Court filing

Exhibit G — Agent Fee Litigation (Dkt. 98.9)

One of 3 filings in Agent Fee Litigation.

What This Document Is

The CM/ECF docket sheet for C.D. Cal. No. 2:20-cv-05104-JAK-PVC, Exhibit G — the last-filed and last-listed of the seven related actions attached to Document 98. Filed 06/09/2020, one day before this notice itself, by Fahmia, Inc. against Zions Bancorporation, N.A., assigned to Judge John A. Kronstadt with Magistrate Judge Pedro V. Castillo referred for discovery/ADR — the only C.D. California action in this cluster.

Factual Summary

Fahmia, Inc., individually and on behalf of all others similarly situated, filed a class-action complaint 06/09/2020 against Zions Bancorporation, N.A. and Doe defendants in the Central District of California, Western Division (Los Angeles), pled under diversity-contract jurisdiction ("190 Contract: Other," 28 U.S.C. § 1332), with a $5,000,000 demand. Counsel is Richard D McCune and Michele Marie Vercoski of McCune Wright Arevalo LLP's Irvine, California office. This is Fahmia, Inc.'s third suit within this notice's seven-action cluster, following its same-day MUFG (Exhibit C) and Citibank (Exhibit D) filings eleven days earlier.

Key Facts

Filed 2020-06-09, the most recent of the seven related actions and filed just one day before this notice (Document 98, dated 06/10/2020) — the tightest filing-to-notice gap in the cluster.
Assigned to Judge John A. Kronstadt with Magistrate Judge Pedro V. Castillo referred, C.D. Cal. Western Division (Los Angeles) — the only Ninth Circuit district represented in this notice's cluster.
Fahmia, Inc.'s third suit in this cluster (after MUFG and Citibank, both filed 05/29/2020), bringing its total related-action count in this notice to three of the seven listed.
McCune Wright Arevalo LLP's fourth distinct regional office appearance within this cluster (after California-based counsel on the Chase suit, the firm's own Illinois office on the BMO Harris suit, and its Irvine office here), evidencing the firm's multi-office staffing across this litigation wave.

Source Caveats

This is a docket sheet, not the underlying complaint itself; substantive allegations are inferred from docket-entry descriptions only.
Clean born-digital text (62,513 chars over 23 pages); no rendering defect.

No. 2:20-cv-05104-JAK-PVC · Doc. 98-9 · Docket on CourtListener

Full text

Case MDL No. 2950 Document 98-9 Filed 06/10/20 Page 1 of 23

EXHIBIT G
Case MDL No. 2950 Document 98-9 Filed 06/10/20 Page 2 of 23

ACCO,(PVCx),DISCOVERY,MANADR
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA (Western Division − Los Angeles)
CIVIL DOCKET FOR CASE #: 2:20−cv−05104−JAK−PVC

Fahmia, Inc. v. Zions Bancorporation, N.A. et al Date Filed: 06/09/2020
Assigned to: Judge John A. Kronstadt Jury Demand: Plaintiff
Referred to: Magistrate Judge Pedro V. Castillo Nature of Suit: 190 Contract: Other
Demand: $5,000,000 Jurisdiction: Diversity
Cause: 28:1332 Diversity−Contract Default
Plaintiff
Fahmia, Inc. represented by Richard D McCune
individually and on behalf of all others McCune Wright Arevalo LLP
similarly situated 18565 Jamboree Road Suite 550
Irvine, CA 92612
909−557−1250
Fax: 909−557−1275
Email: rdm@mccunewright.com
LEAD ATTORNEY
ATTORNEY TO BE NOTICED

Michele Marie Vercoski
McCune Wright Arevalo LLP
18565 Jamboree Road Suite 550
Irvine, CA 92612
909−557−1250
Fax: 909−557−1275
Email: mmv@mccunewright.com
ATTORNEY TO BE NOTICED

V.
Defendant
Zions Bancorporation, N.A.

Defendant
Does
1−100, inclusive

Date Filed # Docket Text
06/09/2020 1 COMPLAINT Receipt No: ACACDC−26738243 − Fee: $400, filed by Plaintiff
Fahmia, Inc.. (Attorney Richard D McCune added to party Fahmia,
Inc.(pty:pla))(McCune, Richard) (Entered: 06/09/2020)
06/09/2020 2 CIVIL COVER SHEET filed by Plaintiff Fahmia, Inc.. (McCune, Richard) (Entered:
06/09/2020)
06/09/2020 3 Request for Clerk to Issue Summons on Complaint (Attorney Civil Case Opening) 1
filed by Plaintiff Fahmia, Inc.. (McCune, Richard) (Entered: 06/09/2020)
06/09/2020 4 NOTICE OF ASSIGNMENT to District Judge John A. Kronstadt and Magistrate
Judge Pedro V. Castillo. (ghap) (Entered: 06/09/2020)
06/09/2020 5 NOTICE TO PARTIES OF COURT−DIRECTED ADR PROGRAM filed. (ghap)
(Entered: 06/09/2020)
06/09/2020 6 21 DAY Summons Issued re Complaint (Attorney Civil Case Opening) 1 as to
Defendant Zions Bancorporation, N.A. (ghap) (Entered: 06/09/2020)
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06/09/2020 7 NOTICE OF DEFICIENCIES in Attorney Case Opening RE: Complaint (Attorney
Civil Case Opening) 1 . The following error(s) was found: No Notice of Interested
Parties has been filed. A Notice of Interested Parties must be filed with every partys
first appearance. See Local Rule 7.1−1. Counsel must file a Notice of Interested
Parties immediately. Failure to do so may be addressed by judicial action, including
sanctions. See Local Rule 83−7. (ghap) (Entered: 06/09/2020)
06/10/2020 8 NOTICE of Interested Parties filed by Plaintiff Fahmia, Inc., identifying Fahmia, Inc..
(McCune, Richard) (Entered: 06/10/2020)
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1 Richard D. McCune, State Bar No. 132124
rdm@mccunewright.com
2 Michele M. Vercoski, State Bar No. 244010
mmv@mccunewright.com
3 MCCUNE·WRIGHT·AREVALO, LLP
18565 Jamboree Rd., Suite 550
4 Irvine, CA 92612
Telephone: (909) 557-1250
5 Facsimile: (909) 557-1275
6
Attorneys for Plaintiff
7
8
IN THE UNITED STATES DISTRICT COURT
9 CENTRAL DISTRICT OF CALIFORNIA
10
11 FAHMIA, INC., individually and on behalf of all __________________
others similarly situated, Civil Action No. _20-cv-5104_____________
12
Plaintiff,
13 CLASS ACTION COMPLAINT
v.
14
JURY DEMANDED
15
ZIONS BANCORPORATION, N.A., and DOES
16 1 through 100, inclusive,

