given the distinctness of all facts that would be at issue in the various cases.
I. The Panel Should Allow the Original Forum Courts To Resolve the Legal
Issues, Including the Absence of Any Private Right of Action
As a practical matter, dispositive motion practice is likely to resolve the claims
against Regions and other banks. First, under well-established law, a plaintiff has no right
of action for an alleged violation of an SBA lending program. See, e.g., Aardwoolf Corp. v.
Nelson Capital Corp., 861 F.2d 46, 48 (2d Cir. 1988) (“[T]he Small Business Act does not
provide a debtor such as [the plaintiff] with a private cause of action . . . .”) ; Bulluck v. Newtek
Small Bus. Fin., Inc., _ F. App’x _, No. 19-10238, 2020 WL 1490702, at *3 (11th Cir. Mar.
27, 2020) (“[W]e agree with the district court that no private right of action exists for a
violation of the Small Business Act or the regulations.”). The CARES Act did not herald
any change in that jurisprudence, as the United States District Court for the District of
Maryland recently held. See Profiles, Inc. v. Bank of Am. Corp., __ F. Supp. 3d __, No.
SAG-20-0894, 2020 WL 1849710, at *7 (D. Md. Apr. 13, 2020) (“The plain language of
the statute does not suggest . . . a private remedy against participating SBA lenders. To
the extent Congress intends to create such a private right of action, it will be able to make
its intent clear, if it ultimately amends the CARES Act.” (emphasis added)).6
Second, the claims are doubly non-justiciable — either unripe or moot. The IFR
6
True enough, whether the CARES Act creates a private right of action may be a
legal question common to the Regions Action and other actions, but common legal
questions on their own cannot support centralization. As the Panel has repeatedly held,
“merely to avoid two federal courts having to decide the same issue is, by itself, usually
not sufficient to justify Section 1407 centralization.” In re Medi–Cal Reimbursement Rate
Reduction Litig., 652 F. Supp. 2d 1378, 1378 (J.P.M.L. 2009). District courts around the
country are competent to decide similar questions of law, as shown already by the Profiles
court in the District of Maryland, and Alliant has shown no common factual questions that
would warrant divesting the district courts of the cases.
7
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 8 of 15
states that “[a]gent fees will be paid by the lender out of the fees the lender receives from
the SBA.” 85 Fed. Reg. 20811, 20816. Regions, like most of the other banks, had not yet
received any lender fees when it moved to dismiss for lack of subject matter jurisdiction in
the Northern District of Alabama. [Motion to Dismiss, Ex. C, ¶¶ 9–12.] Even now that the
SBA has begun disbursing lender fees, Regions undisputedly is not refusing to pay agent
fees. As a result, there still is no case or controversy arising out of a refusal to pay agent
fees. See, e.g., Texas v. United States, 523 U.S. 296, 300 (1998) (“A claim is not ripe for
adjudication if it rests upon contingent future events that may not occur as anticipated, or
indeed may not occur at all.” (emphasis added)). At this point, any allegation that Regions
refuses to pay agent fees is a pure fabrication.
That the SBA has begun paying lender fees in no way strengthens the case for an
MDL. On the contrary, the SBA’s payments elucidate the baselessness of the plaintiffs’
various claims against Regions and others because those banks will turn around and pay
the agent fees to agents who provided legitimate assistance to borrowers and have
properly documented that assistance. [Motion to Dismiss, Ex. C, ¶ 12.] The plaintiffs’
claims therefore will be mooted. Although some banks have announced that they will not
pay agent fees, Regions and others should not be wrapped into an MDL focused on banks
not paying agent fees when they will pay agent fees as soon as they can.
“[M]otions to dismiss or remand, raising issues unique to the particular case, may
be particularly appropriate for resolution before the Panel acts on the motion to transfer.”
Manual for Complex Litigation (Fourth) § 20.131 (2004).7 In other words, the interests of
7
A denial of Alliant’s Motion to Transfer because of the legal issues pending before
the original forum courts would be in line with the Panel’s longstanding precedent. See,
e.g., In re U.S. Navy Variable Reenlistment Bonus Litig., 407 F. Supp. 1405, 1407 (J.P.M.L.
8
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 9 of 15
efficiency and convenience weigh in favor of allowing the original forum courts to take up
the legal issues,8 rather than sending all the actions and all the various to a transferee court.
