Court filing
RESPONSE IN OPPOSITION -- (re: pldg. ( 1 in MDL No. 2950) ) Filed by Defendants… — Agent Fee Litigation (Dkt. 166)
Summary
A response in opposition to Movant Alliant CPA Group, LLC's Motion for Transfer of Actions, filed June 17, 2020 as Document 166 before the United States Judicial Panel on Multidistrict Litigation in MDL No. 2950, the PPP Agent Fees Litigation. It is filed by a self-described Regional and Small Bank Group of five bank defendants and joins an opposition filed by Synovus Bank. The brief argues that centralization under 28 U.S.C. § 1407(a) is a last resort, that 66 of the 72 defendants named in the 12 listed actions appear in only one lawsuit, that the complaints plead no facts specific to these banks, and that the motion is premature because motions to dismiss are pending. It adds that most borrowers needed no agent, noting that SBA Form 2483 is two pages with an estimated completion time of 8 minutes. The filing is 24 pages.
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Case MDL No. 2950 Document 166 Filed 06/17/20 Page 1 of 24
BEFORE THE UNITED STATES
JUDICIAL PANEL ON MULTIDISTRICT LITIGATION
IN RE: Paycheck Protection Program (“PPP”) MDL Docket:2950
Agent Fees Litigation
REGIONAL AND SMALL BANK RESPONSE IN OPPOSITION TO MOVANT
ALLIANT CPA GROUP, LLC’S MOTION FOR TRANSFER OF ACTIONS
The “Regional and Small Bank Group”1 opposes Movant Alliant CPA Group, LLC’s
(“Movant”)’s Motion for Transfer of Actions. The Regional and Small Bank Group join the
opposition filed by Synovus Bank (and others) but write separately to identify the particular
perspective of regional and smaller banks.
I. INTRODUCTION
Consolidation under 28 U.S.C. § 1407(a) is the option of last resort, and Movant has failed
to meet its burden of demonstrating that consolidation would be for “the convenience of the parties
and witnesses” or “promote the just and efficient conduct” of these actions.
Most banks are sued only once: Most of the defendants in these actions are like the
Regional and Small Bank Group – involved in a single lawsuit. For instance, although there were
nominally 72 defendants in the 12 actions listed by Movant, 66 defendants are involved in only a
single lawsuit.2 Most of the remaining are defendants in only two actions or three actions. Only
the very largest banks with nationwide footprints are defendants in more than three actions. See In
re Transocean Ltd. Sec. Litig., 753 F.Supp.2d 1373, 1374 (J.P.M.L. 2010) (denying centralization
1
“Regional and Small Bank Group” includes: (1) Cadence Bancorporation and Cadence Bank,
N.A. (collectively, “Cadence”), (2) ServisFirst Bank; (3) Newton Federal Bank; (4) First National
Bank of Pennsylvania; and (5) F.N.B. Corp.
2
Exhibit A lists the cases in which each defendant has been named. Movant’s Motion states there
are 83 defendants. This was true, but movant has dismissed some defendants, generally bank
holding companies; other bank holding companies are due to be dismissed, and Movant’s failure
to do so artificially inflates the number of defendants.
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of two actions, “[a]s we have stated in the past, where only a minimal number of actions are
involved, the moving party generally bears a heavier burden …”); In re Six Flags Fair & Accurate
Credit Transactions Act (FACTA) Litig., 289 F. Supp. 3d 1343, 1344 (J.P.M.L. 2018)
(centralization unnecessary where only two actions pending); In re: Chemed Corp. S'holder
Derivative Litig., 11 F. Supp. 3d 1335, 1336 (J.P.M.L. 2014) (same); In re: Alteryx, Inc., Customer
Data Sec. Breach Litig., 291 F. Supp. 3d 1377-78 (J.P.M.L. 2018) (“centralization is not
necessary” when only three actions pending).
Most banks are far smaller: Most of the defendants are far smaller than the handful of
banks, with nationwide footprints, which have been sued in five or more actions. For example,
Cadence Bank is less than 1% the size of JP Morgan Chase or Wells Fargo by assets.3 Likewise,
Cadence made only approximately 4,000 PPP loans. In comparison, JP Morgan Chase announced
it would make 239,000 PPP loans and that it had made PPP loans “in all 50 states”4 and Wells
Fargo has made well over 100,000 PPP loans.5 Cadence is headquartered in Atlanta, Georgia, and
has less than 100 branches in six states (Alabama, Florida, Georgia, Mississippi, Tennessee and
Texas). To compare, as of April 2020, Wells Fargo had 75 times as many branches as Cadence
3
See Alicia Phanuef, Here’s a List of the Largest Banks in the United States by Assets in 2020,
BUSINESS INSIDER (Aug. 26, 2019), available at https://www.businessinsider.com/largest-banks-
us-list (last visited June 12, 2020).
4
Chase approved to fund about $29 billion to 239,000 businesses through the Paycheck Protection
Program, JPMORGANCHASE.COM (May 1, 2020), https://institute.jpmorganchase.com/news-
stories/chase-approved-to-fund-29-billion-to-239000-businesses-through-ppp (last visited June
15, 2020).
5
See Imani Moise & Bharath Manjesh, Wells Fargo Gets Federal Inquiries Over Handling of PPP
Loans, RUETERS (May 5, 2020), available at https://www.reuters.com/article/us-wells-fargo-
loans/wells-fargo-gets-federal-inquiries-over-handling-of-ppp-loans-idUSKBN22H2V9 (last
visited June 12, 2020).
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and served a third of all American households.6 As of 2018, JP Morgan Chase had 52 times as
many branches as Cadence and planned to open more.7 Many of the other defendant banks are
even smaller than Cadence. See Chart Ranking Defendants by Size, attached hereto as Exhibit B.
The top five banks by size in the United States hold almost 50% of the assets8 and the top eight
banks are designated as Global Systemically Important Banks.9 The Regional and Small Banks
have little in common with these substantially larger lenders with a nationwide footprint.
