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Exhibit A - Sport & Wheat's amended complaint — Agent Fee Litigation (Dkt. 185.1)
Summary
Exhibit A, Document 185-1 in MDL No. 2950, filed June 17, 2020, reproducing an amended class action complaint. The complaint is Sport & Wheat CPA PA v. ServisFirst Bank Inc., Synovus Bank, The First, A National Banking Association, and Truist Bank, Case No. 3:20-cv-5425-TKW-HTC, in the U.S. District Court for the Northern District of Florida, dated May 27, 2020. It alleges that the defendant banks refused to pay fees owed to agents who helped borrowers prepare Paycheck Protection Program loan applications, and seeks to represent a class of such agents. A table of relevant authorities lists the CARES Act, Pub. L. No. 116-136, Section 1102, 15 U.S.C. § 636(a)(36) and the interim final rule at 85 Fed. Reg. 20811. It asserts jurisdiction under 28 U.S.C. § 1332(d) and 28 U.S.C. § 1331 and requests injunctive relief, class certification, costs and a jury trial.
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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF FLORIDA
PENSACOLA DIVISION
SPORT & WHEAT CPA PA,
a Florida corporation, individually and
on behalf of a class of similarly situated
businesses and individuals,
Plaintiff,
Case No. 3:20-cv-5425-TKW-HTC
v.
SERVISFIRST BANK INC.;
SYNOVUS BANK;
THE FIRST, A NATIONAL
BANKING ASSOCIATION; and
TRUIST BANK,
Defendants.
AMENDED CLASS ACTION COMPLAINT
Plaintiff Sport & Wheat CPA PA (“Sport & Wheat”) now brings this
amended complaint. Sport & Wheat is a small accounting firm that assisted several
small businesses with applying for loans in the federal “Paycheck Protection
Program,” an emergency initiative of the Small Business Administration that was
intended to dispense hundreds of billions of dollars through bank loans to keep the
U.S. economy afloat.
Sport & Wheat worked hard—and at lightning speed—to help its clients file
loan applications, which the Defendant banks relied upon in making their loans.
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The Defendant banks benefited from Sport & Wheat’s advance work, and they
were aware of it. But they did not pay a dime for it, despite federal law requiring
them to.
This action is on behalf of Sport & Wheat and all similarly situated agents
who helped borrowers access the Paycheck Protection Program, but were
uncompensated for the hard work they did.
TABLE OF RELEVANT AUTHORITIES
The following authorities are especially relevant to resolution of this action.
For ease of consultation, Sport & Wheat sometimes uses these more familiar
names, rather than the full citations.
Familiar Name Used in this Formal Citation
Complaint
CARES Act. Pub. L. No. 116-136.
Paycheck Protection Program. Section 1102 of the CARES Act;
15 U.S.C. § 636(a)(36).
PPP Interim Final Rule. 85 Fed. Reg. 20811.
The SBA’s Section 7(a) lending Section 7(a) of the Small Business Act,
program. Pub. L. No. 85-536, as amended; now
codified at 15 U.S.C. § 636(a).
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INTRODUCTION
1. As part of its response to the COVID-19 pandemic, Congress created
the Paycheck Protection Program (the “PPP”), to provide emergency loans to small
businesses.
2. The PPP was initially enacted in the Coronavirus Aid, Relief, and
Economic Security Act, also known as the CARES Act, which was signed into law
on March 27, 2020. The initial round of funding was $349 billion. The PPP was
replenished on April 24, 2020 when Congress added another $310 billion to the
available pool.
3. The PPP, one of the CARES Act’s core programs, is a program which
offers loans of up to $10 million to businesses with fewer than 500 workers. It was
designed to assist small businesses in keeping their employees on the books and the
businesses intact during the worst part of the national shutdown.
4. The PPP’s enabling statute generally provides that if a small business
uses a PPP loan to continue paying its employees, most or all of the loan will be
forgiven. The PPP represents a direct injection of federal cash into the economy.
5. The U.S. Small Business Administration (“SBA”) administers the
PPP.
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6. Congress decided to channel PPP money through the Small Business
Administration, rather than setting up an entirely new federal bureaucracy, because
that was the fastest way to accomplish the goal of getting money into the hands of
small businesses and their employees.
7. In these circumstances, the SBA does not make loans directly to small
businesses. Rather, the SBA serves as a guarantor for banks and other financial
institutions who ultimately make the loans. The flow of the funds between relevant
entities looks like this:
U.S. Small Business Financial Small Business
Administration Institutions Borrowers
(Defendants) (“Borrowers”)
8. Lenders that make PPP loans receive an origination fee equal to a
percentage of each loan amount. There is a sliding scale, such that the smallest
loans come with the largest percentage fees.
9. These fees are paid directly to lenders by the SBA and are earned
when the loan is originated. Lenders may still earn additional money—interest—on
top of these fees. All of the risk is borne by the federal government.
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10. Congress has long understood that some small business borrowers
need the assistance of accountants, attorneys, or other financial professionals to
assemble, prepare, process, and file their PPP loan applications. These
professionals are known as “agents.”
11. Sport & Wheat, itself a small business, is a Pace, Florida-based
accounting firm that acted as an agent under the PPP.
12. The PPP regulations incentivize agents to provide assistance to
borrowers. It states that agents’ fees will be paid by the lender, out of the
origination fees the lender receives from the SBA.
13. And, to ensure that all PPP loan money goes toward supporting small
business, the relevant rule further provides that agents may not collect fees from
the borrower, or from PPP loan proceeds.
14. Thus: agents were contemplated to be part of the PPP process;
lenders’ fees are the only intended source of compensation for agents; and
lenders—who agreed to these rules by participating in the PPP—know all this.
15. Each of the Defendants participated in a transaction with a borrower,
with Sport & Wheat acting as agent. Notwithstanding the clear Congressional
intent of the PPP, each of the Defendants has refused to pay Sport & Wheat the fees
it is entitled to as an agent.
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16. Defendants’ refusals cite their own generally applicable policies,
meaning that Defendants are also refusing to pay other members of the class this
action seeks to represent.
