NOTICE OF ELECTRONIC FILING - almedia.al.com/wire/other/payday loan database lawsuit.pdfin the...

AlaFile E-Notice

To: ANDREW P. CAMPBELL

[email protected]

03-CV-2013-901639.00

NOTICE OF ELECTRONIC FILING

IN THE CIRCUIT COURT OF MONTGOMERY COUNTY, ALABAMA

The following complaint was FILED on 9/19/2013 4:19:58 PM

CASH MART INC. ET AL V. ALABAMA STATE DEPARTMENT OF BANKING ET AL

03-CV-2013-901639.00

Notice Date: 9/19/2013 4:19:58 PM

TIFFANY B. MCCORD

CIRCUIT COURT CLERK

MONTGOMERY COUNTY, ALABAMA

MONTGOMERY, AL 36104

334-832-1260

251 S. LAWRENCE STREET

State of Alabama

Unified Judicial System

Form ARCiv-93 Rev.5/99

COVER SHEETCIRCUIT COURT - CIVIL CASE

(Not For Domestic Relations Cases)

Case Number:

Date of Filing:

03-CV-2013-901639.00

09/19/2013

Judge Code:

GENERAL INFORMATION

IN THE CIRCUIT OF MONTGOMERY COUNTY, ALABAMA

First Plaintiff:

CASH MART INC. ET AL v. ALABAMA STATE DEPARTMENT OF BANKING ET AL

Business

Government

Individual

Other

BusinessFirst Defendant:

Government

Individual

Other

NATURE OF SUIT:

TORTS: PERSONAL INJURY

WDEA - Wrongful Death

TONG - Negligence: General

TOMV - Negligence: Motor Vehicle

TOMM - Malpractice-Medical

TOPL - Product Liability/AEMLD

TOWA - Wantonnes

TOLM - Malpractice-Legal

TOOM - Malpractice-Other

TBFM - Fraud/Bad Faith/Misrepresentation

TOXX - Other:

TORTS: PERSONAL INJURY

TOPE - Personal Property

TORE - Real Property

OTHER CIVIL FILINGS

ABAN - Abandoned Automobile

ACCT - Account & Nonmortgage

APAA - Administrative Agency Appeal

ADPA - Administrative Procedure Act

ANPS - Adults in Need of Protective Services

OTHER CIVIL FILINGS (cont'd)

MSXX -

CVRT - Civil Rights

COND - Condemnation/Eminent Domain/Right-of-Way

CTMP-Contempt of Court

CONT-Contract/Ejectment/Writ of Seizure

Birth/Death Certificate Modification/Bond ForfeitureAppeal/Enforcement of Agency Subpoena/Petition toPreserve

TOCN - Conversion

EQND- Equity Non-Damages Actions/DeclaratoryJudgment/Injunction Election Contest/Quiet Title/Sale ForDivision

CVUD-Eviction Appeal/Unlawfyul Detainer

FORJ-Foreign Judgment

FORF-Fruits of Crime Forfeiture

MSHC-Habeas Corpus/Extraordinary Writ/Mandamus/Prohibition

PFAB-Protection From Abuse

FELA-Railroad/Seaman (FELA)

