Red Lake Nation News - Babaamaajimowinan (Telling of news in different places)

United States: California Supreme Court Finds Two Payday Lenders Not Immune From State Lending Laws


January 16, 2017

On December 22, the California Supreme Court in Owen v. Miami Nation Enterprises, held that payday lending companies failed to prove by a preponderance of the evidence that they were "arms of" Indian tribes. Therefore, the lenders were not immune from complying with a California state lending law. In its decision, the Court reaffirmed well-settled law holding that Indian tribes are immune from lawsuits. The defendant payday lenders, however, were not the tribes themselves. Rather, the defendants were companies created by federally-recognized Indian tribes under tribal laws, and the tribes hired non-tribal corporations to manage the payday lending businesses. The issue in the case was determining the circumstances under which a tribal-affiliated entity shares tribal immunity as an "arm of the tribe." The Court analyzed five factors before determining that the companies were not arms of the tribe. These factors were: (1) the entity's method of creation; (2) whether the tribe intended the entity to share in the immunity; (3) the entity's purpose; (4) the tribe's control over the entity; and (5) the financial relationship between the tribe and the entity. According to the Court, four of the five factors weighed against a finding of immunity based on the evidence.


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