Letter (defendant discovery status update) — Marshall v. Prestamos CDFI, LLC (E.D. Pa. No. 5:21-cv-04337, 2024-05-10)

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U.S. District Court for the Eastern District of Pennsylvania · No. 5:21-cv-04337-JMG · Doc. 112 · 2024-05-10 · Docket on CourtListener

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Ballard Spahr 
1735 Market Street, 5ist Floor 
Philadelphia, PA 19103-7599 
TEL 215.665.8500 
FAX 215.864.8999 
www.ballardspahr.com 
 
 
 
Marcel Pratt 
Tel: 215.864.8506 
Fax: 215.864.8999 
prattm@ballardspahr.com 
 
 
 
 
 
May 10, 2024 
By Electronic Filing 
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  v. Prestamos CDFI, LLC, No. 5:21-cv-04337-JMG (E.D. Pa.) 
 
Judge Gallagher:  
We write on behalf of Defendant Prestamos CDFI, LLC (“Prestamos”) in response to 
the Court’s May 1, 2024 Order requesting outlines of all completed, outstanding, and 
anticipated discovery requests.  ECF 105.  Later that day, Plaintiffs filed a Third Amended 
Complaint (“TAC”) with new allegations, class definitions, and class certification 
arguments—the scope of which was not consistent with the Court’s prior directives or 
contemplated by Prestamos.  As with Plaintiffs’ discovery, their allegations in this case have 
been a consistently moving target.  Attached are the outlines requested by the Court, and 
Prestamos also wishes to provide context to the circumstances with this letter. 
I. 
Outstanding and Anticipated Discovery 
a. Party Discovery 
Plaintiffs continue to ignore their discovery obligations in violation of the Court’s 
specific direction.  As the Court is aware, on March 4, 2024, Prestamos filed a letter 
identifying multiple deficiencies in Plaintiffs’ discovery responses.  ECF 98.  Plaintiffs 
responded on March 8, 2024, ECF 100, and this Court held a Discovery Status Conference 
on March 12, 2024 (the “Discovery Conference”), ECF 101.   
At the Discovery Conference, Plaintiffs agreed to supplement their discovery 
responses to comply with their obligations under the Federal Rules, but they have yet to do 
so.  In short, in the almost two months following the Discovery Conference, Plaintiffs have 
essentially ignored the Court’s directives.   
The remaining outstanding deficiencies in Plaintiffs’ discovery responses include:  
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The Hon. John M. Gallagher 
May 10, 2024 
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 
Plaintiffs’ improper reliance on Rule 33(d) in response to sixteen 
interrogatories, without identifying the requisite burden of responding to the 
requests or specifying and producing the responsive documents themselves; 
 
Plaintiffs’ failure to provide information about each named plaintiff in 
response to the interrogatories;   
 
Plaintiffs’ failure to provide requested documents for each named plaintiff or 
to state plainly whether they have any such responsive documents, despite 
promising Prestamos that they would do so in a letter dated November 7, 
2023; and 
 
Plaintiffs’ failure to verify their Interrogatory Responses or their 
Supplemental Interrogatory Responses as required by Rule 33(b)(5).  The first 
set of interrogatories in Marshall was served on July 21, 2023.1 
Plaintiffs’ responses to the now consolidated case Drevnak v. Prestamos CDFI, LLC, 
Case No. 5:23-cv-02777, are similarly deficient.  On December 29, 2023, Prestamos served 
Interrogatories and RFPs on the Drevnak Plaintiffs.  Plaintiffs have failed to provide 
complete responses to these discovery requests despite multiple follow-up efforts by 
Prestamos.  Plaintiffs’ Drevnak discovery responses share many of the same deficiencies as 
the Marshall discovery responses, including:  failure to produce documents responsive to 
RFPs for each named plaintiff; improper reliance on Rule 33(d) in lieu of answering 
interrogatories; failure to answer interrogatories for each named plaintiff; and failure to 
verify the interrogatory responses.  Prestamos has sent the Drevnak Plaintiffs two letters 
addressing their deficient responses to the interrogatories and one letter addressing their 
deficient responses to the RFPs.  As of today, Prestamos has yet to even receive a response 
to two of these three letters.   
On April 9, 2024, Prestamos served a second set of RFPs and Interrogatories on 
Plaintiffs in Marshall and Drevnak.  On May 9, 2024, Plaintiffs served responses and 
objections to Prestamos’s second set of RFPs and Interrogatories, but did not produce any 
responsive Documents. 
Plaintiffs’ continued dereliction of their discovery obligations has forced Prestamos 
to take extensive third party discovery on a number of fundamental issues.  For example, 
beginning on July 21, 2023, Prestamos requested discovery from the named Plaintiffs 
                                                 