Bootstrapping cannot justify consolidation because no efficiency is gained. Counsel for
Movant has manufactured this MDL petition. They have filed ten putative class actions against
PPP lenders in eight different United States District Courts throughout the country.10 In fact,
Movant’s counsel has filed multiple cases against some of the same banks, making the same claims
6
See Wells Fargo Today, WELLSFARGOMEDIA.com (April 2020),
https://www08.wellsfargomedia.com/assets/pdf/about/corporate/wells-fargo-today.pdf, at 1 (last
visited June 15, 2020).
7
Matthew Heimer, Bank Branches Are Closing At A Record Pace. Here’s Why JPMorgan Chase
Is Opening More, FORTUNE, https://fortune.com/2018/08/20/jp-morgan-chase-bank-branches/
(last visited June 15, 2020).
8
See Bank Asset Concentration for United States, FEDERAL RESERVE BANK OF ST. LOUIS
(Updated Oct. 21, 2019) available at https://fred.stlouisfed.org/series/DDOI06USA156NWDB
(last visited June 12, 2020).
9
See Jared Berry and Akber Khan et al., How Do U.S. Global Systemically Important Banks Lower
Their Capital Surcharges?, FederalReserve.gov (Jan. 31, 2020), available at
https://www.federalreserve.gov/econres/notes/feds-notes/how-do-us-global-systemically-
important-banks-lower-their-capital-surcharges-20200131.htm, at n.5 (last visited Jun 12, 2020).
10
See American Video Duplicating Inc. et al. v. Citigroup Inc. et al., 2:20-cv-03815-ODW-AGR
(C.D. Cal. Apr. 27, 2020); A.D. Sims, LLC v. Wintrust Financial Corp. et al., 1:20-cv-02644 (N.D.
Ill. Apr. 30, 2020); David S. Lowry CPA Ltd. v. U.S. Bancorp. et al., 1:20-cv-00348-MWM (S.D.
Ohio April 30, 2020);American Video Duplicating Inc. v. Royal Bank of Canada et al., 2:20-cv-
04036-JFW-JPR (C.D. Cal. May 1, 2020). Brunner Accounting Group v. SVB Financial Group, et
al., 2:20-cv-04235-GW-E (C.D. Cal. May 8, 2020); Panda Group PC v. Bank of America
Corporation et al., 4:20-cv-00045-DN-PK (D. Utah May 11, 2020); ImpAcct, LLC v. JPMorgan
Chase & Co. et al., 1:20-cv-01344-NRN (D. Colo. May 12, 2020); Panda Accounting LLC v.
Academy Bank, N.A. et al., 2:20-cv-00985-DJH (D. Ariz. May 20, 2020).
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on behalf of the exact same putative class members.11 The MDL process is not intended to be
manipulated for advantage by litigants. Because the large bank classes by the Movant are identical
– and brought by the same core group of plaintiff’s counsel – the plan for efficiency is simple and
within their own power to achieve (that is, either coordinate their own cases with the same lawyers
for the same large defendants, or just dismiss without prejudice the cases with identical classes).12
No common facts (actually no facts at all) pled by movants: These 10 complaints filed by
Movant counsel are virtually “block and paste” copies and they include no factual allegations
regarding the individual Regional and Small Banks. Because there are no facts pled about any of
the Regional and Small Banks or any of their transactions, it is simply impossible for Movant to
assert that there are any common factual issues.
To illustrate, the Alliant complaint does not even use the names of any banks except in
the paragraphs identifying their citizenship. In all of the other paragraphs, the complaint simply
makes generic assertions about the “Defendants”. This type of naked “shotgun” pleading is not
only insufficient to sustain a complaint, but it cannot possibly demonstrate common facts even
among a particular bank – much less among all of the banks. See Vibe Micro, Inc. v. Shabanets,
878 F.3d 1291, 1294–95 (11th Cir. 2018) (quoting Weiland v. Palm Beach Cty. Sheriff's Office,
792 F.3d 1313, 1323 (11th Cir. 2015)) (“Shotgun pleadings violate Rule 8, which requires ‘a short
11
Compare Panda Group PC, No. 4:20-cv-00045-DN-PK, [Doc. 1] at ¶ 52 with American Video
Duplicating Inc., No. 2:20-cv-0815-ODW-AGR, [Doc. 1] at ¶ 52.
12
In re CP4 Fuel Pump Mktg., Sales Practices, & Prod. Liab. Litig., 412 F. Supp. 3d 1365, 1366
(J.P.M.L. 2019) (denying centralization because risk of redundant discovery and inconsistent class
certification rulings was diminished “plaintiffs in nine of the ten actions, as well as one of the two
tag-alongs, [we]re represented by the same attorneys”) ; In re Credit Union Checking Account
Overdraft Litig., 158 F. Supp. 3d 1363, 1364 (J.P.M.L. 2016) (denying centralization of eleven
actions (four tag-alongs), noting informal coordination of any overlapping discovery appeared
practicable, as all plaintiffs were represented by the same law firms); In re Helicopter Crash Near
Savannah, Georgia, on Jan. 15, 2014, 178 F. Supp. 3d 1372, 1373 (J.P.M.L. 2016) (denying
centralization in four actions; “plaintiffs are represented in all actions by the same law firm”).
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and plain statement of the claim showing that the pleader is entitled to relief,’ Fed. R. Civ. P.