17 Defendants.

18
19
20 Plaintiff Fahmia, Inc. (“Fahmia” or “Plaintiff”) brings this Class Action Complaint and

21 Demand for Jury Trial against Defendant Zions Bancorporation (“Zions”) and Does 1 through 100,
22 inclusive (collectively “Defendants”), seeking compensation from Defendants, who refuse to comply
23
with the CARES Act that requires them to pay out of the compensation they received for processing
24
PPP loans, for services Plaintiff Fahmia and a large number of other agents rendered on behalf of
25
26 recipients of Small Business Administration (“SBA”) emergency loans. Plaintiff alleges as follows

27 upon personal knowledge as to itself and its own acts and experiences, and, as to all other matters,
28
upon information and belief.

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COMPLAINT AND DEMAND FOR JURY TRIAL
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1 NATURE OF THE ACTION
2 1. In response to the shut-down of virtually every business across all non-essential
3 industries due to COVID-19, the federal government has raced over the past few months to ease the
4 impact of the shut-down on the U.S. economy. In order to keep afloat small businesses, and to
5 encourage those businesses to avoid massive worker layoffs and furloughs further damaging the
6 economy, Congress decided to create an economic relief program to distribute money to small
7 businesses.
8 2. In order to distribute the money swiftly to small businesses, Congress decided to utilize
9 the nation’s financial institutions to take applications and distribute the funds that would be fully
10 guaranteed by the federal government. However, in order to avoid delay, Congress decided that the
11 financial institutions would not be required to verify the accuracy of the applications. Instead, the
12 burden to provide accurate information was put directly and solely on the small businesses submitting
13 applications.
14 3. The applications would need to be simple and the amount of the economic relief would
15 be based on historical payroll information with specific limitations. However, as the lenders would
16 not be verifying the information, there would need to be a number of representations and certifications,
17 and specific warnings because the failure to provide true and accurate information could subject the
18 small business owner to five years in prison and a $250,000 fine.
19 4. In order for these small businesses to be able to make timely, truthful and accurate
20 applications, Congress understood that small businesses would need assistance from the nation’s
21 professional accountants, tax preparers, financial advisors, attorneys, and other such agents normally
22 relied upon by small businesses.
23 5. On March 27, 2020, Congress passed the SBA’s Paycheck Protection Program (“PPP”)
24 which initially authorized up to $349 billion in forgivable loans to small businesses to cover payroll
25 and other expenses (PPP I). After the initial funds quickly dried up, Congress added $310 billion
26 additional dollars to the program (PPP II).
27 6. The PPP was designed to be fast and straightforward, allowing business to apply
28 through SBA-approved lenders and await approval. Once approved, lenders would be compensated in

