Consumer Financial Protection Bureau v. Cashcall, Inc.
FOR PUBLICATION (2025)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A party knowingly and voluntarily waives its Seventh Amendment right to a jury trial for legal restitution claims if it expressly agrees to a bench trial, even if it later asserts a mistaken understanding of the legal characterization of the remedy. Legal restitution, measured by consumer losses, is not limited to a defendant's net profits.
Facts:
- CashCall, Inc., a consumer lender, created a lending scheme to avoid state usury laws by setting up a lender incorporated under the laws of the Cheyenne River Sioux Tribe.
- The tribal lender issued high-interest, unsecured loans with choice-of-law provisions stating they would be governed by tribal law.
- CashCall purchased these loans and collected payments from consumers in various states.
- The Consumer Financial Protection Bureau (CFPB) believed CashCall's attempts to collect payments were illegal because the loans and their choice-of-law provisions were invalid under state law, meaning they did not create legally enforceable obligations.
- CashCall's lending scheme constituted an "unfair, deceptive, or abusive act or practice" in violation of federal consumer protection law.
Procedural Posture:
- In 2013, the Consumer Financial Protection Bureau (Bureau) brought an enforcement action in the United States District Court for the Central District of California (trial court) against CashCall, Inc., its CEO, and affiliated companies, alleging an "unfair, deceptive, or abusive act or practice."
- CashCall filed an answer to the complaint, in which it demanded a jury trial.
- The district court granted partial summary judgment to the Bureau on liability.
- The parties filed a joint status report stating that they "agreed to waive their right to a jury."
- The district court conducted a bench trial to determine the appropriate remedy, where the Bureau sought restitution and a civil penalty.
- The district court imposed a civil penalty of $10.3 million but declined to order restitution.
- Both sides appealed to the Ninth Circuit Court of Appeals (CashCall I); CashCall (appellant) contested the finding of liability, and the Bureau (appellee) argued that the civil penalty should have been larger and that it was entitled to restitution.
- The Ninth Circuit affirmed the district court’s finding of liability but vacated the civil penalty and remanded with instructions for the district court to impose a higher penalty, and also vacated the denial of restitution, remanding for further proceedings.
- On remand, the district court determined that the Bureau was not precluded from seeking legal restitution and applied a two-step burden-shifting framework to calculate the restitution award.
- The district court then ordered CashCall to pay more than $134 million in legal restitution.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a defendant waive its Seventh Amendment right to a jury trial on a claim for legal restitution if it expressly agrees to a bench trial, even if the parties initially mischaracterized the remedy as equitable?
Opinions:
Majority - Judge Miller
Yes, CashCall waived its Seventh Amendment right to a jury trial on the claim for legal restitution. The majority concluded that CashCall made an express, knowing, and voluntary waiver of its jury trial right by agreeing to a bench trial in a joint status report and participating in the initial bench trial without objection. The court reasoned that the Bureau's initial incorrect characterization of the restitution as an 'equitable remedy' did not vitiate CashCall's waiver, as a party's legal error does not invalidate a waiver, especially when the party was not confused about the substance of the relief sought (the return of interest and fees). The court emphasized that timely demand under Federal Rule of Civil Procedure 38 and knowing participation in a bench trial without objection constitute a valid waiver, and an objection on remand cannot revive a previously waived right. The court further held that judicial estoppel and waiver did not preclude the Bureau from seeking legal restitution, as the Bureau's underlying request for consumer losses remained consistent, regardless of its initial labeling of the remedy. The district court's calculation of restitution based on consumers' full losses, rather than limiting it to CashCall’s net profits or deducting expenses, was affirmed because legal restitution aims to make consumers whole. Finally, CashCall’s argument that the Bureau’s funding mechanism violates the Appropriations Clause was rejected as foreclosed by Supreme Court precedent in CFPB v. Community Fin. Servs. Ass’n of Am., Ltd.
Concurring - Judge R. Nelson
Yes, CashCall waived any Seventh Amendment jury trial right on the Bureau's claims for restitution, and the majority's finding on waiver is correct. However, Judge R. Nelson wrote separately to argue that even if CashCall had not waived its right, it would not have been entitled to a jury under existing Ninth Circuit precedent, FTC v. Commerce Planet, Inc., which he believes was wrongly decided and should be reconsidered en banc. He explained that Commerce Planet mistakenly asserted that all restitution claims are equitable for Seventh Amendment purposes, ignoring the Supreme Court's clear distinction between legal and equitable restitution in Great-West Life & Annuity Insurance Co. v. Knudson. The concurrence highlighted that recent Supreme Court decisions like Liu v. SEC and SEC v. Jarkesy further reinforce the principle that legal restitution, which derives from common law actions, does trigger a Seventh Amendment right to a jury trial. Judge Nelson stressed that Commerce Planet dilutes the jury trial right and puts the Ninth Circuit at odds with the Fifth Circuit's correct interpretation of Supreme Court precedent.
Analysis:
This case affirms the robust standard for Seventh Amendment jury trial waiver, emphasizing that an express, knowing, and voluntary agreement to a bench trial is binding, even if the parties harbored legal misconceptions about the remedy's characterization. It reinforces the critical distinction between legal and equitable restitution, aligning the Ninth Circuit's application of Liu v. SEC to clarify that legal restitution prioritizes making consumers whole by recovering full losses, without being capped by a defendant's net profits. The concurring opinion signals a potential shift in the Ninth Circuit's jurisprudence regarding jury trial rights for restitution claims, as it strongly criticizes precedent that treats all restitution as equitable, advocating for an en banc reconsideration that could expand the scope of jury trials in similar enforcement actions.
