The Third Circuit ruled that applying Pennsylvania usury laws to an out-of-state lender does not violate the dormant Commerce Clause. The plaintiff issues automobile loans with interest rates as high as 160 percent. Though it loaned money to Pennsylvanians, it had no brick-and-mortar presence in Pennsylvania and did not actively advertise in Pennsylvania. Nonetheless, the company conceded that Pennsylvanians might receive some of its advertisements. Under its authority to enforce its usury laws, Pennsylvania’s Department of Banking and Securities issued a subpoena requesting documents regarding the plaintiff’s interactions with Pennsylvania residents. The plaintiff then filed this action in the United States District Court for the District of Delaware, seeking injunctive and declaratory relief for, among other things, violations of the Commerce Clause. The Third Circuit agreed with the District Court that Younger abstention did not apply. As to the merits of the plaintiff’s Commerce Clause arguments, the Third Circuit noted that the plaintiff serviced loans made to Pennsylvanians, thus applying Pennsylvania’s usury statutes to the plaintiff did not violate the extraterritoriality principle. Furthermore, the Court held that Pennsylvania has a strong interest in prohibiting usury, while the burden on interstate commerce from doing so is, “at most, incidental.” Thus, there was no Commerce Clause violation. The Third Circuit reversed the judgment of the District Court in favor of the plaintiff and remanded with instruction to enter judgment in favor of the Department of Banking and Securities.