RPRO-Real Property

WTEG-Will/Trust/Estate/Guardianship/Conservatorship

COMP-Workers' Compensation

CVXX-Miscellaneous Circuit Civil Case

ORIGIN: F

R

A

T

INITIAL FILING

REMANDED

APPEAL FROMDISTRICT COURT

TRANSFERRED FROMOTHER CIRCUIT COURT

O OTHER

HAS JURY TRIAL BEEN DEMANDED? Yes No

RELIEF REQUESTED: MONETARY AWARD REQUESTED NO MONETARY AWARD REQUESTED

MEDIATION REQUESTED: Yes No Undecided

ATTORNEY CODE: CAM006 9/19/2013 4:19:57 PM /s/ ANDREW P. CAMPBELL

ELECTRONICALLY FILED9/19/2013 4:19 PM

03-CV-2013-901639.00CIRCUIT COURT OF

MONTGOMERY COUNTY, ALABAMATIFFANY B. MCCORD, CLERK


CASH MART, INC., RAPID CASH OF ) ALABAMA, INC., CBL, LLC d/b/a NETCASH, ) CASH SERVICES, INC., EZ TITLE LOANS, ) INC., QUICK CASH, INC., TITLE CASH, ) INC., TITLE CASH OF BIRMINGHAM, INC., ) TITLE CASH OF HUNTSVILLE, INC., TITLE ) CASH OF MOBILE, INC., TITLE CASH OF ) MONTGOMERY, INC., TITLE CASH OF ) PELHAM, INC., TITLE CASH OF TROY, ) INC., SPEEDEE CASH OF ALABAMA, INC., ) 1SC, INC., 2SC, INC., 3SC, INC., 11SC, LLC, ) 12SC, LLC, 13 SC, LLC, 5SC, LLC, 6SC, LLC, ) 7SC, LLC, 8SC, LLC, 10SC, LLC, ACC OF ) MONTGOMERY, INC., ACC OF SELMA, ) INC., ACC OF GREENVILLE, INC., ACC OF ) TUSKEGEE, INC., ACC OF PRATTVILLE, ) INC., ACC OF TROY, INC., ACC OF ) PELHAM, INC., ACC OF DOTHAN, INC., ) ACC OF OZARK, INC., ACC OF ) ENTERPRISE, INC., ACC OF EUFAULA, ) INC., ACC OF TROY II, INC., MONEY IN A ) FLASH CASH ADVANCE, LLC, CITY ) CHECK ADVANCE, LLC, EASY CHECK ) ADVANCE, LLC, SIGNATURE LOAN ) SERVICE, LLC, MONEY NOW DEMOPOLIS, ) INC., MONEY NOW OF SOUTH ALABAMA, ) INC., ) ) Plaintiffs, ) ) v. ) Civil Action No. 2013:__________ ) ALABAMA STATE BANKING ) DEPARTMENT, JOHN HARRISON, ) individually and in his official capacity as ) Superintendent of the Alabama State Banking ) Department and SCOTT CORSCADDEN, ) Individually and in his official capacity as ) Supervisor of the Bureau of Loans at the ) Alabama State Banking Department, ) ) Defendants. )




2

COMPLAINT

COME NOW Plaintiffs and submit this Complaint against Defendants Alabama State

Banking Department, John Harrison, and Scott Corscadden (collectively the “Defendants”). In

this Complaint, Plaintiffs seek the Court to make a declaratory judgment determining the

constitutionality of the Database Service Provider provision set forth in the newly enacted

Deferred Presentment Services Act Regulation (the “Regulation”). Ala. Admin. Code R. 155-2-

4.09. Plaintiffs filed a Motion for Preliminary Injunction contemporaneously herewith. In

support of this Complaint, Plaintiffs state as follows:

I. Summary of Claims

1. Plaintiffs are all citizens and resident corporations located in Alabama which

conduct business in this State and pay taxes to the State of Alabama.

2. Defendant Alabama State Banking Department (the “Department”) is an agency

of the State of Alabama, headquartered in Montgomery, Alabama. As a state agency, the

Department is part of the Executive Branch of State government, responsible for issuing licenses

and regulating all lenders in the State of Alabama, including banks, savings and loans

establishments, and retail lenders. The Department’s duties include promulgating rules to

enforce, implement, and execute regulations within the State. However, it has no authority to

“legislate” by enacting a regulation that makes substantive changes that conflict with existing

statutes passed by the Legislature.

3. Defendant John Harrison (“Harrison”) is an adult resident citizen of the State of

Alabama and is the superintendent of the Department.

4. Defendant Scott Corscadden (“Corscadden”) is an adult resident citizen of the

State of Alabama and is the supervisor of the Department’s Bureau of Loans.

3

5. Both Harrison and Corscadden drafted the Regulation, intentionally acting beyond

their statutory authority—therefore, they are not protected by any type of immunity for their

actions. Although the State generally enjoys sovereign immunity under Ala. Const. Art. I, § 14,

a “state official is not immune from an action that (1) seek to compel a state official to perform

his or her legal duties, (2) seeks to enjoin a state official from enforcing unconstitutional laws,

(3) seeks to compel a state official to perform ministerial acts, or (4) seeks a declaration under

the Declaratory Judgments Act, § 6-6-22- et seq., Ala. Code 1975, construing a statute and

applying it in a given situation.” Ex parte Alabama Dept. of Transp., 978 So. 2d 17, 22 (Ala.

2007); see Off Campus College Bookstore, Inc. v. University of Alabama in Huntsville, 25 So. 3d

424, 426 (Ala. 2009) (“the purpose of the so-called ‘exception’ to § 14 allowing declaratory-

judgment actions is to give direction to State officers”).

