129 F.4th 418
7th Cir.2025Background
- Eido Hussam Al-Nahhas, an Illinois resident, took out four online loans from "ZocaLoans," which charged interest rates up to nearly 700%, violating Illinois usury laws.
- Al-Nahhas alleged ZocaLoans was a front for two non-tribal private equity firms—777 Partners, LLC, and Tactical Marketing Partners, LLC—using the Rosebud Sioux Tribe's name to claim tribal sovereign immunity and evade state law.
- Al-Nahhas filed a federal class-action suit asserting violations of Illinois usury statutes, the federal RICO Act, and seeking declaratory/injunctive relief.
- Defendants participated in the litigation for 14 months (answering complaint, engaging in discovery, status conferences) before moving to compel arbitration based on contract provisions.
- The district court found defendants had waived arbitration by their litigation conduct and denied their motion to compel arbitration; the defendants appealed, also arguing the case was moot due to a settlement with ZocaLoans.
- The Seventh Circuit addressed both the waiver and mootness arguments on appeal.
Issues
| Issue | Al-Nahhas' Argument | 777 Partners' Argument | Held |
|---|---|---|---|
| Who decides waiver of arbitration | Court has authority under FAA to decide waiver from litigation conduct | Arbitrator must decide as waiver is "procedural" under contract | Court decides; waiver-by-litigation is for the courts |
| Whether arbitration was waived | Defendants waived by substantial, dilatory litigation participation | No waiver; delay excusable (blame counsel); moved on learning of rights | Waived right to compel arbitration through conduct |
| Mootness due to settlement with ZocaLoans | Not moot; punitive damages and other relief not covered by settlement | Case moot; Al-Nahhas received all he could via settlement; double recovery | Not moot; punitive damages claim remains; single recovery rule inapplicable |
| Sealing settlement documents | Agrees to file declaration under seal | Motion to seal documents on settlement terms | Motions to seal granted; contents not relevant to decision |
Key Cases Cited
- Morgan v. Sundance, Inc., 596 U.S. 411 (2022) (waiver of arbitration by litigation conduct is a question for courts)
- St. Mary's Med. Ctr. of Evansville, Inc. v. Disco Aluminum Prods. Co., 969 F.2d 585 (7th Cir. 1992) (courts decide waiver of arbitration due to litigation conduct)
- Cabinetree of Wis., Inc. v. Kraftmaid Cabinetry, Inc., 50 F.3d 388 (7th Cir. 1995) (waiver of arbitration is reviewed for clear error, not de novo)
- Baxter Int’l, Inc. v. Abbott Lab’ys, 297 F.3d 544 (7th Cir. 2002) (judicial materials are presumptively public unless truly confidential)
- Knox v. Serv. Emps. Int’l Union, Local 1000, 567 U.S. 298 (2012) (case mootness standard: must be impossible to grant effectual relief)