People ex rel. Owen v. Miami Nation Enterprises

Short-term deferred-deposit lending, or payday lending, typically involved very high lending fees. When states imposed limits on payday lending, entities affiliated with federally recognized Indian tribes started offering payday lending, reasoning that the tribes’ sovereign immunity allowed the entities to operate without regard for state limitations. For example, the Miami Tribe of Oklahoma (Miami) created Miami Nation Enterprises, Inc., and its subsidiary MNE Services (collectively, MNE) (defendant), which was incorporated under tribal law and held tribal licenses to engage in payday lending under various business names. Similarly, the Santee Sioux Nation (Santee) created SFS, Inc. (defendant), which was formed as an economic and political subdivision of Santee and held tribal licenses to conduct payday lending under the names Preferred Cash and One Click Cash. Although Miami and Santee were located in Oklahoma and Nebraska, respectively, MNE and SFS offered loans nationwide, including to California residents. The loan terms violated California law, prompting California’s commissioner of the Department of Financial Protection and Innovation (commissioner) (plaintiff) to sue MNE and SFS. The entities claimed they were protected by tribal immunity because they were created pursuant to tribal law, were intended to have immunity because they served tribal purposes, were controlled by the tribes, and supplied profits supporting tribal operations and programs. The commissioner presented evidence the tribes had little to do with the entities’ operations, instead relying on outsiders to manage the businesses. Additionally, the entities failed to provide data showing what percentage of profits supported tribal operations and programs. Further, tribal funds would not be liable for any judgments against the entities. The commissioner therefore argued that tribal immunity should not extend to the entities. When the trial court and appellate court concluded that tribal immunity applied, the commissioner appealed to the state supreme court.