6. The Plaintiffs are all engaged in the business of making short-term cash loans or

advances to retail customers through deferred presentment transactions or payday loans

(“DPTs”). All Plaintiffs are lenders, licensed by the Department and operating lawful business

establishments by providing loans to customers who otherwise have limited access to any type of

financing. Plaintiffs are regulated by the Department pursuant to Deferred Presentment Services

Act, codified at Ala. Code 5-18A-1, et seq. In making these loans, Plaintiffs compete with many

other financing entities, including major banks throughout the State as well as online lenders

outside of the State which provide the same loans and cash advances to consumers. Indeed, the

market for providing small loans and cash advances to consumers exploded over the past few

years and now includes such lenders include major banks, offshore-based lending companies,

lenders only accessible electronically by internet and Native American tribes.

4

7. This action arises from the fact that the Regulation ONLY applies to Plaintiffs

and other Alabama-based deferred presentment lenders. The Regulation DOES NOT apply to

Plaintiffs’ competitors, such as the major banks, online lenders, offshore-based lending

companies and Native American tribes. See Ala. Code § 5-18A-3 (providing that the Deferred

Presentment Services Act does not apply to: trust companies, life insurance companies, federally

constituted agencies, banks, credit unions, savings associations, savings bank, and thrift

institutions). Indeed, none of Plaintiffs’ competitors are governed by the Deferred Presentment

Services Act and the Regulation and have no limits on the number of loans they may offer, on

the maximum amount of the loans made or on the interest charged on such loans.

8. Accordingly, this is an action to challenge the validity of the Regulation recently

adopted by the Department. This Regulation, designed to carry out the Deferred Presentment

Services Act, requires all deferred presentment lenders such as Plaintiffs to participate and

provide confidential customer information to a single database assembled, operated, and

controlled by the Department. The Regulation contemplates, as a condition to obtain a license in

this State, for such businesses to pay a fee for accessing and participating in this single database.

For example, under the Regulation, deferred presentment lenders must report all transactions and

pay a fee to access the database prior to making loans. The purpose of the single database is for

the Department to monitor customers and ostensibly consumer-borrower activity throughout the

State by such lenders, even though such requirements do not extend to banks, offshore-based

lending companies, Native American tribe lenders or internet lenders providing the exact same

lending services to customers.

5

9. Specifically, the Regulation states as follows:

155-2-4-.09 Database Service Provider—Deferred Presentment Services Act

(1) In order to comply with the intent of the Act regarding the maximum

loan amount for a single customer, the State Banking Department shall implement a common approved database with real-time access through an internet connection. Each licensee shall use the same approved third-party database service provider as determined by the State Banking Department.

(2) The database service provider shall afford the State Banking Department access to the database information without charge in order to conduct continuous and random inquiries to measure compliance with the applicable provisions of the Act and regulations.

(3) The database service provider shall establish and maintain minimum standards as to the database required by the State Banking Department. The database service provider must have “real time” capability to communication with all licensees to determine compliance with the maximum loan amount for a single customer.

(4) Licensees must submit accurate and timely information to the database service provider. Failure to do so may result in the assessment of civil money penalties and/or license revocation.

(5) Licensees must cooperate with the approved database service provider to resolve customer disputes.

10. Plaintiffs contend that the enactment of this Regulation is unlawful and should be

declared unconstitutional because it conflicts with and contravenes established law enacted by

the Alabama Legislature. Without a doubt, the Regulation is also is a violation of separation of

powers between the governmental branches as set forth in the Alabama Constitution.

Undeniably, because the Regulation essentially constitutes legislation adopted through regulation

by the Department where the Alabama Legislature has already declared public policy in this area

through its own statutory scheme that directly conflicts with the Regulation. Indeed, as

demonstrated below, the Regulation is a direct result of Defendants’ the failure to convince the

6

Alabama Legislature to amend the current Deferred Presentment Service Act, codified at Ala.

Code § 5-18A-13(o), which was adopted in 2003 and provides:

The licensee shall use a third party private sector database, where available, to ensure that the customer does not have outstanding deferred presentment transactions that exceed five hundred dollars ($500). 11. As the Court can see, Ala. Code § 5-18A-13(o) only requires that a deferred

presentment lender contractually use a private sector database. For the Department to now

implement the new requirement of a “Big Brother” database controlled by the Department, is

contradictory and a usurpation of Ala. Code § 5-18A-13(o).