8(a)(2), by ‘fail[ing] to one degree or another ... to give the defendants adequate notice of the
claims against them and the grounds upon which each claim rests.’); Weiland, 792 F.3d at 1323
(shotgun pleadings commit the “sin of asserting multiple claims against multiple defendants
without specifying which of the defendants are responsible for which acts or omissions, or which
of the defendants the claim is brought against”). For instance, the Alliant complaint:
does not identify any borrower for whom Alliant allegedly assisted as an agent;
does not identify (even in vague terms) any loan at issue;
does not identify the work done on any particular loan application;
does not identify any person at any bank involved
does not identify any person involved at Alliant with a particular bank
does not identify any person involved by any borrower;
does not identify how a particular bank would know that Alliant was involved on a
particular loan;
does not identify any communications with any bank by Alliant;
does not identify any dates for any work done or any loan submission;
does not identify whether any borrower agreed (in writing or otherwise) that Alliant
was its agent, how the borrower agreed, or when;
does not identify whether Alliant has made a demand (verbal or in writing) for agent
fees for a loan; and does not identify whether Alliant has itemized its fees, or
completed an SBA Form 159 (required under SBA rules for agent fees). See 13
C.F.R. § 103.5(a).
No efficiency is gained by dragging smaller banks away from where they operate: There
is no reason to drag the Regional and Small Banks across the country to be consolidated with cases
that contain no common factual questions, will have no overlapping discovery, and will produce
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no efficiency. This is especially true considering all of the witnesses, employees, borrowers, agents
and documents will be in their home states or nearby.
The MDL process is a powerful force for good when used in the correct circumstances, but
it also imposes significant costs and inconvenience on the parties. There are no efficiencies gained
when a Regional and Small Bank, named as a defendant in only one or two actions in its home
region, is forced into a complex and time consuming MDL in a place where they do not do business
– with no common facts – simply because Movant counsel has filed other actions against other
unrelated parties.
The Motion is premature: Although all of these cases are freshly filed,13 almost a third of
the Movant counsel’s actions already have serious motions to dismiss pending.14 These motions
include both (1) a simple attack under Rule 12(b)(6) (for instance, there are no facts pled at all)
and (2) more sophisticated attacks under Rule 12(b)(1) (for instance, ripeness, standing and subject
matter jurisdiction). Many more such motions are coming. All of the Regional and Small Banks
intend to file Motions to Dismiss. For instance (and this is just an example), Regions Bank15 has
raised a ripeness argument because it has not yet received its lender’s fees and therefore no agent
fee is currently due to “be paid out of lender fees” (quoting the plaintiff’s complaint and the SBA
13
See Press Release No. 20-45, Joint Statement by SBA Administrator Jovita Carranza and U.S.
Treasury Secretary Steven T. Mnuchin Regarding Enactment of the Paycheck Protection Program
Flexibility Act, SMALL BUSINESS ADMINISTRATION (Jun. 8, 2020), available at
https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/joint-statement-
sba-administrator-jovita-carranza-and-us-treasury-secretary-steven-t-mnuchin.
14
Attached as Exhibit C is a chart showing which actions have pending motions to dismiss.
15
Leigh, King, Norton & Underwood, LLC et al. v. Regions Financial Corporation et al., No.
2:20-cv-00591-JHE (N.D. Al. Apr. 28, 2020), [Doc. 7] at 2, 6, 11, 12, & 14.
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“Fact Sheet”).16 The Regional and Small Banks believe that their diverse facts and postures will
provide them even additional grounds for such motions. As this Panel has repeatedly held,
consolidation should not occur until the proper time. See In re ATM Interchange Fee Antitrust
Litigation, 350 F. Supp. 2d 1361, 1362-63 (J.P.M.L. 2004); In re Republic W. Ins. Co. Ins.
Coverage Litig., 206 F. Supp. 2d 1364, 1365 (J.P.M.L. 2002). To the extent cases survive early
motions to dismiss raising threshold questions of standing, ripeness, mootness, and subject matter,
then any efficiencies can be better achieved through informal coordinated discovery, internal
transfers within districts, § 1404 transfers, and stays under the first-filed rule.
II. BACKGROUND
These actions generically allege that a myriad of unrelated banks failed to pay “agent fees”
under the CARES Act for various types and degrees of assistance in the preparation of thousands
of different PPP loan applications, for thousands of different borrowers, by thousands of different
alleged agents. [Doc. 1-1] at 1-2, 4-5.
However, for the vast majority of loan applications, no agent would even be necessary. The
SBA form application for a PPP loan is a mere two pages, including signature lines. It states: “The
estimated time for completing this application, including gathering data needed, is 8 minutes.”
SBA Form 2483 (emphasis added).17 The applicant is only required (1) to answer eight simple
“yes/no” questions, and (2) list their average payroll and number of employees. The entire PPP
loan program was designed to be streamlined and easy for small business. The application was
16
See Paycheck Protection Program Information for Lenders, available at
https://home.treasury.gov/system/files/136/PPP%20Lender%20Information%20Fact%20Sheet.p
df.
17
https://www.sba.gov/sites/default/files/2020-
06/PPP%20Borrower%20Application%20Form%20%28Revised%20June%2012%202020%29-
Fillable-508.pdf.
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designed so that the overwhelming majority of small businesses would not need the use of an agent
as contemplated under the “regular” 7(a) loan program. Plaintiffs appear to assert that all 4,475,599
PPP borrowers18 required an agent. Nonsense. Determining which (if any) of these borrowers used
an agent will never be a common question.
A. Pleadings Demonstrate Significant Factual Differences Among Banks,
Borrowers and Alleged Agents.
The complaints filed by Movant’s counsel, though not necessarily adequately pled under
Rule 12(b)(6), at least include some factual allegations.19 Those complaints illustrate some of the
significant factual differences (1) among banks, (2) among individual borrowers and (3) among
individual alleged agents. The pleadings in those cases illustrate that it is not enough to make a
conclusory claim of providing undisclosed assistance to an unknown bank for undescribed work
at an unidentified time. An example is – Sport & Wheat CPA, P.A. et al. v. ServisFirst Bank Inc.
et al., Case No. 3:20-cv-05425-TKW-HTC (N.D. Fla. Apr. 27, 2020). The Sport & Wheat
complaint, for instance, makes clear:
Some banks pay agent fees and some do not. See [Doc. 21] at ¶ 80 (“Some lenders
have agreed to pay Sport & Wheat for its services. Defendants, however, have
refused.”)