1  
In addition, Prestamos identified this deficiency in letters to Plaintiffs dated November 
28, 2023, and March 7, 2024, and this Court directly addressed the lack of verification 
at the Discovery Conference.  
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The Hon. John M. Gallagher 
May 10, 2024 
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regarding the financial institutions designated to receive the proceeds of Plaintiffs’ PPP 
loans, including information relating to any rejection of a PPP loan disbursement.  This 
information is central to class certification because it will show, inter alia, that there are 
many different answers to the question why the named Plaintiffs, let alone absent class 
members, did not receive their PPP loan funds.  Accordingly, this discovery will 
demonstrate that the individualized inquiries necessary to answer this question will 
predominate over any potential common questions.  Thus far, Plaintiffs have produced only 
232 documents, none of which are bank account agreements that might identify additional 
individualized issues specific to particular banks or borrowers.  Accordingly, as detailed 
below, Prestamos has been forced to take discovery from these third party banks. 
The chart enclosed as Exhibit 1 documents in more detail Plaintiffs’ continued failure 
to comply with their discovery obligations.  The deficiencies described above and 
documented in the attached chart reveal that, far from Plaintiffs’ spurious allegation that 
“Prestamos’s delay is what is really at issue,” see ECF 104, Plaintiffs’ failure to comply with 
their discovery obligations is preventing an expeditious resolution of class certification.   
b. Third-Party Discovery 
Following receipt of the Court’s May 1 Order, Prestamos immediately sent the Order 
to the following subpoena recipients:  (1) Evolve Bank & Trust (“Evolve”), the bank 
Prestamos used to disburse PPP loans; (2) Dave, Inc. (“Dave”), a spending account service 
used by several Plaintiffs to receive PPP loans for their small businesses; and (3) Blueacorn, 
the lender service provider that facilitated small-business applications for Prestamos.  On 
May 9 and 10, Dave produced some documents that Prestamos had requested from Plaintiffs 
but that Plaintiffs had failed to produce, highlighting the critical nature of third party 
discovery in this case.2  Dave produced account agreements that provided that “[t]he Dave 
Spending Account is only available to individuals for personal, family or household 
purposes and may not be opened by a business in any form or used for business purposes.”  
Ex. 2 (Dave Deposit Agreement and Disclosures, last updated 01/20/2021) at 2 (emphasis 
added).  As Dave explained to some of the named Plaintiffs, “Dave Spending is a personal 
spending account and cannot receive business loans.”  See, e.g., Ex. 3 (June 4, 2021 
Customer Support Chat Log between Dustin Innis and Dave, Inc.) (emphasis added).  These 
agreements and communications show not only that Plaintiffs did not receive their loans 
because they improperly used an account, but also that these types of individualized issues 
will predominate across the putative class. 
                                                 
2  
Plaintiffs Alicia Marshall, Dustin Innis, Kiana Dervin, Lametria Marvel, and Leona 
Owsley had accounts with Dave. 
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The Hon. John M. Gallagher 
May 10, 2024 
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4 
 
 On May 9 and 10, 2024, respectively, Prestamos served subpoenas on Blueacorn and 
Evolve (both of whom are out-of-state third parties) to compel their appearance at the May 
23 hearing.  Prestamos intends to provide the Court with an update on the status of third-
party discovery next week. 
On May 8, 2024, Prestamos served subpoenas on most named Plaintiffs’ financial 
institutions, thus adding to the list of discovery Prestamos has been forced to seek from third 
parties because Plaintiffs have disregarded their discovery obligations.3  This process is 
ongoing, and Prestamos has not received any documents from the financial institutions in 
response to its subpoenas.  
II. 
The Third Amended Complaint Represents a Substantive Do-Over,  
Not The Minor Changes Contemplated by the Court’s Order 
During the Discovery Conference, the Court discussed potentially consolidating the 
Marshall action with the Drevnak action based on the history of the related cases and 
Plaintiffs’ expressed support for consolidation.  After further consideration, the Court 
directed the parties to consider dismissing the Drevnak action and amending the Marshall 
action “to incorporate Drevnak’s allegations.”  Ex. 4 (Mar. 22, 2024 Email from B. Dixon).  
Prestamos informed Plaintiffs that it agreed with the Court’s suggested approach to 
streamline this litigation.  Ex. 5 (Mar. 26, 2024 Email from M. Pratt).  Plaintiffs likewise 
responded that they “agree[d] with the Court’s suggestion.”  Ex. 6 (Mar. 27, 2024 Email 
from B. Cohen).   
On March 27, 2024, Plaintiffs informed the Court that, per the parties’ agreement, 
“Plaintiffs will file an amended complaint in Marshall that incorporates the allegations in 
Drevnak.”  Ex. 7 (Mar. 27, 2024 Email from L. Lederer).  Plaintiffs further stated that they 
“will not add any new causes of action; will incorporate the claims of the plaintiffs in 
Drevnak; will add new plaintiffs from additional states . . . ; and will drop the claims alleged 
by one plaintiff in the Drevnak action.”  Id.  
Contrary to these repeated representations, Plaintiffs made significant substantive 
revisions in their Third Amended Complaint.  These substantive changes, and the additional 
                                                 