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1 the form of a generous origination fee paid by the federal government, with the requirement that the
2 lender would be responsible for paying the fee owed to the loan applicant’s agent (e.g., attorney or
3 accountant). Both the lender and the agents were specifically forbidden by the PPP from charging the
4 small business borrower any amounts for the loan or the assistance in preparing the application for the
5 loan. The amount of the total compensation and the allocation between the lender and the agents
6 assisting the borrowers in preparing the application was specifically set out in the PPP. For the
7 majority of loans (those under $350,000), the lender would receive an amount equal to 5% of the loan
8 as compensation, and if the borrower used an agent such as a CPA or accountant, the lender was to pay
9 an amount equal to 1% of the loan amount to the agent. In other words, compensation from the federal
10 government to the lender and the borrower’s agent was allocated as 80% to the lender and 20% to the
11 CPA or attorney assisting the small business borrower.
12 7. Zions is a bank holding company that does business under several localized brands,
13 including Amegy Bank of Texas, California Bank and Trust, National Bank of Arizona, Nevada State
14 Bank, Vectra Bank Colorado, Zions Bank, and Zions Direct. These banks collectively operate over
15 400 branch offices across the Western United States. Zions has reported that its affiliate banks have
16 processed and obtained approval for 40,483 PPP applications totaling over $7.05 billion in borrowed
17 funds. 1 The average PPP loan approved by Defendants was approximately $174,000. Assuming a
18 conservative average fee of four percent, they have, accordingly, been allocated over $282 million in
19 origination fees, from which they were required to pay the agents who assisted the borrowers in
20 submitting applications.
21 8. However, Defendants apparently decided that they do not need to complete the final
22 step of the process and based on information and belief have refused to pay the agents who assisted
23 PPP loan recipients with their applications. This practice seemed to be a deliberate scheme from the
24 beginning as even though they were required to pay agents that assisted in the application process,
25 Defendants did not set up a structure or ask any questions to determine whether borrowers utilized an
26
27
1
See Zions Bancorporation Delivers Paycheck Protection Program Loan Approvals for More
28
Than 40,000 Small Businesses, available at https://finance.yahoo.com/news/zions-bancorporation-
delivers-paycheck-protection-200500696.html (last visited May 28, 2020).
-3- ________
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1 agent in completing applications. It appears that this scheme was to claim ignorance of the existence
2 of the agent as an excuse not to pay the agent its share of the compensation. This refusal is harming
3 accountants, attorneys, and other agents who dropped everything (in the midst of tax season) to assist
4 their customers in filling out these vital loan applications correctly and in compliance with the PPP,
5 and who were specifically only allowed to be paid for these services out of the compensation paid to
6 the lender. The Defendants’ failure to pay agents is in blatant violation of PPP regulations stating that
7 agent fees “will be paid by the lender out of the fees the lender receives from SBA.”
8 9. These agents, including Plaintiff, have no other recourse for collecting fees for assisting
9 borrowers on PPP loan applications because the PPP regulations delegate the responsibility for paying
10 agents to the lenders alone. And yet, Defendants have disregarded the regulations and refused to pay
11 agents who assisted small businesses in receiving PPP funds.
12 10. Plaintiff has been harmed by Defendants’ practice. As a CPA firm that does payroll
13 and other small business support functions, Plaintiff assisted a small business client who submitted an
14 application to Defendant and was then funded through the PPP program. Based on information and
15 belief, Defendants have received the 5% compensation related to that loan, but have not paid Plaintiff
16 its 1% agent fee related to the loan.
17 11. As a result of Defendants’ acts and omissions, Plaintiff, and a large number of others
18 like it have been deprived of payment for their critical work in supporting their clients’ PPP loan
19 applications. As such, Plaintiff brings this Class Action Complaint and Demand for Jury Trial in order
20 to vindicate its rights and those of agents everywhere who are similarly situated, and to force
21 Defendants to account for their blatant violation of the PPP and to pay agents their portion of the
22 compensation.
23 PARTIES
24 12. Plaintiff Fahmia, Inc. is a Certified Public Accounting (“CPA”) firm incorporated in
25 California, with its principal place of business located in Torrance, California.
26 13. Defendant Zions Bancorporation, N.A. is a federally-chartered bank association under
27 the laws of the United States. Zions is headquartered in Salt Lake City, Utah.
28

-4- ________
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1 14. In this Complaint, references made to any act of any Defendant shall be deemed to
2 mean that officers, directors, agents, employees, or representatives of the Defendants named in this
3 lawsuit committed or authorized such acts, or failed and/or omitted to adequately supervise or properly
4 control or direct their employees while engaged in the management, direction, operation or control of
5 the affairs of the Defendants and did so while acting within the scope of their employment or agency.
6 15. Plaintiff is unaware of the names, identities or capacities of the Defendants sued as Doe
7 Defendants 1 through 100, but is informed and believes and thereon alleges that such fictitiously-
8 named defendants are responsible in some manner for the damages and unfair business practices and
9 violation of rights as described herein. Plaintiff will amend this Complaint to state the true names,
10 identities, or capacities of such fictitiously-named Defendants when ascertained.
11 JURISDICTION AND VENUE
12 16. This Court has subject matter jurisdiction over this action under the Class Action
13 Fairness Act, 28 U.S.C. § 1332(d), because, as to the proposed Class and Subclasses, (a) at least one
14 member of the proposed Class, which consists of at least 100 members, is a citizen of a different state
15 than Defendants; (b) the claims of the proposed Class Members exceed $5,000,000 in the aggregate,
16 exclusive of interest and costs, and (c) none of the exceptions under that subsection apply to this
17 action.
18 17. Personal jurisdiction over Defendants is proper because Defendants transact business in
19 the State of California, and a substantial number of the events giving rise to the claims alleged herein
20 took place in California.
21 18. This Court has jurisdiction to grant declaratory relief under 28 U.S.C. § 2201 because
22 an actual controversy exists between the parties as to their respective rights and obligations under 85
23 Fed. Reg. 20816 § (4)(c) (hereinafter, the “PPP regulations”).
24 19. Venue is proper in this judicial District pursuant to 28 U.S.C. § 1391(b)(2) because a
25 substantial part of the events, acts or omissions giving rise to the claim occurred in this judicial
26 District. Defendant is also headquartered in this District.
27
28

