Two Internet lenders that are wholly owned by Indian tribes have asked that Consumer Financial Protection Bureau civil investigative demands not be enforced until they have the opportunity to present their sovereign immunity arguments to the Supreme Court. In their request that the U.S. Court of Appeals for the Ninth Circuit stay its mandate in CFPB v. Great Plains Lending, LLC, the companies argue that different interpretations of sovereign immunity among the U.S. appellate courts mean they can present a substantial question to the Court and that enforcing the CIDs will harm them while delaying enforcement will not harm the bureau.
The CFPB has served CIDs on the three companies in an effort to determine whether they are complying with consumer financial protection laws that relate to advertising, extending, and collecting small-dollar loans. When the companies, at the direction of their tribal owners, refused to comply, the CFPB secured an enforcement order, which was later affirmed by the Ninth Circuit (see Banking and Finance Law Daily Jan. 23, 2017).
Sovereign immunity. The essence of the sovereign immunity argument is whether federal laws of general applicability are presumed to apply, or not to apply, to sovereign tribes. The Ninth Circuit applied its precedent, established in Donovan v. Coeur d’Alene Tribal Farm, 751 F.2d 1113 (1985), and decided that a tribe does not have sovereign immunity from a law of general applicability unless the law says the tribe is immune. The Consumer Financial Protection Act is a law of general applicability, which means the lenders must comply with the CIDs.
The companies, however, point to a directly contrary precedent in their motion. The U.S. Court of Appeals for the Tenth Circuit has rejected the Coeur d’Alene rule. According to Soaring Eagle Casino & Resort v. NLRB, 791 F.3d 648 (2015), a federal law of general applicability does not deprive a tribe of sovereign immunity unless the law makes clear that Congress intended to do so. Other circuits have at least implicitly agreed with Soaring Eagle, the companies claim.
More generally, the companies assert, the Supreme Court has said that "person" in a statute generally does not include a sovereign tribe unless the contrary intent is clear (Vt. Agency of Nat. Res. V. U.S. ex rel Stevens, 539 U.S. 765 (2000)).
The case is No. 14-55900.
Companies: Chippewa Cree Tribe; Great Plains Lending, LLC; Mobilloans, LLC; Plain Green, LLC; Tunica Biloxi Tribe; Otoe Missouria Tribe
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