In Gingras v. Think Finance, Inc., 2019 WL 1780951 (C.A.2-Vt.), borrowers in Vermont accused individuals and businesses owned by a Native American tribe in Montana of predatory lending practices in violation of federal and state laws. In particular, the plaintiff borrowers alleged excessive interest rates and unconscionable loan terms.
The U.S. Court of Appeals for theSecond Circuit held that in suits against tribal officials in their official capacity for conduct occurring off of the reservation, tribal sovereign immunity does not bar state and substantive federal law claims for injunctive relief that is prospective in nature. This holding is based on a theory similar to the landmark Supreme Court case, Ex parte Young, which created a notable exception to sovereign immunity for government officials for violations of federal law. This holding has implications for both the payday loan industry and tribal sovereign immunity, but also serves as a warning to lenders to ensure their loan agreements comply with state and federal laws.
Second Circuit Decision has Implications for Native American Sovereign Immunity and Predatory Lending Practices
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