Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—D. Nev.: Public interest group could intervene, inspect sealed documents in FTC deceptive payday loan action, (Nov 19, 2014)

By Linda O’Brien, J.D., LL.M.

In an action against payday lenders affiliated with American Indian tribes regarding the offer and sale of high-fee, short-term payday loans, a public interest group could intervene and access certain sealed court documents, according to a magistrate judge in the federal district court in Las Vegas. However, the group’s motion to modify the protective order sealing the documents was denied (FTC v. AMG Services, Inc., November 13, 2014, Ferenbach, C.).

Following an investigation into consumer complaints about the offer and sale of high-fee, short-term payday loans, the FTC filed a complaint against 18 payday lenders affiliated with American Indian tribes for engaging in deceptive collection practices in violation of the FTC Act. The FTC moved for summary judgment against all defendants. In October 2013, certain defendants agreed to settle the FTC charges in a settlement that was approved by the court. In March 2014, the court determined that the FTC Act applied to tribal-chartered corporations and entered summary judgment in favor of the FTC. Certain court records remain under seal. Subsequently, public interest group Americans for Financial Reform (AFR) filed a motion for permissive intervention and motion to unseal.

Intervention. When a member of the public seeks intervention to modify a protective order and inspect court documents, the court must consider whether the intervention would unduly delay or prejudice the adjudication of the original parties’ rights and whether the strong presumption in favor of access has been rebutted.

The court determined that the defendants failed to rebut the presumption in favor of access. In rejecting the defendants’ argument that AFR’s motion was untimely, the court noted that a motion to intervene was timely as long as the documents remain under seal. The defendants also failed to offer facts demonstrating that AFR’s intervention was prejudicial or that’s AFR’s reason for intervention—public education—lacked a sufficiently strong nexus with the underlying action. The defendants’ argument that the FTC, a party to the action, adequately represents the parties’ interest was also rejected. Although both the AFR and FTC both seek to protect the public from predatory lenders, a public interest agency has a right to ensure the workings of government agencies. Furthermore, the defendants’ contention that AFR’s counsel moved to intervene to access records for a different client that was involved in the different action with the same defendants was rejected, since motive for intervention was irrelevant, the court noted. Thus, the motion to intervene was granted.

Motion to unseal. However, the court determined that AFR’s motion to unseal the protected documents and distribute their contents to the public should be denied as not ripe for review. Since AFR did not have access to the records in controversy, it lacked an adequate factual basis to challenge the court’s protective order or provide sufficiently compelling reasons why the sealed information should be released to the public. Furthermore, AFR failed to meet the requirements of Federal Rule of Civil Procedure 26(c) that a movant seeking to modify a protective order must include certification that it has in good faith conferred or attempted to confer with other affected parties in an effort to resolve the dispute without court action. Such a motion will not be considered until the movant certifies that, after personal consultation and sincere effort to do so, the parties were unable to resolve the matter, the court concluded.

The case is No. 2:12-cv-00536-GMN-VCF.

Attorneys: Blaine T. Welsh, U.S. Attorney's Office, and Courtney Anne Estep for FTC. Andrew A. Kassof (Kirkland & Ellis LLP) and Nicole Ducheneaux (Fredericks Peebles & Morgan LLP) for AMG Services, Inc., and Red Cedar Services, Inc. Joshua M. Dickey (Bailey Kennedy) for SFS, Inc. Von S. Heinz (Lewis Roca Rothgerber LLP) for AMG Capital Management, LLC, and Level 5 Motorsports, LLC.

Companies: AMG Services, Inc.; Red Cedar Services, Inc.; SFS, Inc.; AMG Capital Management, LLC; LeadFlash Consulting, LLC; Level 5 Motorsports, LLC

Cases: ConsumerProtection FederalTradeCommissionNews