12. In fact, Harrison, at a meeting in October, 2012, of members of Modern Financial

Services Association, acknowledged that while he wanted a single database, such a change in the

present statute would have to be could only be implemented by amendment by the Alabama

Legislature, not by the Department. Subsequently, Harrison and Corscadden determined they

would usurp the statute.

13. The Regulation also will, in effect, impose an unlawful tax as a condition for its

use on Plaintiffs as “licensees” by requirement payment for access to and use of the already

existing requirement to subscribe to a third-party database. This required payment was clearly

contemplated by the existing statutory scheme, and not imposed. Finally, the Regulation,

through its onerous requirements imposes a discriminatory and punitive burden on one class of

retail lenders making short-term loans, including the Plaintiffs, while not imposing these same

burdens to banks, online lenders or other unregulated lenders. As a result, the Regulation

violates the Equal Protection Clause of the Alabama Constitution, will stifle competition in this

market, and put many small deferred presentment lenders such as Plaintiffs out of business.

7

14. Accordingly, Plaintiffs seek a preliminary injunction enjoining the enforcement of

the Regulation. Additionally, Plaintiffs seek a permanent injunction and declaratory judgment

declaring that the Regulation is unconstitutional.

II. Legislative History

15. On June 20, 2003, the Deferred Presentment Services Act was adopted by the

Alabama Legislature after a heated debate. According to the legislative history, the goal of the

Deferred Presentment Services Act was to protect consumers who enter into short-term loans,

including deferred presentment transactions or payday loans from an endless cycle of

unmanageable debt. The statute sets a maximum limit of $500 on such transactions. Under Ala.

Code § 5-18A-1, banks are fully exempt from coverage under the statute, even though banks

now provide the same exact services to consumers on an unregulated basis. While a single state

controlled database was advocated by many persons and institutions prior to the enactment of the

Deferred Presentment Services Act, the Legislature ultimately rejected the concept of a state

controlled unitary database and, instead, required each lender, where available, to acquire access

and maintain a “third party private sector” database of loans where transactions were recorded to

insure that the $500 statutory limit on a customer’s deferred presentment loans was satisfied.

Thus, the very requirements set forth in the Regulation recently adopted by the Department was

rejected by the Legislature prior to the enactment of the Deferred Presentment Services Act in

favor of a decentralized database contracted for by the lender, but subject to monitoring and audit

by the Department.

16. In adopting the Deferred Presentment Services Act, the Alabama Legislature

clearly established its legislative policy with respect to deferred presentment lenders’ use of a

third-party, private database to ensure compliance with the law. The Department was required to

8

administratively enforce the statute and pass regulations in connection therewith, but was given

no powers under the Act to: 1) create a single, centralized database controlled by the

Department; 2) require licensed deferred presentment lenders to participate and file private data

in this database; or 3) impose fees on licensed deferred presentment lenders for using and

accessing the database.

17. The Deferred Presentment Services Act also preserved the private rights of

borrowers not to have their personal and private transactions recorded or maintained by a

government agency on a consolidated basis and subject to the State’s control and potential abuse.

Since 2003, the Deferred Presentment Services Act has worked well and there has been no

widespread demand for changes in the statutory scheme.

18. In 2013, at the behest of the Department, several bills were presented requiring a

single database to be maintained and controlled by the Department. The first bill, SB 449,

proposing changes to Deferred Presentment Services Act, was introduced during the 2013

Regular Session of the Alabama Legislature. It was not signed into law.1 The proposed changes

contemplated by this bill, provided for a single, common database and limits on interest. The bill

had two readings but was indefinitely postponed.

Subsequently, a second bill SB 282, was presented to the Senate.2 Senate Bill 282 placed

limits on payday loans, extended the time to repay such loans, and created a state-wide database.3

This second bill was referred to committee where it died.

Additionally, in the Alabama House of Representatives, another bill, HB 320, relating to

payday loans was presented in the 2013 Regular Session. Similar to the proposed Senate Bills,

1 SB 449, Open States, http://www.openstates.org/al/bills/2013/rs/SB449/. Senators Marsh, Holtzclaw, and Beason sponsored Senate Bill 449. 2 SB 282 – Regular Session 2013, OpenBama, http://www/openbama.org/bill/8008. 3 Payday Lending: 2013 Legislation, National Conference of State Legislatures (Mar. 18, 2013), http://www.ncsl.org/issues-research/banking/payday-lending-2013-legislation.aspx.

