BROWN v. WESTERN SKY FINANCIAL, LLC, 1:13-cv-00255

Plaintiffs (North Carolina residents) brought a putative class action challenging high‑rate online "payday" loans made by Western Sky and related entities, alleging violations of North Carolina and federal law.
Loan agreements contained forum‑selection/arbitration provisions designating the Cheyenne River Sioux Tribe (CRST) as the governing law/tribal forum and stating disputes would be arbitrated under CRST consumer rules.
Defendants moved to dismiss or compel arbitration based on those forum clauses and sought dismissal for lack of personal jurisdiction (for some defendants).
Prior decisions around identical CRST forum clauses have split: some circuits found the clauses unenforceable because the tribal arbitration forum was unavailable; some district courts enforced the clauses; some required tribal‑court exhaustion.
The district court found Defendants had at least a colorable claim that the CRST has jurisdiction and that tribal‑court exhaustion was appropriate before this court resolves enforceability or compulsion of arbitration.
The court dismissed the federal action without prejudice pending exhaustion in CRST courts, denied personal‑jurisdiction dismissal without prejudice, and declined to compel arbitration at this time; discovery motions were denied without prejudice.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Enforceability of forum‑selection/arbitration clause	Clauses are invalid because CRST lacks jurisdiction and the tribal arbitration forum is a sham or biased	Clauses are contractually valid and require dismissal or enforcement of arbitration in CRST	Court declined to decide enforceability now; found tribal exhaustion required because CRST jurisdiction is a colorable question
Whether federal court should dismiss/stay under tribal‑court exhaustion	Federal court should proceed and allow discovery to resolve jurisdictional issues	Tribal exhaustion required where a colorable claim of tribal jurisdiction exists	Court held tribal‑court exhaustion appropriate and dismissed without prejudice to allow CRST to determine its jurisdiction
Motion to dismiss for lack of personal jurisdiction (Payday/Reddam)	Plaintiffs contend federal court can exercise jurisdiction	Defendants argued lack of personal jurisdiction	Court denied the motion without prejudice pending tribal‑court proceedings
Compel arbitration under FAA	Plaintiffs argued arbitration forum unavailable and clause unenforceable	Defendants sought dismissal/stay to compel arbitration in CRST per agreements	Court declined to compel arbitration now and denied motion in part; left arbitration issue for later after tribal exhaustion

Atl. Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Tex., 134 S. Ct. 568 (2013) (forum‑selection clauses normally enforced; forum non conveniens framework applies when selected forum is foreign)
Jackson v. Payday Fin., LLC, 764 F.3d 765 (7th Cir. 2014) (forum clause unenforceable where tribal arbitration forum was illusory/unavailable)
Inetianbor v. CashCall, Inc., 768 F.3d 1346 (11th Cir. 2014) (forum clause integral to arbitration and not enforceable where tribal forum unavailable)
Heldt v. Payday Fin., LLC, 12 F. Supp. 3d 1170 (D.S.D. 2014) (tribal‑court exhaustion required where tribal jurisdiction over nonmembers presented a colorable question)
Ninigret Dev. Corp. v. Narragansett Indian Wetuomuck Hous. Auth., 207 F.3d 21 (1st Cir. 2000) (federal courts should give tribal courts the first opportunity to determine the scope of their jurisdiction when a colorable claim exists)
Plains Commerce Bank v. Long Family Land & Cattle Co., 554 U.S. 316 (2008) (whether tribal court may adjudicate nonmember disputes is a federal question)
Nat'l Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845 (1985) (Supreme Court endorses allowing tribal courts to determine their own jurisdiction first; exhaustion not required in limited exceptions)