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Ninth Circuit
Jury Waiver Was Valid Despite Mix-Up Over Terminology
By a MetNews Staff Writer
The Ninth Circuit Court of Appeals held Friday that a consumer lender of unsecured, high-interest loans may not avoid an award of $134 million in restitution—accounting for the fees and interest payments made on illegal loans—following a court trial by arguing that its jury-trial waiver was made in reliance on the enforcement agency’s assurances that it was seeking only equitable remedies.
In fact, the restitution award was legal in nature, a conclusion supported by the 2020 U.S. Supreme Court decision in Liu v. Securities and Exchange Commission, holding that equitable restitution awards are limited to net profits from illegal activities. The award in question was calculated after the Liu decision without regard to the lender’s profits.
Declining to decide whether the Seventh Amendment right to a trial by jury is triggered by such a restitution award, the court, in an opinion by Circuit Judge Eric D. Miller and joined in by Circuit Judge John B. Owens, held that the wavier was valid, saying that both parties understood that the agency was seeking restitution in the form of the interest and fees paid by consumers on illegal loans and were confused only as to the characterization of the relief.
Circuit Judge Ryan D. Nelson agreed that the waiver was valid but wrote separately to say that there was no right to a jury trial in the first place, noting that the 2016 Ninth Circuit case of FTC v. Commerce Planet, Inc. established that claims for restitution, even when understood as actions at law, never trigger the Seventh Amendment’s guarantee. Disagreeing with that holding, he called for the en banc reconsideration of the decision.
The case is CFPB v. CashCall Inc., 23-55259.
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