Procedural Defects Do Not Defeat Younger Abstention in Pennsylvania’s Quasi‑Criminal Usury Enforcement, and “Prospective” Federal Relief May Still Interfere via Preclusion

1. Introduction

TMX Finance LLC v. Secretary Pennsylvania Department of Banking and Securities (3d Cir. Jan. 7, 2026) arises from Pennsylvania’s administrative enforcement efforts against a group of affiliated entities collectively referred to as “TitleMax.” In 2024, the Pennsylvania Department of Banking and Securities issued an order to show cause seeking civil penalties and restitution for alleged violations of Pennsylvania usury laws, tied to loans made to thousands of Pennsylvania residents.

Rather than litigate those issues in the state administrative-and-review framework, TitleMax filed multiple federal actions against the Department’s Secretary, asserting constitutional claims under the Commerce Clause, Full Faith and Credit Clause, and the Fourteenth Amendment. The district court consolidated four suits and dismissed them under Younger v. Harris abstention. The Third Circuit affirmed.

The key issues on appeal were whether Pennsylvania’s proceeding is the type that triggers Younger abstention (a “quasi-criminal” civil enforcement action), whether the “Middlesex factors” favor abstention, whether alleged procedural defects (naming/service) negate abstention or establish bad faith, and whether TitleMax’s requested “prospective” relief could avoid interference with the state proceeding.

2. Summary of the Opinion

The Third Circuit held that Younger abstention applies and requires dismissal. The court concluded:

The Pennsylvania administrative enforcement matter is a civil enforcement proceeding “akin to a criminal prosecution” (i.e., quasi-criminal).
The Middlesex factors are satisfied: (1) an ongoing judicial proceeding (administrative process with judicial review), (2) important state interests (usury enforcement), and (3) an adequate opportunity to raise constitutional challenges in state proceedings.
Alleged defects in how the Department named or served the entities are case-specific procedural complaints that do not change the “fundamental character” of the proceeding for Younger purposes.
No “exceptional circumstances” (such as bad faith) were shown.
TitleMax’s supposedly “prospective” requested injunctions could still interfere with the state case because federal judgments may have preclusive (res judicata) effect in Pennsylvania courts.
A challenge to the 2024 subpoena was also properly rejected as unripe given TitleMax’s theory (a Dormant Commerce Clause “chilling effect”) was foreclosed by prior Third Circuit precedent.

