On April 20, 2020, Legendary Transport, LLC brought a class action against several national lenders. The complaint was filed in the United States District Court Central District of California (case number 2:20-cv-03636-ODW-JC).
Plaintiff is a small business that applied for a PPP loan with one of the Defendant-lenders. Plaintiff claims that all of the Defendants prioritized loan applications of “favored businesses” over other small businesses contrary to the spirit and purpose of the CARES Act. Accordingly, Defendant delayed and provided contradictory information to many of its small business clients. As a result, Plaintiff was unable to timely submit a PPP application. Additionally, the complaint alleges that the Defendant-lenders only accepted applications from their existing customers, in violation of anti-trust laws. This alleged practice prevented small businesses like Plaintiff from applying for and obtaining a PPP loan from another lender.
The complaint alleges causes of action for (1) violations of 15 USC §1 (Sherman Act); (2) violations of 15 USC §2 (Sherman Act); (3) violations of 15 USC §15 (Clayton Act); (4) negligence; (5) negligent misrepresentation; (6) declaration relief pursuant to 28 USC §2201; and (7) injunctive relief pursuant to the Sherman & Clayton Acts.
On April 22, 2020, Plaintiff filed an ex parte application for a temporary restraining order (“TRO), which sought an order directing Defendants to: (1) discontinue their alleged practice of limiting PPP loan applications to only existing customers; and (2) accept PPP loan applications from all qualifying applicants. Plaintiff asserted that Congress recently announced new funding for the PPP program and argued Legendary and small businesses like it “will likely suffer irreparable harm if they are limited to an application with their existing lender only.”
On April 24, the court denied the TRO for two reasons: (1) Plaintiff failed to give notice of the TRO to Defendants of either the complaint or the TRO and also failed to satisfy the requirements to obtain an injunction without notice; and (2) even had Plaintiff given notice, Plaintiff failed to demonstrate a likelihood of irreparable harm absent the requested injunction.
On April 28, 2020, Plaintiff filed a First Amended Complaint against Plaintiff’s lender (dropping the other Defendants), and also added Rō Fitness, LLC (another small business client of Defendant-lender) as a Plaintiff. The FAC also added a count for intentional misrepresentation. However, the allegations of the FAC are almost identical to those of the initial complaint.