United States District Court, District of Columbia
ADVANCE AMERICA, CASH ADVANCE CENTERS, INC., et al. Plaintiff,
FDIC, et al. Defendant.
Kessler United States District Judge
Advance America, Cash Advance Centers, Inc. ("Advance
America"), Check Into Cash, Inc. ("Check Into
Cash"), NCP Finance Limited Partnership and NCP Finance
Ohio, LLC (collectively "NCP"), Northstate Check
Exchange ("Northstate"), PH Financial Services, LLC
("PHFS"), and Richard Naumann, bring this action
against the Federal Deposit Insurance Corporation ("the
FDIC"), the Board of Governors of the Federal Reserve
System, and both the Office of the Comptroller of the
Currency and Thomas J. Curry, in his official capacity as the
Comptroller of the Currency ("the OCC")
(collectively "Federal Defendants"), alleging
violations of their right to due process under the Fifth
Amendment of the United States Constitution.
matter is now before the Court on the Plaintiffs' Motions
for Preliminary Injunction. [Dkt. Nos. 87 & 107]. Upon
consideration of the Motions, Oppositions, Replies, and the
entire record herein, and for the reasons set forth below,
the Motions shall be denied.
Court has related the background of this case in two previous
opinions. Community Fin. Services Assoc, of America v.
FDIC, 132 F.Supp.3d 98 (D.D.C. 2015) ("CFSA
I") and Community Fin. Services Assoc, of
America v. FDIC, 2016 WL 7376847 (D.D.C. December 19,
2016) ("CFSA II"). The original plaintiffs
in this case were CFSA, an association of payday lenders, and
Advance America, a payday lender and member of CFSA. CFSA
I, 132 F.Supp.3d at 105. Federal Defendants are agencies
of the United States Government that have been delegated
regulatory authority over various parts of the United States
banking system. Id. at 106.
and Advance America alleged that the Federal Defendants
participated and continue to participate in a campaign, known
as "Operation Choke Point" and initiated by the
United States Department of Justice, to force banks to
terminate their business relationships with payday lenders.
Id. at 106-107. They allege that Operation Choke
Point forced banks supervised by Federal Defendants to
terminate relationships with payday lenders, "'by
first promulgating regulatory guidance regarding reputation
risk, ' and by later relying on the reputation risk
guidance 'as the fulcrum for a campaign of backroom
regulatory pressure seeking to coerce banks to terminate
longstanding, mutually beneficial relationships with all
payday lenders.'" Id.; see also
Plaintiffs' Second Amended Complaint ¶¶ 4-11
[Dkt. No. 64] .
this Court's decision in CFSA I dismissing some
of the claims brought by CFSA and Advance America, the
Federal Defendants moved on October 29, 2015, to dismiss CFSA
for lack of standing. Mot. to Dismiss [Dkt. No. 73] . While
that Motion was pending, CFSA and Advance America filed a
Motion for Preliminary Injunction on November 23, 2016.
("Advance America Mot.") [Dkt. No. 87] . On
December 19, 2016, the Court granted the Federal
Defendants' Motion to Dismiss CFSA, leaving Advance
America as the only remaining plaintiff. See CFSA
II, 2016 WL 7376847.
on January 11, 2011, Advance America filed a Motion to Amend
its Complaint for a second time, in order to add additional
plaintiffs, all of whom are current or former payday lenders
allegedly affected by Operation Chokepoint. [Dkt. No. 102].
The Court granted the Motion, thereby adding the following
additional plaintiffs: Check Into Cash, Inc., NCP Finance
Limited Partnership, NCP Finance Ohio, LLC, Northstate Check
Exchange, PH Financial Services, LLC, and Richard Naumann
(collectively "New Plaintiffs"). [Dkt. No. 120].