17. As a result of Defendants’ policies, thousands of CPAs and other
agents are not being compensated for their work.
18. The CARES Act embodies “the sense of the Senate,” that the
Paycheck Protection Program should “prioritize” loans to “small business concerns
and entities in underserved and rural markets, including veterans and members of
the military community, small business concerns owned and controlled by socially
and economically disadvantaged individuals . . . , women, and businesses in
operation for less than 2 years.” 15 U.S.C. § 636(a)(36)(P)(iv).
19. Defendants’ policies violate that provision too. They unjustly
discriminate against the smallest of small businesses. The smallest businesses are,
on the whole, less financially sophisticated and less likely to have in-house
accountants—and therefore more likely to need the services of an agent to
successfully apply get a PPP loan. By refusing to compensate agents, Defendants
are choking off access to funds for the least sophisticated of enterprises.
20. Defendants’ unlawful policies have hurt the smallest businesses in yet
another way: while the pool of funds was enormous, it was not unlimited. The
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initial $349 billion ran out within days, which is why Congress replenished the
funds with another $310 billion. According to the SBA’s May 8, 2020 report, that
money is quickly running out. Small businesses that need these funds don’t have
endless time to navigate the system. Without the help of an agent, the smallest of
businesses will be unable to get a fair shot at the funds before they dry up.
21. Defendants’ policies are unlawful and run counter to Congress’s stated
intent: keeping small businesses afloat during this terrible economic time. And
Defendants’ policies violate federal law. Sport & Wheat seeks redress on behalf of
itself and the class.
JURISDICTION AND VENUE
22. This Court has original jurisdiction over this action under the Class
Action Fairness Act, 28 U.S.C. § 1332(d), because this is a class action in which:
(1) at least some members of the proposed class have different citizenship from any
Defendant; (2) the proposed class consists of more than 100 persons or entities;
and (3) the claims of the proposed class Members exceed $5,000,000 in the
aggregate.
23. This Court also has original jurisdiction under the general federal
question statute, 28 U.S.C. § 1331, because this action arises under the laws of the
United States.
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24. This Court has personal jurisdiction over each of the Defendants
because they do business in this district, including with their own borrowers, they
direct their business activities with Sport & Wheat into this district, and a
substantial number of the events or omissions giving rise to the claims took place in
this district.
25. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b)(2),
because a substantial part of the events or omissions giving rise to the claims
occurred in this district. Specifically, Sport & Wheat performed its work in this
district, for borrowers residing in this district, who applied for PPP loans from the
Defendants while in this district, and Defendants marketed, promoted, and
accepted applications for PPP loans in this district.
PARTIES
26. Plaintiff Sport & Wheat, CPA, PA is a Florida corporation with its
principal place of business in Pace, Florida.
27. As used in this complaint, a “Borrower” means one of several clients
of Sport & Wheat that applied for and received a PPP loan from one Defendant (or
more generally, any business who received a PPP loan from a Defendant by using
the services of a class member).
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28. Defendant ServisFirst Bank, Inc. is a Florida for-profit corporation
with its principal place of business in Birmingham, Alabama.
29. Defendant Synovus Bank is a Georgia for-profit corporation with its
principal place of business in Columbus, Georgia.
30. Defendant The First, A National Banking Association (“TheFirst”) is
a national banking association headquartered in Hattiesburg, Mississippi.
31. Defendant Truist Bank is a North Carolina for-profit corporation with
its principal place of business in Charlotte, North Carolina.
THE COVID-19 CRISIS
BEGINS HITTING SMALL BUSINESSES IN AMERICA
32. Small businesses are the backbone of the American economy. Indeed,
about half of America’s workers work at a small business. These businesses and
their employees have been hit hard by the global COVID-19 outbreak.
33. On March 11, 2020, the COVID-19 outbreak was characterized as a
pandemic by the World Health Organization. Most countries of the world adopted
travel restrictions and stay-at-home policies in order to slow the spread of COVID-
19 and “flatten the curve” so as to not overwhelm the health sector’s capacity to
treat patients.
34. On March 13, 2020, President Trump issued a proclamation declaring
a national emergency concerning the COVID-19 pandemic. A combination of
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federal, state, and private actions led to the closure of large sectors of the economy,
with the effect of throwing millions of small businesses into jeopardy.
35. The President and the Congress quickly understood the need for
economic support in the face of the pandemic.
36. On March 25, 2020, in response to the COVID-19 crisis, the United
States Senate passed the Coronavirus Aid, Relief, and Economic Security Act—the
“CARES Act.” The Act passed the House the next day, and it was signed into law
as Pub. L. No. 116-136 on March 27, 2020.
37. At President Trump’s signing of the CARES Act, U.S. Rep. Steve
Chabot, ranking member of the House Small Business Committee, praised the
legislation as giving small businesses a great chance to reopen.1 Florida’s U.S.
Senator, Marco Rubio, chair of the Senate Small Business and Entrepreneurship
Committee, stated that the “bipartisan small business package . . . will provide
emergency relief so that millions of American workers can keep their jobs and
millions of small businesses can stay open.”2 The Senate Majority Whip, John
1
Remarks by President Trump at Signing of H.R. 748, The CARES Act, The White House
(available at https://www.whitehouse.gov/briefings-statements/remarks-president-trump-
signing-h-r-748-cares-act/).
2
Press Release, Sen. Rubio, Rubio Applauds Passage of Phase 3 Coronavirus Emergency Relief
Bill (Mar. 25, 2020) (available at https://www.rubio.senate.gov/public/index.cfm/press-
releases?ContentRecord_id=D08E8A75-546A-4C56-A890-B948048E9B5C).
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Thune, stated that the PPP loans provided by the CARES Act “will deliver relief to
small businesses to help them and their workers weather this storm.”3
38. The CARES Act poured trillions of federal dollars into the economy.
Unprecedented in size and scope, the legislation was the largest economic stimulus
package in U.S. history, amounting to 10% of the total U.S. gross domestic product.
