Summary
The Ninth Circuit affirmed an order requiring CashCall, Inc. to pay more than $134 million in legal restitution for attempting to collect interest and fees on loans the court determined were legally unenforceable. Assuming without deciding that the restitution award implicated CashCall’s Seventh Amendment jury-trial right, the court held that CashCall knowingly and voluntarily waived that right. The court also rejected challenges based on judicial estoppel, waiver, the calculation of unjust gains, and the Consumer Financial Protection Bureau’s statutory funding mechanism.
Topics
Practice areas
Questions Presented
- Whether CashCall's Seventh Amendment right to a jury trial was implicated by the Bureau's claim for legal restitution and, if so, whether CashCall waived that right.
- Whether judicial estoppel or waiver barred the Bureau from seeking legal restitution after initially characterizing the requested restitution as equitable.
- Whether the district court overstated CashCall's unjust gains by failing to deduct unpaid loan principal or other expenses from the restitution award.
- Whether the Consumer Financial Protection Bureau's statutory funding mechanism violates the Appropriations Clause.
Holdings
- Assuming without deciding that CashCall had a Seventh Amendment right to a jury trial on the Bureau's restitution claim, CashCall expressly, knowingly, and voluntarily waived that right.
- The district court did not abuse its discretion in concluding that judicial estoppel and waiver did not preclude the Bureau from seeking legal restitution.
- The district court properly used CashCall's net revenues as a basis for measuring unjust gains and did not err by declining to deduct unpaid loan principal or other expenses from the legal restitution award.
- The Bureau's statutory funding mechanism is consistent with the Appropriations Clause.
Key quotations
“We need not resolve that debate here. Instead, assuming without deciding that CashCall had a Seventh Amendment right to a jury trial, we conclude that it waived that right.” (9)
“Here, CashCall made an express, knowing, and voluntary waiver of its right to trial by jury.” (10)
“CashCall’s waiver was valid even if CashCall would not have made it absent the parties’ mistaken characterization of the relief the Bureau sought.” (13)
“Legal “[r]estitution may be measured by the ‘full amount lost by consumers rather than limiting damages to a defendant’s profits.’”” (17)
“That argument is squarely foreclosed by recent Supreme Court precedent holding that the Bureau’s statutory funding mechanism is consistent with the Appropriations Clause.” (19)
Factual background
CashCall made unsecured, high-interest loans through a lender incorporated under the laws of the Cheyenne River Sioux Tribe, using tribal-law choice-of-law provisions to avoid state usury laws. CashCall purchased the loans and collected interest and fees from consumers. The Bureau alleged that the loans and their choice-of-law provisions were invalid under state law, making the collection of interest and fees an unfair, deceptive, or abusive act or practice. The district court ultimately ordered more than $134 million in restitution based on amounts consumers paid on the invalid loans.
Procedural history
The district court granted the Bureau partial summary judgment on liability, conducted a bench trial after the parties agreed to waive a jury, imposed a civil penalty, and initially declined to order restitution. In the first appeal, the Ninth Circuit affirmed liability but vacated the restitution ruling and remanded for further proceedings. On remand, the district court awarded more than $134 million in legal restitution, and CashCall appealed. The Ninth Circuit affirmed and denied rehearing and rehearing en banc.