3. Analysis

3.1 Precedents Cited (and How They Shaped the Decision)

Younger v. Harris, 401 U.S. 37 (1971)
Role: The foundational abstention doctrine: federal courts generally must exercise jurisdiction, but must refrain where federal relief would unduly interfere with certain ongoing state proceedings, reflecting comity and equity restraint.
Sprint Commc'ns, Inc. v. Jacobs, 571 U.S. 69 (2013) (quoted via Altice USA, Inc. v. N.J. Bd. of Pub. Utilities, 26 F.4th 571 (3d Cir. 2022))
Role: Cabins Younger to limited categories and frames the “civil enforcement akin to criminal prosecution” inquiry. The panel uses this structure to classify Pennsylvania’s usury enforcement.
Altice USA, Inc. v. N.J. Bd. of Pub. Utilities, 26 F.4th 571 (3d Cir. 2022)
Role: Provides the Third Circuit’s contemporary two-step framework: (1) whether the state action is among the qualifying classes (here, quasi-criminal civil enforcement), and (2) whether the “Middlesex factors” are met.
Middlesex Cnty. Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423 (1982)
Role: Supplies the three-factor test for when abstention is warranted once a qualifying category is found: ongoing judicial proceedings, important state interest, and adequate opportunity to raise federal claims.
PDX N., Inc. v. Comm'r N.J. Dep't of Lab. & Workforce Dev., 978 F.3d 871 (3d Cir. 2020)
Role: Used for standard of review (de novo) and for the principle that courts assess the generic importance of the state proceeding rather than the merits. Also invoked (with O'Neill v. City of Phila., 32 F.3d 785 (3d Cir. 1994)) to reject merits-based reframing of the “important state interest” factor.
Gonzalez v. Waterfront Comm'n of N.Y. Harbor, 755 F.3d 176 (3d Cir. 2014)
Role: Supports treating administrative proceedings with state judicial review as “judicial in nature” for the first Middlesex factor.
Ohio Civ. Rts. Comm'n v. Dayton Christian Sch., Inc., 477 U.S. 619 (1986)
Role: Establishes that it is enough for Middlesex that constitutional claims can be raised during state-court judicial review of the administrative proceeding.
TitleMax of Del., Inc. v. Weissmann, 24 F.4th 230 (3d Cir. 2022) (spelled “Weissman” once in the opinion)
Role: Critically, this prior TitleMax decision resolves the “important state interest” point: Pennsylvania has a strong interest in prohibiting usury and any Dormant Commerce Clause burden is incidental. The panel treats this as substantively dispositive of Middlesex factor two and as undercutting TitleMax’s “chilling effect” ripeness theory.
Cannatella v. California, 404 F.3d 1106 (9th Cir. 2005)
Role: TitleMax invoked it to argue corporate separateness defeats abstention. The Third Circuit distinguishes it: unlike two independent attorneys with unlinked disciplinary matters, TitleMax entities have corporate affiliations and intertwined interests, so treating them separately for abstention is not compelling here.
Sirva Relocation, LLC v. Richie, 794 F.3d 185 (1st Cir. 2015) (citing New Orleans Pub. Serv., Inc. v. Council of New Orleans, 491 U.S. 350 (1989))
Role: Provides the key analytic move: when determining Younger, courts look to the general class of proceedings, and alleged procedural shortcomings (defective orders, long investigations) do not alter the proceeding’s “fundamental character.” The Third Circuit adopts this to reject TitleMax’s naming/service objections as abstention-defeating.
New Orleans Pub. Serv., Inc. v. Council of New Orleans, 491 U.S. 350 (1989)
Role: Used in two ways: (1) via Sirva for the “general class of proceedings” approach; and (2) to reject TitleMax’s reliance on a passage about legislative (not judicial) proceedings—deemed irrelevant because Pennsylvania’s matter is judicial in nature.
Mitchum v. Foster, 407 U.S. 225 (1972) and Perez v. Ledesma, 401 U.S. 82 (1971)
Role: Frame the “exceptional circumstances” escape hatch and define bad faith as bringing an action “without hope” of success—an exacting standard the panel finds unsatisfied.
In re Stevenson, 40 A.3d 1212 (Pa. 2012) (quoting Del. Valley Citizens' Council for Clean Air v. Commonwealth, 755 F.2d 38 (3d Cir. 1985))
Role: Supports the court’s interference analysis: Pennsylvania courts recognize they are bound by federal judgments; a federal judgment requiring ongoing compliance can have res judicata effect in Pennsylvania. This is central to concluding that even “prospective” federal injunctive relief could interfere with the state enforcement case.
Wayne Land & Min. Grp. LLC v. Del. River Basin Comm'n, 894 F.3d 509 (3d Cir. 2018) (quoting Surrick v. Killion, 449 F.3d 520 (3d Cir. 2006))
Role: Provides the ripeness standard (“real and substantial threat of harm” vs. “uncertain and contingent events”), applied to reject the subpoena challenge as unripe on TitleMax’s presented theory.