THE CARES ACT AND
ITS INTERSECTION WITH EXISTING SBA LAW
39. Congress created the Paycheck Protection Program in Section 1102 of
the CARES Act.
40. Rather than setting up an entirely new federal bureaucracy, and
recognizing the need to act quickly, Congress decided to route these loans through
the Small Business Administration and its existing network of private lenders.
41. The Small Business Administration was created by Congress in 1958
with the passage of the Small Business Act, Pub. L. No. 85-536. Its stated aim was
to “aid, counsel, assist, and protect . . . the interests of small-business concerns . . .
to maintain and strengthen the overall economy of the Nation.” Id.
42. Section 7(a) of the Act allowed the SBA to make loans to small
businesses. This section has been amended over the years and is presently codified
3
Press Release, Sen. Thune, Thune Statement on Senate Passage of Bipartisan Coronavirus
Relief Package (Mar. 25, 2020 (available at
https://www.thune.senate.gov/public/index.cfm/press-releases?ID=CA914CF0-5C3D-4A02-
B6F2-84925B5467BD).
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at 15 U.S.C. § 636(a). Over the decades and in partnership with private lenders, the
SBA’s Section 7(a) program has supported companies employing millions of
Americans.
43. In sum, Section 1102 of the CARES Act is the section that created the
Paycheck Protection Program, and Section 1102 amends Section 7(a) of the SBA’s
enabling act.
44. Most of Section 1102 was codified at 15 U.S.C. § 636(a)(36).
45. Acting under its rulemaking authority over the years, the SBA has
written regulations which govern the implementation of the Section 7(a) program.
THE PAYCHECK PROTECTION PROGRAM’S DESIGN
46. The PPP gives American small businesses with eight weeks of cash
flow assistance through federally-guaranteed loans with a short term of two years
and a low interest rate. Under the PPP, the SBA guarantees private lenders’ loans.
47. One of the most important aspects of the PPP is that if a company
retains its workforce for a period of time, the loans are forgiven. Congress set such
generous terms because its primary goal was keeping Americans paid.
48. The PPP was intended to be extremely generous to lenders, so that
they would rapidly disburse the billions in federal funds through the economy.
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49. One of the ways the PPP does this is by paying lenders an origination
fee—either 1%, 3%, or 5%—based on the size of the loans. 15 U.S.C.
§ 636(a)(36)(P)(i).
50. Lenders are not necessarily permitted to retain the entire origination
fee for themselves, however. Under the PPP statute and its implementing rule, this
fee must be divided with an “agent,” such as Sport & Wheat, when the agent assists
with a loan transaction.
51. As used hereafter in this complaint, “PPP Agent” specifically means a
person who acted as an agent to assist a Borrower in applying for a loan under the
Paycheck Protection Program.
52. The statute, 15 U.S.C. § 636(a)(36)(P)(ii), sets a cap on PPP Agents’
fees, as follows:
(ii) Fee limits.—
An agent that assists an eligible recipient to prepare an
application for a covered loan may not collect a fee in
excess of the limits established by the Administrator.
53. Accordingly, how a PPP Agent can collect a fee, and how much, is a
decision Congress expressly delegated to the Small Business Administration.
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54. The SBA exercised its rulemaking authority under this and other
provisions of the Paycheck Protection Program statute, issuing the PPP Interim
Final Rule on April 2, 2020, making it effective April 15, 2020. 85 Fed. Reg. 20811.4
55. As relevant here, the Rule provides:
c. Who pays the fee to an agent who assists a borrower?
Agent fees will be paid by the lender out of the fees
the lender receives from SBA. Agents may not collect
fees from the borrower or be paid out of the PPP loan
proceeds. The total amount that an agent may collect
from the lender for assistance in preparing an application
for a PPP loan (including referral to the lender) may not
exceed:
i. One (1) percent for loans of not more than
$350,000;
ii. 0.50 percent for loans of more than $350,000 and
less than $2 million; and
iii. 0.25 percent for loans of at least $2 million.
The Act authorizes the Administrator to establish
limits on agent fees. The Administrator, in consultation
with the Secretary, determined that the agent fee limits
set forth above are reasonable based upon the application
requirements and the fees that lenders receive for making
PPP loans.
85 Fed. Reg. 20811, 20816 (emphasis added).
4
Available at https://www.sba.gov/sites/default/files/2020-
04/PPP%20Interim%20Final%20Rule_0.pdf.
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56. The U.S. Treasury also distributed a fact sheet for lenders in
connection with this rule. Paycheck Protection Program (PPP) Information Sheet, U.S.
Treasury.5 As relevant in the Treasury’s fact sheet:
How will agents be compensated? Agent fees will be
paid out of lender fees. The lender will pay the agent.
Agents may not collect any fees from the applicant. The
total amount that an agent may collect from the lender for
assistance in preparing an application for a PPP loan
(including referral to the lender) may not exceed:
One (1) percent for loans of not more than $350,000;
0.50 percent for loans of more than $350,000 and less than $2
million; and
0.25 percent for loans of at least $2 million.
(Some emphasis added.)
57. The PPP was in such high demand that its initial $349 billion
allotment was exhausted after just fourteen days. Congress followed on with a
supplement, and on April 24, 2020, the President signed H.R. 266, the Paycheck
Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, into
law. This second act authorized an additional $310 billion in funding for the
Paycheck Protection Program. Other than making additional money available, this
statute is not independently significant to the claims in this action.
5
Available at
https://home.treasury.gov/system/files/136/PPP%20Lender%20Information%20Fact%20Sheet.p
df.
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THE ROLE OF PPP AGENTS IN
THE PAYCHECK PROTECTION PROGRAM
58. It has been a longtime practice under Section 7(a), the small business
lending program, for lenders and borrowers to rely on the services of “agents.”
“Agents” are entities like accounting firms, bookkeepers, and other financial
professionals who help borrowers navigate the Small Business Administration’s
complex processes and the landscape of the SBA lending program, and who help
lenders by feeding them completed loan packages.
59. Agents are especially important for the smallest of small businesses—
who do not have such professionals in house.
