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Consumer Financial Protection Bureau v. Great Plains Lending, LLC

United States Court of Appeals, Ninth Circuit

January 20, 2017

Consumer Financial Protection Bureau, Petitioner-Appellee,
v.
Great Plains Lending, LLC; Mobiloans, LLC; Plain Green, LLC, Respondents-Appellants.

          Argued and Submitted June 6, 2016 Pasadena, California

         Appeal from the United States District Court for the Central District of California D.C. No. 2:14-cv-02090-MWF-PLA Michael W. Fitzgerald, District Judge, Presiding

          Neal Kumar Katyal (argued), Frederick Liu, and Morgan L. Goodspeed, Hogan Lovells U.S. LLP, Washington, D.C., for Respondents-Appellants.

          Kristin Bateman (argued) and Lawrence DeMille-Wagman, Attorneys; John R. Coleman, Assistant General Counsel; To-Quyen Truong, Deputy General Counsel; Meredith Fuchs, General Counsel; Consumer Financial Protection Bureau, Washington, D.C.; for Petitioner-Appellee.

          Before: Ferdinand F. Fernandez, Johnnie B. Rawlinson, and Carlos T. Bea, Circuit Judges.

         SUMMARY[*]

         Tribal Issues / Consumer Financial Protection Bureau

         The panel affirmed the district court's decision compelling Tribal Lending Entities to comply with civil investigative demands issued by the Consumer Financial Protection Bureau.

         The Tribal entities are for-profit lending companies created by the Chippewa Cree, Tunica Biloxi and Otoe Missouria Tribes (the "Tribes"). The Bureau initiated an investigation into the Tribal Lending Entities to determine whether small-dollar lenders violated federal consumer financial laws. The Tribes directed the Tribal Lending Entities not to respond to the investigative demands.

         The panel held that the Consumer Financial Protection Act was a law of general applicability, and it applied to tribal businesses, like the Tribal Lending Entities involved in this appeal. The panel further held that Congress did not expressly exclude Tribes from the Bureau's enforcement authority. The panel also held that none of the three exceptions in Donovan v. Coeur d'Alene Tribal Farms, 751 F.2d 1113, 1115 (9th Cir. 1985), to the enforcement of generally applicable laws against Indian tribes applied to this case. The panel concluded that the district court properly held that the Bureau did not plainly lack jurisdiction to issue investigative demands to the tribal corporate entities under the Act.

          OPINION

          RAWLINSON, Circuit Judge:

         Appellants Great Plains Lending, LLC, Mobiloans, LLC, and Plain Green, LLC (collectively, Tribal Lending Entities) appeal from the district court's decision compelling the Tribal Lending Entities to comply with civil investigative demands (investigative demands) issued by Appellee Consumer Financial Protection Bureau (Bureau). The Tribal Lending Entities maintain that they are not subject to the Bureau's jurisdiction because the entities were created and operated by several recognized tribes, and are thereby cloaked in tribal sovereign immunity. The Tribal Lending Entities assert that, because the Consumer Financial Protection Act of 2010 (the Act)[1] defines the term "State" as including Native American tribes, the Tribal Lending Entities, as arms of sovereign tribes, are not required to comply with the investigative demands. We disagree with the argument made by the Tribal Lending Entities that the inclusion of tribes in the Act's definition of "State" impliedly excludes the Tribal Lending Entities from regulation under the Act, and therefore AFFIRM the decision of the district court enforcing the investigative demands.

         I. BACKGROUND

         This appeal stems from the creation of several Tribal Lending Entities as for-profit lending companies by the Chippewa Cree, Tunica Biloxi, and Otoe Missouria Tribes (collectively, Tribes). The Tribes established regulatory frameworks for consumer lending by these Tribal Lending Entities.

         In addition to regulation by the Tribes, the Tribal Lending Entities came to the attention of the Bureau, which initiated an investigation into the Tribal Lending Entities by serving investigative demands. The Bureau explained that:

The purpose of this investigation is to determine whether small-dollar online lenders or other unnamed persons have engaged or are engaging in unlawful acts or practices relating to the advertising, marketing, provision, or collection of small-dollar loan products, in violation of Section 1036 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 12 U.S.C. § 5536, the Truth in Lending Act, 15 U.S.C. § 1601, the Electronic Funds Transfer Act, 15 U.S.C. § 1693, the Gramm-Leach-Bliley Act, 15 U.S.C. §§ 6802-6809, or any other Federal consumer financial law. The purpose of this investigation is also to determine whether Bureau action to obtain legal or equitable relief would be in the public interest.

         The Tribes directed the Tribal Lending Entities not to respond to the investigative demands, and informed the Bureau that it lacked jurisdiction to investigate lending entities created and operated by the Tribes. Rather, the Tribes offered to cooperate with the Bureau as co-regulators of consumer lending services.

         When the offer of cooperative regulation was rejected by the Bureau, the Tribes petitioned the Bureau to set aside the investigative demands. The Bureau denied the Tribes' petition, and sought enforcement of the investigative demands in federal court. The district court then issued an order to show ...


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