Agents cannot qualify for a fee unless they have submitted a completed SBA Form
159 for each transaction (which requires a borrower’s signature agreeing the alleged
agent was their agent). Id. at ¶ 65 (“to be paid under 13 CFR § 103.5(a), the PPP
Agent must submit the arrangement in writing on SBA’s Form 159”);
18
This figure is the total number of PPP borrowers nationally. See Press Release No. 20-45, supra
note 13. The Alliant complaint demands a flat percentage of all “lender fees” be placed into a
“fund.” It is unclear if the Alliant class is every PPP loan in the country or whether other actions
filed by Movant’s counsel would cover the remainder. Regardless, the number of loans is huge
and the assertion is a maximum agent fee is due on every loan made by every defendant.
19
The Regional and Small Bank Group Defendants do not in any way acknowledge that any of
the complaints filed against them or any of the other Defendants are adequately pled such as to
state a claim under Fed. R. Civ. P. 12(b)(6), and the Regional and Small Bank Group Defendants
each reserve their rights to move to dismiss under this rule, and on any other grounds.
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Agents must itemize their services if the amount claimed is over $2,500. See id.;
Fee Disclosure and Compensation Agreement,
https://www.sba.gov/sites/default/files/2018-09/Form%20159%20-
%20%28FINAL%29%209.10.18.pdf, at 2 (“Itemization and supporting
documentation is required if the compensation paid exceeds $2,500. Itemization
must include: 1) a detailed explanation of the work performed; and 2) the hourly
rate and the number of hours spent working on each activity.”).20
An agent’s work is also not compensable unless it is reasonable and satisfactory. See SBA
Form 159 (“The undersigned 7(a) participating lender certifies that the representations of services
rendered and amounts charged as identified in this form are reasonable and satisfactory to it.”).
In short, even the pled facts among banks are not common. They pled for example that
some banks, like Synovus, allegedly posted notices on their public websites that they would not
pay agent fees. See Sport & Wheat, [Doc. 14] at 8 & n.4.21 Some, also like Synovus, allegedly told
purported agents that they would not pay agent fees. See Sport & Wheat, [Doc. 21] at ¶¶ 107-108.
Other banks allegedly told borrowers they would not pay agent fees at the time when some
borrowers submitted their PPP loan application. Id. at ¶¶ 92-93. Still, Plaintiffs allege that other
banks, like Truist, (allegedly) simply did not know what to say in response to agent fees inquiries
and either did not respond at all or stated that they were awaiting further guidance from their legal
team or SBA. Id. at ¶¶ 135, 140. Even within the same bank, statements allegedly varied. Some
banks never announced any formal policy regarding agent fees but sometimes paid fees and
sometimes did not.
Another case illustrates the exact same thing. In Leigh, King, Norton & Underwood, LLC
et al. v. Regions Financial Corporation et al., No. 2:20-cv-00591-JHE (N.D. Al. Apr. 28, 2020),
20
Further, itemization may also be required for amounts below $2,500. The SBA Form 159 states:
“Note: SBA, in its discretion, may request an itemization and supporting documentation for any
fee charged in connection with an SBA loan application, regardless of the amount.”
21
See, e.g., CARES Act – Paycheck Protection Program, SYNOVUS,
https://www.synovus.com/covid-19/paycheck-protection-program/ (last visited June 9, 2020).
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Regions Bank has filed a Rule 12(b) motion and attached a sworn and detailed declaration. In the
declaration, Regions explains that it will pay agent fees (after the receiving its lender fees) but only
when there is a properly documented demand that meets all federal rules and regulations. [Doc.6-
1] at ¶¶ 8, 11. Each Regions transaction will need to be individually examined to determine
whether any agent fee is due. In other words, there are no common factual questions. Likewise,
there are no efficiencies by lumping Regions Bank in with lenders who have taken an entirely
different approach (as Synovus allegedly has, for example.).
Cadence Bank has taken a similar but slightly different position and has stated in writing
to Movant counsel that it pays agent fees when it receives a fully completed SBA Form 159 (at the
time they are due) in connection with applying for the loan which are reasonable, necessary and
appropriate under the then applicable SBA Section 7(a) procedures, rules and guidelines.22
B. Plaintiffs assert an array of state law claims which will vary by state and bank.
Plaintiffs assert an array of state law claims as varied as the banks’ agent fees responses:
injunctive relief, declaratory judgment, unjust enrichment, breach of implied contract, quantum
meruit, conversion, tortious interference with economic relations, and violations of various state
consumer protection and unfair trade practices laws. Compare, e.g., Alliant Action at [Doc. 1] ¶¶
57-115 with Panda Group [Doc. 6] at ¶¶ 49-89.
Most of the claims brought by the Movant are state law claims23 and such state law will
vary depending upon where the PPP loan was made and alleged agent services rendered to the
22
Cadence’s willingness to pay such documented fees should not be taken as creating any reliance
interest and should not be taken as a legal admission that such fees are due, or as an admission
about when they are due. Cadence has agreed to pay such fees as a business judgment.
23
An example is the Alliant action. There, plaintiffs brought declaratory judgment, unjust
enrichment, quantum meruit, conversion, and Georgia Uniform Deceptive Trade Practices claims.
Putting aside the declaratory judgment (which might be a hybrid), every single claim is brought
under state law. In fact, it appears that the only action with an exception is Plaintiff Leigh King
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borrower, yet another reason against consolidation. See In re DirectTV, Inc., Fair Labor Standards
Act & Wage & Hour Litig., 84 F. Supp. 3d 1373, 1375 (J.P.M.L. Feb. 6, 2015) (denying
centralization of eleven actions where plaintiffs’ claims implicated multiple states’ laws); In re
Title Ins. Real Estate Settlement Procedures Act (RESPA) & Antitrust Litig., 560 F. Supp. 2d 1374,
1375 (J.P.M.L. 2008) (denying centralization of 25 actions involving “different regulatory regimes
in the states in which the actions [we]re pending along with variances in insurance regulation and
law in each state”). The Regional and Small Bank group has prepared a chart in Exhibit D
illustrating the different state law claims.
