Hearing today on this motion.
Here:
tribal payday lenders
Update in Otoe-Missouria Tribe v. NY State Dept. of Financial Services
Tribal Payday Lenders’ Complaint against New York State Dept. of Financial Services
Here is the complaint in Otoe-Missouria Tribe v. New York State Dept. of Financial Services (S.D. N.Y.):
Press Release on Federal Complaint against New York DFS over Tribal Payday Lending
Here.
WASHINGTON (August 21, 2013) — After recent actions by New York Department of Financial Services (DFS) Administrator Benjamin Lawsky to unlawfully intimidate Native American tribes and the legal and licensed businesses they run, a coalition of Tribes has filed a complaint today with the United States District Court Southern District of New York requesting an injunction against Lawsky’s efforts. The tribes filing the lawsuit are members of the Native American Financial Services Association (NAFSA).
“Defendant Lawsky and the State of New York have overstepped their bounds with their illegal attacks on our tribes,” said Barry Brandon, Executive Director of the Native American Financial Services Association (NAFSA). “His actions are a flagrant denial of our rights as sovereign entities, and today, we are fighting back to defend these rights.”
“We have enjoyed these sovereign rights for centuries predating even the United States,” Brandon continued. “They have been established and reinforced by Constitutional law, federal legislation, and a long history of legal rulings. Our actions today will protect the sovereign rights of Native American tribes and their wholly-owned businesses from extraterritorial attempts to impose New York State laws on transactions governed by tribal law.”
“This is a straightforward case that is about the real world importance of Native American sovereign rights,” said David Bernick of Boies, Schiller & Flexner, LLP, who serves as Counsel of Record for the action. “Defendant Lawsky knows that he doesn’t have the authority to regulate and limit tribes’ sovereignty, which is why the Department of Financial Services has instead gone after tribes’ banking relationships. Since Defendant Lawsky has turned a blind eye to hundreds of years of precedent, he has left tribes with only one clear path: go to the courts to protect these very old and highly-respected rights.”
The complaint argues that tribes will suffer irreparable injury absent injunctive relief, as Defendant Lawsky’s intimidation tactics against banks and third-party processors have already led to significant harm to tribes’ business relationships. As a result, critical funding for government operations on tribal lands, such as health care, social services, and education will be severely impacted. Funding from these businesses can make up 25% of tribal operating budgets, at a minimum.
The lawsuit was filed on behalf of the Otoe-Missouria Tribe, a federally-recognized Indian Tribe; Great Plains Lending, LLC, a wholly-owned tribal limited liability company; American Web Loan, Inc., a wholly-owned tribal corporation; Otoe-Missouria Consumer Finance Services Regulatory Commission, a tribal regulatory agency; Lac Vieux Desert Band of Lake Superior Chippewa Indians, a federally-recognized Indian Tribe; Red Rock Tribal Lending, LLC, a wholly-owned tribal limited liability company; and the Lac Vieux Desert Tribal Financial Services Regulatory Authority, a tribal regulatory agency. Benjamin M. Lawsky, in his individual capacity and in his official capacity as Superintendent of the New York State Department of Financial Services, has been named as the Defendant.
David Bernick of Boies, Schiller & Flexner, LLP, is serving as Counsel of Record for the action with Robert Rosette serving as co-counsel and attorney representing the two tribes.
About NAFSA
The Native American Financial Services Association (NAFSA) formed in 2012 to advocate for Native American sovereign rights and enable tribes to offer responsible online lending products. Through the protection of consumer rights and sovereign immunity, NAFSA provides vital services to tribally operated lenders serving the under-banked with better short term financial services, furthering economic development opportunities in Indian Country. Continue reading
Federal Trade Commission Partially Settles Suit against Indian Country Payday Lenders
The case is Federal Trade Commission v. AMG Services (D. Nev.). Here are the most recent materials from the FTC website:
- Order and Report and Recommendation Regarding Tribal Defenses [PDF-45 Pages]
- Agreed Joint Motion to Enter Stipulated Order for Permanent Injunction and Judgment [PDF-5 Pages]
- Stipulated Order for Permanent Injunction and Judgment [Proposed] [PDF-26 Pages]
- News Release
News coverage here.
Briefs here:
FTC Motion for Partial Summary J
Survey of Pending Litigation against Tribal Payday Lenders
Here. As opposed to individual Indian payday lenders like Western Sky Financial.
An excerpt:
To date, state actions, class action cases, and federal agency actions have yielded mixed results. Most agree that federally recognized, sovereign tribes have the authority to engage in internet lending to state residents without those tribes being subjected to state authority. However, the extent to which tribal sovereign immunity shields service providers that assist tribes engaging in this business remains to be seen, as does the proper role of federal agencies such as the FTC and CFPB. Ultimately, Congress may be asked to establishlaws regulating various tribal lending practices and jurisdiction over them.
