Sixth Circuit Judge Kathleen Trandahl has rejected Erin Ageton’s lawsuit against Attorney General Marty Jackley for what she called an incomplete explanation of the proposed ballot measure to cap interest rates at 36%.
While I’d love to see someone win a big lawsuit against the new National Association of Attorneys General president, I’m glad it didn’t happen on this case. As I detailed when payday lending exec Ageton filed this suit last week, Ageton was asking the court to order Jackley to step beyond the legal requirements of his office and peddle her industry’s political arguments against the rate-cap initiative. While I don’t have a copy of Judge Trandahl’s ruling yet, it appears she recognizes that in providing a ballot explanation, the Attorney General acts as a legal advisor, not an economist or soothsayer on what a given ballot initiative might do if passed.
Judge Trandahl took a little longer than expected to issue this ruling, perhaps because Ageton sandbagged her with four exhibits, 137 pages of what Ageton said backed up her case. Those exhibits did no such thing. The four papers, two of them commissioned by the payday lending industry, all talked about the economic impacts of capping interest rates. None of them made the legal case that the Attorney General is obliged by South Dakota law to make such economic arguments in his explanations of ballot measures. The first exhibit, this non-peer-reviewed paper for the Northwest Area Foundation, actually undermines Ageton’s argument. Ageton claims that capping interest rates at 36% will force her payday lending company and all other payday lenders out of business in South Dakota. The NWAF paper offers no such certainty, saying that payday lenders may close under a rate cap but pointing out that some payday lenders still operate and that the evidence of doom for lenders under rate caps is “inconclusive or incomplete” [p. 6]. The NWAF paper acknowledges that if payday lenders choose to leave the market, banks and credit unions can fill the short-term lending gap with cheaper products [p. 7].
The payday lenders still won a small victory, delaying the circulation of the rate-cap initiative petition by a couple of weeks. However, they still have until November 8 to gather the 13,871 signatures required to place the measure on our 2016 general election ballot, and I suspect the cross-partisan cooperation on this bill will easily overcome that Sioux Falls paper’s continual propaganda on behalf of the payday lending industry. (Really, how many updates do we need to hear about one business’s construction?)