60. In the context of the PPP, agents gather financial documents, explain
the law, prepare loan applications, and shepherd those applications through banks’
processes to completion. Agents may also assist with helping borrowers obtain the
critical loan forgiveness later on.
61. “Agent” has a specific regulatory definition, which can be found at 13
CFR § 103.1(a):
(a) Agent means an authorized representative,
including an attorney, accountant, consultant,
packager, lender service provider, or any other
individual or entity representing an Applicant or
Participant by conducting business with SBA. For
purposes of SBA’s business loan programs, the term
Agent includes but is not limited to:
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...
(2) Packager: An Agent who prepares the Applicant's
application for financial assistance and is employed
and compensated by the Applicant.
(3) Loan Broker (also known as Referral Agent): an Agent
who, on a specific transaction, either assists the Applicant
in finding an SBA Lender that will be willing to make a
loan to the Applicant or assists the SBA Lender in finding
an Applicant. A Loan Broker may be employed and
compensated by either the Applicant or the SBA Lender
(but not both). Compensation paid to a Loan Broker by
an SBA Lender may not be passed on to the Applicant
and may not be paid out of SBA–guaranteed loan or
debenture proceeds.
13 CFR § 103.1(a) (emphasis added).
62. The Treasury’s fact sheet uses a similar definition of “agent,”
specifically in connection with the PPP.6
63. Before the Paycheck Protection Program, an agent could charge a
borrower for his or her services. An agent involved in a transaction and receiving a
fee was required to compensation agreement on a form created by the SBA. 13 CFR
§ 103.5(a). Each agreement “govern[ed] the compensation charged for services
rendered or to be rendered to the Applicant or lender in any matter involving SBA
assistance.” SBA calls this “Form 159.”
6
Paycheck Protection Program (PPP) Information Sheet, U.S. Treasury, available at:
https://home.treasury.gov/system/files/136/PPP%20Lender%20Information%20Fact%20Sheet.p
df.
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64. The PPP Interim Final Rule modified this procedure. Under that rule,
a PPP Agent’s fee is to be paid from the lender’s origination fee.
65. Harmonizing these provisions, a Borrower may agree to hire a PPP
Agent, subject to the fee caps set by the SBA in its PPP Interim Final Rule; and to
be paid under 13 CFR § 103.5(a), the PPP Agent must submit the arrangement in
writing on SBA’s Form 159.
66. The SBA has another relevant regulation, 13 CFR § 120.195. This
regulation requires Borrowers to identify “agents” who assisted them in obtaining a
loan, describe the work performed, and describe the fee to be paid.
67. Under this provision, any Defendant who accepted a loan application
from a Borrower involving Sport & Wheat must have assured itself that Sport &
Wheat was identified on the loan application, along with its work performed and the
fee to be paid.
68. Sport & Wheat acted as a PPP Agent with respect to each Defendant
on at least one Borrower’s transaction, the details of which are discussed in sections
below. Each Borrower agreed to pay Sport & Wheat—its longtime accounting firm
on other matters—for the value of its time spent on PPP transactions.
69. Each of the Defendants here knew that their Borrowers had utilized
the services of Sport & Wheat as a PPP Agent. When each Defendant was asked to
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compensate Sport & Wheat, each Defendant refused. Those circumstances are also
detailed below.
70. Each Defendant refused to permit Sport & Wheat from collecting the
money it earned, and in refusing to do that, each Defendant violated the law.
71. In part, each Defendant did that by (1) refusing to list Sport & Wheat
as a PPP Agent, (2) actually removing Sport & Wheat’s name from PPP loan
applications, or (3) ordering Borrowers to remove Sport & Wheat’s name and
signature from submitted applications—all in violation of law. The circumstances
of these acts are also detailed below.
72. At all times, Sport & Wheat intended to be compensated for its work,
and intended to comply with all provisions of law necessary to be lawfully
compensated.
73. Sport & Wheat’s only permissible source of compensation, under the
PPP statute and its implementing rule, is the Defendants’ statutorily-created
origination fees. Defendants are now liable to Sport & Wheat because they acted
with full knowledge of the relevant federal laws and accepted the benefit of Sport &
Wheat’s services.
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FACTUAL ALLEGATIONS SPECIFIC TO SPORT & WHEAT’S
INTERACTION WITH EACH DEFENDANT
74. Sport & Wheat is a CPA firm located in Pace, Florida. It has
approximately 1,000 clients, approximately 200–250 of which are small businesses
or sole proprietorships. It provides accounting and tax services.
75. Like many CPA firms around the country, Sport & Wheat realized that
many of its small business clients likely would be applying for PPP loans.
Accordingly, Sport & Wheat immediately began to study the law, regulations, and
rules issued by the government, as well as guidance from CPA societies, banks and
other recognized authorities.
76. Due to the extremely quick passage of the law and the knowledge that
the funds would likely run out after being given on a “first come/first served” basis,
Sport & Wheat employees put considerable time into their research, and they set
aside other opportunities for profitable work.
77. Sport & Wheat initiated contact with its hardest-hit small business
clients to inform them of the PPP and to advise them that if a PPP loan was used to
keep its employees employed during the pandemic, all or a substantial portion of
that loan would be forgiven.
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78. Shortly after the PPP became public, Sport & Wheat was inundated
with requests from its clients for assistance in applying for PPP loans, many of
which were desperately trying to avoid laying off employees.
79. During March and April 2020, Sport & Wheat assisted approximately
50 clients in preparing, processing, and filing PPP loan applications.
80. Some lenders have agreed to pay Sport & Wheat for its services.
Defendants, however, have refused.
ServisFirst
81. On April 2, 2020, Sport & Wheat was asked by one of its small
business clients, “Borrower R,” to assist it in applying for a PPP loan.
82. Borrower R is an engineering firm specializing in the design and
manufacturing of equipment used by mechanics to repair vehicles. It is a Florida
limited liability company. Borrower R has eight employees.
83. Due to the COVID-19 pandemic and the cessation of almost all of its
business, Borrower R was considering furloughing a number of its workers.
