368 F. Supp. 3d 901
E.D. Va.2019Background
- Plaintiffs (Virginia residents) sued Haynes and related entities, alleging they funded, controlled, and profited from a ‘‘rent‑a‑tribe’’ tribal online‑lending operation (Plain Green and Great Plains) that issued loans with APRs far above Virginia’s 12% usury cap.
- Documents attached to the complaint (term sheets, credit agreements, profit breakouts) allege Haynes Investments and a Haynes‑created entity (Sovereign Business Solutions) provided multi‑million dollar revolving lines of credit and received revenue shares and interest payments.
- Plaintiffs asserted six class counts: four RICO claims under 18 U.S.C. § 1962(a)–(d), a Virginia usury claim, and unjust enrichment; plaintiffs seek class relief, damages, and fees.
- Haynes moved to transfer under the first‑to‑file rule to a Vermont case (Gingras), to compel arbitration under tribal‑law arbitration clauses in the loan contracts, and to dismiss under Rule 12(b)(6).
- The court denied transfer (first‑to‑file did not apply and special‑circumstances/§ 1404 factors favored staying in Eastern District of Virginia), denied the motion to compel arbitration (arbitration clauses unenforceable under the prospective‑waiver doctrine), and denied the Rule 12(b)(6) motion (plausible RICO, usury, and unjust enrichment claims).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the case should be transferred under the first‑to‑file rule to Vermont | Gingras and this action differ in parties, claims, and class definitions; transfer is premature and would impair Virginia plaintiffs’ interests | Haynes: Gingras was filed earlier and involves overlapping transactional allegations; first‑to‑file requires transfer | Denied — parties and claims are not sufficiently similar; first‑to‑file not invoked |
| Even if first‑to‑file applied, whether special circumstances or § 1404(a) require transfer | Plaintiffs: forum convenience, witnesses, and personal jurisdiction in Vermont weigh against transfer; related cases in EDVA favor keeping case here | Haynes: judicial efficiency favors Vermont where related case pending | Denied — special circumstances (case progress, convenience, related EDVA litigation, jurisdiction concerns) justify proceeding in EDVA |
| Whether tribal‑law arbitration clauses are enforceable under the FAA | Plaintiffs: clauses purport to exclude federal/state law and thus prospectively waive federal rights (unenforceable) | Haynes: tribal choice‑of‑law/arbitration respects tribal sovereignty and should be enforced (invokes Bremen analogy) | Denied — arbitration clauses attempt to disavow federal/state law and violate the prospective‑waiver doctrine; clauses are non‑severable and unenforceable |
| Whether the complaint states plausible claims (RICO, usury, unjust enrichment) under Rule 12(b)(6) | Plaintiffs: documentary allegations show Haynes funded, controlled, received revenue from loans that violate Virginia usury law; supports unlawful‑debt and RICO elements and unjust enrichment | Haynes: no unlawful debt since contracts chose tribal law; Haynes only financed or identified banks and did not collect unlawful debt | Denied — plaintiffs plausibly plead Virginia usury (void loans), unlawful debt for RICO, Haynes’ receipt/reinvestment of proceeds, control/association with enterprise, conspiracy, and unjust enrichment |
Key Cases Cited
- Hayes v. Delbert Servs. Corp., 811 F.3d 666 (4th Cir. 2016) (arbitration clause that attempts to renounce federal law is an unenforceable prospective waiver)
- Dillon v. BMO Harris Bank, N.A., 856 F.3d 330 (4th Cir. 2017) (tribal‑choice arbitration provisions that effectively exclude federal/state law are unenforceable and nonseverable)
- Volvo Const. Equip. N. Am., Inc. v. CLM Equip. Co., Inc., 386 F.3d 581 (4th Cir. 2004) (first‑to‑file rule: first suit generally has priority absent showing otherwise)
- ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617 (4th Cir. 1997) (service under RICO statute § 1965(d) supports personal jurisdiction via service in district where defendant resides)
- M/S Bremen v. Zapata Off‑Shore Co., 407 U.S. 1 (1972) (choice‑of‑forum/enforcement principles in international commercial contexts; distinguished by the court here)