A recent lawsuit seeks to hold a fintech company liable for failing to adequately service loans made as part of the Paycheck Protection Program (PPP), marking what may be the first putative class action lawsuit challenging the manner in which PPP lenders process loan forgiveness applications.

The suit, filed in late March 2022, alleges that Kabbage failed to appropriately process borrowers’ PPP loan forgiveness applications.  See Carr v. Kabbage, Inc., Case No. 1:22-cv-01249 (N.D. Ga.).  The PPP permitted borrowers to have their loans forgiven if they were able to meet certain criteria.  The complaint alleges that Kabbage issued billions of dollars in PPP loans, but made it difficult or impossible for borrowers to submit loan forgiveness applications.  It contends that Kabbage failed to process applications within the time required by federal regulations, asked customers to sign altered forms, and demanded that customers provide unnecessary documents. 

The complaint faults Kabbage for other conduct that it says made it more difficult for borrowers to have loans forgiven.  It claims that Kabbage services PPP loans through a separate, understaffed entity.  It argues that Kabbage should have participated in the Small Business Administration’s loan forgiveness portal.  And it alleges that Kabbage has wrongfully attempted to collect on loans that should have been forgiven.

The suit seeks to certify a nationwide class of Kabbage borrowers, along with five state sub-classes.  Notably, it seeks to disgorge from Kabbage all of its origination fees from PPP loans.

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Photo of Dillon Grimm Dillon Grimm

Dillon Grimm is an associate in the firm’s Washington, DC office, where his practice focuses on defending complex class actions in state and federal court. Dillon also represents clients in a range of commercial litigation matters.

Dillon works with companies in the financial…

Dillon Grimm is an associate in the firm’s Washington, DC office, where his practice focuses on defending complex class actions in state and federal court. Dillon also represents clients in a range of commercial litigation matters.

Dillon works with companies in the financial services, consumer brands, and technology industries, among others. He has experience in all phases of litigation, including drafting dispositive motions, managing discovery, preparing witnesses for depositions and trial, and appeals. Dillon also has particular expertise in matters involving federal preemption.

Dillon maintains an active pro bono practice focused on criminal justice.

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Photo of Andrew Soukup Andrew Soukup

Andrew Soukup is a co-chair of the firm’s Class Action Litigation Practice Group. Andrew specializes in representing heavily regulated businesses in class actions, multidistrict litigation, and other high-stakes disputes. Recognized for achieving “big wins in his class action practice,” Andrew has defeated a variety…

Andrew Soukup is a co-chair of the firm’s Class Action Litigation Practice Group. Andrew specializes in representing heavily regulated businesses in class actions, multidistrict litigation, and other high-stakes disputes. Recognized for achieving “big wins in his class action practice,” Andrew has defeated a variety of advertising, consumer protection, privacy, and product defect and safety claims ranging in exposure from millions to billions of dollars.

Andrew’s clients include those in the consumer products, life sciences, financial services, technology, automotive, and media and communications industries. He has helped his clients prevail in litigation in federal and state courts across the country against putative class representatives, government agencies, state attorneys general, and commercial entities.

With a long history of representing companies subject to extensive federal regulation and oversight, Andrew provides a unique ability to help courts understand the complex environment that governs clients’ businesses. Clients turn to Andrew because of his successful outcomes at all stages of litigation, his responsiveness and attention to their matters, his understanding of their businesses, and his creative strategies.

Andrew’s recent successes include:

  • Leading the successful defense of several of the world’s leading companies and brands from claims that they engaged in deceptive marketing or sold defective products, including claims brought under state consumer protection and unfair deceptive acts or practices statutes.
  • Delivering wins in multiple nationwide class actions on behalf of leading financial institutions related to fees, disclosures, and other banking practices, including the successful defense of numerous financial institutions accused of violating the Paycheck Protection Program’s implementing laws, which contributed to Covington’s recognition as a “Class Action Group of the Year.”
  • Helping one of the world’s largest seafood companies defeat ESG-related claims accusing the company of misrepresenting its environmental-friendly production practices.

Andrew has also obtained favorable outcomes for numerous clients in commercial and indemnification disputes raising contract, fraud, and other business tort claims. He helps companies navigate contractual and indemnification disputes with their business partners. And he advises companies on their arbitration agreements, and has helped numerous clients avoid multi-district and class-action litigation by successfully enforcing their arbitration agreements.

Watch: Andrew provides insights on class action litigation, as part of our Navigating Class Actions video series.

 
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