-5- ________
COMPLAINT AND DEMAND FOR JURY TRIAL
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1 FACTUAL BACKGROUND
2 20. The spread of COVID-19 was declared a pandemic by the World Health Organization
3 (“WHO”) on March 11, 2020.
4 21. On March 13, 2020, President Donald Trump issued the Coronavirus Disease 2019
5 (COVID-19) Emergency Declaration, which declared that the pandemic was of “sufficient severity
6 and magnitude to warrant an emergency declaration for all states, territories and the District of
7 Columbia.”
8 22. The Federal Government expressly recognized that with the COVID-19 emergency,
9 “many small businesses nationwide are experiencing economic hardship as a direct result of the
10 Federal, State and local public health measures that are being taken to minimize the public’s exposure
11 to the virus.” 2
12 23. The economic fallout from COVID-19, and the national response to it, was immediate
13 and enormous. As “stay at home” issues were ordered by states across the nation, countless businesses
14 were forced by law to overhaul their business models, scale back their business dramatically, or
15 shutter–either temporarily or permanently. Business were further harmed as the public began to avoid
16 all public spaces. Furloughs and layoffs were rampant in the private sector.
17 24. On March 25, 2020, in response to the economic damage caused by the COVID-19
18 crisis and to overwhelming public pressure, the U.S. Senate passed the Coronavirus Aid, Relief, and
19 Economic Security Act, or the CARES Act. The CARES Act was passed by the House of
20 Representatives the following day and signed into law by President Trump on March 27, 2020.
21 Amounting to approximately $2 trillion, the CARES Act was the single-largest economic stimulus bill
22 in American history.
23 25. Critically, the CARES Act created a $659 billion loan program for business with fewer
24 than five hundred employees, called the “Paycheck Protection Program” (“PPP”) 3. The goal of the
25 PPP was to provide American small businesses with eight weeks of cash-flow assistance, with a
26
27 2 See Business Loan Program Temporary Changes; Paycheck Protection Program, 13 CFR Part
120, Interim Final Rule (“SBA PPP Final Rule”).
28 3
The first phase of the PPP was for $349 billion, and when that quickly ran out, a second phase
was funded for $310 billion.
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1 certain percentage forgivable if utilized to retain employees and fund payrolls. The loans are fully
2 federally guaranteed and administered by the Small Business Administration (“SBA”). 4
3 26. Basically, PPP loans operate more like grants if the recipient follows certain rules,
4 including that at least 75 percent of the loan goes toward payroll. 5 Businesses that follow the rules are
5 permitted to submit a request to their SBA lender for total forgiveness. Otherwise, the loan matures in
6 two years and carries a one percent interest rate. 6
7 27. The SBA was charged with creating the PPP implementing regulations. It issued the
8 first interim final rule (“Initial Rule”) on April 2, 2020, allowing businesses to begin applying for PPP
9 loans with all SBA lenders on April 3, 2020.
10 28. An important piece of the PPP was that applications were to be processed and funded
11 on a “first-come, first-served” basis—that is, the SBA was to process applications and distribute funds
12 based on the order in which they were received. This made the SBA’s list of approved lenders key
13 gatekeepers in this process, which the lenders certainly understood. Because the PPP was to be
14 administered only through SBA-approved lenders, and because applicants were applying for funds
15 from the single pot allocated for the program, submitting an accurate application for a loan through the
16 SBA-approved lender as quickly as possible was critical.
17 29. Congress added an incentive for the SBA-affiliated lenders, knowing they would face a
18 crush of PPP loan applications: for each loan processed and approved, the bank would receive an
19 origination fee of five percent for loans up to $350,000; three percent for loans between $350,000 and
20 $2 million; and one percent for loans between $2 million and $10 million. 7
21 30. With similar incentives in mind, Congress and the SBA also carved out a specific
22 benefit for the countless accountants, attorneys, and advisors who would need to lead or assist their
23 clients in preparing and filing PPP loan applications. These individuals and entities are referred to as
24 “agents” in the CARES Act and PPP implementing regulations.
25
26
4
Small Bus. Admin., Docket No. SBA-2020-0015, 13 CFR Part 120, Paycheck Protection
27 Program 3245-AH34, Interim Final Rule, 85 Fed. Reg. 20814 § (2)(o) (Apr. 15, 2020).
5
85 Fed. Reg. 20812 § (2)(e); id. at 20813 § (2)(o).
28 6
Id. at 20813 § (2)(j).
7
Id.
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1 31. As explained in an Information Sheet provided for “lenders,” the SBA states that ‘[a]n
2 ‘Agent’ is an authorized representative and can be: an attorney; an accountant; a consultant; someone
3 who prepares an applicant’s application for financial assistance and is employed and compensated by
4 the applicant; someone who assists a lender with originating, disbursing, servicing, liquidating, or
5 litigating SBA loans; a loan broker; or any other individual or entity representing an applicant by
6 conducting business with the SBA.” 8
7 32. In addition, the SBA Regulations provide that “Agent fees will be paid out of lender
8 fees. The lender will pay the agent. Agents may not collect any fees from the applicant. The total
9 amount that an agent may collect from the lender for assistance in preparing an application for a PPP”
10 loan is as follows (“Agent Fees”): one percent (1%) for loans up to $350,000; 0.50% for loans between
11 $350,000 and $2 million; and 0.25% for loans between $2 million and $10 million. 9
12 33. Within this context, Congress and the SBA set up a straightforward system for the
13 disbursement of PPP loan funds where the applicant is assisted by an agent: (i) the agent prepares the
14 application and/or necessary supporting documents for the client’s application; (ii) the client applies
15 for the PPP loan through the lender; (iii) the lender submits the application to the SBA; (iv) the SBA
16 approves the loan and sends the client the money, through the lender, and eventually pays the lender’s
17 origination fee; and (v) the agent submits the request for fee payment to the lender with the agent’s fee
18 based upon (a) the work performed for the client and (b) the caps on agent fees provided by the SBA’s
19 PPP regulations.
20 34. Unfortunately, based on information and belief, Defendants are refusing to pay the fees
21 of agents for their assistance in providing an accurate and truthful application for funding.
22 35. Upon information and belief, this refusal is a company-wide policy. Further, the fact
23 that Defendants set up the application process without even asking the borrower if they utilized the
24 assistance of an agent, suggests that the Defendants did not want to have any record of the agent
25 information in their files.
26
27 8
U.S. Dep’t of Treasury, Paycheck Protection Program (PPP) Information Sheet Lenders,
https://home.treasury.gov/system/files/136PPP%20%Lender%20Information%20Fact%20Sheet.pdf
28
(last accessed May 25, 2020).
9
85 Fed. Reg. 20816 § (4)(c).
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1 36. This policy of refusal to pay to agents “Agent Fees” that are due, and that only the
2 lenders are authorized to pay, stands as an immediate threat to these agents’ abilities to receive
3 payment. In the midst of an unprecedented economic/pandemic crisis, this policy represents short-
4 sighted profit-padding at best, and blatantly illegal conduct, at worst.
5 37. This policy stands in stark contrast to Defendants’ public statements touting Zions as
6 “one of the nation’s leading small business banks” which cares “deeply about the health and vitality of
7 America’s entrepreneurs, their employees and businesses.” 10 Defendants also flaunted their team’s
8 success and the value PPP added to Zions, explaining that it was “proud of the work [it had] done to
9 provide loans to small businesses and qualifying non-profit organizations under the CARES Act.” 11
10 38. Refusing to pay Agent Fees is also inconsistent with agreements Defendants made in
11 order to become approved PPP lenders. Specifically, based on information and belief, Defendants
12 were required to fill out and sign the “CARES Act Section 1102 Lender Agreement” for each loan. 12
13 This submission requires each putative PPP lender to certify, under penalty of perjury, that it (i) “is in
14 compliance and will maintain compliance with all applicable requirements of the [PPP], and PPP Loan
15 Program Requirements[,]” (ii) will “service and liquidate all covered loans made under the Paycheck
16 Protection Program in accordance with PPP Loan Requirements[,] and (iii) will “close and disburse
17 each covered loan in accordance with the terms and conditions of the PPP Authorization and PPP
18 Loan Requirements.”
19 39. To the extent Defendants had to certify, at any point, that they would follow the PPP’s
20 regulations in making PPP loans, they were not being truthful. Defendants’ policy to refuse to pay
21 Agent Fees directly violates the PPP’s implementing regulations.
22
23
24
25 10 See Zions Bancorporation Delivers Paycheck Protection Program Loan Approvals for More
26 Than 40,000 Small Businesses, available at https://finance.yahoo.com/news/zions-bancorporation-
delivers-paycheck-protection-200500696.html (last visited May 28, 2020).
27 11
Id.
12
U.S. Small Bus. Admin., CARES Act Section 1102 Lender Agreement,
28
https://www.sba.gov/sites/default/files/2020-04/PP--Agreement-for-New-Lenders-Banks-Credit-
Unions-FCS-w-seal-fillable.pdf (last accessed May 25, 2020).
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1 40. It is pursuant to these representations that Zions was able to process and obtain
2 approval for 40,483 PPP applications totaling over $7.05 billion in borrowed funds. 13 The average
3 PPP loan approved by Defendants was approximately $174,000. Assuming a conservative average fee
4 of four percent, they have, accordingly, been allocated over $282 million in origination fees, from
5 which they were required to pay the agents who assisted the borrowers in submitting applications.
6 41. Knowing that they were required to pay agents a percentage of PPP loan origination
7 fees if an agent assisted an applicant in preparing and submitting the application, Defendants elected
8 not to ask borrowers whether they utilized an “agent” to assist them in the application process and
9 have not paid Plaintiff or similarly situated agents compensation from funded PPP loans.
10 PLAINTIFF FAHMIA’S EXPERIENCE
11 42. Plaintiff Fahmia, Inc. is a California CPA firm which has provided financial services to
12 clients in the Southern California Area for over 30 years, including bookkeeping, taxation, payroll
13 services, financial planning and consulting for small businesses and individuals. In March, Plaintiff
14 became aware that the CARES Act had been signed into law. Plaintiff, knowing that the COVID-19
15 crisis would significantly impact clients’ businesses, sought to obtain PPP loans through various SBA-
16 approved lenders on behalf of clients.
17 43. Plaintiff’s professionals spent considerable time familiarizing themselves with the Act
18 and the related SBA Regulations, in particular, (a) Section 1102, which permits the SBA to guarantee
19 100% of Section 7(a) loans under the PPP and (b) Section 1106 of the Act, which provides forgiveness
20 of up to the full principal amount of qualifying loans guaranteed under the PPP.
21 44. In or about March, April, and May 2020, Plaintiff assisted many clients in the gathering
22 and analysis of their documents, as well as the calculations and preparation of the loan applications.
23 45. Based on the SBA Regulations, Plaintiff understood that it was not allowed to charge
24 clients a fee relating to the application process. The agents were only allowed to receive compensation
25
26
27
13
See Zions Bancorporation Delivers Paycheck Protection Program Loan Approvals for More
28
Than 40,000 Small Businesses, available at https://finance.yahoo.com/news/zions-bancorporation-
delivers-paycheck-protection-200500696.html (last visited May 28, 2020).
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Case 2:20-cv-05104-JAK-PVC Document 198-9
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1 from the agents’ share of the estimated $20 billion in fees that the Federal Government paid the
2 Lenders for originating the PPP loans.
3 46. For its clients, Plaintiff had the primary role in calculating the payroll information
4 needed for the application, and providing the clients’ accounting information, advice, documentation
5 in support of the PPP loan application. Plaintiff will have ongoing responsibility for advising clients
6 on the forgiveness of the PPP loan.
7 47. Plaintiff provided all of these services to a client who obtained a PPP loan from Zions
8 Bank in the amount of $57,805. Based on information and belief, Zions Bank was paid or will be
9 paid, an origination fee of $2,890, of which Plaintiff is entitled to $578 (1% of total loan amount) of
10 that fee for its work as the agent of the borrower in submitting the application and documentation.
11 48. Defendants did not comply with the SBA Regulations because they have not paid
12 Plaintiff the agent fees to which it is entitled despite awarding PPP loans to Plaintiff’s client for whom
13 Plaintiff acted as a PPP agent. Instead, Defendants retained all of the Agent Fees for themselves.
14 49. As a result of Defendants’ unlawful and unfair actions, Plaintiff and the Class have
15 suffered financial harm by being deprived of the statutorily mandated compensation for the
16 professional services provided to clients in assisting them with obtaining PPP loans.
17 CLASS ALLEGATIONS
18 50. Plaintiff brings this action on behalf of itself and all others similarly situated as a
19 nationwide Class, defined as follows:
20
21 All persons and businesses who served as an agent in relation to, and provided
assistance to a client in relation to, the preparation and/or submission of a
22 client’s PPP loan application to Zions which resulted in a loan being funded
under the PPP. Plaintiff further brings this action on behalf of a subclass of
23 individuals defined as follows:
24
California Subclass. All persons and businesses in California who served as
25 an agent in relation to, and provided assistance to a client in relation to, the
preparation and/or submission of a client’s PPP loan application to Zions
26 which resulted in a loan being funded under the PPP.
27 51. Excluded from this Class and Subclass (hereinafter “the Class” unless otherwise
28 indicated) are: (1) any Judge or Magistrate presiding over this action and members of their families;

