Consumer Fin. Prot. Bureau v. Great Plains Lending, LLC, 14-55900

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Citation: 846 F.3d 1049
• Docket Number: No. 14-55900,14-55900
• Parties: CONSUMER FINANCIAL PROTECTION BUREAU, Petitioner-Appellee, v. GREAT PLAINS LENDING, LLC ; Mobiloans, LLC ; Plain Green, LLC, Respondents-Appellants.
• Decision Date: 20 January 2017

846 F.3d 1049

CONSUMER FINANCIAL PROTECTION BUREAU, Petitioner-Appellee,
v.
GREAT PLAINS LENDING, LLC ; Mobiloans, LLC ; Plain Green, LLC, Respondents-Appellants.

No. 14-55900

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 6, 2016, Pasadena, California
Filed January 20, 2017

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

Kristin Bateman (argued) and Lawrence DeMille-Wagman, Attorneys;

846 F.3d 1050

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.

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 GrammLeach-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.

846 F.3d 1051

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 cause as to why the Tribal Lending Entities should not comply with the investigative demands.

Relying primarily on our ruling in Donovan v. Coeur d'Alene Tribal Farm, 751 F.2d 1113, 1115 (9th Cir. 1985), the district court concluded that the Act, as an act of general applicability, was enforceable against the Tribal Lending Entities. The district court rejected the Tribal Lending Entities' reliance on the holding in Vermont Agency of Natural Resources v. United States ex rel. Stevens , 529 U.S. 765, 780, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000) that the statutory definition of the term "person" typically excludes "the sovereign." The district court noted the unlikelihood that Stevens overruled subsequent Ninth Circuit authority restating the holding in Coeur d'Alene . Instead, the district court found it persuasive that "[t]he Stevens and Coeur d'Alene presumptions have ... existed side by side for decades" without so much as a suggestion of "an inescapable conflict between them." The district court reasoned that the cases were indeed reconcilable because the Supreme Court had not definitively held that the holding in Stevens applied to actions brought by the federal government against "the sovereign."

The district court was also not swayed by the Tribes' argument that, because the Act treats the states and tribes as co-regulators, Congress did not intend to vest authority in the Bureau to regulate tribal entities in the absence of cooperation with tribal regulators. The district court emphasized that:

textually, the [Act] is not silent with respect to Indian tribes.... The exclusion of statutes that are not silent with respect to Indian tribes is intended to avoid undermining the expressed intent of Congress. Congress does not express such intent by merely mentioning Indian tribes as sovereign regulators, while remaining silent on whether the unrelated provision at issue is also intended to regulate Indian tribes.

Put simply, there is no provision of the [Act] that expressly or impliedly suggests that the defined terms "persons" and "States" are mutually exclusive. Accordingly, the provision creating the Bureau's authority to investigate "persons" is silent with respect to the tribes.

Finally, the district court referenced the lack of any convincing legislative history bearing on the issue.

Following the district court's denying the Tribal Lending Entities' petition to set aside the Bureau's investigative demands, the Tribal Lending Entities filed a timely notice of appeal.

II. STANDARD OF REVIEW

We review de novo whether the Bureau plainly lacked jurisdiction to issue the investigative demands. See Nat'l Labor Relations Bd. v. Chapa De Indian Health Program Inc. , 316 F.3d 995, 997–98 (9th Cir. 2003).²

846 F.3d 1052

III. DISCUSSION

A. The Bureau's Jurisdiction to Investigate the Tribal Lending Entities' Activities

Consistent with their argument before the district court, the Tribal Lending Entities contend on appeal that the Act does not confer authority upon the Bureau to investigate tribal entities. The Tribal Lending Entities repeat their assertion that the Act limits the Bureau's authority to "persons," which excludes sovereign entities. The Tribal Lending Entities add that Congress did not intend for the definition of "person" to encompass tribal entities because the Act explicitly includes tribes in the definition of "State" in 12 U.S.C. § 5481(27).

Before we address the merits of the Tribal Lending Entities' arguments, a delineation of the Act's statutory framework is in order. Pursuant to the expressed statutory purpose of the Act:

The Bureau shall seek to implement and, where applicable, enforce Federal consumer financial law consistently for the purpose of ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive.

12 U.S.C. § 5511(a). The "primary functions" of the Bureau include "collecting, investigating, and responding to consumer complaints," and, to accomplish its objectives, "[t]he Bureau is authorized to exercise its authorities under Federal consumer financial law" to ensure that "consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination." 12 U.S.C. § 5511(b), (c)(2). In terms of its enforcement authority,

Whenever the Bureau has reason to believe that any person may be in possession, custody, or control of any documentary material or tangible things, or may have any information, relevant to a violation, the Bureau may, before the institution of any proceedings under the Federal consumer financial law, issue in writing, and cause to be served upon such person, a civil investigative demand requiring such person to—(A) produce such documentary material for inspection and copying or reproduction in the form or medium requested by the Bureau; (B) submit such tangible things; (C) file written reports or answers to questions; (D) give oral testimony concerning documentary material, tangible things,

...