Western Sky Financial LLC

Ninth Circuit Decides CFPB v. CashCall

Matthew L.M. Fletcher

Here. An excerpt:

CashCall, Inc., made unsecured, high-interest loans to consumers throughout the country. After attracting unwanted attention from regulators, it sought to avoid state usury and licensing laws by using an entity operating on an Indian reservation. CashCall paid for that entity to issue loans and then purchased the loans days later. The loan agreements contained a choice-of-law provision calling for the application of tribal law, so they would not be subject to the law of borrowers’ home States, which would have prohibited the loans. CashCall sought advice from a scholar of federal Indian law, who opined that the scheme “should work but likely won’t.” His concern proved well founded. The Consumer Financial Protection Bureau brought this action against CashCall, its CEO, and several affiliated companies, alleging that the scheme was an “unfair, deceptive, or abusive act or practice,” 12 U.S.C. § 5536(a)(1)(B), because CashCall demanded payment from consumers under the pretense that the loans were legally enforceable obligations, when in fact they were invalid under state law. The district court found the defendants liable and imposed a civil penalty of $10.3 million, but the court declined to order restitution.

Briefs here.

Payday Lending Legal Malpractice Suit (Western Sky-Related)

Matthew L.M. Fletcher

ATL: “Katten Muchin Sued By Bottom-Feeding Former Client.”

Complaint in CashCall v. Katten Muchin Rosenman (Cal. Super Ct. — Orange County) here:

Complaint

HT.

Fourth Circuit Rules against Western Sky et al.

Matthew L.M. Fletcher

Here is the opinion in Hayes v. Delbert Services Corp. (4th Cir.).

An excerpt:

We both respect and appreciate the support of Congress and the Supreme Court for an arbitration procedure that reduces the costs and delays of civil litigation. Our review of the record leads us to conclude, however, that the arbitration agreement in this case is unenforceable. The agreement purportedly fashions a system of alternative dispute resolution while simultaneously rendering that system all but impotent through a categorical rejection of the requirements of state and federal law. The FAA does not protect the sort of arbitration agreement that unambiguously forbids an arbitrator from even applying the applicable law. We therefore reverse the district court’s order compelling arbitration and remand for further proceedings.

Briefs here.