84. In applying for a PPP loan with Defendant ServisFirst on behalf of
Borrower R, Sport & Wheat expended 6.8 hours of time preparing, processing and
filing the PPP loan application and supporting documents.
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85. Sport & Wheat’s work may continue even after Borrower R’s loan is
funded, helping . Borrower R prepare the necessary certifications in order for the
PPP loan to be forgiven. This “back-end work” is part and parcel of Sport &
Wheat’s arrangement with its clients. The form for this work was recently released
and runs eleven pages.
86. Between April 2, 2020 and April 7, 2020, Sport & Wheat prepared,
signed as PPP Agent, hand-delivered, and e-mailed to Borrower R and ServisFirst
different iterations of the PPP loan application and supporting documents.
87. Thus, ServisFirst was aware that Borrower R was working on the
application.
88. On April 7, 2020, Borrower R filed its PPP loan application through
ServisFirst’s portal using the information and documents that Sport & Wheat had
prepared. Borrower R requested a PPP loan in the amount of $94,165.
89. On or about April 10, 2020, ServisFirst funded the requested loan for
Borrower R.
90. Based on the size of this loan, applying the formula in the Paycheck
Protection Program, and on information and belief, ServisFirst will receive or has
received its PPP loan origination fee of $4,708.25 (5% × $94,165).
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91. ServisFirst is required under the SBA rule to pay Sport & Wheat’s fees
as Borrower R’s PPP Agent. Under the rule, Sport & Wheat’s fee can be as much as
1% of the loan, or $941.65.
92. On April 17, 2020, Borrower R asked ServisFirst about payment of
Sport & Wheat’s fees as Borrower R’s PPP Agent.
93. ServisFirst advised Borrower R that “[t]he SBA guidance on charging
the client fees changed late in the game. The Bank has made a decision to not pay
agents.”
94. Borrower R communicated this to Sport & Wheat the same day.
95. ServisFirst’s representation that the SBA guidance “changed” is false.
In fact, the PPP Interim Final Rule mandated that PPP “Agent fees will be paid by
the lender out of the fees the lender receives from SBA.” That has not changed.
96. Sport & Wheat has not been compensated by ServisFirst for its
services as Borrower R’s PPP Agent.
97. Had Sport & Wheat not performed its work, ServisFirst would not
have been able to fund this loan or earn its origination fee from the SBA.
98. In addition to Borrower R, Sport & Wheat assisted, is presently
assisting and may in the future assist other clients with their PPP loan applications
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with ServisFirst. Sport & Wheat expects to be paid for its services in connection
with each loan, consistent with law.
Synovus Bank
99. On March 24, 2020, Sport & Wheat was asked by another small
business client, “Borrower C,” to assist it in applying for a PPP loan.
100. Borrower C is a medical group in Pensacola, Florida that specializes in
surgery. Borrower C has nine employees.
101. Because the surgeries Borrower C performs for its patients are
predominately elective, Borrower C’s business had all but stopped due to the
COVID-19 pandemic and it was considering furloughing its staff.
102. Borrower C hired Sport & Wheat to prepare a PPP loan application
intended to be submitted to Defendant Synovus Bank.
103. Sport & Wheat expended 8.67 hours of time preparing, processing,
and filing the PPP loan application and supporting documents. As with other
clients, Sport & Wheat’s help also will be needed with so-called “back-end work”
to ensure that the loan is later forgiven.
104. On April 1, 2020, Sport & Wheat prepared a PPP loan application that
Borrower C signed as the borrower, and that Sport & Wheat signed as its PPP
Agent.
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105. On April 1, 2020, Sport & Wheat communicated with Synovus Bank,
assisting Synovus Bank in resolving the bank’s mismatching of Borrower C’s name.
This mismatch had caused a delay to Borrower C’s application.
106. Synovus Bank knew that Sport & Wheat was acting as Borrower C’s
PPP Agent in connection with Borrower C’s PPP loan application.
107. On April 9, 2020, Sport & Wheat asked Synovus Bank about the
payment of Sport & Wheat fees as Borrower C’s PPP Agent.
108. Synovus Bank advised Sport & Wheat that Synovus Bank had decided
that it would not pay PPP Agents’ fees. Of course, this was after Synovus Bank had
relied on Sport & Wheat’s help.
109. On April 17, 2020, Borrower C was able to access Synovus Bank’s
online portal to apply for a PPP loan in the amount of $163,303. Borrower C did so
using the financial information and supporting documentation that Sport & Wheat
had prepared.
110. On April 21, 2020, Borrower C received the funds from its PPP loan as
requested: $163,303.
111. Based on the size of this loan, applying the formula in the Paycheck
Protection Program, and on information and belief, Synovus Bank will receive or
has received its PPP loan origination fee of $8,165.15 (5% × $163,303).
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112. Under the rules, Synovus Bank is required to share part of its fee with
Sport & Wheat as Borrower C’s PPP Agent. The maximum amount Sport & Wheat
may receive under the PPP Interim Final Rule is $1,633.03 (1% × $163,303).
113. Sport & Wheat has not been compensated by Synovus Bank for its
services as Borrower C’s PPP Agent.
114. In addition to Borrower C, Sport & Wheat has assisted and will assist
other clients with their PPP loan applications with Synovus Bank. Sport & Wheat
expects to be paid for its services in connection with each loan, consistent with law.
TheFirst
115. On April 8, 2020, Sport & Wheat was asked by one of its small
business clients, “Borrower I,” to assist it in applying for a PPP loan.
116. Borrower I is a single-member LLC in the business of pressure-
washing, soft-washing, and roof cleaning. It is a Florida limited liability company
with its principal place of business in Pace, Florida.
117. Due to the COVID-19 pandemic, almost all of Borrower I’s business
had ceased.
118. Sport & Wheat expended 1.8 hours of time preparing Borrower I’s
PPP loan application and gathering supporting documents. Sport & Wheat may also
be required to provide assistance to Borrower I for back-end work.