III. ARGUMENT AND CITATION TO AUTHORITY
A. Standard
Centralization of actions is appropriate only if: (1) one or more common questions of fact
exist among actions; (2) transfer would be more convenient for the parties and witnesses; and
(3) transfer would promote the just and efficient conduct of the actions. 28 U.S.C. § 1407(a).
Movant bears the “burden of demonstrating the need for centralization.” In re Best Buy Co., Inc.,
Cal. Song-Beverly Credit Card Act Litig., 804 F. Supp. 2d 1376, 1379 (J.P.M.L. 2011). Movant
fails to demonstrate transfer is appropriate under any of these factors, much less all of them.
B. Movant Has Not Met Its Burden of Showing One or More Common Questions
of Fact Exist Among the Actions.
A factual question should only satisfy the commonality requirement if it will generate
common answers. It is not enough that the same factual question be asked in different actions –
otherwise every car crash case would be consolidated. The relevant inquiry is whether there is
overlapping and common discovery that will all relate to resolving a common factual question.
Norton Underwood, who alleges a violation of the SBA Section 7(a) Loan Program. See Leigh
King Norton Underwood, [Doc. 1] at ¶¶ 56-58.
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The Supreme Court has explained this in the class action context: What matters “is not the raising
of common ‘questions’ – even in droves – but rather, the capacity of a class-wide [or multi-district]
proceeding to generate common answers apt to drive the resolution of the litigation.” Wal-Mart
Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011) (emphasis in original).
There are zero factual questions capable of common answers. Commonality demands
more than superficial similarity. This Panel has emphasized that “numerosity of actions” will not
support centralization without “sufficient common questions of fact.” In re Not-for-Profit
Hospitals/Uninsured Patients Litigation, 341 F. Supp. 2d 1354, 1355 (J.P.M.L. 2004).24 Common
issues must “predominate over individual factual issues.” In re Westinghouse Elec. Corp.
Employment Discrimination Litigation, 438 F. Supp. 937, 939 (J.P.M.L. 1977); see also In re
Pharmacy Benefit Plan Adm’rs Pricing Litigation, 206 F. Supp. 2d 1362, 1363 (J.P.M.L. 2002)
(denying transfer “unique questions of fact predominate over any common questions”).25
1. No common questions of fact.
Movant contends common questions of fact exist because “all of the cases involve a single
loan product” – the PPP loan – and are “ based on the allegation that the PPP Lender defendants
failed to remit the Agent Fees owed to plaintiffs despite the SBA Regulations that require
payment[.]” [Doc. 1-1] at 7-13. Movant asserts these cases share a common factual thread simply
because they are based upon the same federal loan product. But, all of the fact questions raised are
incapable of common answers, and therefore, do not satisfy the commonality requirement.
24
See also In re Asbestos School Prods. Liab. Litig., 606 F. Supp. 713, 714 (J.P.M.L. 1985); In re
Eli Lilley & Co. “Oraflex” Prods. Liab. Litig., 578 F. Supp. 422 (J.P.M.L. 1984)..
25
See also In re Electrolux Dryer Prods. Liab. Litig., 978 F. Supp. 2d 1376, 1377 (J.P.M.L 2013);
In re Ocala Funding, LLC, Commercial Litig., 867 F. Supp. 2d 1332 (J.P.M.L. 2012); In re Blair
Corp. Chenille Robe Prods. Liab. Litig., 831 F. Supp. 2d 1367 (J.P.M.L. 2010).
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The answers will vary by each loan, borrower, type of business, agent, and even within
each bank. Even if class certification could be made (and it cannot), there would need to be separate
classes against each defendant bank. It would be only happenstance that a particular alleged agent
was in the class for more than one bank. Even so, that agent might recover against one bank and
fail to recover against another bank because their claim against one bank would not depend upon
their claim against another. The principals for these alleged agents – the borrowers – would
certainly not be connected to more than one class and one bank – since they can legally only have
one PPP loan. Based upon the current complaints, these individualized issues could include:
Whether an agent completed an SBA Form 159 to receive agent fees, and if so.
o Did the Form itemize the services?
o Was the Form signed by the borrower? Also by the agent? Also by the lender?
o What particular services were provided and detailed in the form? (Who
provided them? What rate was charged?)
o When was the Form submitted to the lender?
o Was the agent cleared through the federal government’s System for Awards
Management (SAM)? 26 (SAM validates information about vendors in
government programs).
Whether the individual borrower and agent have any written or verbal agreement
regarding payment of fees;
Whether the agent had any written or verbal agreement or understanding with the
bank about payment of agent fees;
Whether the borrower already paid the agent;
26
The Form 159 requires three signatures: the agent signature, the applicant/borrower signature
and the Lender signature. The Lender is also required to conduct due diligence on the
reasonableness of the fee and confirm the agent through SAM. SBA Form 159 states: “The SBA
Lender must ensure that the Agent performing services is not debarred, suspended, proposed for
debarment, declared ineligible, or voluntarily excluded from participation in this transaction by
any Federal department or Agency. (See www.sam.gov.)”
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Whether an agent communicated to the bank that it was serving as an agent for any
borrower(s) or in connection with any PPP loan application(s).
o Did the agent provide to the bank an engagement letter with the borrower? See
Leigh King Norton Underwood, [Doc. 1] at ¶ 24;
o Did the agent work directly with the bank on iterations of a PPP loan application?
See Sport & Wheat, [Doc. 21] at ¶ 86;
o Did the agent sign the loan application documents? Id. at ¶ 119 (“Sport & Wheat
signed the application as PPP Agent in the space marked ‘Borrower’s Agent’”);
o Did the borrower or agent ask the bank about payment of agent fees prior to
submitting a loan application? See id. at ¶¶ 92-93.
