On April 20, 2020, Outlet Tile Center filed a class action lawsuit in the United States District Court, Central District of California (case number 2:20-cv- 03603) against a national lender and the Small Business Administration (named as the United States of America). Plaintiff was represented by Tauler Smith LLP. The complaint was dismissed on April 28, 2020.
The named plaintiff is a sole proprietorship, with six employees, that applied for a Paycheck Protection Program (PPP) loan under the CARES Act through the defendant-lender’s online portal on April 9, 2020. Plaintiff was notified on April 17, 2020 that all PPP funds were exhausted. Plaintiff alleged the SBA’s implementation of the PPP and the defendant-lender’s processing of the loan applications favored larger businesses and larger loans to the detriment of smaller businesses like plaintiff. The named plaintiff also sought to represent a class of other businesses who were similarly denied PPP funding under the CARES Act.
The complaint included causes of action for promissory estoppel, equitable relief, intentional misrepresentation, interference with contractual relations, and unfair business practices. Among other relief, the complaint sought injunctive relief barring the defendant-lender from participating in the PPP, and restitution requiring the defendant-lender to return any fees it received under the PPP.
On April 23, 2020, plaintiff moved ex parte for injunctive relief against the defendant-lender and also against the SBA seeking to enjoin the SBA from structuring the PPP to incentivize larger loans. On April 27, 2020, the Court ruled on the ex parte, without a hearing, finding there was no subject matter jurisdiction, that plaintiff’s causes of action did not support injunctive relief, that plaintiff could be compensated for its alleged injury through money damages, and that given the importance of the Congressional efforts in connection with the Coronavirus and its impact on the national economy, injunctive relief on an ex parte basis was not appropriate. The court directed the plaintiff to immediately file an amended complaint that addressed the subject matter jurisdiction issue. The following day, on April 28, 2020, plaintiff dismissed the complaint. It does not appear that the case has been re-filed as of yet.