United States District Court, D. Montana, Great Falls Division
Morris United States District Court Judge
Consumer Financial Protection Bureau (“CFPB”)
commenced this action on November 15, 2017. (Doc. 1.) CFPB
filed an Amended Complaint on March 28, 2018. (Doc. 38.) The
Amended Complaint alleges four violations of the Consumer
Financial Protection Act. (Doc. 38 at 37-42.) Defendants
Think Finance, LLC (“Think Finance”), Think
Finance SPV, LLC, Financial U, LLC, TC Loan Service, LLC,
Tailwind Marketing, LLC, TC Administrative Services, LLC, and
TC Decision Sciences, LLC (collectively
“Subsidiaries”) filed the instant Motion to
Dismiss on April 24, 2018. (Doc. 50.) The Native American
Financial Services Association and the State of Oklahoma
filed a joint amicus brief in support of the Motion to
Dismiss on June 19, 2018. (Doc. 65.) The Court held a hearing
on the motion on June 21, 2018. (Doc. 66.)
Finance operates a lending business that extends credit,
services loans, and collects debt throughout the United
States. (Doc. 38 at 4.) Think Finance SPV, Financial U, and
TC Loan Service constitute wholly-owned subsidiaries of Think
Finance. (Doc. 38 at 5-6.) Tailwind Marketing, TC
Administrative Services, and TC Decision Sciences represent
wholly-owned subsidiaries of TC Loan Service. (Doc. 38 at
6-8.) CFPB operates as an independent agency of the United
States Government created under the Consumer Financial
Protection Act of 2010 (CFPA), 12 U.S.C. § 5491(a).
(Doc. 38 at 3.)
Amended Complaint concerns three lending businesses owned by
Indian tribes (“Tribal Lenders”) for which Think
Finance provided critical services. (Doc. 38 at 4, 9.) The
Tribal Lenders are not party to this action.
Amended Complaint alleges that Think Finance, through the
Tribal Lenders, collected loan payments that customers did
not owe, as the loans issued to those customers were void
ab initio due to violations of state law. (Doc. 38
at 29, 34, 37-39.) CFPB alleges that Think Finance used
unfair and abusive practices to collect on these void loans.
(Doc. 38 at 39-41.) Finally, CFPB alleges that Think Finance
provided substantial assistance to Tribal Lenders and other
entities who, in turn, committed deceptive, unfair, and abuse
acts or practices by demanding payment for and collecting
void debts. (Doc. 38 at 41-42.)
raise multiple grounds for dismissal, including: 1) that the
structure of the CFPB is unconstitutional; 2) that the
CFPB's claims are not permitted by the CFPA; 3) that the
Complaint fails to, and cannot, join indispensable parties;
4) that the Court lacks personal jurisdiction over Think SPV;
5) that the Complaint fails to state cognizable claims under
the CFPA; and 6) that certain claims against the Subsidiaries
are time-barred. (Doc. 51 at 2.)
The Structure of the CFPB
argue that the structure of the CFPB violates the
Constitution because the President may remove the Director of
the CFPB only for cause. (Doc. 51 at 16.) Defendants argue
additionally that the CFPB's ability to control its own
budget—subject to a statutory
cap—unconstitutionally interferes with Congress's
power to direct federal spending pursuant to the
Appropriations Clause, U.S. Const. art. I, § 8, cl 1.
Defendants point out that the Acting Director of the CFPB and
the Department of Justice now question the constitutionality
of the CFPB's structure. (Doc. 51 at 17 n.7)
district court orders have determined that Congress did not
violate the constitution in structuring the CFPB. CFPB v.
All American Check Cashing, Inc., No. 16-356 (S.D.Miss.
Mar. 21, 2018) (ECF No. 236); CFPB v. Future Income
Payments, LLC, 252 F.Supp.3d 961 (C.D. Cal. 2017);
CFPB v. Nationwide Biweekly Admin., Inc., No.
15-2106, 2017 WL 3948396 (N.D. Cal. Sept. 8, 2017); CFPB
v. TCF Nat'l Bank, No. 17-0166 (D. Minn. Sept. 8,
2017) (ECF No. 89); CFPB v. Seila Law, LLC, No.
17-01081, 2017 WL 6536586 (C.D. Cal. Aug. 25, 2017); CFPB
v. Navient Corp., No 17-101, 2017 WL 3380530 (M.D. Penn.
