Brief In Support of Plaintiffs' Motion — Marshall v. Prestamos CDFI, LLC (Dkt. 106-1, E.D. Pa. No. 5:21-cv-04337)

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U.S. District Court for the Eastern District of Pennsylvania · No. 5:21-cv-04337-JMG · Doc. 106-1 · 2024-04-17 · Docket on CourtListener

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IN THE UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF PENNSYLVANIA 
 
ALICIA MARSHALL, et al., individually 
and on behalf of all others similarly situated, 
 
 
 
 
Plaintiffs, 
 
 
 
v. 
 
PRESTAMOS CDFI, LLC and CHICANOS 
POR LA CAUSA, INC., 
 
 
 
 
Defendants. 
 
 
 
Civil Action No. 5:21-cv-04337-JMG 
 
 
 
 
 
 
PLAINTIFFS’ MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION FOR 
LEAVE TO FILE A THIRD AMENDED CLASS ACTION COMPLAINT 
 
Introduction 
 
Plaintiffs respectfully submit this memorandum of law in support of their accompanying 
motion pursuant to the Court’s April 17, 2024 Scheduling Order (ECF No. 102 at ¶ 1) and Fed. 
R. Civ. P. 15(a)(2) for leave to file their Third Amended Class Action Complaint (the “TAC”).   
Background 
 
