Order directing jurisdictional briefing — Womply v. Capital Plus

Record facts

U.S. District Court for the Northern District of Texas, Dallas Division · No. 3:21-cv-02636-B · Doc. 7 · 2021-11-23 · Docket on CourtListener

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
OTO ANALYTICS, INC. d/b/a WOMPLY, §
§
Plaintiff,
§
§
v.
§
CIVIL ACTION NO. 3:21-CV-2636-B
§
CAPITAL PLUS FINANCIAL, LLC,
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CROSSROADS SYSTEMS, INC., and 
    §
ERIC DONNELLY,
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§
Defendants.
§
ORDER
Before the Court is Defendants Capital Plus Financial, LLC (“Capital Plus”), Crossroads
Systems, Inc. (“Crossroads”), and Eric Donnelly (“Donnelly”)’s notice of removal (Doc. 1) in the
above-captioned action. Having considered the notice and its arguments for why this Court has
jurisdiction over this action, the Court concludes that additional briefing is necessary.
Plaintiff Oto Analytics d/b/a Womply (“Womply”) originally filed this action in the 95th 
Judicial District, Dallas County, Texas. Doc. 1, Notice Removal, ¶ 1. Womply’s Original Petition
states that the “lawsuit arises out of Defendants’ fraudulent misrepresentations and wrongful conduct
causing Womply damages in excess of $76 million.” Doc. 1-4, Pl.’s Original Pet., ¶ 1. Specifically,
Womply claims that it “created a technology platform that allows potential borrowers to easily apply
for [Paycheck Protection Program] PPP loans” and then contracted with “non-party Blueacorn, a
lender service provider and partner of Capital Plus,” to refer potential borrowers to lender “Capital
Plus through . . . Blueacorn.” Id. ¶¶ 2–3. Womply alleges that it only agreed to contract with
Blueacorn for the Capital Plus referrals after “Donnelly, the former CEO of Capital Plus and the
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current CEO of Capital Plus’s parent company Crossroads . . . represented that fees Capital Plus
received from the [Small Business Association] SBA . . . would be deposited directly into a joint
account held by Capital Plus and Blueacorn, and that Capital Plus would provide Womply with
visibility into the account.” Id. ¶ 2. “Based on Donnelly’s representations, Womply understood that
Blueacorn and Capital Plus would receive fees from the SBA for all Womply-referred loans
simultaneously, because such fees would be deposited directly into the [j]oint [a]ccount.” Id. ¶ 3.
Womply ultimately “referred 86,521 PPP loans to Capital Plus through Blueacorn” and asserts that
it is “entitled to fees totaling $76,714,482.67, not including interest that has accrued on those late
fees” in compensation for those referrals, “[u]nder its agreements with Blueacorn.” Id. ¶¶ 3, 6.
However, Womply states it has received no fees for the referrals. Id. 
Defendants filed a notice of removal on October 25, 2021. Doc. 1, Notice Removal.
Defendants claim that “removal is proper pursuant to both federal-question jurisdiction and the
federal officer removal statute.” Id. ¶ 4. Their argument for federal-question jurisdiction is that
“[a]lthough [Womply] asserts only state common law claims, the viability of each claim depends on
interpretation of federal law—both statutory and regulatory—governing the [PPP].” Id. Defendants
note that federal-question jurisdiction may lie “‘over state-law claims that implicate significant
federal issues’” so long as the “‘federal issue is: (1) necessarily raised, (2) actually disputed, (3)
substantial, and (4) capable of resolution in a federal court without disrupting the federal-state
balance approved by Congress.’” Id. at ¶ 18 (first quoting Grable & Sons Metal Products, Inc., v. Darue
Eng’g & Mfg, 545 U.S. 308, 312 (2005); then quoting Gunn v. Minton, 568 U.S. 251, 258
(2013)).The four Grable requirements are satisfied in this case, they argue. Id. ¶¶ 22–41. 
Defendants also assert that removal is “proper under the federal officer removal statute,
which provides for removal of any suit brought against . . . ‘any officer (or any person acting under
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that officer) of the United States or of any agency thereof . . . for or relating to any act under color
of such office.” Id. ¶ 42 (quoting 28 U.S.C. § 1442(a)(1)). Defendants argue that the “SBA has
‘delegated authority’ to Capital Plus for the purpose of making PPP loans.” Id. ¶ 44 (citing 15 U.S.C.
§ 636(a)(36)(F)(ii)(I)).
“‘Federal courts are courts of limited jurisdiction.’” Settlement Funding, L.L.C. v. Rapid
Settlements, Ltd., 851 F.3d 530, 537 (5th Cir. 2017) (quoting Howery v. Allstate Ins. Co., 243 F.3d
912, 916 (5th Cir. 2001)). Thus, courts “‘must presume that a suit lies outside this limited
jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking the federal
forum.’” Id. And “if the record does not contain sufficient evidence to show that subject matter
jurisdiction exists, [then] ‘a federal court does not have jurisdiction over the case.’” Id. 
The Court notes that Plaintiff has not filed a motion to remand this action. Nevertheless, the
Court must sua sponte  decide the merits of Defendants’ federal-question jurisdiction arguments and,
if required, remand this action to the state court. See Baris v. Sulpicio Lines, Inc., 932 F.2d 1540,
1544–45 (5th Cir. 1991). To assist the Court in deciding this issue, the Court therefore ORDERS
Womply to file responsive briefing, including legal authority, responding to Defendants’ subject-
matter-jurisdiction arguments. Womply’s briefing should specifically address (1) Defendants’
contention that construction of the PPP regulations and governing statutes will be dispositive of an
essential element of Womply’s state-law claims; (2) whether Womply is an “agent” within the
definition of 13 C.F.R. § 103.1(a); and (3) may address any other issues raised by Defendants’
arguments regarding federal-question jurisdiction and the federal-officer removal statute. 
Plaintiff’s brief shall comply with Local Rules 7.1(d) and 7.2 and shall be filed on or before
January 1, 2022. Defendant shall be entitled to file a reply brief consistent with Local Rules 7.1(f)
and 7.2. 
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SO ORDERED.
Signed: November 23, 2021.
_________________________________
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE
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