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119. On April 9, 2020, Sport & Wheat prepared a PPP loan application and
supporting documents. Sport & Wheat signed the application as PPP Agent in the
space marked “Borrower’s Agent,” and e-mailed it to Borrower I. Borrower I then
sent the application to Defendant TheFirst.
120. On April 10, 2020, Borrower I was informed by TheFirst that the
application needed to be redone, and that only Borrower I should sign the
application—with Sport & Wheat’s name removed.
121. Further, TheFirst asked for another spreadsheet showing how the loan
amount had been calculated.
122. In response, Sport & Wheat complied with TheFirst’s request,
preparing a new spreadsheet, and making the changes to Borrower I’s PPP loan
application.
123. As a result of TheFirst’s review of the initial PPP loan application
submitted by Borrower I, TheFirst knew that Sport & Wheat was acting as
Borrower I’s PPP Agent in connection with the loan.
124. On April 29, 2020, Borrower I received the PPP loan it had applied for,
$7,574.50.
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125. Based on the size of this loan, applying the formula in the Paycheck
Protection Program, and on information and belief, TheFirst will receive or has
received its PPP loan origination fee of $378.73 (5% × $7,574.50).
126. Under the Rule, TheFirst is required to share its fee with Sport &
Wheat as Borrower I’s PPP Agent, up to the amount of $75.75 (1% × $7,575).
127. Sport & Wheat has not been compensated by TheFirst.
128. In addition to Borrower I, Sport & Wheat has handled and will handle
other clients’ PPP loan applications for TheFirst. Sport & Wheat expects to be paid
for its services in connection with each loan, consistent with law.
Truist
129. On April 1, 2020, Sport & Wheat was asked by one of its small
business clients, “Borrower M,” to assist it in applying for a PPP loan. Borrower M
provides heating and air conditioning services. It is a Florida corporation with its
principal place of business in Milton, Florida. Borrower M has fifteen employees.
Due to the pandemic, customers were reluctant to expend funds on replacing air
conditioning units, and Borrower M was considering furloughing a number of its
workers.
130. Borrower M’s primary bank is Truist, and Borrower M hired Sport &
Wheat to work with Truist to secure its PPP loan. Accordingly, on April 1, 2020, Jill
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Sport (a partner in Sport & Wheat) wrote to Truist to say: “Good morning. Under
the guidelines released by the Treasury yesterday, we will be acting as [Borrower
M’s] agent in this process.”
131. Sport & Wheat then worked up an application on Truist’s forms. It
expended 4 hours of time preparing Borrower M’s loan application and gathering
supporting documents.
132. As with other borrowers, Sport & Wheat also will be required to
perform “back-end work” so that this loan is properly forgiven.
133. On April 6, 2020, Sport & Wheat uploaded Borrower M’s completed
application and supporting documents to the Truist portal. The application was
signed by Sport & Wheat as Borrower M’s PPP Agent.
134. In e-mails on April 24, 2020, Truist notified Sport & Wheat that a
certain PPP worksheet had not been properly uploaded into the portal. When Sport
& Wheat asked if Borrower M needed to sign the document, Truist responded:
“You are able to sign as authorized representative[.]” In a further e-mail that day,
Truist wrote to Jill Sport: “Jill - it might be a good idea to log into the portal and
upload on your end the PPP Worksheet.” Ms. Sport did so.
135. On April 29, 2020, Sport & Wheat asked Truist what information it
would need in order to compensate Sport & Wheat fees for the work done as
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Borrower M’s PPP Agent. Truist did not respond. Notably, Truist also did not
disclaim Sport & Wheat’s right to a fee, and Truist continued to perform work on
the application.
136. On May 1, 2020, Truist e-mailed Sport & Wheat to say that Borrower
M’s loan was approved, but that the worksheet signed by Sport & Wheat would
need to be signed by a Borrower M representative. Truist did not tell Sport &
Wheat that its name would have to be removed. The Truist banker also wrote: “I
also wanted to share that we secured SBA funding for their loan this week. . . . Feel
free to call my cell with any questions.” This entire e-mail was with Sport & Wheat.
Truist did not even copy Borrower M on the exchange.
137. Truist funded Borrower M’s PPP loan on May 7, 2020, in the
requested amount of $187,557.
138. Based on the size of this loan, applying the formula in the Paycheck
Protection Program, and on information and belief, Truist will receive or has
received its PPP loan origination fee of $9,377.85 (5% × $187,557).
139. As with the other loans of this size, that means Sport & Wheat is
entitled to a maximum of $1,875.57 (1% × $187,557), which is to come from Truist’s
fee.
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140. On May 8, 2020, Sport & Wheat again inquired about information
needed to pay agent fees and was told “[a]t this time we are still awaiting guidance
from legal team on approved response and guidance.”
141. Sport & Wheat has not been compensated by Truist for its services as
Borrower M’s PPP Agent.
142. Sport & Wheat construes Truist’s silence and stonewalling of its
repeated requests for payment as a refusal to carry out its legal obligation to share
its fee with Sport & Wheat.
143. In addition to Borrower M, Sport & Wheat has assisted and will assist
other clients with PPP loan applications through Truist. Sport & Wheat expects to
be paid for its services in connection with each loan, consistent with law.
CLASS ACTION ALLEGATIONS
144. Sport & Wheat brings this action on behalf of itself and a class and
subclass of similarly situated businesses. Sport & Wheat seeks class certification
under both Fed. R. Civ. P. 23(b)(3) (monetary damages) and Rule 23(b)(2)
(injunctive relief ).
145. Plaintiff’s proposed “National Class” is:
All persons in the United States who acted as borrowers’
agents with respect to a Paycheck Protection Program
loan made by any Defendant, and who were not
compensated by the Defendant for the work performed.
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146. Plaintiff’s proposed “Florida Subclass” is:
All persons in Florida who acted as borrowers’ agents
with respect to a Paycheck Protection Program loan made
by any Defendant, and who were not compensated by the
Defendant for the work performed.
147. Throughout this complaint, references to “the class” or “class
members” are intended to refer to members of both proposed classes.