II. Even If a Case Could Survive Rule 12, Centralization Would Be Inconvenient,
Inefficient, and Unwieldy
“The objective of transfer is to eliminate duplication in discovery, avoid conflicting
rulings and schedules, reduce litigation cost, and save the time and effort of the parties, the
attorneys, the witnesses, and the courts.” Manual for Complex Litigation, § 20.131 (4th
ed.). Here, if a case were to proceed to discovery, transfer would not further this objective.
A. The Multiplicity of Defendants Demands Denial of the Motion
The Panel consistently has held that multiple defendants, combined with the need
for defendant-specific discovery, warrant denying a motion to consolidate. See, e.g., In re
Mortg. Indus. Home Affordable Modification Program (HAMP) Contract Litig., 867 F.
Supp. 2d 1338, 1338–39 (J.P.M.L. 2012) (explaining that actions challenging “industry-
1976) (“[W]e are of the view that questions of law rather than common questions of fact
are significantly preponderant and, hence, Section 1407 treatment would in any event be
unwarranted.”); In re Am. Home Prods. Corp. “Released Value” Claims Litig., 448 F.
Supp. 276, 278 (J.P.M.L. 1978) (“Thus, since these actions involve a common question of
law and share few, if any, questions of fact, transfer under Section 1407 is inappropriate.”);
In re The Boeing Company Empl. Prac. Litig., 293 F. Supp. 2d 1382, 1383 (J.P.M.L. 2003)
(denying transfer) (“It further appears that the Pennsylvania action is moving forward
rapidly and that a motion for summary judgment may be filed shortly. If after the
Pennsylvania court has ruled on any summary judgment motions, it appears that any
allegations of company-wide discrimination remain unresolved in the Pennsylvania action,
movants can again seek Section 1407 centralization.”).
8
For examples of the growing number of motions to dismiss on legal grounds in
addition to Regions’ Motion, see Defendants’ Motion to Dismiss, Doc. 17, David S. Lowry,
CPA, Ltd. v. U.S. Bancorp et al., No. 1:20-cv-348 (S.D. Ohio); Motion to Dismiss of
Defendant Cross River Bank, Doc. 43, A.D. Sims, LLC v. Wintrust Fin. Corp., et al., No.
1:20-cv-2644 (N.D. Ill.). Furthermore, at least one district court has ordered the plaintiff to
show cause as to why the complaint should not be dismissed for lack of subject matter
jurisdiction under the Class Action Fairness Act. Order to Show Cause, Doc. 6, Aloha
Accounting and Tax, LLC v. First Hawaiian Bank et al., No. 1:20-cv-254 (D. Haw.).
9
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 10 of 15
wide misconduct in mortgage origination, servicing, and foreclosure practices” where “the
nature of plaintiffs’ allegations and the involvement of many different non-overlapping
defendants make the existence of common questions of fact unlikely” (emphasis added));
see also In re Am. Bd. of Med. Specialties Maint. of Certification Antitrust Litig., 382 F.
Supp. 3d 1353, 1353–54 (J.P.M.L. 2019) (“[I]ndividualized discovery and legal issues . . .
are likely to be numerous and substantial.”).9
Alliant tries to manufacture some “common questions of fact” that Alliant hopes
could bolster centralization under § 1407. Instead, Alliant ends up bolstering the opposite.
Some of the purported “common questions of fact” identified by Alliant hinge largely on
a legal determination and are thus insufficient to justify centralization. [Motion, at 8
(“Whether defendants were required to pay the PPP Agent fees to the plaintiffs”; “Whether
defendants complied with their legal obligations under the terms of the CARES Act”).]
Others confirm the defendant-specific nature of the discovery that would be at issue. [Id.
(“Whether defendants complied with all applicable SBA Regulations in processing
applications for PPP funds and in distributing PPP funds”; “Whether defendants have a
policy and/or practice of failing to compensate PPP Agents who facilitated PPP loans to
the detriment of the PPP Agents”; “Whether the defendants converted plaintiffs’ and
Agents’ PPP Agent fees”).10
9
Importantly, none of the plaintiffs appear to have alleged that any of the banks
collaborated, coordinated, or otherwise conspired on PPP matters. See In re Prescription
Drug Co-Pay Subsidy Antitrust Litig., 883 F. Supp. 2d 1334, 1335 (J.P.M.L. 2012) (citing
the plaintiffs’ failure to “allege that any of the defendants conspired or collaborated to
develop and implement th[e] co-pay and subsidy programs” (emphasis added)).
10
Alliant also contends that general convenience, the number of defendants, and
the presence of class allegations are bases for consolidation. [Motion to Transfer at 9–11.]
