HELENA — The voter-initiative to cap interest charged by payday and title lenders in Montana will remain on the Nov. 2 ballot, a state district judge ruled Thursday, as he soundly rejected payday lenders’ claims that Initiative 164 signature gatherers violated the law.
District Judge C.B. McNeil of Polson said payday lenders that sued to disqualify I-164 failed to show that any signatures were gathered illegally in qualifying the measure for the ballot.
“The certification of I-164 (for the ballot) by the secretary of state shall remain in full force and effect,” he wrote.
I-164, backed by a coalition of consumer groups, unions and low-income groups, caps the annual interest rate charged by payday and auto-title lenders to 36 percent.
Supporters of I-164 hailed McNeil’s decision Thursday, saying it appears to clear the way for Montana voters to decide the issue next month.
“The lending industry made wildly irresponsible and distorted claims in their desperate attempts to remove I-164 from the ballot,” said Jim Reynolds, a Helena attorney who represented the pro-initiative campaign. “Fortunately, they were unsuccessful. Hopefully Montanans will be able to vote on this matter without further interference from the lending industry.”
Lenders could appeal McNeil’s ruling to the Montana Supreme Court, but one of their spokesman said Thursday that a decision hasn’t been made.
“I’ve not had a chance to talk with anybody in the industry,” said Bernie Harrington, who owns EZ Money Check Cashing, a payday lender with offices in four Montana cities. “I’ll visit with our counsel and figure out what the options are.
“Obviously, I’m disappointed. I respect the judge, but I completely disagree with his decision.”
Payday and auto-title lenders offer short-term loans, usually for two- to four-week periods, and can charge a fee of up to one-fourth of the value of the loan. Those fees equate to annual interest rates of up to 600 percent.
Lenders have said I-164, if passed, essentially puts them out of business, because they can’t make a profit with an annual interest rate capped at 36 percent.
Harrington and four other payday-lending owners and companies sued the state in August, saying I-164 should be tossed from the ballot because its supporters committed widespread violations this spring while gathering signatures on petitions to place the measure on the Nov. 2 ballot.
I-164 supporters turned in petitions with about 27,400 valid signatures, or 3,000 more than required to place it on the November ballot.
The lawsuit said signature-gatherers were paid by the signature, which is a violation of state law; made misleading statements about the initiative when trying to persuade people to sign it; improperly notarized the petitions; and sometimes did not attach a full text of I-164 to the petitions, as required by law.
McNeil rejected every argument, saying lenders presented no convincing evidence to support them.
McNeil noted that while some signature-gatherers received gift cards for “going above and beyond the call of duty by extending hours spent collecting signatures,” they were not paid on a per-signature basis.
He also said signature gatherers’ statements about I-164 while encouraging people to sign the petitions is “core political speech” protected by the First Amendment.
Reynolds said the I-164 campaign “took great care” to meet all laws and requirements in the signature-gathering effort and that the secretary of state’s office received no complaints against the effort.
Montana has about 150 payday and auto-title lenders, who wrote about $45 million worth of loans in 2009.