Indian country saw a landmark victory last month in California v. Miami Nation Enterprises, et. al, which ruled against the state of California in favor of two tribal online lenders, the Miami Tribe of Oklahoma and the Santee Sioux Nation of Nebraska.
The California Court of Appeals affirmed the dismissal of a suit by the State of California against online lenders owned by the two federally recognized Indian tribes who were represented by Fredericks Peebles & Morgan. The suit was an attempt by the state to shut down the sovereign tribes’ online lending businesses and impose penalties for alleged failure to comply with the California laws governing short-term loans.
This case comes in the wake of a series of other states’ efforts to shut down various tribal lending operations around the country. States have mounted campaigns to restrict and control tribal lending operations in their state even though federally recognized Indian tribes are not subject to state laws in general and are regulated primarily through Federal Indian law. This issue has gained widespread publicity around the country in the last several months.
This California case has now re-affirmed that federally recognized Indian Tribes are sovereign nations, not subject to state control. The court decision will significantly impact other states and other Tribes throughout the country as the issue of tribal sovereignty has been under attack on many fronts over the last several years.
In this case, California claimed that loans made by the tribes are not enforceable under California law because the tribes are not licensed in California and the loan fees exceed California’s enforceable rates.
In a ruling issued on January, 21, 2014 the Court of Appeals rebuffed the state’s claims, finding that the tribes’ lending activities “are subject to tribal laws governing interest rates, loans and cash advance services,” and that California’s lending laws are not enforceable against the tribal lenders. The Court went on to find that “there can be little question” that the tribally owned lenders “function as arms of their respective tribes” and therefore are not subject to California’s jurisdiction.