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.

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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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