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1 (2) Defendants, Defendants’ subsidiaries, parents, successors, predecessors, and any entity in which
2 Defendants or its parents have a controlling interest and its current or former employees, officers and
3 directors; (3) persons who properly execute and file a timely request for exclusion from the Class; (4)
4 persons whose claims in this matter have been finally adjudicated on the merits of otherwise released;
5 (5) Plaintiff’s counsel and Defendants’ counsel; and (6) the legal representatives, successors, and
6 assigns of any such excluded persons.
7 52. Plaintiff reserves the right to expand, limit, modify, or amend this Class definition,
8 including the addition of one or more subclasses, in connection with Plaintiff’s motion for class
9 certification, or any other time, based upon new facts obtained during discovery.
10 53. Numerosity: The Class is composed of hundreds of Agents (“Class Members”) whose
11 joinder in this action would be impracticable. The disposition of their claims through this class action
12 will benefit all Class Members, the parties, and the courts.
13 54. Commonality and Predominance: There is a commonality in questions of law and fact
14 affecting the Class. These questions of law and fact predominate over individual questions affecting
15 individual Class Members, including, but not limited to, the following:
16 a. Whether Defendants’ conduct violates the CARES Act and/or its implementing
17 regulations;
18 b. Whether Defendants are required to compensate Plaintiff out of the origination fees
19 obtained from SBA through the PPP;
20 c. Whether Plaintiff is entitled to compensation by Defendants for its work assisting in its
21 client’s PPP loan application;
22 d. Whether Defendants’ conduct was willful and knowing;
23 e. Whether Defendants submission of completed Form 2484 constituted an agreement;
24 f. Whether Defendants breached that agreement;
25 g. Whether Defendants’ conduct was pursuant to a company-wide policy or policies; and
26 h. Whether Defendants’ conduct constitutes unjust enrichment.
27 55. Superiority: This case is also appropriate for class certification because class
28 proceedings are superior to all other available methods for the fair and efficient adjudication of this