Whether a bank manually removed, or demanded a borrower remove, an agent’s
name from any individual application. Id. at ¶¶ 76, 121, and 136.
What each bank told each PPP loan applicant – and each alleged agent -- about agent
fees and whether the bank’s position changed over time or changed with respect to
any particular PPP loan.
These individualized, transaction-specific inquiries are not suited for consolidation. No
common evidence will provide proof for any answer – and certainly not between banks. Nor will
the discovery be common or overlapping. For example, what Wells Fargo stated to any particular
borrower or alleged agent has nothing to do with what a different borrower or agent may have been
told by another bank. Because resolving each transaction, for each bank will depend on such
individualized inquiries, the claims and cases lack commonality. See In re American-
Manufactured Drywall Prods. Liab. Litig., 716 F. Supp. 2d 1367, 1368 (J.P.M.L. 2010) (“The
proponents of centralization have not convinced us that any efficiencies from centralization would
outweigh the multiple individualized issues. . . . ”). Literally, each borrower and each agent would
need to provide testimony for each PPP loan. The need for different discovery for different banks
based on differing allegations and claims and differently-situated plaintiffs’ counsels against
centralization. See In re Pharmacy Benefit Plan Administrators, 206 F. Supp. 2d at 1363
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(recognizing that transfer is inappropriate when individual discovery predominates); In re
Westinghouse, 438 F. Supp. at 938.
The Regional and Small Banks are entitled to develop the individual facts that bear on their
individual claims. They are entitled to be heard, individually, on their defenses for each agent and
each transaction and not lumped together with unrelated banks. It is never enough to simply sue
an entire industry and make no showing of common fact questions. In re Mortgage Lender Force-
Placed Ins. Litig., 895 F. Supp. 2d 1352, 1353 (J.P.M.L. 2012) (declining transfer of an alleged
industry-wide practice among banks and insurers concerning placement of insurance policies
because common questions of fact among different defendants did not predominate).27
2. Movant only identifies legal questions.
Movant fails to identify common questions of fact in its Motion. Rather, the Motion is
ultimately an effort to have one cherry-picked court answer a single question of law – whether the
CARES Act ever mandates payment of agent fees – and obtain universal application of that legal
decision. This is evidenced by Movant’s own list of purported “common questions,” nearly all of
which are legal – not factual – questions:
“Whether defendants complied with all applicable SBA Regulations . . . .”
“Whether defendants complied with their legal obligations under the terms of the CARES
Act . . . .”
“Whether defendants were required to pay the PPP Agent Fees to the plaintiffs and PPP
Agents under the CARES Act and SBA Regulations”
“Whether the defendants converted plaintiffs’ and Agents’ PPP Agent fees”
27
The Panel is “typically hesitant to centralize litigation on an industry-wide basis,” In re
AndroGel Prods. Liab. Litig., 24 F. Supp. 3d 1378, 1379 (J.P.M.L. 2014); In re Hotel Indus. Sex
Trafficking Litig., — F. Supp. 3d —, 2020 WL 581882, at *2 (J.P.M.L. Feb. 5, 2020) (denying
centralization of actions alleging that various hotel chains knowingly profited from sex trafficking,
where “[t]he vast majority of actions involve different hotels”)).
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“Whether the defendants were unjustly enriched . . . .”
[Doc. 1-1] at 12-13. (emphasis added). The answers to these legal questions will vary by each bank
and each PPP loan. These legal questions do not show that any common questions of fact exist
among the actions.28 Therefore, Movant has failed to satisfy 28 U.S.C. § 1407(a)’s first element.
C. Movant Has Not Met Its Burden of Showing Transfer Would Be More
Convenient for Parties and Witnesses – Especially as to Regional and Small
Banks.
Here, there is no reason to expect centralization could “eliminat[e] duplicative discovery,”
or “conserve the resources of the parties, their counsel and the judiciary.” In re Airline Baggage
Fee Antitrust Litig., 655 F. Supp. 2d 1362, 1362-63 (J.P.M.L. 2009). Whether a particular bank
owes agent fees for services rendered to a particular borrower, by a particular agent, for a particular
transaction has no connection with whether another bank owes agent fees to a different agent on a
different transaction. Centralizing cases making different allegations against different defendants,
under the laws of different states makes no sense and will not generate convenience or efficiency.
On the other hand, it is certain that the Regional and Small Banks would suffer increased
burdens if forced into a large, slow moving MDL proceeding where they cannot be heard for years
on their individual facts and arguments. Therefore, Movant has not shown consolidation is more
convenient for the parties or witnesses. The second element of 28 U.S.C. § 1407(a) is not satisfied.
D. Movant Has Not Met Its Burden of Showing Transfer Promotes the Just and
Efficient Conduct of Actions -- Especially as to Regional and Small Banks.
Movant claims consolidation promotes the just and efficient conduct of actions by giving
a “single judicial voice to what otherwise could become a chaotic litigation[.]” [Doc. 1-1] at 11.
However, Movant’s counsel created their own chaos by instituting 10 putative class actions against
28
Multidistrict Litig. Manual § 5.4 (“Where the issues in a case are primarily legal in nature, even
though some fact issues may exist, the Judicial Panel of Multidistrict Litigation is nearly certain
to conclude that transfer is not appropriate.”).
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unrelated defendants. It is illogical to reward Movant’s counsel’s self-inflicted, manufactured
chaos by imposing significantly greater economic burdens on the Regional and Small Banks.
Moreover, there is no possible efficiency in having the Regional and Small Banks leave the state
in which they are headquartered (and where their borrowers, as putative class members, likely
conduct business) to participate in an MDL. The vast majority of witnesses and documents are in
the forum state – not across the county.
