Letter dated February 25, 2022 by Prestamos CDFI, LLC — Marshall v. Prestamos CDFI, LLC (Dkt. 27, E.D. Pa. No. 5:21-cv-04337)

Record facts

U.S. District Court for the Eastern District of Pennsylvania · No. 5:21-cv-04337-JMG · Doc. 27 · 2022-02-25 · Docket on CourtListener

Full text

Marcel Pratt 
Tel: 215.864.8506 
Fax: 215.864.8999 
prattm@ballardspahr.com 
 
 
 
 
 
February 25, 2022 
 
Via CM/ECF 
The Hon. John M. Gallagher 
United States District Court for 
the Eastern District of Pennsylvania 
Edward N. Cahn Courthouse & Federal 
Building 
504 W. Hamilton Street 
Allentown, PA 18101 
Re: 
Marshall, et al. v. Prestamos CDFI, LLC, No. 5:21-cv-04337-JMG (E.D. Pa.) 
Dear Judge Gallagher: 
We write on behalf of Defendant Prestamos CDFI, LLC (“Prestamos”) in response to the 
letter Plaintiffs filed with the Court on February 14, 2022 (Doc. 22) (the “Letter”), without 
notice to Prestamos, regarding a purported discovery dispute in the above-referenced case. 
Prestamos’s position with respect to Plaintiffs’ sprawling and irrelevant discovery requests is 
sound: the extraordinary circumstances of this putative nationwide class action warrant a 
stay, or at least a substantial narrowing, of discovery pending resolution of Prestamos’s 
Motion to Dismiss Plaintiffs’ Amended Complaint (Doc. 24) (the “Motion”). Not only does 
the Motion challenge the viability of Plaintiffs’ claims—which ask the Court to sidestep a 
complex regulatory scheme that, by Congressional design, is to be overseen by the United 
States Small Business Administration—it also disputes this Court’s subject matter 
jurisdiction to hear the action. Granting the Motion would obviate the need for expansive 
(and expensive) discovery involving, by Plaintiffs’ own account, “thousands of proposed 
class members,” dozens of depositions, and “perhaps millions of pages of documents.” Joint 
Rule 26(f) Report (Doc. 17) at 9, 13 (emphasis added).  
Background 
A Rule 16 conference has not yet been scheduled. Plaintiffs served their first sets of 
interrogatories and requests for production on Prestamos on November 16, 2021. (Under 
Rule 26(d), the requests would remain premature until the parties held their Rule 26(f) 
conference on December 13, 2021.) The parties agreed to and did serve initial disclosures 
Case 5:21-cv-04337-JMG     Document 27     Filed 02/25/22     Page 1 of 4

 
The Hon. John M. Gallagher 
February 25, 2022 
Page 2 
 
 
 
 
 
under Rule 26(a)(1) on January 14, 2022, and Prestamos responded to the interrogatories and 
requests for production on January 19, 2022, largely with objections to the substance of the 
discovery requests, which were voluminous, overbroad, and sought information about 
Prestamos’s business that is irrelevant to Plaintiffs’ contract-based claims.  
As Plaintiffs acknowledge, the parties met and conferred at length about Prestamos’s 
discovery responses on January 25, 2022. During that call, Prestamos asked Plaintiffs 
whether they would agree to a stay. Further, Prestamos offered a compromise: in response to 
identified requests, Prestamos would produce non-privileged information in its possession 
relating specifically to the Named Plaintiffs, who remain (until a class is certified by this 
Court) the only parties in this dispute. Plaintiffs agreed to consider the proposal. But 
Plaintiffs did not respond to Prestamos’s stay proposal or otherwise engage in further 
dialogue about reducing the burdens of discovery. Instead, Plaintiffs rushed the matter to the 
Court, while at the same time seeking to circumvent Prestamos’s well-founded objections 
altogether by serving an onerous subpoena on Chicanos Por La Causa, Inc., Prestamos’s 
corporate parent, seeking much of the same information that they seek from Prestamos.  
Argument 
While Prestamos had hoped to resolve the issue among the parties or, failing that, to raise it 
at the Rule 16 conference as provided in the Court’s Policies and Procedures, a stay or 
substantial narrowing of discovery is appropriate pending resolution of Prestamos’s case-
dispositive motion to dismiss. The Motion presents extraordinary circumstances justifying a 
stay, as it challenges the Court’s subject matter jurisdiction as a threshold matter and would 
preempt unnecessary and unusually wide-ranging discovery. 
As an initial matter, the Letter is premature. Prestamos has proposed, in lieu of a complete 
stay, providing Plaintiffs with documents that respond to their requests and relate 
specifically to the Named Plaintiffs. Plaintiffs contend that this is “unworkable” and 
“presum[e]” that this discovery would exclude certain broad categories of information. See 
Letter at 2–3. These are exactly the issues that could have been resolved—or at least 
clarified—by further conversations between the parties. Raising the dispute to the Court is 
unhelpful and inappropriate at this juncture, and Prestamos submits that no conference is 
necessary.  
Should the Court decide to adjudicate the dispute, it should find that the extraordinary scope 
of Plaintiffs’ proposed discovery, together with the serious jurisdictional and policy issues 
that Prestamos raises in the Motion, warrant a stay at this early stage of the litigation. 
Whether to stay discovery while considering a motion to dismiss is within the Court’s sound 
discretion. In re Orthopedic Bone Screw Prod. Liab. Litig., 264 F.3d 344, 365 (3d Cir. 
Case 5:21-cv-04337-JMG     Document 27     Filed 02/25/22     Page 2 of 4

 
The Hon. John M. Gallagher 
February 25, 2022 
Page 3 
 
 
 
 
 