9

this bill related to the interest charged, eligible customers, and provided for a single, common

database.4 It likewise was referred to a committee, where it died.

19. Despite efforts by Defendants to influence said Deferred Presentment Services

Act in the 2013 Session, the statute was not amended. Rather, both the Alabama House and

Senate made the choice to maintain the existing statutory scheme simply requiring an individual

private sector database be maintained by each deferred presentment lender as opposed to a

unitary database where lenders are charged a fee for access and customers’ transactions are

recorded under the control of the Department.

20. Unhappy with these results, Defendants determined to breach the constitutional

separation of powers by enacting new law through the Regulation thereby ignoring the existing

legislation and its preemptive authority defining what database is required by law. Defendants

undertook the action to usurp the Alabama Legislature and adopted a regulation requiring a

single database even though it directly conflicts and essentially seeks to replace the Deferred

Presentment Services Act.

III. Violation of Rights

21. As set forth above, the Regulation is patently inconsistent with the existing statute

which has governed lenders since 2003. Under established Alabama law, it is illegal, in violation

of the constitutionally-mandated separation of powers, and an illegal usurpation of legislative

prerogatives. Alabama Dept. of Revenue v. Jim Beam Brands Co., Inc., 11 So.3d 858, 866 (Ala.

Civ. App. 2008 (“When [a] Department’s interpretation conflicts with the applicable statute, the

Department’s regulation cannot stand.”); Ex parte Jones Mfg. Co., 589 So.2d 208, 210 (Ala.

1991); see also Ex parte Crestwood Hosp. & Nursing Home, Inc., 670 So.2d 45 (Ala. 1995); Ex

parte State Dep’t of Hum. Res., 548 So.2d 176 (Ala. 1988); Ex parte City of Birmingham, 992 4 HB320, Open States, http://openstates.org/al/bills/2013rs/HB320.

10

So.2d 30, 32 (Ala. Civ. App.2008); Kid’s Klub, Inc. v. State Dep’t of Hum. Res., 874 So. 2d 1075

(Ala.Civ.App.2003) (“The provisions of a statute will prevail in any case of a conflict between a

statute and an agency regulation.”); Lynch v. Tilden Produce Co., 265 U.S. 315 (1924) (“A

regulation … which operates to create a rule out of harmony with the statute, is a mere nullity.”);

Ex parte City of Florence, 417 So. 2d 191 (Ala. 1982) (“An administrative regulation must be

consistent with the statutes under which its promulgation is authorized; Alabama State Milk

Control Bd. v. Graham, 33 So.2d 11 (Ala. 1947) (“An administrative agency cannot usurp

legislative powers or contravene a statute.”); Jefferson County Bd. of Educ. v. Alabama Bd. of

Cosmetology, 380 So.2d 913 (Ala. Civ. App.1980) (“A regulation cannot subvert or enlarge upon

statutory policy.”).

22. Moreover, evidence from other states demonstrates that a single database will: 1)

drive numerous small “store front” lenders out of the business, thus lessening the availability of

financing to the retail consumer base and raising borrowing costs; 2) not prevent abuses in terms

of excessive loans; 3) result in an illegal tax imposed by a department with no authority to do so

for the privilege of such deferred presentment lenders engaging in business; and 4) remedy a

problem which does not currently exist in Alabama.

23. In addition, the Regulation imposes anti-competitive requirements on deferred

presentment lenders such as Plaintiffs, when it does not impose such requirements on banks,

internet lenders, offshore financiers, and tribal lenders who engage in the exact same lending

activities, but without such restrictions. In administratively imposing such restrictions and taxes

on Plaintiffs and other deferred presentment lenders, the Department is violating Plaintiffs’ equal

protection rights in that the Regulation is inherently discriminatory and punitive and applicable

to only one class of short-term loan lenders. Undeniably, there is no evidence demonstrating the

11

necessity of this draconian system being applied to only one part of the short-term loan lending

market made up mostly of small businesses providing such loans to consumers when the

Regulation with its costs will drive many such lenders out of business. The only justification is

anti-competitive: to target a class of short-term loan lenders while benefiting competitors who

face no such scrutiny.

24. Plaintiffs seek to do equity and face irreparable injury if the Court does not

declare the Regulation to be illegal and, thereby, unenforceable. Plaintiffs will be forced to pay

substantial monies in illegal taxes/fees and be required to change their current database systems

in order to comply with the new Regulation which costs cannot be recovered or determine and

may well be forced out of business. Accordingly, there is no adequate remedy at law and a

preliminary and permanent injunction is necessary.