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1 controversy given that joinder of all parties is impracticable. The damages suffered by the individual
2 members of the Class will likely be relatively small, especially given the burden and expense of
3 individual prosecution of the complex litigation necessitated by Defendants’ actions. Thus, it would
4 be difficult and not economical for the individual members of the Class to obtain effective relief from
5 Defendants’ misconduct. Even if members of the Class could sustain such individual litigation, it
6 would still not be preferable to a class action, because individual litigation would increase the delay
7 and expense to all parties due to the complex legal and factual controversies presented in this
8 Compliant. By contrast, a class action presents far fewer management difficulties and provides the
9 benefits of single adjudication, economy of scale, and comprehensive supervision by a single court.
10 Economies of time, effort and expense will be fostered, and uniformity of decisions ensured.
11 56. Typicality: Plaintiff’s claims are typical of, and are not antagonistic to, the claims of all
12 Class Members, in that Plaintiff and members of the Class sustained damages arising out of
13 Defendants’ uniform wrongful conduct.
14 57. Adequacy: Plaintiff will fairly and adequately represent and protect the interests of the
15 Class and has retained counsel with substantial experience in litigating complex cases, including
16 consumer fraud and class actions. Plaintiff’s claims are representative of the claims of the other
17 members of the Class. That is, Plaintiff and members of the Class sustained damages as a result of
18 Defendants’ uniform conduct. Plaintiff also has no interests antagonistic to those of the Class, and
19 Defendants have no defenses unique to Plaintiff. Both Plaintiff and its counsel will vigorously
20 prosecute this action on behalf of the Class and have the financial ability to do so. Neither Plaintiff
21 nor counsel have any interest adverse to other Class Members.
22 58. Ascertainability: Plaintiff is informed and believes that Defendants keep extensive
23 computerized records of their loan applications through, inter alia, computerized loan application
24 systems and federally-mandated record-keeping practices. Defendants have one or more databases
25 through which all of the borrowers may be identified and ascertained, and it maintains contact
26 information, including electronic mail and mailing address. From this information, the existence of
27 the Class Members (i.e., borrowers’ Agents) can be determined, and thereafter, a notice of this action
28 can be disseminated in accordance with due process requirements.

