Connecticut Supreme Court declares lender entitled to tribal sovereign immunity as “arm of the tribe”


In a first impression case, the Connecticut Supreme Court recently ruled that (1) an entity claiming “arm of the tribe” status for purposes of tribal sovereign immunity has the burden of proving entitlement to that status; and (2) tribal immunity extends to an officer of the entity, as long as the officer has acted within his authority and the tribe, rather than the individual officer, is the true interested party. See Great Plains Lending, LLC v. Dep’t of Banking, 2021 WL 2021823 (Connecticut May 20, 2021). In that case, the Connecticut banking department issued temporary cease and desist orders, restitution orders for Connecticut residents and a notice of intent to impose civil penalties on two lenders after an investigation The department revealed that lenders had granted consumer loans through the Internet without a license and at interest rates that exceeded Connecticut’s usury and banking laws. Great Plains Lending, LLC (“Great Plains”) and American Web Loan, Inc., carrying on business as Clear Creek Lending (“Clear Creek”) (collectively, the “Lenders”) were created by law. tribal, namely, the Otoe- Missouria Indian Tribe Limited Liability Company Act and the Otoe-Missouria Indian Tribe Company Act. Thus, the lenders asserted that (1) they were arms of the tribe of the Otoe-Missouria Indians (the “tribe”) and were entitled to tribal sovereign immunity, and (2) the chairman of the tribe who served as secretary and treasurer of the two lenders was also entitled to sovereign immunity because he was acting in his official capacity. The commissioner dismissed the lenders’ motion to dismiss, concluding that “the department’s administrative action was not a ‘lawsuit’ from which the plaintiffs enjoyed sovereign immunity on probation.”

On appeal, the Connecticut Supreme Court overturned and remanded. First, the Court ruled that an entity claiming to be an arm of this tribe has the burden of demonstrating the existence of this relationship and that it has the right to share tribal sovereign immunity. However, “once the entity proves by a preponderance of evidence that it is an arm of the tribe, the onus is on the party seeking to overcome tribal sovereign immunity to prove that such immunity has been lifted or revoked. place. . “Next, the Court determined that the appropriate standard for determining whether the lenders were tribal weapons was the Breakthrough test. In Breakthrough management. Grp., Inc. v Chukchansi Gold Casino & Resort, the Tenth Circuit ruled that in order to determine whether an entity can share the sovereign immunity of a tribe, the court must consider: (1) the method of creation of economic entities, (2) the purpose of these entities, (3) ) the structure, ownership and management of the entities, including the degree of control the tribe exercises over them, (4) the intention of the tribe with respect to sharing its sovereign immunity, (5) “the financial relationship between tribe and entities ”, and (6) the“ policies underlying tribal sovereign immunity and its link to tribal economic development, and whether these policies are served by granting immunity to economic entities ” . See Breakthrough management. Grp., Inc. v Chukchansi Gold Casino & Resort, 629 F.3d 1173 (10th Cir. 2010). However, like the Fourth, Ninth and Tenth Circuits, the Court here adopted only the first five factors. The Court concluded that Great Plains was a branch of the tribe in law and entitled to sovereign immunity, but that there was not enough evidence to conclude the same with regard to Clear Creek. Specifically, the record did not contain any evidence of Clear Creek’s stated objectives, of the tribe’s control over Clear Creek or of its structure or management, or of an intention to extend immunity, or whether any benefits or Clear Creek funds were directed to the tribe. With respect to the president of the tribe, the Court concluded that because the tribe was the true interested party and the president was acting within his authority, he was also entitled to sovereign immunity only as a public servant. from Great Plains.

In light of the foregoing, the Connecticut Supreme Court set aside and returned with direction to dismiss the administrative proceeding against Great Plains and to set aside the civil penalties imposed on the President in his capacity as an officer of Great Plains. However, with respect to Clear Creek, the Court returned the case to determine whether Clear Creek is an arm of the tribe and whether the President was entitled to sovereign immunity in respect of his actions as a Clear Creek official.

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