IV. Claims

COUNT 1: Declaratory Judgment That the Regulation Is Unconstitutional Because it Conflicts with the Deferred Presentment Services Act

25. Plaintiffs repeat and reallege the foregoing allegations as if fully set forth herein.

26. A bona fide justiciable controversy exists as to whether the Regulation is

constitutional and enforceable.

27. Pursuant to the Declaratory Judgment Act, Ala. Code § 6-6-220, et seq., Plaintiffs

are entitled to declaratory judgment that Regulation 155-2-4.09 is in violation of the law and in

conflict with the existing statutory scheme set forth in the Deferred Presentment Services Act

Ala. Code § 5-18A-13(o) and, as a result, is illegal and unenforceable under Alabama law.

28. This principle is established by numerous Alabama cases which consistently hold

that an administrative regulation that conflicts with the existing law is void and unenforceable.

12

This patent inconsistency between the Regulation and existing law is clearly established by the

legislative history underlying the Deferred Presentment Services Act, including the Alabama

Legislature’s rejection of efforts to amend the statutory scheme. The Court should not allow the

Department to legislate through its own regulation.

WHEREFORE, premises considered, Plaintiffs pray that this Court shall: 1) take

jurisdiction over the matter and enter a preliminary injunction prohibiting enforcement of the

Regulation pending a hearing on the merits; 2) enter a final declaratory judgment declaring the

Regulation to be void, illegal, and unenforceable on its face because of its conflicts with existing

legislation; 3) enter a permanent injunction preventing Defendant Harrison and others from

enforcing the Regulation; 4) award attorneys’ fees to Plaintiffs; and 5) grant such other further

additional relief to which Plaintiffs may be entitled

COUNT 2: Declaratory Judgment that the Regulation’s Provisions

Requiring a Fee and a Single Database Is Unconstitutional


30. Plaintiffs are entitled to a declaratory judgment that there is no legislative

enactment giving such power to the Department to impose a tax or fee to access the single,

common database which will be required for Plaintiffs to retain their licenses.

WHEREFORE, premises considered, Plaintiffs request an Order enjoining Defendants

from attempting to collect or impose such a fee or tax on Plaintiffs and other similarly situated

entities for the purpose of enforcing Regulation 155-2-4.09 and as such constitutes an illegal

taking under Alabama law.

13

COUNT 3: Declaratory Judgment that the Regulation

Violates Alabama’s Equal Protection Clause


32. The Regulation violates the Equal Protection Clause of the Alabama Constitution

as it subjects Plaintiffs as a unique class to punitive and discriminatory laws which do not apply

to similarly situated competitors. See Ensley Seafood Five Points, LLC v. City of Birmingham,

98 So. 3d 1149, 1157 (Ala. Civ. App. 2012) (“Sections 1, 6, and 22 of the Alabama Constitution

combine to guarantee equal protection of the laws. The essence of the theory of equal protection

of the laws is that all similarly situated be treated alike. An individual cannot be subject to

[arbitrary] exercise of governmental powers.”).

33. Plaintiffs request a declaratory judgment that Regulation 155-2-4.09 constitutes a

violation of their equal protection rights and accordingly, is null and void and unenforceable

under the Alabama Constitution.

WHEREFORE, premises considered, Plaintiffs pray that this Court will declare the

Regulation illegal and unconstitutional and shall award appropriate attorneys’ fees and costs as a

result of this unlawful action taken by Defendants.

COUNT 4: Permanent Injunction


35. Under Alabama law:

To be entitled to a permanent injunction, a plaintiff must demonstrate success on the merits, a substantial threat of irreparable injury if the injunction is not granted, that the threatened injury to the plaintiff outweighs the harm the injunction may cause the defendant, and that granting the injunction will not disserve the public interest.

14

See, e.g., Classroomdirect.com, LLC v. Draphix, LLC, 992 So. 2d 692, 702 (Ala. 2008).

36. Plaintiffs have a substantial likelihood of success on the merits in proving that the

Regulation is unconstitutional because it directly conflicts with the Deferred Presentment

Services Act, it imposes an illegal tax/fee on deferred presentment lenders and requires them to

submit to a single common database, and it illegally violates their equal protection rights.