Plaintiffs’ Second Amended Complaint (the “SAC”) was filed on May 20, 2022. ECF 
No. 42. Plaintiffs’ SAC alleges that defendant Prestamos CDFI, LLC (“Prestamos”) failed to 
fund Paycheck Protection Program (“PPP”) loans for their businesses, despite the U.S. Small 
Business Administration’s (“SBA”) approval of those loans.  Prestamos is a wholly-owned 
subsidiary of Chicanos Por La Causa, Inc. (“CPLC”).  Id. at ¶ 62. Plaintiffs filed the SAC 
individually, and on behalf of a proposed nationwide class of similarly situated borrowers whose 
PPP loans were also approved by the SBA but not funded by Prestamos (id. at ¶ 230(a)), and 
three proposed subclasses alleging claims under consumer protection laws of California, Illinois 
and Ohio (id. at ¶¶ 230(b-d)).  
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On March 30, 2023, the Court granted in part and denied in part defendants’ motion to 
dismiss. ECF Nos. 56-57. In particular, the Court denied defendants’ motion to dismiss 
plaintiffs’ breach of contract claim, but also dismissed those claims to the extent that it held that 
the “Named Plaintiffs do not have standing to bring their claims under the laws of states in which 
they do not reside in or were never injured.” Marshall v. Prestamos CDFI, LLC, Civil No. 5:21-
cv-04337-JMG, 2023 WL 2727541, at *7 (E.D. Pa. March 30, 2023). The Court also dismissed 
plaintiffs’ claims under California, Illinois and Ohio consumer protection law, and denied 
without prejudice CPLC’s motion to dismiss pending jurisdictional discovery.  Id. at *17-18. 
On July 20, 2023, additional plaintiffs from additional states not included in the first-filed 
Marshall action brought a related class action in this Court against defendants captioned 
Drevnak v. Prestamos CDFI, LLC, Case No. 5:23-cv-02777 (E.D. Pa.).  Plaintiffs in Drevnak 
similarly allege that they were approved by the SBA for their PPP loans but not funded by 
Prestamos, but on behalf of a substantially narrowed class of similarly situated SBA-approved 
borrowers only in the respective states in which they reside or were injured in accord with the 
Court’s ruling concerning standing in Marshall. ECF 1 at ¶¶ 15-21, 214. The plaintiffs in 
Drevnak also did not allege any consumer protection claims under state law but instead confined 
their claim to breach of contract also given the Court’s ruling in Marshall, and unjust enrichment 
against defendant CPLC only in the alternative to plaintiffs’ breach of contract claim. Id. at ¶ 
245. 
By Order on December 5, 2023, the Court granted CPLC’s motion to dismiss on grounds 
of personal jurisdiction in Marshall. ECF No. 93. The parties stipulated that the Court’s ruling 
regarding jurisdiction over defendant CPLC in Marshall would also apply to the Drevnak action.  
Discovery has been ongoing in the two actions.   
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Following a discovery conference with the Court on March 12, 2024, the Court on March 
22, 2024 directed the parties in Drevnak and Marshall to meet and discuss potentially agreeing to 
permit plaintiffs to amend the complaint in Marshall to include the allegations in Drevnak, and 
to the dismissal of the Drevnak action, in lieu of consolidating the two actions. The parties 
thereafter met and conferred and, on March 27, 2024, reported to the Court that they agree that 
plaintiffs will file an amended complaint in the Marshall action that incorporates the allegations 
in Drevnak, and to the dismissal of Drevnak. 
On April 17, 2024, the Court issued its Scheduling Order in Marshall. ECF No. 102. That 
Order directs that “[a]ll motions to amend the Complaint and to join or add additional parties 
shall be filed on or before May 1, 2024.” Id. at ¶ 1 (emphasis in original).   
Plaintiffs’ proposed TAC is attached to Plaintiffs’ accompanying motion as Exhibit A. 
Plaintiffs’ TAC adds four new plaintiffs (Grichar, Horne, Etuknwa and Smith); drops one 
of the seven original plaintiffs from the Drevnak action (Loyd); and adds no new claims and, to 
the contrary, alleges a single cause of action against defendants for breach of contract. See 
Exhibit A at ¶¶ 418-436. Plaintiffs’ TAC also updates certain factual allegations such as 
regarding the resignation of CPLC’s President and CEO, id. at ¶ 38, and class certification. 
Plaintiffs’ TAC also expressly acknowledges that, by Order on December 5, 2023 (ECF 
No. 93), the Court granted CPLC’s motion to dismiss on grounds of jurisdiction, and alleges that 
plaintiffs accordingly include CPLC as a defendant to the extent relevant to plaintiffs’ claims 
against defendant Prestamos, and to preserve plaintiffs’ rights in the event of an appeal.   
On April 26, 2024, Prestamos requested (ECF No. 103) that the Court modify and extend 
the deadlines concerning discovery for class certification and other deadlines set forth in the 
Court’s April 17, 2024 Scheduling Order.  In that request, Prestamos pretextually seeks to blame 
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plaintiffs for its own delay in pursuing discovery despite the fact that Marshall was filed over 
two years ago, Drevnak was filed on July 20, 2023, the Court adjudicated Prestamos’ motion to 
dismiss over a year ago on March 20, 2023, and discovery has been ongoing since these cases 
were filed.  Prestamos argues that “[d]ue to Plaintiffs’ failure to remedy discovery deficiencies, 
Prestamos is concerned about the ability to complete necessary discovery and expert reports 
pursuant to” the Court’s Scheduling Order, and that “Prestamos is currently pursuing important 
third-party discovery for class certification which will take some time to complete[.]” ECF No. 
103 at 1. Prestamos’ filing does not even mention let alone attempt to justify why it would take 
the additional months of discovery it seeks particularly to get records from its own bank and 
lender service provider concerning less than two dozen plaintiffs. Plaintiffs have separately 
replied to Prestamos’ request (ECF No. 104), and by Order today (May 1, 2024), set a hearing 
for May 23, 2024 regarding Prestamos’ request.  ECF No. 105. Plaintiffs intend to abide by the 
discovery and other deadlines set forth in the Court’s Scheduling Order and any other deadlines 
the Court may set.  
Even if the Court grants additional time for discovery concerning class certification as 
Prestamos seeks, there can be no reasonable claim that permitting the filing of plaintiffs’ TAC 
would unduly prejudice defendants.   
Argument 
The amendment of pleadings before trial is governed by Federal Rule of Civil Procedure 
15(a).1  As this Court stated in Richardson v. Barbour, No. 2:18-CV-01758-JMG, 2020 WL 
 
