In Midwest Title Loans, Inc. v. Mills, the U.S. Court of Appeals for the Seventh Circuit affirmed a lower court decision, previously reported, and handed a major victory to Ballard Spahr client Midwest Title. The unanimous decision, authored by Judge Richard Posner, constitutes a ringing endorsement of our position that the Commerce Clause of the U.S. Constitution precludes Indiana from applying its Uniform Consumer Credit Code (UCCC) to loans made in person in Illinois to Indiana residents.
According to the court, extraterritorial laws such as the UCCC, "however well intentioned and genuinely beneficial to the state imposing it, would burden interstate commerce by restricting travel and a firm's ability to deal with residents of a different state." The court reasoned that to "allow Indiana to apply its law against title loans when its residents transact in a different state that has a different law would be arbitrarily to exalt the public policy of one state over that of another." It emphasized that its "conclusion is not altered by the fact that Midwest advertises in Indiana. If Indiana cannot prevent Midwest from lending money to [Indiana residents] in Illinois, it cannot prevent Midwest from truthfully advising them of this opportunity."