Advance Am., Cash Advance Ctrs., Inc. v. Fed. Deposit Ins. Corp.
| Decision Date | 05 July 2017 |
| Docket Number | Civil Action No. 14-953 GK) |
| Parties | ADVANCE AMERICA, CASH ADVANCE CENTERS, INC., et al. Plaintiffs, v. FEDERAL DEPOSIT INSURANCE CORPORATION, et al. Defendants. |
| Court | U.S. District Court — District of Columbia |
Two motions are before this Court. The first motion is Federal Defendants' Motion to Dismiss Check Into Cash, Inc. ("Check Into Cash"), NCP Finance Limited Partnership and NCP Finance Ohio, LLC ("NCP Finance"), PH Financial Services, LLC ("PH Financial"), Northstate Check Exchange, and Richard Naumann ("collectively New Plaintiffs") for lack of subject matter jurisdiction or for failure to state a claim upon which relief can be granted or, in the alternative, for summary judgment. [Dkt. No. 152]. The second motion is Federal Defendants' Motion for Summary Judgment against Advance America. [Dkt. No. 101-1].
After consideration of the Motions, all dispositive briefing, and the entire record herein, and for the reasons stated below, the Federal Defendants' Motions are denied as to all Plaintiffs except PH Financial.
On June 5, 2014, CFSA and Advance America (collectively "Original Plaintiffs") commenced this lawsuit. Complaint [Dkt. No. 1]. The Original Plaintiffs alleged that the Federal Defendants—the Federal Deposit Insurance Corporation ("the FDIC"), the Board of Governors of the Federal Reserve System, and both the Office of the Comptroller of the Currency and Thomas J. Curry, in his official capacity as the Comptroller of the Currency ("the OCC")—participated in "Operation Choke Point," a campaign allegedly initiated by the United States Department of Justice to force banks to terminate their business relationships with payday lenders. See generally First Amended Complaint ("FAC") [Dkt. No. 12].
The Original Plaintiffs brought two distinct categories of claims against the Federal Defendants. First, they alleged that certain actions taken by the Federal Defendants as part of Operation Chokepoint violated the Administrative Procedure Act ("APA"), 5 U.S.C. § 551 et seq.. FAC ¶¶ 80-108, 116-44, 152-77. Second, they alleged that Operation Chokepoint violated the due process rights of CFSA's members, one of which is Advance America. FAC ¶¶ 109-115, 145-51, 178-84.
On September 25, 2015, in response to Motions to Dismiss brought by the Federal Defendants, the Court dismissed all of the Original Plaintiffs' APA claims. CFSA v. FDIC, 132 F. Supp. 3d 98, 105-107 (D.D.C. 2015) ("CFSA I"). However, the Court concluded that the Original Plaintiffs had stated a claim for denial of due process and had standing to pursue that claim. Subsequently, the Federal Defendants brought a new Motion to Dismiss, arguing that CFSA lacked standing to pursue the remaining due process claims on behalf of its members. [Dkt. No. 73]. On December 19, 2016, the Court granted the Federal Defendants' Motion, thereby dismissing CFSA as a party to this lawsuit. CFSA v. FDIC, No. 14 Civ. 953, 2016 WL 7376847 (D.D.C. Dec. 19, 2016) ("CFSA II"). That left Advance America as the only party to this lawsuit.
Prior to the entry of the decision in CFSA II, Advance America filed a Motion for Preliminary Injunction. [Dkt. No. 87]. While the Motion for Preliminary Injunction was pending, the New Plaintiffs were added to the Complaint. See Order Granting Plaintiffs' Motion for Leave to File Third Amended Complaint [Dkt. No. 120]; also Third Amended Complaint ("TAC") [Dkt. No. 124]. These New Plaintiffs filed their own Motion for a Preliminary Injunction, advancing virtually the same arguments as Advance America. [Dkt. No. 107]. The Court denied both Motions for Preliminary Injunction, based in large part on the Court's conclusion that the Plaintiffs are unlikely to succeed on the merits because they are likely not to be able to show they have been or will be deprived of their right to hold a bank account or that they have been or will be broadly precluded from the payday lending industry. See Un-Sealed Memorandum Opinion at 8-13 [Dkt. No. 134] ("CFSA III").
As already noted, two new Motions are now before the Court. First, is the Government's Motion to Dismiss, arguing that the New Plaintiffs should be dismissed for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted or, in the alternative, for summary judgment. Corrected Motion to Dismiss [Dkt. No. 152].1 Second, is the Government's Motion for Summary Judgment against Advanced America, arguing that the Court should award summary judgment to the Federal Defendants on Advance America's remaining due process claims. Motion for Summary Judgment on Counts IV, VIII, and XII of the Second Amended Complaint ("Motion for Summary Judgment") [Dkt. No. 101-1].
