Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-02106/USCOURTS-cand-3_15-cv-02106-10/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court 

Northern District of California 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

CONSUMER FINANCIAL PROTECTION 

BUREAU, 

Plaintiff, 

v. 

NATIONWIDE BIWEEKLY 

ADMINISTRATION, INC., et al., 

Defendants. 

Case No. 15-cv-02106-RS 

ORDER DENYING MOTION TO 

DISMISS AND MOTION TO STRIKE, 

AND VACATING CASE 

MANAGEMENT CONFERENCE 

This is a civil enforcement action, brought by the Consumer Financial Protection Bureau 

(“CFPB”), a federal agency, alleging that defendants have violated the Consumer Financial 

Protection Act of 2010, 12 U.S.C. §§ 5531(a), 5536(a), 5564(a), 5565, and the Telemarketing and 

Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6105(d) and implementing regulations, in 

connection with a service or product they sold known as the “Interest Minimizer.” Defendants 

Nationwide Biweekly Administration, Inc., Loan Payment Administration LLC, and Daniel S. 

Lipsky (collectively “Nationwide”) responded with counterclaims alleging, in essence, that CFPB 

acted wrongfully by engaging in extra-judicial “back-room pressure tactics ” designed to coerce 

Nationwide’s banking partners to cease doing business with it, and that those tactics succeeded. 

Nationwide contends that, as a result, it has effectively lost the ability to provide Interest 

Minimizer services to approximately 130,000 customers. 

CFPB’s motion to dismiss the counterclaims was previously granted, (and certain 

“affirmative defenses” were stricken) for reasons set out in the order on that motion and discussed 

Case 3:15-cv-02106-RS Document 139 Filed 12/13/16 Page 1 of 4
CASE NO. 15-cv-02106-RS

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United States District Court 

Northern District of California 

in some detail at the hearing. Broadly speaking, the prior order found that Nationwide had 

failed to set out sufficient plausible facts to show that, (1) CFPB had participated in allegedly 

wrongful conduct as part of the so-called “Operation Choke Point” program, or (2) that the banks 

terminated their relationships with Nationwide as the result of any such participation by CFPB in 

Operation Chokepoint, or any other allegedly wrongful extra-judicial conduct. 

 The prior order cautioned Nationwide to give careful consideration whether it could, in 

good faith, allege additional facts sufficient to address the identified pleading shortcomings. 

Nationwide elected to file amended counterclaims with additional material directed at showing 

CFPB’s participation in Operation Choke Point, and offered to support a reasonable inference that 

the filing of this suit and activities within the litigation were not the sole reasons the banks 

terminated their relationships with Nationwide. 

 CFPB again moves to dismiss, arguing that the additional factual allegations remain 

unduly conclusory and fail to show any wrongful extra-judicial conduct by it in connection with 

Operation Chokepoint or otherwise, and that the only plausible inference remains that banks 

terminated their relationships in response to CFPB’s lawful resort to legal process. Although it is 

understandable why CFPB insists the amendments have accomplished less than the prior order 

intimated would be necessary, Nationwide has now presented factual allegations—and arguments 

regarding the inferences reasonably to be drawn from those averments—that a decision on the 

basis of the pleadings alone would not be appropriate.1

 

For the same reasons discussed in the prior order, CFPB’s additional arguments regarding 

jurisdiction, standing, and sovereign immunity all fail. Whether Nationwide will be able to 

present enough evidence to create a triable issue of fact and, if so, then to persuade a trier of fact 

that the inferences it advances should be adopted, are questions for a later day.2

 Accordingly, the 

 

1

 Although CFPB may be correct that Nationwide’s opposition relies in part on factual assertions 

not set out in the amended counterclaims, the presence or absence of those specific allegations in 

the pleading is not dispositive. 

2

 CFPB has now filed a motion seeking summary judgment on Nationwide’s counterclaims. 

While the fact of that filing has not affected the conclusions of this order, and without any 

Case 3:15-cv-02106-RS Document 139 Filed 12/13/16 Page 2 of 4
CASE NO. 15-cv-02106-RS

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United States District Court 

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motion to dismiss must be denied. 

For similar reasons, CFPB’s motion to strike the ninth affirmative defense (an amended 

version of the prior tenth affirmative defense) also must be denied. Whatever merit the challenges 

to that defense may still have, the matter no longer is suitable for disposition merely on the 

pleadings alone. Finally, the motion to strike paragraph 36 of the third amended answer is denied, 

on the basis that the amendments thereto, even if not strictly authorized, are non-substantive. 

Nationwide, however, will be held to its representation that the legal effect of the paragraph as 

amended does not differ from that of the prior version. 

In light of the parties’ joint case management conference statement, the case management 

conference set for December 15, 2016 is vacated. The parties’ joint request that the Scheduling 

Order be corrected to provide that “Rebuttal disclosures / reports” and the “expert discovery cutoff” dates are January 30, 2017 and March 2, 2017,” respectively, is hereby granted.

The parties are directed to continue their efforts to resolve all outstanding discovery issues, 

with such assistance of the assigned magistrate judge as may be necessary, as expeditiously as 

possible. The Court notes CFPB’s concern regarding the relatively short interval between the 

presently set hearing date on its motion for summary judgment and the trial date. Appropriate 

scheduling relief may be sought, or may be granted sua sponte, if it appears that a ruling on the 

summary judgment motion likely cannot be issued sufficiently in advance of the parties’ 

obligations to comply with the various pre-trial deadlines. 

 

 

implication as to how likely or not it will be that triable issues remain, it is worth noting that 

having a record on which to evaluate the parties’ arguments may be more illuminating that 

attempting to do so on the face of the pleadings. 

Case 3:15-cv-02106-RS Document 139 Filed 12/13/16 Page 3 of 4
CASE NO. 15-cv-02106-RS

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United States District Court 

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IT IS SO ORDERED. 

Dated: December 13, 2016 

______________________________________ 

RICHARD SEEBORG 

United States District Judge 

______________________________________

RICHARD SEEBORG

United States District Judge

Case 3:15-cv-02106-RS Document 139 Filed 12/13/16 Page 4 of 4