Big Picture Loans Defeats Class Action Lawsuit in Eastern District of Virginia

A class action lawsuit, brought against Big Picture Loans, was recently overturned by the Fourth Circuit.

Big Picture Loans is a tribal lender, owned and operated by the Lac Vieux Desert Band of Lake Superior Chippewa Indians, a federally recognized Indian tribe.

Tribal loans offer consumers unsecured, emergency loans ranging from $200 up to $3,500 with interest rates as high as 475% APR.

In 2017, consumer plaintiffs argued that federal and state laws applied to Big Picture Loans, regardless of their sovereign immunity.

The tribal lender, however, argued that they are entitled to sovereign immunity, regardless of state or federal laws.

Initially, the U.S. District Court rejected Big Picture Loans assertions that they are immune from the suit.

However, an unexpected turn came about when the U.S. District Court decision was reversed by the Fourth Circuit.

Reason: The U.S. District Court was found to be erroneous in their decision in claims that Big Picture Loans is not arms of the Tribe.

The case was officially dismissed, giving the lender and it’s technology partners, Ascension, an unexpected victory for tribal lenders.

Further, the Fourth Circuit concluded that, regarding tribal lenders, it will adopt the Ninth Circuit’s first five breakthrough factors when determining tribal sovereign immunity in future cases.

How This Impacts Tribal Lenders Moving Forward

Lenders should adhere to the following five breakthrough factors by the Ninth Circuit if they wish to prevent a lawsuits in the future.

Method of Creation – According to the court’s findings, business formation under Tribal law weighs in favor of sovereign immunity. Organized under the Tribe’s Business Entity Ordinance via Tribal Council resolutions, Big Picture Loans and Ascension, were in fact, exercising powers delegated to it by the Tribe’s Constitution.

Purpose – Tribal nations receive little, if any, federal or state assistance. Big Picture Loans argued the case that the goals of their lending program were to support economic development for their tribal nation, which financially benefits the tribe to grow and prosper. As the case stated, the lender proved the business revenue had been used to fund home ownership opportunities, new health clinics, youth activities, college scholarships and much more. If a tribal lender can prove the business revenue helps fund economic development, the Purpose factor has been met.

Structure, Ownership, and Management – Since the lender was incorporated under tribal laws, and operates and manages the business, the court found that this weighed in favor of tribal immunity. Ascension, however, was not 100% immune.

Intent to Extend Immunity – Tribal lenders must not extend immunity to any third party partners. The court found that BPL indeed, did not provide immunity to any of their partners outside of the tribe, specifically Ascension.

Financial Relationship – A lawsuit could prove to be devastating to a tribal nation if a lender is found guilty. According to the court, this would severely impact the Tribal Treasury in a way that would limit economic growth. Therefore, the fifth factor was in favor of BPL.

Based on these five factors, the Fourth Circuit ruled that all factors were being upheld by Big Picture Loans and Ascension.

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