On August 5, the U.S. Court of Appeals for the 4th Circuit affirmed the dismissal of a South Carolina-based title lender’s federal challenge to a Pennsylvania state administrative enforcement proceeding alleging violations of the state’s usury laws. The lender originated all loans in South Carolina but made approximately 5,270 title-secured loans to Pennsylvania residents at interest rates allegedly as high as 720 percent, exceeding the state’s general 6 percent usury cap. The lender also engaged in loan-servicing activities in Pennsylvania, including recording liens, collecting payments, and repossessing vehicles. After a Pennsylvania agency issued an order to show cause seeking more than $52.7 million in civil penalties, the lender filed suits in multiple federal courts asserting dormant Commerce Clause challenges and arguing that the state could not apply its usury laws to loans originated entirely in South Carolina.

The 4th Circuit held that Younger abstention required the federal court to refrain from interfering with the ongoing state quasi-criminal civil enforcement proceeding, finding that all three Middlesex factors were satisfied: (i) the state proceeding was ongoing and judicial in nature, (ii) it implicated Pennsylvania’s important interest in protecting residents from usurious lending, and (iii) it afforded the lender an adequate opportunity to raise constitutional objections. The court further noted that Pennsylvania’s usury laws applied evenhandedly and did not regulate commerce occurring wholly outside the state. Separately, the court held that the lender’s challenge to a 2024 investigative subpoena was unripe because the subpoena was non-self-executing and had not been judicially enforced. The court therefore vacated the judgment insofar as it dismissed the subpoena claims with prejudice and remanded with instructions to dismiss those claims without prejudice.