The CFPB’s assault on payday lenders is nothing new (see our coverage of the Bureau’s proposed Payday lending rules here and Enforcement Watch’s coverage of a payday-lending-based consent order here), but the Bureau has now gone international. CFPB v. NDG Financial Capital (Case No. 15-cv-05211), currently pending in the Southern District of New York, is an action against a foreign payday lender (NGD), its foreign subsidiaries, and several foreign individuals. NDG and several individual defendants have moved to dismiss, arguing (among other things) that the Southern District lacks personal jurisdiction over them because none of the defendants is a U.S. citizen.
On April 25, 2016, the Bureau argued that dismissal is inappropriate because these foreign entities and individuals have subjected themselves to the jurisdiction of the federal courts both via New York’s long-arm statute and Federal Rule of Civil Procedure 4(k). At bottom, the Bureau’s argument stems from its view that all of the defendants worked together as part of a “joint online payday lending enterprise” that targeted U.S. consumer’s generally, transacted with consumers in New York specifically, and operated “highly interactive” websites.
Aside from the personal jurisdiction issues, the Bureau was also faced with the argument that its structure is unconstitutional. Dismissing this argument as a “last-ditch attempt to escape liability,” the Bureau defended the “for cause only” removal of its Director and independent funding. Although the constitutionality argument is not novel, in light of the consideration of the Bureau’s constitutionality in the PHH case (which we’ve discussed here, and which remains pending in D.C. Circuit Court), the Bureau’s summary dismissal of it may be a bit premature.
Both because of the Bureau’s aggressive stance on personal jurisdiction and because of the pending constitutional question, we will be monitoring the outcome of these motions to dismiss closely.