3  
The financial institutions include: JP Morgan Chase, Azlo Business, Inc., Bluebird, 
Wells Fargo Bank, N.A., Chime financial, Inc., TCF Bank National Bank, GO Bank, 
Public Service Credit Union, Green Dot. Corp., FirstBank, American First Federal 
Credit Union, SoFi Securities LLC, The Bancorp, Metabank National Association, 
Radius Bank, BMO Harris Bank NA, EECU, Capital One, Bank of America. 
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The Hon. John M. Gallagher 
May 10, 2024 
Page 5 
 
 
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discovery required to address them, will for all practical purposes prevent the parties from 
completing class discovery according to the current schedule.   
Although the Drevnak Complaint (but not the previously operative Marshall 
Complaint4) contained allegations that the SBA’s records of disbursement of certain named 
Plaintiffs’ PPP loan proceeds was “based on false data Prestamos provided to the SBA,” it 
stopped short of alleging that Prestamos intentionally reported allegedly incorrect 
information to the SBA.  In contrast, the TAC contains extensive and unsupported new 
allegations that Prestamos actively “falsely reported to the SBA that it had funded” the 
named Plaintiffs’ PPP loans.  See, e.g., TAC¶¶ 14, 131, 148, 157, 166, 180, 189, 198, 207, 
216, 228, 237, 248, 266, 279, 291, 308, 320, 333, 345, 356, 367, 396, 397, 400, 411, 414, 
416, 427. 
Plaintiffs add these allegations in order to buttress a new argument entirely absent 
from either the Marshall or Drevnak Complaints—that Prestamos violated an SBA rule 
regarding PPP reporting obligations.  See id. ¶¶ 64–65, 71–73, 109, 389–90.  Plaintiffs 
underscore the tactical importance of these new allegations by arguing, in the TAC, that they 
“support[] the commonality and predominance requirements for class certification.  Id. 
¶ 414.  
In sharp contrast to both the Marshall and Drevnak Complaints, which recited the 
alleged facts in support of Rule 23’s class certification requirements in under two pages, the 
TAC devotes fifteen pages to these same factors.  Id. 82–96.  This bloat is due to newly-
alleged facts combined with substantial improper, premature legal argument.  See 
Moorehead v. Sch. Dist. of the City of Allentown, 2023 U.S. Dist. LEXIS 66450, at *74 
(E.D. Pa. Apr. 17, 2023) (Gallagher, J.) (striking paragraphs from the plaintiff’s Complaint 
that consist purely of legal conclusions and plead no relevant facts); see also Nance v. 
Emages, Inc., 2022 U.S. Dist. LEXIS 104927, at *5–6 (N.D. Ill. June 13, 2022) (striking 
legal argument from complaint, holding “[t]he occasional legal conclusion among a 
numbered statement of alleged facts is often not worth the trouble of striking, but here, 
plaintiff has essentially included a legal brief in his complaint.”).  
Both the Marshall Complaint and the Drevnak Complaint identified a single class 
defined to include “all persons” in the named Plaintiffs’ states “who, in 2021, applied for 
PPP loans with defendant Prestamos as the lender for whom the SBA provided an SBA loan 
                                                 
4  
For ease of reference, the previously operative Complaint in the Marshall action, 
Plaintiffs’ Second Amended Class Action Complaint, is referred to herein as the 
“Marshall Complaint.”   
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The Hon. John M. Gallagher 
May 10, 2024 
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number, and who executed their Loan Documents and did not receive the PPP loan 
proceeds.”  Marshall Compl. ¶ 230; Drevnak Compl. ¶ 214.   
The TAC now identifies two different classes, a “Damages Class” and a “Declaratory 
Judgment Class.”  TAC ¶ 376–77.  Continuing to highlight the centrality of Plaintiffs’ new 
allegations concerning the SBA rule regarding PPP reporting allegations and Prestamos’s 
allegedly fraudulent reporting of information required by it, Plaintiffs revised the class 
definitions to include all persons who “provided to Prestamos all required loan 
documentation, but as to whom Prestamos both failed to disburse the PPP loan proceeds and 
reported to the SBA that the loan proceeds were disbursed.”  Id. (emphasis added). 
In sum, the TAC is a class certification motion masquerading as a pleading, and the 
Court should not countenance this type of gamesmanship. 
Prestamos looks forward to addressing these issues at the hearing on May 23, 2024. 
 
Respectfully, 
/s/ Marcel S. Pratt  
Marcel S. Pratt 
Case 5:21-cv-04337-JMG   Document 112   Filed 05/10/24   Page 6 of 7

 
 
 
CERTIFICATE OF SERVICE  
I, Marcel Pratt, hereby certify that on the 10th day of May 2024, I caused a true and 
correct copy of the foregoing letter to be served on counsel of record for all Plaintiffs via the 
Court’s ECF System.  The letter is available for viewing and downloading from the ECF 
System. 
 
 
/s/ Marcel Pratt 
Marcel Pratt  
 
 
Case 5:21-cv-04337-JMG   Document 112   Filed 05/10/24   Page 7 of 7

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