On Wednesday, the Judicial Panel on Multidistrict Litigation rejected consolidation of 62 class actions involving Paycheck Protection Program (“PPP”) loans under the federal Coronavirus Aid, Relief, and Economic Security (“CARES”) Act in a multidistrict litigation (“MDL”).  These actions claim to represent a class of accounting firms (and other consultants) that allegedly worked as agents on behalf of applicants for PPP loans – typically small business clients. Plaintiffs contend the CARES Act and implementing regulations require lenders to pay them “agent fees” for preparing loan applications.

Continue Reading Lenders Gain Big Win Resisting MDL Consolidation in PPP Agent Fees Class Action Litigation

In In Re: Bay Circle Properties, LLC., No. 1812536, 2020 WL 1696303 (Ala. April 8, 2020), the Eleventh Circuit dismissed an appeal by a guarantor alleging a wrongful foreclosure, because the guarantor did not own the foreclosed property and therefore lacked Article III standing.  Here are the facts:  Debtor owed for two loans,

At least two class actions filed in the wake of the COVID-19 pandemic by disgruntled accounting firms allege some of the nation’s largest banks never paid “agent fees” to entities assisting small businesses apply for Paycheck Protection Program (“PPP”) loans under the federal Coronavirus Aid, Relief, and Economic Security (“CARES”) Act – and never intended to.

These lawsuits allege plaintiffs represent a class of financial services and accounting firms that prepared PPP applications on behalf of eligible small business clients. Plaintiffs contend the CARES Act and implementing regulations require lenders to pay them “agent fees” for preparing loan applications. Fees are calculated by tiers according to the amount of the loan – a one percent fee for loans of $350,000 or less, a .50 percent fee for loans of more than $350,000 and up to $2 million, and a .25 percent fee on loans over $2 million.


Continue Reading Second Wave of CARES Act Litigation Filed Against Banks; Accounting Firms Seek “Agent Fees” for Preparing PPP Loan Applications.

In a flurry of new class actions filed on behalf of unhappy small business owners, banks are facing suits alleging they unlawfully prioritized processing large loans under the Paycheck Protection Program (PPP) over smaller ones. Two parallel class actions were filed on April 19, 2020 and April 20, 2020 in California federal court accusing two large banks of reshuffling loan applications instead of processing them on a first-come, first-served basis to purportedly maximize the banks’ profit from the federal loan program. Another similar class action was filed in state court in Texas. The class plaintiffs include a frozen yogurt shop, an auto body shop and a flooring company among others.

Continue Reading Banks Beware: New Class Actions Alleging Banks Prioritized Large PPP Loans Over Smaller Ones

Last month, the Eleventh Circuit affirmed the dismissal of a putative class action suit alleging violations of the Fair Credit Reporting Act thereby delivering an important victory to lenders and other entities that provide consumer information to credit reporting agencies. Under the FCRA, “furnishers” of consumer information are prohibited from providing inaccurate information to credit reporting agencies (“CRAs”) and must investigate when a consumer disputes such information.  In Hunt v. JP Morgan Chase Bank, Nat’l Ass’n, Case No. 18-11306, 2019 WL 1873419 (11th Cir. Apr. 25, 2019) (unpublished), a united panel held (in an unpublished opinion) that JP Morgan Chase had not violated its duties as a furnisher under the FCRA when it reported that a customer’s account was past due.  Not only was such information accurate when it was provided, but the bank was never even required to investigate its accuracy because the plaintiff’s complaint did not allege that JP Morgan received notice that he disputed the information with the CRAs. The Court did not decide, however, whether JP Morgan had an obligation to “refresh” information it had previously provided.

Continue Reading Eleventh Circuit affirms dismissal of attempted FCRA class action against furnisher of consumer information

According to the Eleventh Circuit, a municipalities’ lawsuit alleging lost tax revenue and increased costs for services case proceed against several large lenders. In City of Miami v. Wells Fargo & Co., 2019 WL 1966943 (11th Cir. 2019), Miami alleged that several large banks violated the Fair Housing Act by engaging in predatory lending that targeted racial minorities. These practices allegedly led to a higher rate of home foreclosures, which directly caused lost tax revenue and increased costs for services.

Continue Reading Eleventh Circuit allows Miami’s predatory lending suit for lost tax revenues to proceed

In Obduskey v. McCarthy & Holthus, LLP, the United States Supreme Court unanimously held the Fair Debt Collection Practices Act does not apply to a law firm conducting a nonjudicial foreclosure.

While the law firm prevailed in Obduskey, the Court’s opinion suggested several circumstances in which the law firm might have been subject

Last week, the U.S. District Court for the Middle District of Alabama denied Southern Independent Bank’s (“Southern Independent’s”) motion for class certification following a data breach which allegedly affected over 2,000 financial institutions across the country. Southern Independent, a community bank located in south Alabama, brought a class action complaint against Fred’s in response to a data breach in which hackers, using malware installed on servers, harvested payment data from consumer debit cards used at Fred’s stores.

Continue Reading Class certification denied for data breach claim brought by bank against retailer

In Patel, et al v. Specialized Loan Servicing LLC, et al, No. 16-12100 (11th Cir. 2018), the Eleventh Circuit held that claims against a loan servicer for “artificially inflated” force-placed insurance premiums were barred by the filed rate doctrine. In Patel, the plaintiff alleged that loan servicers and insurance companies breached implied covenants of good faith and fair dealing, as well as various deceptive and unfair trade practice statutes, by purchasing force-placed insurance for the plaintiffs’ mortgaged properties. Plaintiffs alleged that the premiums were “artificially inflated”, “unreasonably high”, and that they reflected the “costs of kickbacks” to the loan servicers. The Court affirmed the Southern District of Florida’s dismissal of the plaintiff’s complaint for failure to state a claim, finding that the allegations in the complaint were “textbook examples of the sort of claims” barred by the filed-rate doctrine.

Continue Reading Eleventh Circuit: Filed-Rate Doctrine bars claims over lender’s force-placed insurance