3.2 Legal Reasoning

Step One: Is the state matter a quasi-criminal civil enforcement proceeding?
The court applies the Sprint/Altice factors and finds them satisfied: Pennsylvania acted in its sovereign capacity; sought sanctions for wrongful conduct (usurious lending); the matter followed an investigation culminating in formal charges (show-cause order); and Pennsylvania could have pursued criminal enforcement (the opinion cites “criminal usury” statutes).
TitleMax’s main resistance—corporate separateness and alleged defects in how the show-cause order referred to “TitleMax”—is treated as beside the abstention point. Relying on Sirva Relocation, LLC v. Richie, the panel emphasizes that procedural imperfections or naming issues do not change the nature of the general enforcement proceeding.
Step Two: Are the Middlesex factors met?
- Ongoing judicial proceeding: The show-cause order was filed before the federal complaints; the administrative action is “judicial” because it is subject to state-court review (supported by Gonzalez v. Waterfront Comm'n of N.Y. Harbor and Pennsylvania’s appeal provision).
- Important state interest: The court treats this as largely resolved by TitleMax of Del., Inc. v. Weissmann: Pennsylvania’s interest in prohibiting usury is strong, and any interstate commerce burden is incidental.
  TitleMax’s contention that particular entities did not make loans in Pennsylvania is characterized as a merits defense, which abstention doctrine instructs courts not to adjudicate when assessing the State’s interest (using PDX N., Inc. v. Comm'r N.J. Dep't of Lab. & Workforce Dev. and O'Neill v. City of Phila.).
- Adequate opportunity to raise federal claims: It suffices that such claims may be presented in state-court review of the agency action (per Ohio Civ. Rts. Comm'n v. Dayton Christian Sch., Inc.).
Exceptional circumstances (bad faith): not shown.
TitleMax repackaged its separateness and service arguments as evidence the Department was proceeding without a viable theory. The court applies Perez v. Ledesma’s stringent “without hope” standard and finds the Department’s positions at least “colorable,” refusing to decide the merits while concluding bad faith is absent.
“Prospective” federal relief can still interfere.
TitleMax argued abstention was improper because some requested remedies were forward-looking. The panel rejects that framing as inconsistent with the complaints’ actual requests (injunctions barring enforcement of the show-cause order and future regulation) and explains that such federal relief could bind state courts through preclusion principles.
The court’s interference analysis is notable: citing In re Stevenson (and Del. Valley Citizens' Council for Clean Air v. Commonwealth), it reasons that because Pennsylvania courts give res judicata effect to certain final federal judgments directing ongoing compliance, a federal injunction could materially constrain the state court’s adjudication of the same regulatory authority over the same conduct.
Subpoena challenge: ripeness independently fails on the argument presented.
The district court found the subpoena claim unripe under Wayne Land & Min. Grp. LLC v. Del. River Basin Comm'n. On appeal, TitleMax argued a Dormant Commerce Clause “chilling effect,” but the panel states this concern is foreclosed by TitleMax of Del., Inc. v. Weissmann, which already held Pennsylvania may investigate and apply its usury laws to TitleMax without violating the Commerce Clause.

3.3 Impact

Reinforcement of a “category, not defects” approach to Younger: By adopting Sirva’s logic, the opinion underscores that litigants cannot typically defeat abstention by highlighting alleged service, naming, or other procedural problems in the state matter; those issues belong in the state forum unless they rise to an extraordinary level.
Limits on “prospective relief” workarounds: The decision emphasizes that forward-looking federal injunctions can still be abstention-triggering when they risk binding or precluding state adjudication of the same regulatory authority. Litigants seeking to avoid Younger by relabeling relief as “prospective” face a more demanding interference analysis.
Practical consequence for regulated entities: Businesses targeted by state civil enforcement actions—especially those involving financial regulation, consumer protection, or licensing—should expect federal courts in the Third Circuit to channel constitutional defenses into the state administrative-and-review pathway when that pathway provides judicial review.
Nonprecedential but instructive: Although designated “NOT PRECEDENTIAL,” the opinion provides a detailed roadmap for how the Third Circuit is likely to treat similar abstention arguments, particularly those grounded in procedural objections and corporate-structure distinctions.

4. Complex Concepts Simplified

Younger abstention: A doctrine requiring federal courts to refrain from granting relief that would interfere with certain ongoing state proceedings, out of respect for state functions and because state courts can usually decide federal constitutional issues too.
Quasi-criminal civil enforcement proceeding: A civil (not criminal) state action that resembles prosecution: the State investigates, files formal charges, and seeks sanctions (penalties, restitution) for alleged wrongdoing.
Middlesex factors: Three conditions supporting abstention: the state case is ongoing and judicial in nature; it involves an important state interest; and the state forum allows the federal issues to be raised.
Bad faith (in the Younger context): An exceptional circumstance where the state brought the enforcement action without a realistic possibility of success (i.e., “without hope”), often to harass. Merely disputing liability or asserting procedural defects is usually not enough.
Res judicata (claim preclusion): A final judgment can prevent the same parties from relitigating the same claim (or certain issues) later. Here, the court reasoned that a federal injunction could bind Pennsylvania courts and thus interfere with the state proceeding.
Ripeness: A justiciability rule: courts avoid deciding disputes that depend on uncertain future events. A plaintiff must show a real, immediate threat of harm, not speculation.

5. Conclusion

The Third Circuit’s decision affirms a robust application of Younger abstention to Pennsylvania’s administrative usury enforcement: the proceeding is treated as quasi-criminal, the Middlesex factors are satisfied, and alleged naming/service defects do not alter the proceeding’s abstention-eligible character. The opinion also sharpens the point that “prospective” federal injunctions are not immune from abstention when they risk preclusive effects that could constrain the state adjudication.

In broader context, the ruling channels regulated entities’ constitutional defenses into the state administrative-and-judicial review process when that system is available—preserving comity and preventing federal courts from becoming parallel venues for disputes already being prosecuted by the State in a judicially reviewable enforcement framework.