Penn. Judge Rejects Tribal Lending Manager’s Immunity Defense
A federal judge in Pennsylvania ruled against a tribal lending enterprise (TLE) employee’s motion to dismiss for alleged racketeering and state lending law violations. The employee, Craig Mansfield, was co-manager of Sovereign Lending Solutions (SLS), an auto title loan company wholly owned and operated by the Lac Vieux Desert Band of Lake Superior Chippewa Indians.
The plaintiff, Daniel Pennachietti, asserted that the loan he received from the TLE violated Pennsylvania state usury caps and federal racketeering laws. Mansfield moved to have the case dismissed on the grounds of sovereign immunity, arguing that he was acting within his scope of employment as the manager of SLS.
The memorandum from the court accompanying Mansfield’s denial for a motion to dismiss relied heavily on the recent Supreme Court decision in Lewis v. Clarke. In Clarke, a tribal employee was sued personally for an auto collision he caused while on the clock for the Mohegan Sun Casino. The Supreme Court ultimately held that since Clarke was sued in his personal capacity, the tribe itself was shielded from any monetary damages or operational interference. Clarke could not rely upon the tribe’s sovereign immunity as a defense. Any judgment found in favor of the Lewis family would not harm tribal coffers or the tribe’s ability to govern, but rather only impose upon Clarke.
The attorney for Pennachietti, Robert Salvin, had also represented another borrower against Mansfield a few years ago in front of the same federal judge. In that case, the judge granted Mansfield a motion to dismiss on the grounds of lack of subject matter jurisdiction due to sovereign immunity. However, circumstances have now changed and Salvin came back to court with a new plaintiff and Supreme Court precedent on his side.
Like the Clarke case, Pennachietti also sued the tribal employee in his personal capacity, not his official capacity with the tribe. Mansfield again asserted the same sovereign immunity defense, but this time the court found it unpersuasive due to the ruling in Clarke and denied Mansfield’s motion to dismiss.
While the decision in Clarke has likely closed the door to tribal employees relying on the tribe’s sovereign immunity to escape jurisdiction when sued in their personal capacity, a footnote in Clarke does provide another route for employees being sued for actions taken in the scope of their employment. Justice Sotomayor points out in the second footnote of the majority’s opinion in Clarke that a form of personal immunity is available to Clarke (an immunity that Clarke unfortunately waited to assert until arguing before the Supreme Court, so the court could not take it under consideration).
Official immunity is a type of personal immunity from suit enjoyed by public officials for injuries caused by exercising their official authority. Theoretically, this form of immunity would be available to both Clarke and Mansfield when sued under their personal capacity. As Indian Country begins to feel the legal effects of the Supreme Court decision in Clarke, Justice Sotomayor’s easter egg may hold the key to protecting tribal employees acting within the scope of their employment.
As more and more plaintiff’s attorneys and federal regulators look for ways around tribal sovereign immunity, tribes may need to look beyond Indian law for protections and answers.