The cases cited by Alliant do not apply here, however. None of the cases identifies the
10
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 11 of 15
The Panel’s recent decision in In re CP4 Fuel Pump Marketing, Sales Practices,
and Products Liability Litigation, 412 F. Supp. 3d 1365 (J.P.M.L. 2019) (Caldwell, J.),
illustrates the impropriety of centralization here. There, a dozen actions involved
allegations that three different automobile manufacturers used a defective “CP4 fuel pump”
in their diesel engines. Id. at 1366. The Panel concluded that “that centralization is not
necessary for the convenience of the parties and witnesses or to further the just and efficient
conduct of this litigation.” Id. Among the key considerations “cut[ting] against
centralization” were the defendant-specific and plaintiff-specific issues at stake. Id. For
example, the manufacturers employed different “design[s],” conducted different “testing,”
“interact[ed]” differently with the manufacturer of the CP4 fuel pump, and engaged in
different “marketing and communications with consumers.” Id. at 1366–67 (emphasis
added). The Panel also explained that “considerable discovery likely will target plaintiffs’
individual — and varying — ownership experiences.” Id. at 1367 (emphasis added). More
broadly, the Panel emphasized its “usual reluctance” to “centralize litigation against
multiple, competing defendants.” Id. “[C]entralizing competing defendants in the same
number of defendants as a ground for consolidation. And all of the cases were consolidated
because of significant common factual questions. See In re Pilot Flying J Fuel Rebate
Contract Litig. (No. II), 11 F. Supp. 3d 1351, 1352 (J.P.M.L. 2014) (cases were based on
same allegedly fraudulent scheme); In re Fisher-Price Rockn Play Sleeper, 412 F. Supp.
3d 1357, 1358 (J.P.M.L. 2019) (cases shared common issue of whether a baby rocker’s
angled design rendered it unsafe); In re Chrysler LLC 2.7 Liter V-6 Engine Oil Sludge
Prods. Liab. Litig. 598 F. Supp. 2d 1372, 1373 (J.P.M.L. 2009) (“actions share[d] factual
questions arising out of the allegation of a common defect in the 2.7 liter engine of several
models of Chrysler vehicles for the years 1998 through at least 2003”); In re North Sea
Brent Crude Oil Futures Litig., 978 F. Supp. 2d 1384, 1385 (J.P.M.L. 2013) (all actions
involved the “undeniably complex” issues of whether defendants manipulated crude oil
prices and futures and “discovery is certain to be international in scope” given defendants’
European headquarters).
11
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 12 of 15
MDL,” the Panel explained, “likely would complicate case management due to the need to
protect trade secret and confidential information.” Id. In addition, “a multi-defendant MDL
may prolong pretrial proceedings, because of, inter alia, the possible need for separate
discovery and motion tracks.” Id. (emphasis added).11
The same principles counsel against MDL treatment in this case. The existence of
the same lending program does not overcome the uniqueness of each defendant bank’s
interactions with the borrowers and their agents and the differences in the defendant banks’
PPP marketing and communications on PPP matters. The individualized experiences of the
plaintiffs also will be distinct for each action, as the parties in each will need discovery on
whether the alleged “agents” provided legitimate assistance and properly qualified as
agents under the law. Further complicating matters, some banks, like Regions, have
announced their plans to pay agent fees; others, however, do not plan to pay agent fees.
Lumping them all together for discovery would be unworkable. As a result, the various
actions reveal the need for separate discovery and motion tracks.12 Plus, centralizing
competing banks in the same MDL would significantly complicate case management
because the competing banks, like the competitors in CP4 Fuel Pump, would need to
protect against disclosure of trade secrets and confidential business information.13
11
For contrast, take the Panel’s recent decision to grant a § 1407 motion where a
series of actions all named the same defendant. See In re Uber Techs., Inc., Data Sec.
Breach Litig. 304 F. Supp. 3d 1351 (J. P. M. L. 2018).
12
Indeed, Regions and other banks already have launched their own motion tracks.
13
Any argument from Alliant or any other party that the CP4 Fuel Pump holding
somehow should be limited to products liability cases would miss the mark. Look no
further than the Panel’s 2008 decision in In re Auction Rate Securities (ARS) Marketing
Litigation, 581 F. Supp. 2d 1371 (J.P.M.L. 2008), which involved securities fraud actions
filed against dozens of banks in the wake of widespread failure in the market for auction
12
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 13 of 15
Overall, centralization would complicate pretrial proceedings and make them more
expensive by forcing lawyers to needlessly crisscross the country to attend irrelevant
depositions and review irrelevant documents.
