In Consumer Financial Protection Bureau v. CashCall, Inc., No. 23-55259 (9th Cir. Jan. 3, 2025), the Ninth Circuit holds the defendant to its express waiver of a Seventh Amendment jury right, affirming an award of more than $134 million in legal restitution against it. The panel declines to excuse the jury waiver on the ground that the parties supposedly both misapprehended that the restitutionary remedy was equitable, rather than legal, in nature.
The federal Consumer Financial Protection Bureau (CFPB) brought an enforcement action against CashCall over a scheme to collect loans that were allegedly invalid under state law. CashCall originally demanded a jury trial in its answer. But after the district court granted summary judgment in favor of the CFPB, “the parties filed a joint status report stating that they ‘agreed to waive their right to a jury,’ [and] the court conducted a bench trial to determine the appropriate remedy. In addition to a civil penalty, the Bureau sought restitution in the amount of the total interest and fees paid on the void loans.” At the first trial, the district court “imposed a civil penalty of $10.3 million but declined to order restitution.”
On the first appeal, CFPB v. CashCall, Inc. (CashCall I), 35 F.4th 734 (9th Cir. 2022), the Ninth Circuit affirmed summary judgment for the CFPB but “held that the district court’s order denying restitution rested on a legal error,” and thus the panel vacated and remanded for further proceedings. In its opinion, based on a recent Supreme Court decision (Liu v. SEC, 591 U.S. 71 (2020)), the panel considered the possibility that the CFPB might seek legal, rather than equitable, restitution on remand.
“On remand, the parties disputed whether the district court could order legal as opposed to equitable restitution. As it had argued in this court, the Bureau insisted that ‘the nature of the restitutionary remedy that [it] has sought throughout this lawsuit is legal’ because it sought only the return of ‘consumer losses, measured by the interest and fees that CashCall had illegally collected.’ CashCall replied that, based on what the Bureau said during the initial proceedings, the court could award only equitable restitution, and that an award in excess of net profits is ‘beyond a court’s equitable powers and necessarily then implicates a defendant’s Seventh Amendment rights.’ But CashCall did not object to a bench trial, nor did it challenge the validity of the jury-trial waiver that it had made during the initial proceedings before the district court.”
The district court granted the CFPB’s request to seek legal restitution and ordered CashCall to pay more than $134 million, measured by the full amount that the court calculated was lost by consumers.
The Ninth Circuit affirms the award. CashCall’s principal argument was that it should have been granted a jury trial on a claim for legal restitution. But the panel declines to excuse CashCall from its original jury waiver. “At no point before trial did CashCall suggest that it was entitled to a jury trial or seek to withdraw its waiver. The case proceeded to a bench trial, in which CashCall participated without objection.”
“CashCall does not dispute that it waived its jury trial right but insists that it did so only in reliance on the Bureau’s statements that the Bureau was seeking equitable restitution. As subsequent developments in the law have revealed, the Bureau’s characterization of the remedy it sought was incorrect.”
Significantly, assuming that CashCall was misled, “it was a legal error shared by both parties: CashCall told the district court that it ‘generally agree[d] with everything’ the Bureau had said about the remedy it was seeking—including that it would be ‘an equitable remedy that . . . would be the Court’s remedy to decide.’ And [CashCall] separately told the district court that it understood the Bureau to be seeking ‘an equitable monetary award.’”
The Ninth Circuit holds that even a mutual mistake would not excuse CashCall’s jury waiver. “We have never held that a party’s legal error can vitiate its waiver of a jury-trial right, or that a party must demonstrate a correct understanding of the law for its waiver to be effective. Such a rule would be inconsistent with the settled understanding that a party can waive the right to a jury trial simply by doing nothing” under Fed. R. Civ. P. 38 by failing to make a timely jury demand.
“After CashCall voluntarily participated in the first bench trial, an objection on remand could not have revived its jury right. See 9 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2321, at 334 (4th ed. 2020) (‘Once the opportunity to demand a jury trial has been waived, the right is not revived by a reversal on appeal or by the grant of a new trial.’). But even on remand . . . CashCall still did not demand a jury trial or otherwise object to participating in the second bench trial.”
Concurring, Judge Ryan Nelson agreed that CashCall waived its Seventh Amendment rights, but invites the Ninth Circuit to reconsider en banc the holding in FTC v. Commerce Planet, Inc., 815 F.3d 593, 602 (9th Cir. 2016), that “claims for restitution, even when understood as actions at law, never trigger the Seventh Amendment’s guarantee.”
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