These New Plaintiffs also filed a Motion for Preliminary
Injunction, essentially joining in all of the same arguments
presented by Advance America. ("New Plaintiffs'
Mot.")[Dkt. No. 107-1].
proposed injunctions ask the Court to enjoin Federal
Defendants "from: 1) harming Plaintiffs'
reputations; 2) applying informal pressure to banks to
encourage them to terminate business relationships with
Plaintiffs because Plaintiffs are members of the payday
lending industry; 3) seeking to deny Plaintiffs of access to
financial services on account of their being members of the
payday lending industry; and 4) seeking to deprive Plaintiffs
of their ability to pursue their chosen line of lawful
business." New Plaintiffs' Proposed Order [Dkt. No.
107-8]; see also Advance America's Proposed
Order [Dkt. No. 87-5].
Federal Defendants filed Oppositions to both Motions for
Preliminary Injunction. Opp'n to Advance America's
Mot. [Dkt. No. 90] & Opp'n to New Plaintiff's
Mot. [Dkt. No. 125] . Advance America and the new Plaintiffs
each filed a Reply. Advance America's Reply [Dkt. No. 95]
& New Plaintiffs' Reply [Dkt. No. 127].
Standard of Review
Court may issue interim injunctive relief only when the
movant demonstrates " that [they are] likely to
succeed on the merits,  that [they are] likely to suffer
irreparable harm in the absence of preliminary relief, 
that the balance of equities tips in [his or her] favor, and
 that an injunction is in the public interest."
Winter v. Natural Res. Def. Council, 555 U.S. 7, 20
particularly important that the movant demonstrate a
likelihood of success on the merits. Cf. Benten v.
Kessler, 505 U.S. 1084, 1085 (1992) (per curiam).
Indeed, absent a "substantial indication" of likely
success on the merits, "there would be no justification
for the court's intrusion into the ordinary processes of
administration and judicial review." Am. Bankers
Ass'n v. Nat'l Credit Union Admin., 38 F.Supp.2d
114, 140 (D.D.C. 1999) (internal citations and quotation
other critical factor in the injunctive relief analysis is
irreparable injury. A movant must "demonstrate that
irreparable injury is likely in the absence of an
injunction." Winter, 555 U.S. at 22 (citing
Los Angeles v. Lyons, 461 U.S. 95, 103 (1983)) . If
the plaintiff demonstrates a likelihood of success on the
merits and irreparable injury, the court "must balance
the competing claims of injury and must consider the effect
on each party of the granting or withholding of the requested
relief." Amoco Prod. Co. v. Gambell, 480 U.S.
531, 542 (1987).
four factors have typically been evaluated on a
"'sliding scale.'" Davis v. PBGC,
571 F.3d 1288, 1291-92 (D.C. Cir. 2009). Under this approach,
" [i]f the movant makes an unusually strong showing on
one of the factors, then it does not necessarily have to make
as strong a showing on another factor." Id.
While there is some doubt as to whether the sliding scale
approach is still appropriate after the Supreme Court's
decision in Winter, it remains good law in this
Circuit. See League of Women Voters v. Newby, 838
F.3d 1, 7 (D.C. Cir. 2016).
a preliminary injunction is an extraordinary remedy, courts
should grant such relief sparingly. Mazurek v.
Armstrong, 520 U.S. 968, 972 (1997). The Supreme Court
has observed "that a preliminary injunction is an
extraordinary and drastic remedy, one that should not be
granted unless the movant, by a clear showing, carries the
burden of persuasion." Id. Therefore, although
the trial court has the discretion to issue or deny a
preliminary injunction, it is not a form of relief to be
granted lightly. In addition, any injunction that the court
issues must be carefully circumscribed and "tailored to
remedy the harm shown." Nat' l Treasury
Employees Union v. Yeutter, 918 F.2d 968, 977 (D.C. Cir.
Likelihood of Success on the Merits
movant may show a likelihood of success on the merits by
demonstrating that it is "more likely than not"
that she will prevail. Sherley v. Sebelius, 644 F.3d
388, 398 (D.C. Cir. 2011). However, under the sliding scale
approach, if the other preliminary injunction factors
strongly favor the movant, the movant need only show the
existence of a "serious legal question" on the
merits. Id. at 398.
Legal Requirements to Successfully Establish a Due Process
Violation Under the Stigma-Plus Rule of
CFSA I, the Court expressly laid out the necessary
elements of Plaintiffs' due process claims, brought under
the so-called "stigma-plus rule" of Paul v.
