Filed 1/21/14
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
THE PEOPLE OF THE STATE OF B242644
CALIFORNIA,
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. BC373536)
v.
MIAMI NATION ENTERPRISES et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of Los Angeles County, Yvette M.
Palazuelos, Judge. Affirmed.
Uche L. Enenwali, Senior Corporations Counsel, and Mary Ann Smith, Deputy
Commissioner, California Corporations Counsel; Kamala D. Harris, Attorney General,
Sara J. Drake, Senior Assistant Attorney General, Jennifer T. Henderson, Deputy
Attorney General, for Plaintiff and Appellant.
Fredericks Peebles & Morgan, John Nyhan, Nicole E. Ducheneaux and Conly J.
Schulte for, MNE and SFS, Inc., Defendants and Respondents.
___________________
Applying the arm-of-the-tribe analysis as we directed in Ameriloan v. Superior
Court (2008) 169 Cal.App.4th 81 (Ameriloan), the trial court dismissed for lack of
subject matter jurisdiction this action by the Commissioner of the California Department
of Corporations against five “payday loan” businesses owned by Miami Nation
Enterprises (MNE), the economic development authority of the Miami Tribe of
Oklahoma, a federally recognized Indian tribe, and SFS, Inc., a corporation wholly
owned by the Santee Sioux Nation, also a federally recognized Indian tribe. Because the
two tribal entities and their cash-advance and short-term-loan businesses are sufficiently
related to their respective Indian tribes to be protected from this state enforcement action
under the doctrine of tribal sovereign immunity, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Commissioner’s Complaint and the Initial Ruling on the Motions To Quash
Following an investigation by the Department of Corporations, in August 2006 the
1
Commissioner issued desist-and-refrain orders to Ameriloan, United Cash Loans, US
Fast Cash, Preferred Cash and One Click Cash, directing them to cease their unlicensed
and unlawful loan activities in California. In June 2007, after the businesses failed to
comply with the desist-and-refrain orders, the Commissioner filed a complaint in the
name of the People of the State of California for injunctive relief, restitution and civil
penalties against Ameriloan, United Cash Loans, US Fast Cash, Preferred Cash and One
Click Cash alleging they were providing short-term, payday loans over the Internet to
California residents in violation of several provisions of the California Deferred Deposit
2
Transaction Law (DDTL) (Fin. Code, § 2300 et seq.). Specifically, the complaint
1
Effective July 1, 2013 the Department of Corporations and Department of
Financial Institutions combined and became the Department of Business Oversight within
the Business, Consumer Services and Housing Agency pursuant to the Governor’s
Reorganization Plan (G.R.P.) No. 2 of 2012. (See Gov. Code, §§ 12080.2, 12080.5.)
The Corporations Commissioner is now the Commissioner of Business Oversight.
2
“Payday loans are controversial. They typically offer about two weeks of credit, due
in full on the borrower’s next payday, at annual interest rates of around 400 percent. While
2
alleged the five businesses engaged in deferred deposit transactions within California
without being licensed (Fin. Code, § 23005, subd. (a)), originated loans in excess of the
$300 statutory maximum (Fin. Code, § 23035, subd. (a)), charged excessive loan fees
(Fin. Code, § 23036, subd. (a)), and failed to provide their customers with various
required written notices (Fin. Code, § 23001, subds. (a), (e)). The trial court granted the
Commissioner’s ex parte request for a temporary restraining order against each of the
businesses and set a date for them to show cause why the request for a preliminary
injunction should not be granted.
MNE and SFS specially appeared and moved to quash service of summons and to
dismiss the complaint on the ground the five payday loan businesses named as defendants
were simply trade names (or “dba’s”) of the two tribal entities and, as wholly owned and
controlled entities of their respective tribes operating on behalf of the tribes, they were
protected from this state enforcement action under the doctrine of tribal sovereign
borrowers find fast relief, they are often left indebted for months, struggling to repay a loan
that was marketed as a short-term solution. Proponents argue that payday loans are a useful
form of credit for consumers who lack access to more conventional banking services, but
opponents claim they overburden people who are already struggling to make ends meet.”
(The Pew Charitable Trusts, Payday Lending in America, Series Summary (Oct. 2013)