Important Montana 1 Decision in Federal Trade Commission Suit against On-Rez Payday Lenders
Here are the materials in FTC v. Payday Financial LLC (D. S.D.):
DCt Order Denying Defendants’ Motion
Defendants’ Motion for Partial Summary J
From the opinion:
The pending motion for partial summary judgment presents the issue of tribal court jurisdiction over non-Indians who contract with a company doing business from an Indian reservation. The “pathmarking” case on tribal authority over nonmembers is Montana v. United States, 450 U.S. 544 (1981). See Strate v. A-I Contractors, 520 U.S. 438, 445 (1997) (describing Montana as “pathmarking” and applying Montana to evaluate tribal court jurisdiction authority over non-Indians.) In Montana, the Supreme Court recognized two areas in which Indian tribes have sovereign power to exercise authority over nonmembers on their reservation. The first such “Montana exception” recognizes tribal authority over “the activities of nonmembers who enter consensual relationships with a tribe or its members, through commercial dealing, contracts, leases, or other arrangements.”Montana, 450 U.S. at 565. The precise question presented in this case is one of first impression: When a company conducting business from an Indian reservation enters into a commercial contract with a non-Indian, is it an unfair and deceptive practice for the company to include forum selection and consent to tribal jurisdiction provisions in [2] the contract and to then expect to litigate any alleged breach of contract claim against the non-Indian in tribal court? This Court determines that, under the circumstances of this case and on the sole issue currently before this Court, such contract provisions are not unfair and deceptive when the non-Indian has entered into “consensual relationships [with tribal] members” with a sufficient connection to on-reservation activities to make the consent to jurisdiction and forum selection provisions enforceable under the first Montana exception. See Montana, 450 U.S. at 565. However, in this case, two open issues prompt this Court to deny Defendants’ Motion for Partial Summary Judgment: (1) This Court’s record lacks information establishing that the Defendants are in fact “members” of the tribe for purposes of the first Montana exception; and (2) an ambiguity in the contract exists as to under what circumstances the non-Indian is consenting to tribal court jurisdiction in addition to binding arbitration.
New Scholarship Recommending Curbs on Tribal Payday Lenders
Heather L. Pretrovich, a North Carolina law student, has published Circumventing State Consumer Protection Laws: Tribal Immunity and Internet Payday Lending in the North Carolina Law Review.
Here is the abstract:
As tribal payday lending becomes more prevalent, there is a dire need for federal action to halt the trend’s momentum. In 2010, tribal payday lenders made up “[m]ore than 35 of the 300” Internet payday lenders and made “about $420 million in payday loans.” The need for regulation of this conduct is imminent—“[s]ome observers predict that the number of tribes with payday-loan operations eventually could climb close to the 400 that now have casinos.” Additionally, various lenders have shown an interest in copying the tribal lending business model, which will likely result in additional industry growth. In the absence of federal regulation, the number of companies targeting consumers will increase, rendering previous state regulation efforts futile.
This Comment argues that federal action is necessary to block attempts by payday lenders to bypass consumer protection laws by organizing as tribal entities. Because the federal government does not currently regulate payday lending and tribes are immune from state suit, states are unable to protect their consumers from the practices that they have previously fought to curtail. Due to these obstacles, this Comment proposes possible solutions that can prevent tribal payday lending companies from circumventing state consumer protection laws. Part I provides background information introducing the specific problems that states have encountered in their initial regulation efforts against these companies. Part II describes why tribal payday lending cases are so rare and analyzes this body of case law. Part III analyzes why state regulation is inadequate and the reasoning behind the need for a federal response to this practice. Finally, Part IV examines what courses of action may be taken and which of those proposals are most likely to quickly and effectively address the problem.
State of Oregon Warning (and Fight) Against Tribal Payday Lenders
The consumer alert is here.
Story from KATU is here (thanks to J.B.). An excerpt:
This woman’s case – and thousands like it – is now at the center of a legal battle at the highest levels of the U.S. Government –a story that’s taken us from Portland, to the halls of Congress, to a dusty town in Oklahoma – and deep into the pages of one of the murkiest chapters in America’s history. Millions of dollars hangs in the balance as the rights of you, the consumer, are pitted against the rights of all Native Americans.
Their treaties with the United States are century-old binding contracts upheld by numerous court decisions. But the issue of tribal sovereignty is taking center stage in the fight to stop online loan sharks.
Recent previous post here.
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