Because the claims against the banks lack basic commonality, there is no efficiency to be
gained. See In re American-Manufactured Drywall Prods. Liab. Litig., 716 F. Supp. 2d 1367,
1368 (J.P.M.L. 2010) (“The proponents of centralization have not convinced us that any
efficiencies from centralization would outweigh the multiple individualized issues, including ones
of liability and causation, that these actions appear to present.”). Centralization would not
streamline the pretrial process. Instead, it would place upon a transferee court a compound burden
that could be addressed more efficiently and with greater local expertise by the courts of original
jurisdiction.29 For all of these reasons, Movant has failed to show transfer promotes the efficient
and just consideration of the Alliant Action.
E. Premature: The Likelihood Early Dispositive Motions Dispose of the Cases or
Claims also Counsels against Consolidation for the Regional and Small Banks.
Early dispositive motion practice will likely eliminate any perceived multidistrict character
of the litigation. First, many cases may be dismissed on standing, mootness, or ripeness grounds.
All plaintiffs’ claims are contingent upon future events. Plaintiffs allege they are entitled to receive
29
In re DirectTV, Inc., Fair Labor Standards Act & Wage & Hour Litig., 84 F. Supp. 3d 1373,
1375 (J.P.M.L. Feb. 6, 2015) (denying centralization of eleven actions where plaintiffs’ claims
implicated multiple states’ laws); In re Title Ins. Real Estate Settlement Procedures Act (RESPA)
& Antitrust Litig., 560 F. Supp. 2d 1374, 1375 (J.P.M.L. 2008) (denying centralization of 25
actions involving “different regulatory regimes in the states in which the actions [we]re pending
along with variances in insurance regulation and law in each state”).
17
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agent fees out of the processing fees that the SBA allegedly will pay to banks who funded PPP
loans. See, e.g., Alliant Action, [Doc. 1] at ¶¶ 33, 35. But a lender will not receive a processing
fee: (1) prior to full disbursement of the PPP loan, (2) if the PPP loan is cancelled before
disbursement, or (3) if the PPP loan is cancelled or voluntarily terminated and repaid after
disbursement. See 85 Fed. Reg. at 26323. No plaintiff alleges any bank has already received any
of its lender fees. Thus, plaintiffs are speculating lenders will actually receive lender fees in the
first instance and will then fail to pay agent fees, if agent fees are required. For example, a bank
may not receive lender fees for a particular loan because the loan is never fully disbursed or is
cancelled. Alternatively, as an exercise of its business judgment, a bank may agree to pay a
purported agent fees for a particular loan or once they receive lender fees for that loan.
Second, many cases may also be dismissed for failure to state a claim. This Panel has long
recognized that it should not centralize cases when, as here, dispositive motion practice offers a
reasonable prospect of weeding out claims and reducing the number of plaintiffs and cases. See In
re ATM Interchange Fee Antitrust Litigation, 350 F. Supp. 2d at 1362-63 (recognizing that transfer
should be denied where pending rulings or motions may moot the multidistrict proceedings); also
In re The Boeing Company Employment Practices Litigation, 293 F. Supp. 2d 1382, 1383
(J.P.M.L. 2003) (denying transfer motion when Panel believed that a summary judgment motion
“may be filed shortly”).30 Transfer is likely only to slow this process as the transferee court is
confronted with separate dispositive motions involving different facts and issues for each case.
This is an instance in which, “motions to dismiss or remand, raising issues unique to the particular
30
See also In re Adelphia Commn’s Corp. Sec. & Derivative Litig., 237 F. Supp. 2d 1381, 1382
(J.P.M.L. 2002); In re Am. Home Prods. Corp. “Released Value” Claims Litig., 448 F. Supp. 276,
278 (J.P.M.L. 1978); In re Lite Beer Trademark Litig., 437 F. Supp. 754, 755 (J.P.M.L. 1977); In
re United States Navy Variable Reenlistment Bonus Litig., 407 F. Supp. 1405, 1407 (J.P.M.L.
1975).
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case, may be particularly appropriate for resolution before the Panel acts on the motion to transfer.”
Manual for Complex Litigation, Fourth § 20.131 (2004).
Here, whatever cases remain following early dispositive motion practice can readily be
managed on an individual basis through procedural avenues short of centralization. “[I]nformal
coordination and cooperative efforts by the parties and involved courts should be sufficient to
minimize or eliminate duplicative discovery and other pretrial proceedings.” See In re 3M Co.
Lava Ultimate Prods. Liab. Litig., 222 F. Supp. 3d 1347, 1348 (J.P.M.L. 2016).
F. If there must be a consolidation, the Northern District of Georgia is
appropriate.
Movant requests the Northern District of Georgia and concedes “presence in or near” a
judicial district weighs on the transfer analysis. [Doc. 1-1] at 11. Movant alleges “Bank of
America, Wells Fargo, Synovus, Ameris Bank, Cadence Bank, United Community Bank, and
Truist Bank all have corporate offices either in or near Georgia, and Atlanta is geographically
central to many of the Lenders that are not otherwise connected to Georgia, making the Northern
District of Georgia the most convenient location for this litigation.” Id.31 Many of the lawyers,
parties, witnesses, and evidence are in Atlanta or nearby. Movant also discusses the benefits of
Georgia because of the COVID virus. Movant also filed its largest case (in terms of numbers of
defendants) in the Northern District of Georgia.
Regional and Small Banks agree that if this case must be consolidated, the Northern District
of Georgia would be most convenient for witnesses, counsel, and evidence.
31
40% of all Cadence’s PPP loans were made in Georgia. See Paycheck Protection Program
Speaks Volumes to Cadence Bank’s Resolve, CADENCEBANK.COM (May 29, 2020), available at
https://cadencebank.com/cadencebeat/feature-stories/paycheck-protection-program-speaks-
volumes?utm_source=bronto&utm_medium=email&utm_term=Read+More&utm_content=Payc
heck+Protection+Program+Speaks+Volumes+to+Cadence+Bank%E2%80%99s+Resolve&utm_
campaign=consumer (last visited June 12, 2020).
