Twice this year, Balch & Bingham reported on the wave of “Agent Fee” class actions against lenders who made PPP loans under the CARES Act. At one point, there were over sixty such lawsuits spread across the federal courts, alleging that banks were required to pay CPAs and others who assisted borrowers with loan applications.
Since then, eight different federal judges have now ruled in favor of the banks and dismissed Agent Fee class actions. These cases recognized “every court that has decided this issue has held that the CARES Act does not require lenders to pay agent fees absent an agreement to do so” and dismissed a myriad of federal and state law claims for fees. For the Agent Fee Plaintiffs, there is no end to these mounting losses in sight, and there is real reason to question whether these suits will continue.
The most recent decisions came from Alabama and California. In Alabama, a federal judge dismissed Leigh, King, Norton, Underwood LLC v. Regions, 2:20-cv-00591 (N.D. Al.) as moot after learning the Plaintiff had actually cashed a check from Regions in payment of the alleged agent fees. Shortly thereafter, two different California judges dismissed the identical agent fee cases of Am. Video Duplicating Inc. v. Citigroup Inc., No. 20-03815 (C.D. Cal.) and Am. Video v. City Nat. Bank, 2:20-cv-04036 (C.D. Cal.). Last week, in a final blow seemingly sealing off any path for Plaintiffs, another California judge dismissed Lopez v. Bank of America, 20-cv-04172-JST (N.D. Cal.). While Lopez was granted 30 days to file an amended complaint, the court expressed doubt that he “could ever establish the entitlement to agent fees that is a predicate to each of his claims.”
These decisions add to the banks’ four previous motion to dismiss victories in Sport & Wheat CPA, PA v. Servisfirst Bank et al., No. 3:20-cv-05425 (N.D. Fla.), the first-filed Agent Fees case in the country, Johnson, et al v. JPMorgan Chase, et al., 20-cv-4100 (S.D.N.Y.), which was decided by the highly respected Judge Jed S. Rakoff, Steven L. Steward & Associates, P.A. v. Truist Bank and Truist Financial Corp., 6:20-cv-1083 (M.D. Fla.), and Sanchez v. Bank of South Texas, 7:20-cv-00139 (S.D. Tex.).
Banks scored other important victories along the way. Even before courts started granting motions to dismiss, the Judicial Panel on Multidistrict Litigation rejected efforts to drag over 100 unrelated banks across the country and consolidate all 62 then-pending putative class actions in a multidistrict litigation. Amidst Plaintiffs’ mounting motion to dismiss losses, the court in Unbehagen Tax & Accounting, Inc. v. JP Morgan Chase Bank, NA, 8:20-cv-01709 (M.D. Fla.) dealt Plaintiffs a procedural blow by severing claims against over two dozen unrelated banks and ordering Plaintiffs to dismiss their omnibus lawsuit and refile separate actions against each bank. (A Balch client was initially sued in Unbehagen but was dismissed before the court issued its severance order.). The Unbehagen Plaintiffs dismissed without refiling. Some other Plaintiffs have also been dismissing cases voluntarily. Some of the dismissed actions are merely duplicative of cases against the same defendant, even by the same set of Plaintiffs’ counsel.
Unless an appellate court unexpectedly reinstates a case, it appears as though the banks are headed for total victory.
Please contact Gregory C. Cook if you have questions.