B. If Discovery Were Needed and Coordination Were Called For,
Informal Coordination Would Be the Appropriate Alternative to
Centralization for All the Cases
A review of the cases listed on the Schedule of Related Actions reveals that the law
firms Graylaw Group and Dhillon Law Group represent the plaintiffs in eleven of the
twelve cases, and the law firm Geragos & Geragos represents the plaintiffs in eight of the
twelve, proving that the plaintiffs would be able to coordinate among themselves if there
were any reason to engage in overlapping discovery (a doubtful proposition for the reasons
explained above). The Panel therefore should decline centralization. See, e.g., In re Best
Buy Co., Inc., Cal. Song-Beverly Credit Card Act Litig., 804 F. Supp. 2d 1376, 1378
(J.P.M.L. 2011) (“[C]entralization under Section 1407 should be the last solution after
considered review of all other options.”); In re Rite Aid Corp. Wage and Hour Emp’t
Practices Litig., 655 F. Supp. 2d 1376, 1377 (J.P.M.L. 2009) (“[c]ooperation among
counsel and the parties is particularly appropriate here, where plaintiffs in four of the six
actions encompassed by the motion share counsel” (emphasis added)).
rate securities (“ARS”). The Panel held that the movant failed to carry its burden of proving
sufficiently complex and numerous common questions of fact, and the Panel’s reasoning
compels the denial of Alliant’s Motion. After acknowledging that the actions “share[d]
some general common factual questions,” the Panel focused on the fact that all the actions
were brought against different entities. Id. Furthermore, the Panel explained, the actions
involved “different representations made to each purchaser of ARS,” which would
“necessarily vary from institution to institution (and perhaps from ARS to ARS).” Id.
(emphasis added). So it is here, with PPP loans instead of ARS: The particular interactions
between the agent and the lender will have varied from institution to institution, and
centralized discovery will not be productive.
13
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 14 of 15
C. For Regions, § 1404 Transfer of the Southern District of Florida Claims
to the Northern District of Alabama Is Preferable to Centralization
Under § 1407
Finally, without burdening the Panel or a transferee court, Regions intends to take
action that actually would serve the interests of convenience and judicial economy. Regions
intends not only to move to dismiss the claims in the Southern District of Florida but also
to move under § 1404 to sever and transfer the claims against Regions to the Northern
District of Alabama. While the Southern District of Florida, like all the other original forum
courts, will have everything it needs to dismiss the case under Rule 12, Regions will present
this alternative option because of the prior pending action in the Northern District of
Alabama. This would allow that court to resolve all the Regions claims at once. And
because Regions’ headquarters are in Birmingham, it would be more convenient and
efficient to conduct any discovery that might be needed. The Panel’s precedent shows that
this is a preferable alternative to centralization. See, e.g., In re Dollar Tree Stores, Inc.,
Fair Labor Standards Act (FLSA) & Wage & Hour Litig., 829 F. Supp. 2d 1376, 1377
(J.P.M.L. 2011) (“Section 1404 transfer, if appropriate, [is a] preferable alternative[e] to
Section 1407 centralization.”).
CONCLUSION
Undersigned counsel is unaware of any centralized MDLs that involved claims for
which no private rights of action existed. This should not be the first. Furthermore, the
differences among the various banks, including but not limited to the reality that some
banks have announced that they will pay agent fees while others have declared the opposite,
make these cases unsuitable for centralization. For all the reasons discussed, the Panel
should not centralize these cases under § 1407.
14
Case MDL No. 2950 Document 150 Filed 06/17/20 Page 15 of 15
Submitted on June 17, 2020.
s/Larry B. Childs
Larry B. Childs
Brian J. Malcom
Charles W. Prueter
WALLER LANSDEN DORTCH & DAVIS, LLP
1901 Sixth Avenue North, Suite 1400
Birmingham, Alabama 35203
larry.childs@wallerlaw.com
brian.malcom@wallerlaw.com
charles.prueter@wallerlaw.com
205.226.5700 telephone
Counsel for Regions Bank and Regions
Financial Corporation
15
File and source
- File
- gov.uscourts.jpml.1161172.150.0.pdf
- Size
- 225,829 bytes
- SHA-256
- e25c0b76f1e507443434a9d6293893bf63e3fcbbb82682ab01e97c08acb5665d
- Original
- No public link identified.