New Jersey Federal Court Holds No Discrimination Claim When Bank Declined to Honor PPP Transactions

The United States District Court for the District of New Jersey recently dismissed a suit for racial discrimination and retaliation brought by a bank account holder against a national bank, holding that the account holder had not sufficiently pled facts alleging racial discrimination when the bank ceased to honor checks and electronic payments related to the Paycheck Protection Program (“PPP”). Re Republic Grp. LLC v. Bank of Am., N.A., 2021 WL 321477 (D.N.J. Feb. 1, 2021). Plaintiffs were New Jersey residents and the founders of multiple companies whose purposes were to “provide cash flow and investment opportunities to small and diverse businesses and individuals.” They gained approval from the Small Business Administration to issue PPP loans to minority-owned businesses and deposited approximately $100 million in their business account with the defendant bank. The bank later “refused to honor checks or electronic payments presented against” this account and informed Plaintiffs that it was unable to support their efforts to participate in the PPP program. Plaintiff brought claims for discrimination and retaliations under 42 U.S.C. § 1981 as well as the New Jersey Law Against Discrimination and the New Jersey Civil Rights Act, claiming that the bank “never provided a legitimate, lawful, or non-discriminatory reason” for refusing to honor the checks and payments. Defendant moved to dismiss the complaint for failure to state a claim upon which relief can be granted.

In a letter opinion, the District Court granted the defendant bank’s motion to dismiss. Although the Plaintiff claimed no legitimate reason was given for refusing to honor PPP-related checks and payments, and also alleged that the bank subsequently closed their related personal and business accounts, their claims failed because they did not “plead facts that show that Defendants intended to discriminate against them because of their race.” Although plaintiffs pled that they were members of a racial minority, they did not “plead that they were treated differently than any other individuals or businesses who are not members of a protected class.” Therefore, Plaintiffs conclusions, “without support,” that the bank’s decision to decline these transactions with motivation to discriminate were not sufficient to support a claim. As a result, “Plaintiffs’ Section 1981 claims,” as well as the New Jersey State claims, over which “the Court decline[d] to exercise supplemental jurisdiction,” were dismissed.

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at, Desiree McDonald at, or Andrew Raimondi at