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1 59. Defendants have acted, and refused to act, on grounds generally applicable to the Class,
2 thereby making appropriate final equitable relief with respect to the Class as a whole.
3 CAUSES OF ACTION
4 COUNT I – DECLARATORY RELIEF
5 60. Plaintiff incorporates by reference each preceding and succeeding paragraph as though
6 fully set forth at length herein.
7 61. Plaintiff and the Class represent individuals who are “agents” as defined by the SBA
8 regulations for the PPP.
9 62. Plaintiff and the putative Class have assisted clients with the process of preparing
10 applications, and applying for, PPP loan funds. Defendants, despite the clear command of the SBA’s
11 PPP regulations, have refused to make these payments. An actual controversy has arisen between
12 Plaintiff and the Class, on one hand, and Defendants on the other, wherein Defendants deny by their
13 refusal to pay that they are obligated to pay Plaintiff’s and the Class’s “agent” fees pursuant to PPP
14 regulations.
15 63. Plaintiff and the Class seek a declaration, in accordance with SBA regulations and
16 pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, that Defendants are obligated to set aside
17 money to pay, and pay third-party agents –within the SBA-approved limits—for the work performed
18 on behalf of a client in relation to the preparation and/or submission of a PPP loan application that
19 resulted in a funded PPP loan.
20 COUNT II – BREACH OF CONTRACT, THIRD PARTY BENEFICIARY
21 64. Plaintiff incorporates by reference each preceding and succeeding paragraph as though
22 fully set forth at length herein.
23 65. Based on information and belief, Defendants entered into an agreement with the SBA
24 in connection with the loans funded in the PPP.
25 66. The agreements required that Defendants would adhere to all PPP rules and regulations
26 and incorporate these requirements by reference. Defendants and the SBA understood that agents
27 involved in the preparation and submission of PPP loan applications would need to be compensated.
28

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1 67. The SBA’s PPP regulations specifically require that PPP lenders pay the fees of any
2 “agent” that assists with the PPP loan application process, within limits.
3 68. Defendants understood that Plaintiff and the Class were intended beneficiaries in this
4 agreement. Nevertheless, Defendants have refused to live up to their end of the bargain, and have
5 uniformly refused to pay agent fees to Plaintiff and the Class.
6 69. By refusing to pay agent fees in accordance with SBA regulations, Defendants are
7 violating the terms of their agreement, thereby damaging Plaintiff and the Class. Plaintiff and the
8 class thus ask this Court to award them damages sufficient to make them whole, and compensate them
9 for work they did in preparing clients’ PPP loan application for loans that were funded, consequential
10 damages, and all other damages available at law.
11 COUNT III - VIOLATIONS OF THE CALIFORNIA UNFAIR COMPETITION LAW
12 (Cal. Bus. & Prof. Code § 17200, et seq.)
13 70. Plaintiff incorporates by reference each preceding and succeeding paragraph as though
14 fully set forth at length herein.
15 71. Pursuant to California Business & Professions Code § 17200, “any unlawful,
16 unfair…business act or practice” is prohibited in the State of California. This statute creates a private
17 right of action based on any unlawful or unfair act committed in the course of business, particularly
18 where it provides the unlawful actor with an unfair business advantage. Local, state and/or federal law
19 can serve as the basis for an “unlawful…business act or practice[.]”
20 72. The SBA’s PPP regulations specifically provide that “lenders” who provide loans under
21 the program will be responsible for paying “agent” fees, within prescribed limits.
22 73. Defendants have uniformly refused to pay these fees to Plaintiff and the Class. As a
23 result, Defendants have engaged in unlawful conduct that has cost Plaintiff and the Class millions of
24 dollars in fees, collectively.
25 74. Defendants have also engaged in “unfair” business practice through this conduct, as
26 well as set forth above.
27
28

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1 75. As a direct and proximate result of the foregoing acts and practices, Defendants have
2 received, or will receive, income, profits, and other benefits, which they would not have received if
3 they had not engaged in the violations of Section 17200 described in this Complaint.
4 76. Because Plaintiff and the Class have been harmed by Defendants’ unreasonable,
5 unlawful, and unfair business practice of refusing to pay agents who assist in the preparation and
6 submission of PPP loan application materials, Plaintiff asks that Defendants be held liable for
7 restitution, be enjoined from further refusing to pay such agent fees, and that Plaintiff be awarded all
8 other such relief available by law.
9 COUNT IV – UNJUST ENRICHMENT
10 77. Plaintiff incorporates by reference each preceding and succeeding paragraph as though
11 fully set forth at length herein.
12 78. Unjust enrichment, or restitution, may be alleged where a Defendant unjustly obtains
13 and retains a benefit to the Plaintiff’s detriment, where such retention violates fundamental principles
14 of equity, justice, and good conscience.
15 79. Here, Defendants have obtained millions of dollars in benefits in the form of PPP loan
16 origination fees. A portion of those fees were to be paid to agents, like and including Plaintiff, who
17 assisted in their clients’ PPP loan applications. But Defendants are refusing to pay those fees, in
18 contravention of PPP regulations.
19 80. Principles of justice, equity, and good conscience demand that Defendants not be
20 allowed to retain these agent fees. Defendants have fallen short in their duties as lenders, and during a
21 crisis no less. As a result, Plaintiff and the putative Class have been unable to obtain the agent fees
22 due to them.
23 81. Accordingly, Defendants must disgorge the portion of any and all PPP origination fees
24 that they have retained to the extent they are due to Plaintiff and the putative Class in their capacities
25 as agents.
26 COUNT V – CONVERSION
27 82. Plaintiff incorporates by reference each preceding and succeeding paragraph as though
28 fully set forth at length herein.