37. Additionally, Plaintiffs will suffer irreparable injury if the Regulation is not

permanently enjoined from being enforced because it will impose significant costs on Plaintiffs

and other similarly situated deferred presentment lenders which will force a number of such

entities out of business. Thus, there is no adequate remedy at law.

38. Moreover, the threatened injury to Plaintiffs—that they will be forced out of

business—substantially outweighs any harm that an injunction may cause Defendants. Indeed, a

permanent injunction would simply leave the current statutory scheme set forth under the

Deferred Presentment Services Act in place.

39. Last, a permanent injunction of enforcement of the Regulation would not disserve

the public interest because there is no evidence of any abuses in the short-term loan lending

market in Alabama necessitating the imposition of the Regulation.

WHEREFORE, premises considered, Plaintiffs pray that the Court enter a permanent

injunction against Defendants prohibiting them from enforcing the Regulation.

DEMAND FOR TRIAL BY JURY

Plaintiffs hereby demand a trial by jury on all issues so triable.

15

Respectfully submitted, /s/ Andrew P. Campbell Counsel for Plaintiff OF COUNSEL: Andrew P. Campbell A. Todd Campbell LEITMAN, SIEGAL, PAYNE & CAMPBELL, P.C. 420 N. 20th Street, Suite 2000 Birmingham, AL 35203 Tel: 205.251.5900 Fax: 205.986.5074 [email protected] [email protected]

16

THE FOLLOWING DEFENDANTS WILL BE SERVED VIA CERTIFIED MAIL ALABAMA STATE DEPARTMENT OF BANKING c/o John D. Harrison State of Alabama P. O. Box 4600 Montgomery, AL 36103-4600 and Luther Strange Attorney General P. O. Box 300152 Montgomery, AL 36130-0152 JOHN HARRISON State of Alabama P. O. Box 4600 Montgomery, AL 36103-4600 SCOTT CORSCADDEN State of Alabama P. O. Box 4600 Montgomery, AL 36103-4600


CASH MART, INC., RAPID CASH OF ) ALABAMA, INC., CBL, LLC d/b/a NETCASH, ) CASH SERVICES, INC., EZ TITLE LOANS, ) INC., QUICK CASH, INC., TITLE CASH, ) INC., TITLE CASH OF BIRMINGHAM, INC., ) TITLE CASH OF HUNTSVILLE, INC., TITLE ) CASH OF MOBILE, INC., TITLE CASH OF ) MONTGOMERY, INC., TITLE CASH OF ) PELHAM, INC., TITLE CASH OF TROY, ) INC., SPEEDEE CASH OF ALABAMA, INC., ) 1SC, INC., 2SC, INC., 3SC, INC., 11SC, LLC, ) 12SC, LLC, 13 SC, LLC, 5SC, LLC, 6SC, LLC, ) 7SC, LLC, 8SC, LLC, 10SC, LLC, ACC OF ) MONTGOMERY, INC., ACC OF SELMA, ) INC., ACC OF GREENVILLE, INC., ACC OF ) TUSKEGEE, INC., ACC OF PRATTVILLE, ) INC., ACC OF TROY, INC., ACC OF ) PELHAM, INC., ACC OF DOTHAN, INC., ) ACC OF OZARK, INC., ACC OF ) ENTERPRISE, INC., ACC OF EUFAULA, ) INC., ACC OF TROY II, INC., MONEY IN A ) FLASH CASH ADVANCE, LLC, CITY ) CHECK ADVANCE, LLC, EASY CHECK ) ADVANCE, LLC, SIGNATURE LOAN ) SERVICE, LLC, MONEY NOW DEMOPOLIS, ) INC., MONEY NOW OF SOUTH ALABAMA, ) INC., ) ) Plaintiffs, ) ) v. ) Civil Action No. 2013:__________ ) ALABAMA STATE BANKING ) DEPARTMENT, JOHN HARRISON, ) individually and in his official capacity as ) Superintendent of the Alabama State Banking ) Department and SCOTT CORSCADDEN, ) Individually and in his official capacity as ) Supervisor of the Bureau of Loans at the ) Alabama State Banking Department, ) ) Defendants. )




2

MOTION FOR PRELIMINARY INJUNCTION1

COME NOW Plaintiffs pursuant to Ala. R. Civ. P. 65, and respectfully move this Court

for a preliminary injunction preliminarily enjoining Defendants, the Alabama State Banking

Department, John Harrison and Scott Corscadden (collectively the “Defendants”), from the

implementation, effectuation and enforcement of the Database Service Provider provision set

forth in the newly enacted Deferred Presentment Services Act Regulation (the “Regulation”)

155-2-4.09, pending a ruling on its legality. As grounds for this Motion, Plaintiffs state as

follows:

1. A party is entitled to a preliminary injunction upon showing:

(1) that without the injunction the party would suffer irreparable injury; (2) that the party has no adequate remedy at law; (3) that the party has a least a reasonable chance of success on the ultimate merits of his case; and (4) that the hardship imposed on the [party opposing the preliminary injunction] by the injunction would not unreasonably outweigh the benefit accruing to the [party seeking the injunction].

