(CN) – Tribal sovereign immunity shields five online payday lenders from a state enforcement action if the companies can prove they’re owned by federally recognized Indian tribes, a California appeals court ruled.
The ruling revives an attempt by Ameriloan, United Cash Loans, US Fast Cash, Preferred Cash and One Click Cash to quash a lawsuit filed by the California Department of Corporations. The state sought to enforce provisions of the Deferred Deposit Transaction Law.
Under federal law, tribes are immune from any lawsuit in state court, even if the allegations are purely commercial in nature or occur off the reservation.
“That immunity extends to a tribe’s for-profit business entities when the entity is operating on behalf of the tribe,” Justice Perluss wrote.
The court overturned the trial court’s denial of the motion to quash and remanded for a new hearing to determine if the companies are “sufficiently related to federally recognized Indian tribes to be entitled to the benefit of … tribal sovereign immunity.”