Aug. 4, 2017); CFPB v. Cashcall, Inc., CV15-7522,
2016 WL 4820635 (C.D. Cal. Aug. 31, 2016); CFPB v. ITT
Educ. Servs., 219 F.Supp.3d 878 (S.D. Ind. 2015);
CFPB v. Morgan Drexen, Inc., 60 F.Supp.3d 1082 (C.D.
Cal. 2014). Only one circuit Court that has considered the
issue has determined the CFPB to be unconstitutionally
structured. PHH Corp. v. CFPB, 839 F.3d 1
(D.C. Cir. 2016). The D.C. Circuit subsequently reversed that
decision upon en banc consideration. PHH Corp. v.
CFPB, 881 F.3d 75 (D.C. Cir. 2018) (en banc).
D.C. Circuit determined ultimately that the for-cause removal
requirement does not “impair the President's
ability to assure the faithful execution of the law.”
Id. at 90 (citing Morrison v. Olson, 487
U.S. 654, 691-92 (1988), and Free Enterprise Fund v. Pub.
Co. Accounting Oversight Bd., 561 U.S. 477, 495-96
(2010)). Similarly, Humphrey's Executor v. United
States, 295 U.S. 602, 619-20 (1935), upheld an identical
for-cause removal provision for the Federal Trade Commission.
Aspects of this argument currently remain pending before the
Ninth Circuit. (Doc. 51 at 18 n.8.)
certainly have consequences, and the CFPB's director and
the Department of Justice's shifting position on this
issue seem to reflect those consequences. The Defendants
present no argument, however, that has not already been
rejected by several district courts within the Ninth Circuit,
and by the en banc panel of the D.C. Circuit. The Court deems
it appropriate to follow these precedents to determine that
the structure of the CFPB comports with the Constitution.
The Nature of the Claims and the CFPA
argue that CFPB's claims are not permitted by the CFPA.
Defendants first argue that the CFPA does not allow the CFPB
to bring claims regarding unfair, deceptive, and abusive
practices (“UDAAP”) based on state law, or to
declare violations of “Federal law” without prior
rulemaking. Second, Defendants argue that Congress has
explicitly prohibited the CFPB from imposing interest rate
State Law and Usury Limits
Amended Complaint alleges that Defendants engaged in
deceptive (Count I), unfair (Count II), and abusive (Count
III) practices when collecting on loans made by the Tribal
Lenders. (Doc. 38 at 37-44.) CFPB alleges that the law of the
states in which the Tribal Lenders' consumers resided
operated to void the loans due to local usury limits or
licensing rules. Defendants' subsequent collection on
those void loans constituted the UDAAPs that comprise the
subject of the complaint.
contend that the CFPB exceeds its statutory authorization to
prevent “unfair, deceptive, or abusive act[s] or
practices under Federal law” and upsets the balance of
state-federal relations by enforcing state law through the
CFPA. (Doc. 51 at 21.) Defendants further contend that the
CFPB attempts to subvert Congress's explicit prohibition
on the CFPB establishing a usury limit. (Doc. 51 at 25); 12
U.S.C. § 5517(o).
district courts have considered similar arguments that the
CFPB seeks to enforce a usury limit by prohibiting the
collection of void loans. Both courts have determined that
“enforc[ing] a prohibition on collecting amounts that
consumers do not owe” differs from
“establish[ing] a usury limit.” CFPB v.
CashCall, Inc., No. 15-7522, 2015 WL 9591569, at *2
(C.D. Cal. Dec. 30, 2015); see also CFPB v. NDG Fin.
Corp., No. 15-5211, 2016 WL 7188792, at *18 (S.D.N.Y.
Dec. 2, 2016). The Court agrees.
argument that CFPB seeks to enforce state law fails for
similar reasons. The CFPA declares it unlawful for “any
covered person or service provider . . . to engage in any
unfair, deceptive, or abusive act or practice.” 12
U.S.C. § 5536(a)(1)(B). The fact that state law may
underlie the violation—for example, to operate to void
a loan, as alleged here—does not relieve Defendants, or
any other covered person or service provider, of their
obligation to comply with the CFPA.
Rulemaking and Declaring
CFPA authorizes the CFPB to take action to prevent a covered
person or service provider from committing or engaging in
UDAAPs. 12 U.S.C. § 5531(a). The CFPA further authorizes
the CFPB to “prescribe rules” that
“identify as unlawful” UDAAPs. 12 U.S.C. §
5531(b). The CFPA finally limits the types of conduct that
the CFPB may declare unfair or abusive. 12 U.S.C. §
5531(c), (d). Defendants argue that “this structure