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As a telecommunications attorney that has worked with a number of Native American tribes to promote economic development on their reservations, I can’t help but find it interesting when issues of telecommunications law and tribal law converge. A decision released this week by the 10th Circuit caught my attention for that very reason.

Before Appeal 

Great Plains Lending, a payday lending company owned by the Otoe-Missouria Tribe of Indians, was sued for TCPA violations after allegedly making two to three autodialed calls per day (to a mobile number) following the borrower’s revocation of consent to receive such calls. The district court dismissed the case, holding that the litigation was barred by the tribe’s sovereign immunity.

On Appeal

The 10th Circuit Court of Appeals reversed and remanded the case, concluding that the trial court erred in denying the plaintiff the opportunity to conduct limited discovery regarding whether the tribe’s sovereign immunity should extend to the payday lender. The plaintiff alleged that Great Plains Lending was under the effective control of Think Finance, a non-tribal entity, and, as such, should not be cloaked in the tribe’s immunity.

According to the 10th Circuit, discovery should have been permitted to proceed on this issue because, “a more satisfactory showing regarding the actual workings of Great Plains and its financial relationship with the Tribe is necessary. . . .” The 10th Circuit explained that allegations of Think Finance’s control over the tribal entity were supported by several pieces of circumstantial evidence, including that, in a separate case, the Pennsylvania Attorney General alleged that Think Finance contracted with Great Plains Lending “to evade Pennsylvania’s cap on interest rates and that the tribe received less than 5% of the profits generated.” The 10th Circuit also found that, while the district court recognized the percentage of profits retained by the tribe could be relevant to its analysis, it nevertheless denied plaintiff the opportunity to conduct discovery on the issue.

After Appeal

The 10th Circuit’s decision has potential ramifications well beyond Great Plains Lending. According to a 2015 Huffington Post article, almost “a quarter of the $4.1 billion the online payday loan industry takes in each year goes to 30 or so lenders based on reservations.” In other words, if tribal lenders seek to avoid TCPA liability by relying on tribal sovereign immunity, they may, in return, be required to divulge the terms of their confidential business relationships with third parties that participate in the business. If the tribes are not the primary beneficiaries of the high interest rates collected on payday loans, tribal sovereign immunity may not be available, even if it is a tribally owned entity.

Finn v. Great Plains Lending, LLC, No. 16-6348.

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