148. Excluded from Plaintiff’s class definition are: (a) Defendants and any
entities in which Defendants have a controlling interest; (b) any entities in which
Defendants’ officers, directors, or employees are employed and any of the legal
representatives, heirs, successors, or assigns of any of the Defendants; (c) the judge
to whom this case is assigned and any member of the judge’s immediate family and
any other judicial officer assigned to this case; and (d) any government entity.
149. This class is maintainable upon the following grounds.
150. Numerosity. FRCP 23(a)(1). The Small Business Administration has
approved millions of PPP loans, and at least hundreds of thousands of those
borrowers relied on the help of PPP Agents. Because Defendants have failed to
compensate PPP Agents as a matter of practice, and due to widespread follow-on
suits in other districts against other lenders after news of this case was published, it
is clear that there are thousands of agents in this class. Joinder of all such PPP
Agents in this action would be impracticable.
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151. Existence and Predominance of Common Questions of Fact and Law.
FRCP 23(a)(2). There is a well-defined community of interest in questions of law
and fact affecting the class. These questions include the following:
a. Does the PPP Interim Final Rule provide class members with a
right to be paid out of Defendants’ origination fees?
b. May Defendants fail or refuse to compensate class members who
assisted Borrowers in successfully applying for PPP loans?
c. Did Defendants maintain a policy of failing or refusing to pay class
members for their services?
d. Was Defendants’ systematic failure or refusal to compensate class
members in violation of federal law?
e. Is class certification appropriate under the circumstances?
f. Are class members are entitled to damages, and if so, how is that to
be determined?
g. Are class members entitled to declaratory or injunctive relief?
h. Are Sport & Wheat and the other class members entitled to an
award of reasonable attorney’s fees, interest, and costs?
152. Typicality. FRCP 23(a)(3). Sport & Wheat’s claims are typical of the
claims of class members. There is nothing unusual about Sport & Wheat’s
organization or business activities; it is a typical accounting firm like others in the
class. Moreover, Sport & Wheat’s claims are identical to other class members in
that all PPP Lenders have received an origination fee under the same statute and
owe a portion of that fee to Sport & Wheat under the same PPP Interim Final Rule,
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as well as the other class members. The factual and legal bases of Defendants’
liability to Sport & Wheat and each class Member are substantially similar. There
are no defenses available that are unique to Sport & Wheat.
153. Adequacy. FRCP 23(a)(4). Sport & Wheat is an adequate
representative of the class. It has diligently pursued its own claims, including filing
this action—the first in the country. Moreover, Sport & Wheat is a member of the
class and its interests do not conflict with those of other class members. Sport &
Wheat has retained national counsel with substantial experience in litigating
complex individual and class cases, including business cases against large financial
institutions, and counsel have the financial ability to litigate this matter.
154. Appropriateness of injunctive relief. FRCP 23(b)(2). Injunctive relief
respecting the class as a whole is appropriate, because Defendants have acted or
failed to act on grounds generally applicable to the class as a whole. Defendants’
refusal to pay PPP Agent fees is a systematic policy of each Defendant, based on a
single statutory/regulatory scheme. Such conduct requires the Court’s imposition
of uniform relief to ensure compatible standards of conduct toward the class.
155. Superiority over other means of resolution. FRCP 23(b)(3). A class action
awarding money damages is superior to other available methods of resolving these
claims. Chiefly, the amounts owed by each individual Defendant to each class
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member are too low to warrant the prosecution of individual actions. Therefore,
most class members could not and would not have redress of the wrongs
complained of, absent a class action. This would result in Defendants’ keeping their
ill-gotten gains. Moreover, a multiplicity of suits would congest the courts if class
members did pursue individual claims, and there would be a risk of inconsistent
results. Regarding other “superiority” factors, class members do not have a
significant interest in controlling their own individual claims, because of the same
reasoning: the values may be too low to pursue, and class members’ limited time is
better spent on productive work. Regarding the extent of any other litigation, Sport
& Wheat is unaware of any other case involving these particular Defendants.
Regarding the desirability of concentrating claims in one forum, the case presents a
question of uniform federal law. Finally, in terms of likely difficulties of
administration, Sport & Wheat and its counsel feel confident that the Court will be
able to keep this litigation on course as a class action.
156. Class members are also readily ascertainable, because the Defendants
have a record of every loan they have made under the Paycheck Protection
Program. Further, the PPP is only weeks old, so it will not involve a significant
search to identify class members. Defendants also have perfect records of
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Borrowers (who are required to repay unforgiven loans) and can locate class
members via that means as well.
CONSTRUCTION
157. This complaint should be construed so as to do substantial justice, and
thus the factual allegations above should be considered incorporated into each
count below.
158. Further, as the Rules of Civil Procedure permit, the counts below are
stated in the alternative. Fed. R. Civ. P. 8(d).
159. References to “Sport & Wheat” below should be construed to include
class members as well.
COUNT 1:
UNJUST ENRICHMENT
(Against All Defendants)
160. Sport & Wheat brings this count on its own behalf and on behalf of
both the National Class and Florida Subclass.
161. Sport & Wheat performed services for Defendants and their
Borrowers.
162. Specifically, as detailed above, Sport & Wheat assisted Defendants by
explaining the new Paycheck Protection Program, including the CARES Act and
the relevant PPP Rules, to Defendants’ own customers, the Borrowers. Sport &
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Wheat also worked with Borrowers to assemble the relevant documents and
information, drafted loan applications on Defendants’ own forms, and packaged
and submitted these materials to Defendants. In some cases, Sport & Wheat
affirmatively responded to the Defendants’ requests for information.
163. All of Sport & Wheat’s conduct, as described in this count, benefited
each of the Defendants, by bringing completed loan packages to Defendants’ banks,
earning them origination fees.
164. With respect to each loan issued, Defendants performed less work
than they would have, absent Sport & Wheat’s involvement.