1  
Rule 16 and its progeny require parties to demonstrate good cause for filing amended 
pleadings once a pretrial scheduling order’s deadline for such filings has passed.  See, e.g., 
Gerhart v. Progressive Preferred Ins. Co., No. 5:20-CV-01401-JMG, 2021 WL 3709522, at *2 
(E.D. Pa. Aug. 20, 2021).  Here, however, plaintiffs’ motion to amend is filed pursuant to the 
deadline set forth in the Court’s Scheduling Order and good cause exists anyway.  
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4815829 (E.D. Pa. Aug. 19, 2020):  “It is axiomatic that a court should freely give leave to 
amend unless the court finds undue delay, that the amendment would be inequitable and 
prejudice the non-moving party, or that it would be futile.”  Id. at *7 (citing Rule 15(a)).  The 
burden is on the non-moving party to show prejudice, bad faith, undue delay, or futility.  Gerhart 
v. Progressive Preferred Ins. Co., No. 5:20-CV-01401-JMG, 2021 WL 3709522, at *3 (E.D. Pa. 
Aug. 20, 2021). 
Prestamos cannot credibly claim it would be unduly prejudiced by permitting the filing of 
the TAC. As noted, the TAC adds no new claims; actually drops all claims but breach of 
contract; narrows and confines the class action allegations to only “in-state” classes in 
conformity with the Court’s ruling on the motion to dismiss; and adds three new plaintiffs and 
drops one plaintiff.   Accordingly, Prestamos cannot credibly maintain that it needs any 
additional or new categories of discovery based on any of the allegations in the TAC, and the 
Court’s Scheduling Order already provides sufficient time for discovery also as to the three new 
plaintiffs. 
 Even if additional discovery was needed, the Court’s Scheduling Order likewise permits 
time for it and a need for additional discovery would not result in undue prejudice in any event.  
See also Gerhart, 2021 WL 3709522, at *3 (“[T]he need for additional discovery due to 
amendment does not, without more, prejudice the non-moving party.”) (citations omitted). 
Nor is there any evidence of bad faith on Plaintiff’s part.  The Third Circuit has held that 
bad faith includes “some indication of an intentional advancement of a baseless contention that is 
made for an ulterior purpose, e.g., harassment or delay.”  Ford v. Temple Hosp., 790 F.2d 342, 
347 (3d Cir. 1986) (citing Baker Indus., Inc. v. Cerberus, Ltd., 764 F.2d 204, 223 (3d Cir. 
1985)). Plaintiffs plainly have no interest in delay; to the contrary, Prestamos seeks to extend the 
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deadlines in the Court’s Scheduling Order (ECF No. 103) as Prestamos has sought previously.  
See, e.g., Drevnak, ECF No. 15 at Exhibit A (pp’s 15-17). 
Moreover, the Court’s Scheduling Order also provides deadlines for summary judgment 
among other things.  ECF No. 102 at ¶ 8. Prestamos will therefore be able to contest the claims 
also at that pretrial stage. In any event, “the length of delay is rarely dispositive.”  Gerhart, 2021 
WL 3709522, at *3.  See also Richardson, 2020 WL 4815829, at *7 (“Although the delay 
between the original Complaint and SAC was substantial, it was not so long as to impute a 
dilatory motive or require denial of leave to amend.”) (citing Third Circuit precedent).  Plaintiffs 
have acted diligently at all times, and therefore this factor supports granting Plaintiffs’ motion to 
file the TAC. 
Nor do Plaintiffs stand to gain by harassing defendants.  Plaintiffs do, however, maintain 
compelling interests in prosecuting their claims and pursuing class certification fairly. 
Finally, Plaintiffs’ allegations do not change the claims at all; to the contrary, the TAC 
alleges the sole breach of contract claim the pleading sufficiency of which the Court has already 
adjudicated in its ruling on Prestamos’s prior motion to dismiss. Hence, Plaintiffs’ TAC is not 
futile. “Given the liberal standard for amendment, ... courts place a heavy burden on opponents 
who wish to declare a proposed amendment futile.”  Ogelsby v. Ferguson, No. 19-cv-5598, 2021 
WL 2935987, at *7 (E.D. Pa. July 13, 2021).    
CONCLUSION 
For the foregoing reasons, the Court should grant Plaintiffs’ motion for leave to file their 
proposed Third Amended Complaint. 
 
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Dated:  May 1, 2024 
Respectfully submitted, 
Bailey & Glasser LLP 
 
 
By: /s/ Lawrence J. Lederer 
 
Lawrence J. Lederer (Pa. ID 50445) 
Bart D. Cohen (Pa. ID 57606) 
1622 Locust Street 
Philadelphia, PA 19103 
T.: 202.463-2101 
F.: 202.463-2103 
llederer@baileyglasser.com 
bcohen@baileyglasser.com  
 
Bailey & Glasser LLP 
Michael L. Murphy (admitted pro hac vice)  
1055 Thomas Jefferson Street NW, Suite 540 
Washington, DC 20007 
T.: 202.463-2101 
F.: 202.463-2103 
mmurphy@baileyglasser.com  
 
and  
 
 
Nolan Heller Kauffman LLP 
Justin A. Heller (admitted pro hac vice) 
Matthew M. Zapala (admitted pro hac vice)  
80 State Street, 11th Floor 
Albany, NY 12207 
T.: 518.449.3300 
F.: 518.432.3123 
jheller@nhkllp.com  
mzapala@nhkllp.com 
 
Attorneys for Plaintiffs and the Proposed Classes 
 
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