The district court abused its discretion in abstaining under Younger v. Harris when the defendants commenced a state court enforcement action against plaintiff 7 months after plaintiff filed this federal court suit.  Later filed state court proceedings are properly an occasion for Younger v. Harris abstention only when the district court proceedings are still at an “embryonic stage.”  Here, the district court had already considered and denied a preliminary injunction motion on the merits in a 29-page decision when the state court proceedings were initiated, and it also considered a motion to dismiss on substantive grounds before abstaining.  As the federal case had gone beyond the embryonic stage, the district court should not have abstained.  This decision also evaluates various sections of the California Business and Professions Code.  Section 14701 and 14702 require a person soliciting financial services and naming the recipient’s existing lender or loan number to disclose that the lender has not sponsored or approved the solicitation.  This decision holds that section 14701 and 14702 do not unconstitutionally infringe the solicitor’s First Amendment rights since the required disclosure is reasonably related to a substantial governmental interest as well as purely factual in nature and not subject to dispute as to accuracy.  However, sections 12200 and 12200.1, which require proraters to be licensed and incorporated in California, violates the dormant Commerce Clause insofar as the statutes apply to corporations engaged in interstate commerce.  The statutes directly discriminate against out-of-state entities and are not justified by any legitimate local purpose that could not be otherwise satisfied.

Ninth Circuit Court of Appeal (Reinhardt, J.; Montgomery, J., sitting by designation, dissenting); October 10, 2017; 2017 WL 4509128.