A group of small businesses recently sued Bank of America in the Central District of California, alleging that it misled them about the terms of Paycheck Protection Program (PPP) loans. This marks yet another putative class action accusing lenders of misconduct in connection with the PPP.

The Complaint theorizes that Bank of America misled customers so that it could increase the amount and volume of fees it was paid for originating PPP loans. It alleges that Bank of America misled small businesses about two different aspects of the PPP.

First, it claims that Bank of America instructed small businesses to include compensation paid to independent contractors when calculating their forgivable loan amount. According to the Complaint, however, the PPP prohibited small businesses from including independent contractors as part of their loan amount. Because Bank of America told them to include this amount, the Complaint alleges, the plaintiffs took out loans that—unlike other PPP loans—were not forgivable. 

Second, the Complaint alleges that Bank of America used an “unstated Bank of America formula” to persuade companies to take out higher loans than authorized by the PPP. The result of this effort, according to the Complaint, is that plaintiffs ended up with “overfunded” loans that were not eligible for loan forgiveness. 

The suit seeks to certify a class of California businesses who were denied loan forgiveness because they either (1) incorrectly included payments to independent contractors in their loan applications; or (2) received a loan in excess of the correct loan calculation formula. It asserts a number of claims, including for breach of contract, fraud, and violations of California’s consumer deception laws. Notably, it seeks—among other relief—disgorgement of the fees that Bank of America received in connection with these loans.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Dillon Grimm Dillon Grimm

Dillon Grimm is an associate in the firm’s Washington, DC office, where his practice focuses on complex commercial litigation and class actions.

Dillon has experience in matters involving a range of issues, including consumer protection, breach of contract, and fraud, among others. He…

Dillon Grimm is an associate in the firm’s Washington, DC office, where his practice focuses on complex commercial litigation and class actions.

Dillon has experience in matters involving a range of issues, including consumer protection, breach of contract, and fraud, among others. He has represented clients in the financial services, technology, and sports industries. He also maintains a robust pro bono practice focusing on criminal justice.

Dillon was a judicial law clerk for the Hon. Rebecca Beach Smith, U.S. District Court for the Eastern District of Virginia and the Hon. Jane R. Roth, U.S. Court of Appeals for the Third Circuit, before rejoining the firm in 2021.

Read more about Dillon GrimmEmail
Show more Show less
Photo of Andrew Soukup Andrew Soukup

Andrew Soukup has a wide-ranging complex litigation practice representing highly regulated businesses in class actions and other high-stakes disputes. He has built a successful record of defending clients from consumer protection claims asserted in class-action lawsuits and other multistate proceedings, many of which…

Andrew Soukup has a wide-ranging complex litigation practice representing highly regulated businesses in class actions and other high-stakes disputes. He has built a successful record of defending clients from consumer protection claims asserted in class-action lawsuits and other multistate proceedings, many of which were defeated through dispositive pre-trial motions.
Andrew is co-chair of the firm’s Class Action Litigation practice group.

Andrew has helped his clients achieve successful outcomes at all stages of litigation, including through trial and appeal. He has helped his clients prevail in litigation against putative class representatives, government agencies, and commercial entities. Representative victories include:

  • Delivered wins in multiple nationwide class actions on behalf of large financial companies related to fees, disclosures, and other banking practices, including the successful defense of numerous lenders accused of violating the Paycheck Protection Program’s implementing laws, which contributed to Covington’s recent recognition as a “Class Action Group Of The Year.”
  • Successfully defending several of the nation’s leading financial institutions in a wide variety of litigation and arbitration proceedings involving alleged violations of RICO, FCRA, TILA, TCPA, FCBA, ECOA, EFTA, FACTA, and state consumer protection and unfair and deceptive acts or practices statutes, as well as claims involving breach of contract, fraud, unjust enrichment, and other torts.
  • Successfully defended several of the nation’s leading companies and brands from claims that they deceptively marketed their products, including claims brought under state consumer protection and unfair deceptive acts or practices statutes.
  • Obtained favorable outcomes for numerous clients in commercial disputes raising contract, fraud, and other business tort claims.

Because many of Andrew’s clients are subject to extensive federal regulation and oversight, Andrew has significant experience successfully invoking federal preemption to defeat litigation.

Andrew also advises clients on their arbitration agreements. He has successfully helped numerous clients avoid multi-district class-action litigation by successfully enforcing the institutions’ arbitration agreements.

Clients praise Andrew for his personal attention to their matters, his responsiveness, and his creative strategies. Based on his “big wins in his class action practice,” Law360 named Mr. Soukup a “Class Action Rising Star.”

Prior to practicing law, Andrew worked as a journalist.

Read more about Andrew SoukupEmail
Show more Show less