The Court of Appeals for the Ninth Circuit has affirmed the Consumer Financial Protection Bureau’s $134 million restitution order against CashCall, resolving a case that has been litigated for over a decade and has now been to the appellate court twice.
The background: CashCall, a California-based lender, was accused of devising a scheme to avoid state usury laws as it expanded operations beyond California. It allegedly partnered with a lender incorporated under the laws of the Cheyenne River Sioux Tribe. Loans were issued under terms stating they would be governed by tribal law, which CashCall argued shielded them from state-imposed interest rate caps. CashCall then purchased the loans and sought to collect payments from consumers.
- The CFPB filed a complaint in 2015, alleging that the loans were invalid under state laws, making CashCall’s collection efforts illegal. The Bureau claimed the company violated the Consumer Financial Protection Act’s prohibition against unfair, deceptive, or abusive acts and practices (UDAAP) by attempting to collect payments on these unenforceable debts.
- In the initial trial, a district court judge granted partial summary judgment to the CFPB on liability, finding that CashCall’s lending practices violated the law. However, the district court declined to order restitution, citing concerns about the appropriateness of the relief sought.
- Both parties appealed, and in 2022, the Ninth Circuit upheld the liability finding but remanded the case, directing the district court to reconsider restitution. On remand, the district court calculated CashCall’s unjust gains and ordered the company to pay more than $134 million in restitution, which CashCall appealed again.
The ruling: In this second appeal, the Ninth Circuit rejected CashCall’s argument that its Seventh Amendment right to a jury trial had been violated. The court found that CashCall had knowingly and voluntarily waived its right to a jury trial during the initial proceedings and further failed to object to a bench trial on remand.
- The court also addressed the calculation of restitution, affirming the district court’s methodology. The CFPB argued — and the court agreed — that restitution should reflect the total interest and fees paid by consumers on loans that were legally void under state law. While CashCall argued that only its net profits should be considered, the court concluded that legal restitution could be based on consumers’ total losses rather than being limited to CashCall’s profits.
- Finally, CashCall’s constitutional challenge to the CFPB’s funding mechanism was dismissed, as the court relied on recent Supreme Court precedent confirming the legality of the Bureau’s funding structure.
