Abuse of Discretion – Due Process Violation

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WI Court of Appeals – District IV

Case Name: Payday Loan Resolution, LLC, et al. v. Wisconsin Department of Financial Institutions

Case No.: 2018AP821

Officials: Lundsten, P.J., Kloppenburg and Fitzpatrick, JJ.

Focus: Abuse of Discretion – Due Process Violation

Payday Loan Resolution, LLC, William Karger, and Lauren Petruzzelli (collectively, Payday) appeal a circuit court order that affirmed an Order of the Administrator of the Wisconsin Department of Financial Institutions, Division of Banking (the Division). The Order requires that Payday, a non-Wisconsin business, cease certain business activities in Wisconsin, pay a forfeiture, and issue refunds for all fees paid by Wisconsin clients to Payday, because Payday “was conducting unlicensed adjustment service company business” in violation of Wisconsin statutes and had not complied with an earlier order issued by the Division.

The parties do not dispute that the Division was exercising Wisconsin’s “police power” in issuing the Order against Payday, and Payday does not dispute that it “was conducting unlicensed adjustment service company business” as stated in the Order. However, Payday argues that the Division’s exercise of Wisconsin’s police power over Payday violates due process. Payday asserts that this is so because due process limitations on Wisconsin’s exercise of its police power require greater contacts between Payday and Wisconsin than are necessary to establish “personal jurisdiction for judicial process,” and because the requirements for “personal jurisdiction” are not present, it necessarily follows that due process bars the exercise of Wisconsin’s police power against Payday. We reject Payday’s argument as contrary to the test set forth by our supreme court for the proper exercise of Wisconsin’s police power over out-of-state entities. Applying that test here, we conclude that the Division’s issuance of the Order falls well within due process limits. Accordingly, we affirm.

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.