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RESPONSE IN OPPOSITION -- (re: pldg. ( 171 in MDL No. 2950), ( 1 in MDL No. 2950) )… — Agent Fee Litigation (Dkt. 180)
Summary
A response by defendant Square Capital, LLC in opposition to a motion for transfer of actions under 28 U.S.C. § 1407, filed June 17, 2020 as Document 180 before the United States Judicial Panel on Multidistrict Litigation in In re Paycheck Protection Program (PPP) Agent Fees Litigation, MDL Docket No. 2950. The response is submitted under Rule 6.1(c) of the Panel's rules by a defendant in Brunner Accounting Group v. SVB Financial Group, No. 2:20-cv-04235-GW-E, and joins the opposition brief filed by Synovus Bank at Docket No. 171. It argues that neither the named defendant nor Square Capital originated loans under the Paycheck Protection Program, and that Square Capital instead facilitated loans for a bank partner. It also argues that the claims against it are subject to individual arbitration, attaching an arbitration demand as Exhibit A, and asks the Panel to deny the motion.
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Case MDL No. 2950 Document 180 Filed 06/17/20 Page 1 of 3
BEFORE THE UNITED STATES
JUDICIAL PANEL ON MULTIDISTRICT LITIGATION
IN RE: Paycheck Protection Program (“PPP”) MDL Docket No. 2950
Agent Fees Litigation
RESPONSE OF DEFENDANT SQUARE CAPITAL, LLC IN OPPOSITION TO
MOTION FOR TRANSFER OF ACTIONS PURSUANT TO 28 U.S.C. § 1407
Pursuant to Rule 6.1(c) of the Rules of Procedure for the United States Judicial Panel on
Multidistrict Litigation, defendant Square Capital, LLC (Square Capital), incorrectly sued as
Square, Inc., one of the defendants in Brunner Accounting Group v. SVB Financial Group, No.
2:20-cv-04235-GW-E (C.D. Cal.) (the “Brunner Action”) submits this response in opposition to
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 and/or Consolidated Proceeding (the “Motion”).
To avoid duplicative filings, Square Capital hereby joins in the opposition brief filed by
Synovus Bank (Docket No. [171]), filed June 17, 2020.
Square Capital possesses two additional defenses on the merits that make centralizing the
Brunner Action inappropriate.
First, neither the named defendant (Square, Inc.) nor Square Capital originated any loans
under the Paycheck Protection Program (“PPP”). Rather, Square Capital facilitated loans on
behalf of a bank partner which originated loans. Indeed, unlike other defendants who joined the
opposition brief filed by Synovus Bank, Square Capital is not a bank or financial institution.
Plaintiffs’ uniform theory is that lenders are the entities obligated to pay agent fees. Square
Capital’s status as an agent, and not as an originating PPP lender to any borrower, provides a
Case MDL No. 2950 Document 180 Filed 06/17/20 Page 2 of 3
unique defense that makes centralization particularly inappropriate here.1 See Brunner Action,
Complaint, ¶ 28 (alleging that SBA pays any fees to the lender); and ¶ 30 (alleging that it is the
“lender [that] will pay the agent.”).
Second, Square Capital will be asserting that Brunner’s claims are subject to arbitration
on an individual basis pursuant to an express arbitration provision governing the loan transaction.
See In re Yellow Brass Plumbing Component Prods. Liab. Litig., 844 F. Supp. 2d 1377, 1379
(J.P.M.L. 2012) (denying centralization because, in part, “one of the actions is being arbitrated
and others could proceed to arbitration”). Square Capital has duly made an arbitration demand
(attached as Exhibit A) and intends to move to compel arbitration if the plaintiff declines to
dismiss. As this arbitration proceeding will result in the stay or dismissal of the action as to
Square Capital, this Court should, at a minimum, deny transfer of the Brunner action for this
reason as well. See, e.g., In re The Boeing Company Emp’t Practices Litig., 293 F. Supp. 2d
1382, 1383 (J.P.M.L. 2003) (denying transfer motion based on Panel’s conclusion that
anticipated dispositive motion may resolve underlying action). In short, since individual
arbitration will likely be compelled for the claims against Square Capital in the Brunner Action,
the purported advantages to centralization — reducing duplicative discovery and motion practice
— are unavailing and simply will not materialize.
1
The Small Business Administration’s list of lenders who originated PPP loans as of June 1, 2020 may
be found at: https://www.sba.gov/sites/default/files/2020-06/PPP_Lender_List_200601-508.pdf (last
accessed June 16, 2020).
2
Case MDL No. 2950 Document 180 Filed 06/17/20 Page 3 of 3
Accordingly, and based on the various reasons and authorities more fully set forth in the
Synovus Opposition, Square Capital respectfully requests that the Panel deny the Motion.
Dated: June 17, 2020 Respectfully submitted,
SQUARE CAPITAL, LLC
By: /s/ Richard E. Gottlieb
Richard E. Gottlieb
MANATT, PHELPS & PHILLIPS, LLP
151 North Franklin Street, Suite 2600
Chicago, IL 60606
Telephone: (312) 529-6300
Email: rgottlieb@manatt.com
3
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