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The Regional and Small Banks disagree with Movant’s alternative proposal of Arizona. It
is not convenient and “readily accessible to all parties, witnesses and counsel” simply by virtue of
the Phoenix Sky Harbor International Airport and a light rail system. Id. at 19. The Arizona case
was not first filed. The Arizona action does not have the most defendants. Most of the Regional
and Small Banks have no connection whatsoever with Arizona.
G. If any large bank desires consolidation, the Panel can create an MDL for that
bank.
If any large bank is in favor of consolidation, the Regional and Small Banks suggest that
the Panel create a consolidated action for that bank. With only one bank in an MDL, there is the
possibility of at least some common discovery. Further, some of the larger banks have five or
more actions against them – rather than a single action. Creating such a single defendant MDL is
far more common and brings far fewer inconveniences and inefficiencies. To the extent that any
other defendants are included in an action with a larger bank, § 1407 provides that “the panel may
separate any claim, cross-claim, counter-claim, or third-party claim and remand any of such claims
before the remainder of the action is remanded.” 28 U.S.C. § 1407(a). Consistent with this
directive, the Panel has separated and remanded claims in other cases and this approach may be
warranted here.32
IV. CONCLUSION
The Regional and Small Banks respectfully request the Panel deny Movant’s proposed
transfer and centralization.33
32
See, e.g., In re Countrywide Fin. Corp. Mortg.-Backed Sec. Litig., 812 F. Supp. 2d 1380, 1383
(J.P.M.L. 2011) (remanding claims against defendant because claims were distinct from those
against others and inclusion of distinct claims “would unnecessarily complicate MDL
proceedings”); In re Light Cigarettes, 652 F. Supp. 2d 1379, 1380-81 (J.P.M.L. 2009) (excluding
certain actions).
33
Cadence Bancorporation was voluntarily dismissed immediately prior to this filing.
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Respectfully submitted this 17th day of June, 2020.
/ s/ Gregory C. Cook_________
Gregory C. Cook
BALCH & BINGHAM LLP
1901 6th Avenue North, Suite 1500
Birmingham, AL 35203
Telephone: (205) 251-8100
Facsimile: (205) 226-8799
Email: gcook@balch.com
Counsel for Defendant Cadence Bank, N.A. and
Cadence Bancorporation
/s/ Sara Ford
Sara Ford
LIGHTFOOT FRANLIN & WHITE, LLC
Logan T. Matthews
Robert A. Pate
400 20TH Street North
Birmingham, AL 35203
Phone (205) 581-0752
Facsimile (205) 581-0799
sford@lightfootlaw.com
Counsel for ServisFirst Bank, Inc.
/s/ William V. Custer
William v. Custer
BRYAN CAVE LEIGHTON PAISNER LLP
One Atlantic Center, 14th Floor, 1201 W. Peachtree
St., N.W.
Atlanta, GA 30309-3471
Phone (404) 572 6828
bill.custer@bclplaw.com
Counsel for Newton Federal Bank
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/s/ Roy W. Arnold
Roy W. Arnold (PA I.D. 70544)
BLANK ROME LLP
Joseph E. Culleiton (PA I.D. 82823)
Shawna J. English (PA I.D. 316881)
501 Grant Street, Suite 850
Pittsburgh, PA 15219
Phone: (412) 932-2800
Facsimile: (412) 932-2777
rarnold@blankrome.com
jculleiton@blankrome.com
senglish@blankrome.com
Counsel for Defendants First National Bank of
Pennsylvania and F.N.B. Corp.
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BEFORE THE
UNITED STATES JUDICIAL PANEL
ON MULTIDISTRICT LITIGATION
In re: Paycheck Protection Program (PPP)
Agent Fees Litigation MDL No. 2950
PROOF OF SERVICE
I hereby certify pursuant to J.P.M.L. R. 4.1(a) that on June 17, 2020, I filed the foregoing
Response in Opposition to Movant Alliant CPA Group, LLC’s Motion for Transfer of Actions to
the Northern District of Georgia Pursuant to 28 U.S.C. § 1407 for a Coordinated/Consolidated
Proceeding And Brief in Support (“Response in Opposition to Transfer”) with this Panel’s
CM/ECF system, which served counsel of record for each of the parties to this putative MDL
electronically.
I further certify I served this Response in Opposition to Transfer on the following via
FedEx for next day delivery:
Clerk of the Panel
United States Judicial Panel on Multidistrict Litigation
Thurgood Marshall Federal Judiciary Building
One Columbus Circle, NE, Room G-255, North Lobby
Washington, DC 20544-0005
I further certify I served this Response in Opposition to Transfer on the following
parties by mailing this document via U.S. Mail to the following addresses provided by the
PACER system:
23
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Ameris Bank Midwest Regional Bancorp, Inc.
3490 Piedmont Rd NE 363 Festus Centre Drive
Atlanta, GA 30305 Festus, MO 63028
Centerstate Bank Corporation Midwest Regional Bank
1011 First Street South 363 Festus Centre Drive
Winter Haven, FL 33880 Festus, MO 63028
Academy Bank NA Modern Bank Management, LLC
8551 N. Boardwalk Ave 410 Park Ave
Kansas City, MO 64154 New York, NY 10022
BSD Capital, LLC Modern Bank N.A.
121 West Long Lake Road 410 Park Ave
Suite 200 New York, NY 10022
Bloomfield Hills, MI 48304
Citizens & Northern Corp.
Square, Inc. 90-20 Main Street
1455 Market Street Wellsboro, PA 16901
San Francisco, CA 94103
Citizens & Northern Bank
Vectra Bank Colorado 90-92 Main Street
2000 South Colorado Blvd. Wellsboro, PA 16901
Suite 2-1200
Denver, CO 80222
/s/ Gregory C. Cook_________
Gregory C. Cook
BALCH & BINGHAM LLP
1901 6th Avenue North, Suite 1500
Birmingham, AL 35203
Telephone: (205) 251-8100
Facsimile: (205) 226-8799
Email: gcook@balch.com
Counsel for Defendant Cadence Bank, N.A.
and Cadence Bancorporation
24
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