Keeping Tabs on the Ninth Circuit
December 16, 2022 - This Week at the Ninth

This Week At The Ninth: Deceptive Financial Advisory Services and Religious Speech

Blog graduation

This week, the Court addresses the definition of “financial advisory services” under the Consumer Financial Protection Act and whether a plaintiff’s allegations of First Amendment violations plausibly stated a claim under Federal Rule of Civil Procedure 12(b)(6).


The Court holds that a defendant’s business, which advertised itself as a targeted program for helping students apply to scholarships, constituted “financial advisory services” covered by the Consumer Financial Protection Act (CFPA) and was deceptive in violation of the Act.

The panel: Judges Graber, Tallman, and Friedland, with Judge Tallman writing the opinion.

Key highlight: “Aria is incorrect that scholarships are not financial in nature merely because they do not have to be repaid. As discussed, the ordinary meaning of financial is broad and encompasses both cash financing and debt financing. Indeed, the definition of ‘finance’ specifically contemplates raising funds, regardless of their origin, for college tuition. Advising students to exhaust scholarship opportunities before taking on debt is no less ‘financial’ than advising students to leverage their unique access to federally subsidized loans.” (Citations omitted).

Background: Defendant Armond Aria, through his company Global Financial Support, Inc. (Global), advertised his business by mailing solicitations to prospective college students. The solicitations advised students to apply for “free” scholarships before taking out student loans. The solicitations then offered to provide each student with targeted scholarship opportunities in exchange for a processing fee. Students who paid the fee received a booklet containing information about scholarships and financial aid programs. Although the booklets contained some tailored information, Aria admitted that most of the information was generated at a group level and was not tailored to each individual student. Through these practices, Global generated $4.7 million in fees from 76,000 students.

The Consumer Financial Protection Bureau (CFPB) filed a civil enforcement action against Aria and Global. The CFPA prohibits “any covered person” from “engag[ing] in any unfair, deceptive, or abusive act or practice.” 15 U.S.C. §5536(a). The CFPB alleged that the defendants’ conduct was deceptive because, among other things, the solicitations misleadingly led students to believe that Global would match them with individually targeted scholarships and help them apply for those scholarships. The district court granted the CFPB’s motion for summary judgment and ordered defendants to pay $4.7 million in restitution and a $10 million civil penalty.

Result: The Ninth Circuit affirmed. First, the Court held that Aria was a “covered person” under the CFPA. A “covered person” is “any person that engages in offering or providing a consumer financial product or service,” which includes “providing financial advisory services ... to consumers on individual financial matters or relating to proprietary financial products or services.” 15 U.S.C. §§ 5481(6)(A), 5481(15)(A)(viii). The Court rejected Aria’s argument that advice about “free,” gift-based scholarships did not fall within this definition. The Court reasoned that advising students to pursue scholarships before taking out loans is “financial” in nature. The Court also pointed out that Global’s booklets included a range of other financial advice about subjects beyond scholarships, including, for example, tax subsidies and health insurance.

Second, the Court affirmed the district court’s holding that Global’s solicitations were deceptive. Existing Ninth Circuit precedent instructed courts to determine whether a solicitation is misleading by considering “the net impression it creates.” FTC v. LLC, 453 F.3d 1196, 1200 (9th Cir. 2006). In this case, the Court held that the district court did not err in applying the net impression test to defendants’ conduct. The Court relied in part on the fact that Global’s solicitations (1) implied that students would be enrolled in a program to help them apply for scholarships, but instead merely provided them with booklets; (2) advertised targeted scholarship opportunities, but provided primarily group level information that was not individually tailored to each student; and (3) manufactured a sense of urgency by including arbitrary enrollment deadlines that carried no consequences. Considering these facts, the Court agreed with the district court that there was no genuine dispute of material fact as to the deceptiveness of the defendants’ conduct.


The Court holds that a plaintiff plausibly alleged that her school district’s policy prohibiting decoration on graduation caps, although neutral and generally applicable on its face, was selectively enforced against her religious speech in violation of her Free Exercise and Free Speech rights.

The panel: Judges Graber, Owens, and M. Miller Baker (Ct. Int. Trade), with Judge Graber writing the opinion, and Judge Baker partially concurring and partially dissenting.

