PHILADELPHIA - A finance company targeted by several states in an important case that will decide if they can deploy a law intended for use by a federal agency will get to argue some of its intended defenses.
Philadelphia federal judge Kelley Hodge on Nov. 10 granted and denied parts of Pennsylvania and others' motion to strike the affirmative defenses of Mariner Finance. The company faces action from the states under the Consumer Financial Protection Act, which is usually enforced by the federal Consumer Financial Protection Bureau.
Hodge already denied the company's motion to dismiss, as Mariner argues allowing the CFPA claims by a small number of states would allow those few officials to enforce federal law nationwide.
Four states and the District of Columbia initially sued Mariner over what they claim were illegal add-on products when offering personal loans. After Hodge's January ruling, more states joined the case - Illinois, Indiana, New York, North Carolina, Tennessee and Wisconsin.
Mariner operates almost 500 branches in 28 states and offers customers who seek direct loans the option to purchase other products like insurance if the customer dies, becomes disabled or loses his or her job.
Though the case moved past Mariner's motion to dismiss, no decision has been reached on its merits. Mariner says the case makes the same claims that have been reviewed by "multiple agencies over the past six years, without a single finding of wrongdoing by any authoritative body."
The states sought to strike seven of Mariner's 15 defenses, four of which were already rejected in Hodge's motion-to-dismiss denial.
Those are that the plaintiffs fail to state a claim upon which relief can be granted, the claims are not susceptible to adjudication on a collective basis, plaintiffs lack standing and the claims are barred by the doctrine of primary jurisdiction. Hodge's most recent order struck those defenses.
More debated were the other three defenses, one of which said the states' claims are barred because "some or all of the acts alleged against Mariner are expressly permitted by state or federal statute, regulation or other law."
Mariner has noted the federal government decided not to pursue charges against it. The states argued the defense is so bare bones that it is void of legal or factual substance.
"While the defendant's affirmative defense offers Plaintiffs little insight into what legal authority Mariner believes permits its challenged activity, the Court nonetheless finds that Mariner has met the notice standard," Hodge wrote.
The final two contested defenses say the claims are barred by the doctrines of waiver, estoppel, unclean hands or laches and that the plaintiffs waived any right to object to their alleged conduct.
These arguments are rarely used against governments, Hodge wrote, but permitted them.
"Despite the high bar that Defendants must clear to actually establish these defenses at later points in litigation, at this time Plaintiffs have not shown that these defenses are unequivocally unavailable to Defendants," Hodge wrote.
Mariner says it has cooperated with investigations, providing information that shows its products are legal.
"The meritless allegations are based on minimal consumer interviews, the details of which were never shared with Mariner, and reflect a misunderstanding of the law, or simply a decision by the additional parties to disregard evidence which negates their claims," the company says.
Other state AGs and the Federal Trade Commission have closed probes without finding any illegalities on Mariner's part - "Even as additional parties have ignored the outcome of these investigations, a full and fair consideration of the facts at hand should lead to this matter being closed with no further action," the company said.