The New Plaintiffs filed an Opposition to the Corrected Motion to Dismiss ("Opposition to the Corrected Motion"), [Dkt. No. 153], and the Federal Defendants filed a Reply to the Corrected Motion to Dismiss ("Reply to the Corrected Motion to Dismiss"), [Dkt. No. 156]. Similarly, Advance America filed an Opposition to the Motion for Summary Judgment, [Dkt. No. 112], and the Federal Defendants filed a Reply to the Motion for Summary Judgment, [Dkt. No. 116]. Accordingly, both Motions are now ripe.
1. Standard of Review
As courts of limited jurisdiction, federal courts possess only those powers specifically granted to them by Congress or directly by the United States Constitution. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). The plaintiff bears the burden of establishing by a preponderance of the evidence that the Court has subject matter jurisdiction to hear the case. See Shuler v. United States, 531 F.3d 930, 932 (D.C. Cir. 2008). In deciding whether to grant a motion to dismiss for lack of jurisdiction under Rule 12(b)(1), the court must "accept all of the factual allegations in [the] complaint as true." Jerome Stevens Pharmaceuticals, Inc. v. Food & Drug Admin., 402 F.3d 1249, 1253-54 (D.C. Cir. 2005) (quoting United States v. Gaubert, 499 U.S. 315, 327 (1991)). The Court may also consider matters outside the pleadings, and may rest its decision on its own resolution of disputed facts. See Herbert v. Nat'l Acad. of Sci., 974 F.2d 192, 197 (D.C. Cir. 1992).
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (internal quotation marks, citations, and footnote omitted).
2. New Plaintiffs: Lack of Standing & Ripeness
The Federal Defendants argue that the New Plaintiffs lack standing because "[their] conclusory allegations regarding the potential for future loss of access to the banking system, and a future preclusion from the payday lending industry, do not set forth a 'real and immediate' threat of injury." Corrected Motion to Dismiss at 22. These are quite similar to the arguments that the Federal Defendants raised in their Motions to Dismiss the claims made by Advance America. See [Dkt. Nos. 16, 17, 18] (arguing that Advance America's allegations of harm were unduly speculative).
Just as the Court previously rejected those arguments with respect to Advance America, the Court now rejects them with respect to the New Plaintiffs. The New Plaintiffs allege that they have previously lost bank accounts as a result of the actions of Federal Defendants, and that they will continue to do so if those actions continue unabated. TAC ¶¶ 128, 135, 142. Those allegations are sufficient to demonstrate the injury in fact, causation, and redressability necessary to establish New Plaintiffs' standing. See CFSA I, 132 F. Supp. 3d at 109-15.
Additionally, the Federal Defendants argue that this case is not ripe because "there are too many 'ifs' in the [New Plaintiffs'] asserted causal chain," because it "require[s] the inference that Defendants will cause banks to terminate New Plaintiffs' accounts in the future, that New Plaintiffs will be unable to replace those accounts, that other aspects of their business will be insufficient tokeep them afloat, and that they will go out of business as a result." Corrected Motion to Dismiss at 23. In essence, the Federal Defendants attempt to recycle their argument regarding the causation prong of standing as a ripeness argument.
Just as the Court rejects Federal Defendants' arguments regarding causation in the standing analysis, the Court rejects that argument with respect to ripeness. The Court considers New Plaintiffs' allegations—that banks regulated by Federal Defendants are terminating relationships with payday lenders as a result of Operation Chokepoint—sufficiently plausible and concrete. Therefore, the New Plaintiffs' claims are suitable for judicial review and are ripe.
3. Standing of Advance America
The Federal Defendants also contend that Advance America lacks standing because only one remedy is available to Advance America—a name-clearing hearing—and Advance America does not seek that remedy in its Second Amended Complaint. Mot. for Summ. Judgment at 3-5. However, the Plaintiffs have filed a Third Amended Complaint which requests "such other and further relief as this Court deems just and proper," TAC ¶ 146.b, which encompasses Plaintiffs' request for a name-clearing hearing. Opposition to Motion for Summary Judgment at 10. If granted, such a hearing could result in the restoration of banking relationships or a cessation of continued terminations by bringing Plaintiffs out from under a cloud of regulatory scrutiny. That is sufficient to satisfy the standing requirement. See CFSA I, 132 F. Supp. 3d at 115.2
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