The Third Circuit Court of Appeals affirmed a district court ruling that dismissed multiple federal lawsuits filed by TitleMax companies challenging Pennsylvania's enforcement of state banking regulations. The consolidated cases involved four TitleMax subsidiaries contesting actions by the Pennsylvania Department of Banking and Securities related to alleged usury law violations.
The appellants included TitleMax of Virginia, Inc., TitleMax of Delaware, Inc., CCFI Companies LLC, TitleMax of Ohio, Inc., TMX Finance LLC, and TitleMax Funding, Inc. These affiliated business entities collectively challenged enforcement actions initiated by Pennsylvania's banking regulator in 2024.
According to the Third Circuit opinion filed Jan. 7, 2026, the Pennsylvania Department of Banking and Securities had ordered TitleMax to show cause why it should not pay civil penalties and restitution for violating the state's usury laws. The department's enforcement action prompted TitleMax to file several federal lawsuits against the Secretary of the Department.
TitleMax's federal court challenge alleged violations of multiple constitutional provisions, including the Commerce Clause, the Full Faith and Credit Clause, and the Fourteenth Amendment. The companies argued that Pennsylvania's regulatory enforcement overstepped constitutional boundaries in its treatment of their multi-state lending operations.
Four of the related lawsuits were consolidated in the U.S. District Court for the Middle District of Pennsylvania under Judge Jennifer P. Wilson. The district court proceedings involved cases numbered 1:24-cv-2212, 1:24-cv-02224, 1:24-cv-02134, and 1:24-cv-02093, all filed in 2024.
In its ruling, the district court applied the Younger v. Harris doctrine, which generally requires federal courts to abstain from hearing cases that would interfere with ongoing state court proceedings. The Supreme Court established this principle in 1971 to prevent federal courts from disrupting state judicial processes, particularly in criminal cases but extending to certain civil enforcement actions.
Circuit Judge Barbara Milano Keenan wrote the Third Circuit opinion, joined by Judges Krause and Phipps. The appeals court described the district court's analysis as "thorough and methodical" in reaching its conclusion that Younger abstention was required.
The Third Circuit's decision represents a significant setback for TitleMax's efforts to challenge state-level banking regulation through federal courts. The ruling suggests that companies facing state banking enforcement actions cannot easily circumvent those proceedings by filing parallel federal constitutional challenges.
TitleMax operates as a title lending company, providing short-term loans secured by vehicle titles. These types of lending operations often face scrutiny from state banking regulators due to high interest rates that may violate state usury laws, which cap the maximum interest rates lenders can charge.
Pennsylvania's usury laws are among the regulations that state banking departments use to oversee lending practices within their jurisdictions. When companies allegedly violate these laws, state banking regulators can initiate enforcement proceedings seeking penalties and restitution for affected consumers.
The multi-state nature of TitleMax's operations appears central to the constitutional challenges the company raised. By operating through subsidiaries incorporated in different states, TitleMax likely argued that Pennsylvania's enforcement actions improperly interfered with interstate commerce or failed to respect the legal determinations of other states.
However, the federal courts' application of the Younger doctrine effectively prevented these constitutional arguments from being heard on their merits. The abstention principle recognizes that state courts are capable of addressing federal constitutional issues raised in state proceedings.
The Third Circuit's affirmance means that TitleMax must pursue its constitutional challenges, if any remain viable, through the state enforcement proceedings rather than through separate federal litigation. This outcome reinforces the principle that state banking regulation remains primarily within state jurisdiction, even when it affects multi-state lending operations.
The decision also demonstrates the continued vitality of the Younger abstention doctrine in cases involving state regulatory enforcement. Federal courts regularly apply this principle to avoid interfering with state administrative and judicial processes, particularly when those processes provide adequate forums for raising federal constitutional claims.
For other multi-state lending companies, the ruling serves as a reminder that federal court challenges to state banking enforcement may face significant procedural hurdles. Companies subject to state banking regulation may find their most viable legal options lie within the state enforcement proceedings themselves rather than in parallel federal litigation.
The case highlights ongoing tensions between state regulatory authority and federal court jurisdiction in the financial services sector. While companies may raise constitutional challenges to state banking enforcement, federal courts will not always provide an alternative forum for those disputes when state proceedings are already underway.