Key highlight: “To be sure . . . several possibilities might explain the alleged violation of Plaintiff’s free-speech rights. It may be that the other students were not permitted to adorn their caps but did so defiantly or were permitted to adorn their caps by accident. But . . . the selective enforcement of the District’s policy renders it plausible that the rationale for the restriction was the opinion or perspective of the speaker, or the content of her expression. In short, in this case, the same facts that make the selective enforcement not generally applicable in the free-exercise context, make the selective enforcement not content or viewpoint neutral in the free-speech context.” (Internal quotation marks omitted.)

Background: Plaintiff Larissa Waln is a member of a Native American tribe in which it is customary to wear eagle feathers “in times of great honor.” Wearing the feather during graduation ceremonies specifically “allows Native students to honor their religious beliefs, pay respect to their ancestors, and recognize the strength it took to reach this milestone as individuals and as members of their tribal communities.”

Plaintiff asked the Dysart School District to accommodate her religious practice by allowing her to wear an eagle feather on her cap during her graduation ceremony. The District declined on the ground that its policy prohibiting students from decorating their caps permits no exceptions. Plaintiff arrived at the ceremony wearing an eagle feather, and District officials prohibited her from attending. That same day, the District allegedly permitted other students to wear non-religious messages on their caps at other ceremonies. For example—and as documented in a photo Plaintiff submitted with her complaint—a student at another ceremony appeared to wear a breast cancer awareness sticker on his cap. Plaintiff sued under 42 U.S.C. § 1983, asserting that the District had violated her rights to the free exercise of religion and free speech. The district court dismissed her complaint with prejudice for failure to plausibly state a claim. Plaintiff appealed.

Result: The Ninth Circuit reversed. The Court first held Plaintiff had plausibly alleged infringement of her Free Exercise rights. Invoking recent Supreme Court precedent, the Court explained that a Free Exercise plaintiff must show that a “government entity has burdened her sincere religious practice pursuant to a policy that is not neutral or generally applicable.” Kennedy v. Bremerton Sch. Dist., 142 S. Ct. 2407, 2422 (2022). General applicability requires “that the laws be enforced evenhandedly.” Accordingly, while the District’s policy was neutral and generally applicable on its face, the alleged manner of its enforcement was not. “If the District did not enforce the policy to exclude a student’s secular message then, in the absence of an appropriate justification, the District cannot enforce its policy to burden Plaintiff’s religious conduct.” Turning to the Free Speech claim, the Court held Plaintiff had plausibly alleged the District impermissibly suppressed her speech on the basis of its viewpoint—that is, on the basis of its “message of academic achievement and resilience.” Namely, “the same facts that make [District’s] the selective enforcement not generally applicable in the free-exercise context, make the [District’s] selective enforcement not content or viewpoint neutral in the free-speech context.”

Responding to the dissent’s arguments, the Court emphasized that for both of Plaintiff’s claims, the District’s plausible alternative explanations did not require dismissal because those explanations were not so convincing that they rendered Plaintiff’s explanation implausible. Relying on prior Ninth Circuit precedent, the Court explained that “[i]f there are two alternative explanations, one advanced by defendant and the other advanced by plaintiff, both of which are plausible, plaintiff’s complaint survives a motion to dismiss under Rule 12(b)(6).” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).

Because Plaintiff met her pleading burden on both her claims, the Court then considered whether the District had satisfied strict scrutiny by showing that “its restrictions . . . serve a compelling interest and are narrowly tailored to that end.” Kennedy, 142 S. Ct. at 2426. The only compelling interest the District advanced was its requirement to comply with the Establishment Clause. The Court deemed this justification insufficient, as that Clause does not “compel the government to purge from the public sphere anything an objective observer could reasonably infer endorses or partakes of the religious.” Kennedy, 142 S. Ct. at 2427.

Judge Baker concurred in part and dissented in part. He believed Plaintiff had failed to plausibly allege selective enforcement for two reasons. First, he stated that Plaintiff could not plead facts about what happened at other graduation ceremonies “on information and belief” because those ceremonies were public events within Plaintiff’s knowledge. Second, even if it was plausible to infer that other students had worn secular messages during other ceremonies, he opined that it was equally plausible those students had simply broken the District’s rules. Because there was an “obvious alternative explanation,” he disagreed with the majority’s conclusion that Plaintiff’s claims “cleared the pleading standard enunciated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009).” Nevertheless, Judge Baker concurred in the judgment, explaining that the district court had erred in denying Plaintiff leave to amend.