See, e.g., Holiday Isle, LLC v. Adkins, 12 So. 3d 1173, 1176 (Ala. 2008).

2. Plaintiffs will suffer irreparable injury if the Regulation is allowed to go into

effect and enforced without a judicial review of its legality. Moreover, there is no adequate

remedy at law because the enforcement of the Regulation with force many deferred presentment

lenders out of business prior to judicial review of its legality.

3. In addition, there is a fair or substantial likelihood of success on the merits for

Plaintiffs as the Complaint clearly establishes that there is a contradiction between the

Regulation in that it clearly contravenes the existing Deferred Presentment Services Act, codified

at Ala. Code 5-18A-1, et seq., requiring each deferred presentment licensee to subscribe to a

single, common database. Accordingly, it is violation of Alabama law.

1 Plaintiffs hereby incorporate by reference each and every allegation set forth in the Complaint that was filed contemporaneously herewith.

3

4. Under the Regulation, participating in the single database program is a condition

to retaining a license, and many licensees will either be forced to give up their licenses or be

forced out of business by the imposition of fees imposed to access the single database.

5. Furthermore, the threatened injury to Plaintiffs—that they will be forced out of

business—substantially outweighs any harm that an injunction may cause Defendants. Indeed, a

permanent injunction would simply leave the current statutory scheme set forth under the

Deferred Presentment Services Act in place.

6. Additionally, the Court has the authority to enter a preliminary injunction when

there is a right to be protected and temporary interference is needed to preserve the status quo

until the Court can rule on the constitutionality of a administrative agency’s regulation. See

Board of Dental Examiners of Alabama v. Franks, 507 So. 2d 517, 520 (Ala. Civ. App. 1986).

Here, Plaintiffs simply seek the Court to preserve the status quo until this issue is decided on the

merits.

7. Moreover, this case presents important questions on the separation of powers and

the ability of the Executive Branch to essentially craft legislation at odds with statutory policy of

the Alabama Legislature. There is no justifiable reason not to grant the Injunction. Both parties

have an interest in having the legality of the situation determined prior to the state spending

substantial monies to create a database if the regulation is illegal.

8. Indeed, both Plaintiffs and Defendants would benefit from a prompt

determination on the merits on the issue of the legality of the Regulation

4

WHEREFORE, premises considered, Plaintiffs pray that this Court shall grant an Order:

1) enjoining the implementation and enforcement of the Regulation pending a determination of

the issues on decree, including the requirement of any payment of costs or the creation of any

single, common database until a final ruling in this case; and 2) such other additional relief to

which Plaintiffs may be entitled.

Respectfully submitted, /s/ Andrew P. Campbell Counsel for Plaintiff OF COUNSEL: Andrew P. Campbell A. Todd Campbell LEITMAN, SIEGAL, PAYNE & CAMPBELL, P.C. 420 N. 20th Street, Suite 2000 Birmingham, AL 35203 Tel: 205.251.5900 Fax: 205.986.5074 [email protected] [email protected]

5

THE FOLLOWING DEFENDANTS WILL BE SERVED VIA CERTIFIED MAIL ALABAMA STATE DEPARTMENT OF BANKING c/o John D. Harrison State of Alabama P. O. Box 4600 Montgomery, AL 36103-4600 and Luther Strange Attorney General P. O. Box 300152 Montgomery, AL 36130-0152 JOHN HARRISON State of Alabama P. O. Box 4600 Montgomery, AL 36103-4600 SCOTT CORSCADDEN State of Alabama P. O. Box 4600 Montgomery, AL 36103-4600

NOTICE OF ELECTRONIC FILING - almedia.al.com/wire/other/payday loan database lawsuit.pdfin the...

Documents

Transcript of NOTICE OF ELECTRONIC FILING - almedia.al.com/wire/other/payday loan database lawsuit.pdfin the...