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1 83. Under the SBA regulations, Plaintiff and the Class, as PPP agents, have a right to agent
2 fees that must be paid from the amount of lender fees provided to Defendants for processing the
3 funded PPP loan applications of Plaintiff’s client and the Class’s clients.
4 84. The SBA regulations state that “[a]gent fees will be paid out of lender fees” and provide
5 guidelines on the amount of agent fees that should be paid to the PPP agent, based upon the size of the
6 PPP loan.
7 85. Additionally, the SBA regulations require that lenders, not loan recipients, pay the
8 agent fees. The SBA regulations unequivocally state that “[a]gents may not collect fees from the
9 applicant.”
10 86. Plaintiff and the Class assisted clients with applying for PPP loans, including gathering
11 and curating information necessary for completing PPP loan applications that were subsequently
12 funded. Due to Plaintiff’s and the Class’s efforts, their clients were awarded PPP loans, through
13 applications made with Defendants. As such, Plaintiff has a right to immediate possession of the agent
14 fees.
15 87. Although Plaintiff is entitled to agent fees under the SBA regulations, Defendants have
16 refused to provide those fees to Plaintiff and the class, thus keeping the agent fees that were paid to it
17 for purposes of being passed on to the agents. By withholding these fees, Defendants have maintained
18 wrongful control over Plaintiff’s property inconsistent with Plaintiff’s entitlements under the SBA
19 regulations.
20 88. Defendants committed civil conversion by retaining monies owed to Plaintiff and Class
21 members.
22 89. Plaintiff and the Class have been injured as a direct and proximate cause of Defendants’
23 misconduct. Plaintiffs, as such, seek recovery from Defendants in the amount of the owed agent fees,
24 and all other relief afforded under the law.
25 DEMAND FOR JURY TRIAL
26 90. Plaintiff demands a trial by jury on all issues to the fullest extent permitted under
27 applicable law
28

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COMPLAINT AND DEMAND FOR JURY TRIAL
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1 PRAYER FOR RELIEF
2 WHEREFORE, Plaintiff FAHMIA, INC., individually and on behalf of the Class,
3 respectfully prays for the following relief:
4 (a) An order certifying the Class as defined above, appointing Plaintiff as the
5 representative of the Class, and appointing its counsel as Class Counsel;
6 (b) An order declaring that Defendants’ actions, as set out above, constitute
7 unjust enrichment, conversion, breach of contract on behalf of third-party beneficiary, violate Cal.
8 Bus. & Prof. Code § 17200, et seq., and violate the SBA’s PPP regulations;
9 (c) An award of all economic, monetary, actual, consequential, compensatory,
10 and punitive damages available under the law and caused by Defendants’ conduct, including without
11 limitation, actual damages for past, present and future expenses caused by Defendants’ misconduct,
12 lost time and interest, and all other damages suffered, including any damages likely to be incurred by
13 Plaintiff and the Class;
14 (d) An award of reasonable litigation expenses and attorneys’ fees;
15 (e) An award of pre- and post-judgment interest, to the extent allowable;
16 (f) The entry of an injunction and/or declaratory relief as necessary to protect the
17 interests of the Plaintiff and the Class; and
18 (g) Such other further relief that the Court deems reasonable and just.
19
20 Dated: June 9, 2020 Respectfully submitted,
21
MCCUNE WRIGHT AREVALO LLP
22
By: /s/ Richard D. McCune
23
Richard D. McCune
24 Michele M. Vercoski
Tuan Q. Nguyen
25 MCCUNE WRIGHT AREVALO LLP
26 18565 Jamboree Road, Suite 550
Irvine, California 92612
27 Telephone: (909) 557-1250
Facsimile: (909) 557-1275
28 Email: rdm@mccunewright.com
mmv@mccunewright.com
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1 tqn@mccunewright.com
2 Attorney for Plaintiff and Putative Class
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1
JURY DEMAND
2
Plaintiff, on behalf of themselves and the putative Class, demands a trial by jury on all issues
3
so triable.
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Respectfully submitted,
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6 MCCUNE WRIGHT AREVALO LLP
7
By: /s/ Richard D. McCune
8 Richard D. McCune
Michele M. Vercoski
9 Tuan Q. Nguyen
10 MCCUNE WRIGHT AREVALO LLP
18565 Jamboree Road, Suite 550
11 Irvine, California 92612
Telephone: (909) 557-1250
12 Facsimile: (909) 557-1275
13 Email: rdm@mccunewright.com
mmv@mccunewright.com
14 tqn@mccunewright.com
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Attorney for Plaintiff and Putative Class
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