165. Defendants benefited from Sport & Wheat’s help.
166. Defendants knew of the services Sport & Wheat was providing as a
PPP Agent to Defendants’ Borrowers. Defendants knew of the value of those
services. And Defendants knew of Sport & Wheat’s expectation of being
compensated, both as required by the PPP Interim Final Rule as well as through
Sport & Wheat’s contact with each Defendant.
167. Defendants accepted Plaintiff’s services and retained the benefit of
those services.
168. Defendants themselves earned substantial origination fees from the
SBA for issuing PPP loans.
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169. But Defendants retained all of those fees for themselves, including the
portion of those fees that are owed to class members.
170. Defendants have been unjustly enriched as a result.
171. Under the circumstances, it would be inequitable for Defendants to
retain all of the PPP loan origination fees paid to Defendants by the SBA, without
paying Sport & Wheat for its services as a PPP Agent.
172. Defendants are liable to Sport & Wheat and class members in the
amounts they unjustly retained.
COUNT 2:
CONTRACT IMPLIED IN LAW (RESTITUTION/QUASI-CONTRACT)
(Against All Defendants)
173. Sport & Wheat brings this count on its own behalf and on behalf of the
National Class and Florida Subclass.
174. Sport & Wheat conferred a benefit on each Defendant. It did so—at a
minimum—by performing work which Defendants did not do, by bringing
completed loan applications to Defendants on behalf of Borrowers, and by making it
easier and faster for Defendants to process loans.
175. Each Defendant was aware of the benefit Sport & Wheat conferred on
it, because each Defendant knew that Sport & Wheat was a part of each loan
transaction in this action. In fact, as pled, certain Defendants even affirmatively
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requested further assistance from Sport & Wheat in connection with various
transactions.
176. Defendants earned the origination fee from the Small Business
Administration, set in the Paycheck Protection Program statute, and did so with
Sport & Wheat’s help.
177. Accordingly, Sport & Wheat conferred a benefit on each Defendant.
178. Each Defendant has failed or refused to pay Sport & Wheat for its
work.
179. For all the reasons set out in this complaint, it would be inequitable for
Defendants to retain these benefits under the circumstances.
180. Defendants wrongfully retained the benefits conferred on them by
Sport & Wheat.
181. Defendants are liable to Sport & Wheat and class members in the
amounts of the benefits conferred on them.
COUNT 3:
CONVERSION
(Against All Defendants)
182. Sport & Wheat brings this count on its own behalf and on behalf of the
National Class and Florida Subclass.
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183. A portion of the origination fee each Defendant received was the
rightful property of Sport & Wheat.
184. Defendants’ interference with, and dominion and authority over,
Sport & Wheat’s property, is an overt act that is inconsistent with Sport & Wheat’s
rights.
185. Accordingly, Defendants are liable to Sport & Wheat and class
members for conversion in the amount of the fees they have tortiously retained.
COUNT 4:
DECLARATORY RELIEF
(Against All Defendants)
186. Sport & Wheat brings this count on its own behalf and on behalf of the
National Class and Florida Subclass.
187. The Declaratory Judgment Act, 28 U.S.C. § 2201(a), permits the
Court to declare the rights of a party in a decree that has the force and effect of a
final judgment.
188. Defendants have asserted that Sport & Wheat is not entitled to a fee
for the work it performed.
189. Sport & Wheat seeks a declaration that, because it performed work for
Borrowers, it is entitled to fees, to be paid from Defendants’ origination fees under
the Paycheck Protection Program.
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190. Sport & Wheat also seeks a declaration that Defendants acted
unlawfully, in refusing to maintain Sport & Wheat’s name as PPP Agent on loan
applications and documents filed with the Small Business Administration.
Defendants’ conduct was unlawful in that it ran afoul of the PPP Interim Final
Rule.
PRAYER FOR RELIEF
Sport & Wheat demands a judgment against each of the Defendants. Sport &
Wheat demands, as pled in the alternative, Fed. R. Civ. P. 8(a)(3), the maximum of
all of the following:
a. Compensatory damages, injunctive relief, restitution, disgorgement,
quantum meruit damages, declaratory relief, and all other relief allowed
by law or equity.
b. An injunction requiring each Defendant to take any step necessary to
permit Sport & Wheat and the class to be lawfully paid under law,
including, but not limited to: retroactively amend and re-process any
loan application; notify the Small Business Administration of a
plaintiff’s participation in a transaction as required by law; and other
steps deemed necessary by the Court.
c. An injunction barring each Defendant from refusing to allow future
Borrowers to have their PPP Agents paid out of origination fees paid to
lenders under the Paycheck Protection Program.
d. All costs of suit and attorney fees.
e. Pre-judgment interest and post-judgment interest.
f. Any other relief the Court deems fair.
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g. An order certifying the class, appointing Sport & Wheat as class
representative, and appointing Sport & Wheat’s counsel as class
counsel for the class.
h. The costs of notifying the class that a class action has been certified.
JURY DEMAND
Sport & Wheat demands a trial by jury on any issue triable of right by a jury.
Dated: May 27, 2020 Respectfully submitted,
/s/ Virginia M. Buchanan
Virginia M. Buchanan
(Fla. Bar No. 793116)
Matthew D. Schultz (Fla. Bar No. 640328)
William F. Cash III (Fla. Bar No. 68443)
LEVIN, PAPANTONIO, THOMAS,
MITCHELL, RAFFERTY & PROCTOR,
P.A.
316 South Baylen Street, Suite 600
Pensacola, FL 32502
Phone: 850-435-7059
Email: bcash@levinlaw.com
42
Case
Case MDL No. 2950 Document
3:20-cv-05425-TKW-HTC 185-1 21
Document Filed 06/17/20
Filed 05/27/20Page
Page4343
of of
4343
/s/ John S. Wirt
John S. Wirt, Esq. (Fla. Bar No. 117640)
Pamela Cocalas Wirt, Esq. (Fla. Bar No.
109576)
WIRT & WIRT, P.A.
5 Calhoun Ave, Suite 306
Destin, FL 32541
Tel: 847-323-4082
Fax: 314-431-6920
jwirt@wirtlawfirm.com
Attorneys for the Plaintiff
43
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