Davis. 132 F.Supp.3d at 123 (citing Paul v.
Davis, 424 U.S. 693, 708 (1976) and Gen. Elec. Co.
v. Jackson, 610 F.3d 110, 121 (D.C. Cir. 2010)). Under
the stigma-plus rule there is a due process violation if the
plaintiff can show, "in addition to reputational harm,
that (1) the government has deprived them of some benefit to
which they have a legal right . . . or (2) the
government-imposed stigma is so severe that it broadly
precludes' plaintiffs from pursuing 'a chosen trade
or business.'" Id. (quoting Paul v.
Davis, 424 U.S. at 708).
Court will explain, Plaintiffs' submissions do not
establish a likelihood of success on the merits - or even a
"serious legal question" on the merits. First,
Plaintiffs have not demonstrated that they are likely to
prove that they have or will suffer harms that rise to the
level of a due process violation under either prong of
Davis. Second, they have failed to demonstrate that
they are likely to prove the existence of a vast backroom
pressure campaign by Federal Defendants that is causing the
termination of their bank accounts and banking relationships.
Plaintiffs' Are Unable to Demonstrate that they Are
Likely to Suffer the Level of Injury that Is Necessary to
Succeed on the Merits Under Either Prong of
can succeed under the first prong of Davis by
showing that Federal Defendants deprived Plaintiffs of their
right to hold a bank account. CFSA I, 132
F.Supp.3d at 123-24 (citing National Council of
Resistance of Iran v. Department of State, 2 51 F.3d
192, 204 (D.C. Cir. 2001) ("NCRI"), and
Wisconsin v. Constantineau, 400 U.S. 433, 437
(1971)). In order to show the deprivation of that right, it
is insufficient for Plaintiffs to show that they have merely
had some bank accounts terminated. The loss of some
discrete number of bank accounts does not constitute a
"change in legal status." Kartseva v.
Department of State, 37 F.3d 1524, 1527-28 (D.C. Cir.
1994). Thus, in order to demonstrate a change in legal
status, each Plaintiff must show that it has had so many bank
accounts and banking relationships terminated it has
effectively been cut off from the banking
do not contend that Federal Defendants have established a
de jure, blanket prohibition on banks transacting
with payday lenders. Instead, they allege that Federal
Defendants have applied pressure to regulated banks to stop
transacting with Plaintiffs, and so many of those banks have
succumbed to that pressure that the result is a de
facto ban that constitutes a change in legal status.
See Third Amended Complaint ("TAC")
¶¶ 8, 18, 19 [Dkt. No. 124] . That is the theory on
which the Court allowed them to proceed, and that is what
they ultimately must prove to succeed under the first prong
of Davis. See CFSA I, 132 F.Supp.3d at 123.
Plaintiffs can succeed under the second-prong of
Davis by showing that "the continued loss of
banking relationships, " caused by Operation Choke
Point, "may preclude them from pursuing their chosen
line of business." CFSA I, 132 F.Supp.3d at
123-24 (citing NCRI, 251 F.3d 192 &
Constantineau, 400 U.S. 433). To do so, Plaintiffs
must show that Operation Choke Point "broadly precludes
plaintiffs from pursuing" the payday lending business.
Id. at 123 (quoting Gen. Elec. Co., 610
F.3d at 121); see also Trifax Corp. v. District of
Columbia, 314 F.3d 641, 644 (D.C. Cir. 2003)
("government stigmatization that broadly precludes
individuals or corporations from a chosen trade or business
deprives them of liberty in violation of the Due Process
Clause."). Plaintiffs can show broad preclusion from the
payday lending business by proving that Federal
Defendants' actions have or will "effectively put
[them] out of business." Trifax Corp., 314 F.3d
submissions to the Court do not establish that they have a
raised a "serious legal question, " let alone that
they are likely to succeed, on either prong of
Davis. To date, they have not been cut off from the
banking system or been put out of business, and their
evidence that those harms will befall them in the future is
speculative and conclusory.
Plaintiffs' evidence of past injury fails to ...