Note: This article originally appeared in
InsideSources’ DC Journal: https://dcjournal.com/why-does-a-rich-chicago-law-firm-keep-suing-indian-tribes/
Why does a deep-pockets Chicago law firm keep
targeting businesses run by Native American tribes?
In September, Daniel Edelman filed yet another
lawsuit against a short-term, small-dollar lending business, this one owned by
the Lac Courte Oreilles Band of Lake Superior Chippewa Indians. They are a
small band, fewer than 8,000 members, and their land – mostly covered in lakes
and forests – is in Wisconsin’s remote northwest corner.
Thanks to their federal tribal status, tribes
can run and self-regulate businesses that are traditionally regulated by state
officials, so long as they comply with federal laws. For some tribes, that has
meant building casinos. For the Lac Court Oreilles and many other tribes,
financial businesses like lending, which can be conducted online, are a better
fit.
But now the Lac Courte Oreilles are in court,
dragged in by Daniel Edelman and his law firm, Edelman, Combs, Latturner &
Goodwin. The lawsuit they filed in September is just the latest in a series
targeting Native American tribes across the U.S. for years. Recent instances
include suits against tribes in Wisconsin, California, Illinois, and Indiana.
The economic impact of their lawsuits, tribal
advocates say, has been devastating.
“There is a common perception that all tribal
governments and tribal nations are operating successful casinos and therefore
doing just fine economically,” said Kate Spilde, chair of the Sycuan Institute
on Tribal Gaming at San Diego State University. “Meanwhile, fewer than
one-third of all tribes offer casino gaming, and many tribal gaming facilities
are small, local properties that mainly provide jobs and entertainment. For
these reasons, I am a huge proponent of tribal economic development online as a
way for geographically remote tribes to participate in businesses beyond
land-based opportunities.”
E-commerce activities are particularly
attractive to tribes because the physical infrastructure for traditional
commerce requires U.S. government leases, and their land is often quite out of
the way. So, many tribes have branched into lending activities, where they are
exempt from the rate caps that some state governments have placed on
short-term, small-dollar loans.
Lending of that type is itself a tricky issue.
While such lenders are often characterized as predatory, they are often
lifesavers to the people who use them because they can’t access capital any
other way. And there is a thriving short-term loan industry in America that
tribes and their governments have a legitimate right to participate in, Spilde
said.
“Under the Dodd-Frank Act, tribal governments
have the legal right to offer and regulate financial services, and many of them
now offer short-term installment loans and other financial products online,”
Spilde noted. “When these tribal businesses are threatened by legal challenges,
the impact on tribal economic and community development are immediate and
profound since they affect employees and tribal programs that are dependent on
that industry.”
Edelman’s firm makes no secret of the fact that
it wants to drive Native American tribes out of the short-term lending business
entirely.
In a post on their law blog, they brag about
their litigation against the Cheyenne River Sioux tribe, another small group of
8,000 or so living on a massive reservation in rural South Dakota. “As should
be expected by this time, payday lending in Indian country is creating bad law
for tribal interests,” the post reads. “My initial recommendations to tribal
leaders and counsel — shut down on-reservation-based payday lending operations
operated privately immediately.”
Edelman’s argument is that the outside firms
brought in to operate these financial businesses are merely using the tribes as
fronts, collecting profits on high-interest rates tribes are allowed to charge
that would be illegal under state regulations. Tribal advocates are insulted by
what they see as a condescending view of Native Americans as unsophisticated
and inept. They note many businesses hire outside experts and consultants, and
arguing that American Indians do so out of incompetence or corruption borders
on racism.
It’s also no secret that other financial
players in the short-term loan business don’t like competing with tribal
lenders. By suing the tribes, Edelman is advancing the interests of big
financial corporations that collect profits from the industry.
And then there is the impact of Edelman’s
actions on the local economies. Noting how vital tribal commerce is, Indian
Country Today reporter Mark Trahant told NPR last year that tribes are
themselves usually the largest employers in regions where they live.
“[A healthy tribal economy] just creates jobs
that didn’t exist a decade ago,” Trahant said. “During the pandemic … a lot of
the large tribal employers tried to keep people on as long as possible. Not
everyone, of course, but in many cases, they tried to keep people working even
when the casino operations were shut down, and I think that was really
remarkable.”
If the federal government wants to end the
short-term lending business, it has the power. And if the government is
interested in being even-handed, it should apply to every business, including
banks and credit unions, who also offer expensive credit in the form of
overdrafts, not just those owned by Native American tribes.
“The fact is, short-term, small-dollar lending
is an economic lifeline for many tribes, advancing tribal sovereignty, enabling
economic development and better economic opportunity on reservations across the
country,” said Steve Parker, a member of Montana’s Chippewa Cree Tribe and a
fintech entrepreneur.
“You hurt tribal lending, you hurt American
Indians.”