2001). “[A] stay is proper where the likelihood that such motion may result in a narrowing or 
outright elimination of discovery outweighs the likely harm to be produced by the delay.” 
19th St. Baptist Church v. St. Peters Episcopal Church, 190 F.R.D. 345, 349 (E.D. Pa. 2000) 
(internal quotation marks omitted). “Where a pending motion to dismiss may dispose of the 
entire action and where discovery is not needed to rule on such motion, the balance generally 
favors granting a motion to stay.” Weisman v. Mediq, Inc., No. 95-cv-1831, 1995 WL 
273678, at *2 (E.D. Pa. May 3, 1995). The Court “need not form an opinion as to the merits 
of the motion,” but instead must simply “consider the scope of the motion and ask whether it 
may potentially lead to the end of the case, and whether it will provide the parties with full 
knowledge as to which claims are viable and, correspondingly, as to what discovery need 
occur.” Perelman v. Perelman, No. 10-cv-5622, 2011 WL 3330376, at *1 (E.D. Pa. Aug. 3, 
2011) (internal quotation marks omitted). 
Extraordinary circumstances warrant a stay. Chief among them is that the Court lacks 
subject matter jurisdiction even to entertain the action because, as the Motion explains, 
Plaintiffs lack Article III standing to bring suit. See Wyers Prod. Grp. v. Cequent 
Performance Prod., Inc., No. 12-cv-02640, 2013 WL 2466917, at *2 (D. Colo. June 7, 2013) 
(“Courts have routinely recognized that discovery may be inappropriate where the court’s 
jurisdiction is at issue. . . . [S]tays are generally favored when a jurisdictional defense under 
Rule 12(b)(1) is asserted.”). And the burden on Prestamos is exceptional: as Plaintiffs 
acknowledge, they seek discovery as to records involving potentially thousands of putative 
class members, dozens of depositions, and documents whose production could easily number 
in the millions of pages.1 Joint Rule 26(f) Report (Doc. 17) at 9, 13. It would be patently 
unfair for the Court to require Prestamos to engage in such an extraordinarily expensive 
discovery effort only to later conclude that it never had jurisdiction in the first place.  
By comparison, Plaintiffs’ burden in waiting for the Motion to be resolved before 
proceeding with discovery is minimal. Plaintiffs have not sought a preliminary injunction, 
and there is no time-sensitive evidence to which Plaintiffs require immediate access. Cf. 19th 
Street Baptist Church, 190 F.R.D. at 346 (allowing immediate discovery where plaintiff-
witnesses were “aged and infirm” and might not be available to testify at trial). Plaintiffs 
                                                 
1  
Even were a stay not granted, Prestamos has legitimate substantive objections to many 
of Plaintiffs’ discovery requests. By Plaintiffs’ own allegations, this case is about 
whether Prestamos is liable to Plaintiffs for the alleged breach of their loan promissory 
notes. Documents relating to the Plaintiffs specifically should be the bulk of what 
Plaintiffs need to litigate their claims. In any event, discovery into “Prestamos’s PPP 
loan policies,” the “whereabouts” of “PPP federal loan dollars,” and the fees Prestamos 
received from SBA for participating in the PPP are entirely irrelevant to the allegations 
and claims in the Amended Complaint.  
Case 5:21-cv-04337-JMG     Document 27     Filed 02/25/22     Page 3 of 4

 
The Hon. John M. Gallagher 
February 25, 2022 
Page 4 
 
 
 
 
 
have repeatedly acknowledged that they would generally expect discovery to take much 
longer in a case of this complexity. See Joint Rule 26(f) Report (Doc. 17) at 17 (noting that 
“[t]he parties are proposing what is a relatively condensed schedule for a case of this 
complexity”); Letter at 2 (acknowledging that the proposed discovery period “is still short of 
what is standard in cases of this complexity”). And the delay itself would be relatively 
minimal, as the Motion is due to be fully briefed as early as March 10, upon the filing of 
Plaintiffs’ response.  
A stay here would “avoid wasting significant time and resources on what may be needless 
discovery.” United States ex rel. Brown v. Pfizer, Inc., No. 05-cv-6795, 2017 WL 2691927, 
at *4 (E.D. Pa. June 22, 2017). At minimum, waiting for the Motion to be resolved would 
help focus subsequent discovery on those claims that are viable, if any. See Weisman, 1995 
WL 273678, at *2 (“By imposing a stay while ruling on the motion, when discovery 
proceeds the parties will have full knowledge as to which claims are viable and, 
correspondingly, as to what discovery need occur.”); McLafferty v. Deutsche Lufthansa A.G., 
No. 08-cv-1706, 2008 WL 4612856, at *2 (E.D. Pa. Oct. 15, 2008) (“[D]elaying discovery 
until the Court can determine whether or not Plaintiffs have pled the facts necessary to 
proceed with the claim, may help to streamline the expensive discovery process, and, 
thereby, minimize the burden on counsel, parties and the Court.”). “In short, the stay will 
potentially save time and money for all concerned.” Weisman, 1995 WL 273678, at *2. 
For the foregoing reasons, the Court should grant the stay. At minimum, the Court should 
limit discovery during the pendency of the Motion to matters relating to the Named 
Plaintiffs, saving discovery as to the potentially thousands of putative class members at least 
until determining which, if any, claims may proceed past the pleadings stage.  
Respectfully submitted, 
 
/s/ Marcel Pratt 
 
Marcel Pratt 
MP 
 
 
Case 5:21-cv-04337-JMG     Document 27     Filed 02/25/22     Page 4 of 4

File and source

File

gov.uscourts.paed.589575.27.0.pdf

Size

54,644 bytes

SHA-256

6214b6e0a2e63892e3195f2937c258767e254bb397cbeb422fe9c08651a4297b

Our copy

gov.uscourts.paed.589575.27.0.pdf

Original

PACER (login required)