421 F.Supp.3d 267
E.D. Va.2019Background
- Plaintiffs are eight Virginia residents who took online loans issued by three Native American tribal lending entities (Plain Green, Great Plains, MobiLoans) and allege a "rent‑a‑tribe" scheme that charged APRs from ~118% to 448%.
- Plaintiffs sued multiple investors/owners of Think Finance (including Sequoia, 7HBF, Stinsons, Shaper entities) asserting RICO claims (18 U.S.C. § 1962(a)–(d)), a Virginia usury claim, and unjust enrichment; they seek class relief.
- Defendants moved to transfer to the Northern District of Texas (§ 1412 / first‑to‑file), moved to compel arbitration (various loan agreements), and filed Rule 12(b)(6) and venue dismissal motions.
- Court found the case related to the Think Finance bankruptcy but denied transfer under § 1412 and declined to apply the first‑to‑file rule because special circumstances (settlements, plaintiffs’ forum, judicial efficiency) favored keeping the case in E.D. Va.
- Court held Plain Green and Great Plains arbitration provisions unenforceable under the Fourth Circuit’s prospective‑waiver doctrine (Hayes, Dillon) because those contracts disavowed federal law; Mobiloans’ 2018 terms, however, expressly preserved application of "applicable federal law," so Mobiloans arbitration was enforced.
- The Court denied defendants’ Rule 12(b)(6) motions: plaintiffs plausibly alleged Virginia usury (basis for "unlawful debt") and RICO claims; unjust enrichment claim also survived. Claims by Price, Hengle, Blackburn against Mobiloans were compelled to arbitration and dismissed without prejudice as to those plaintiffs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether case should be transferred to N.D. Tex. under 28 U.S.C. § 1412 / first‑to‑file | Plaintiffs oppose transfer; Virginia forum & plaintiffs' convenience; judicial efficiency in E.D. Va. | Defendants argue relatedness to Think Finance bankruptcy and prior Texas filings justify transfer / first‑to‑file deference | Transfer denied: § 1412 and first‑to‑file exception applied; special circumstances and efficiency favor E.D. Va. |
| Enforceability of arbitration clauses in Plain Green and Great Plains contracts | Plaintiffs: Clauses attempt to exclude federal law and foreclose vindication of federal rights; delegation clauses invalid | Defendants: Delegation clauses and tribal‑law choice‑of‑law preclude court review (Schein) | Arbitration clauses unenforceable under prospective‑waiver doctrine (Hayes, Dillon); motions to compel arbitration denied as to Plain Green/Great Plains |
| Enforceability of Mobiloans arbitration clause (which defendants say was updated 2018) | Plaintiffs: Dispute which T&C govern; tribal law may bar federal law; arbitration would extinguish federal rights | Defendants (Sequoia/MobiLoans): Palermo decl. shows 2018 T&C applied, which preserves "applicable federal law" and delegates procedural issues to arbitrator | Motion to compel granted as to Mobiloans: 2018 T&C governs; arbitration compelled; claims of Price, Hengle, Blackburn dismissed without prejudice as to court forum |
| Sufficiency of Amended Complaint (Rule 12(b)(6)) on usury, RICO, unjust enrichment | Plaintiffs: Plead interest rates, amounts paid, role of defendants in designing/controlling enterprise — plausibly allege unlawful debt and RICO predicates | Defendants: Challenge personal jurisdiction, venue, claim‑splitting, and that plaintiffs fail to plead collection/receipt or control required for RICO/usury | Motions to dismiss denied: plaintiffs plausibly plead Virginia usury (basis for "unlawful debt"), RICO §§1962(a)–(d) claims, and unjust enrichment; jurisdiction/venue arguments rejected at this stage |
Key Cases Cited
- Schein v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (courts decide existence of a valid arbitration agreement before sending arbitrability disputes to arbitrator)
- Hayes v. Delbert Servs. Corp., 811 F.3d 666 (4th Cir. 2016) (arbitration clauses that categorically disavow federal law are unenforceable under the prospective‑waiver doctrine)
- Dillon v. BMO Harris Bank, N.A., 856 F.3d 330 (4th Cir. 2017) (choice‑of‑law provisions that effectively exclude federal law render arbitration agreements invalid and non‑severable)
- Celotex Corp. v. Edwards, 514 U.S. 300 (1995) (broad test for when civil proceedings are "related to" bankruptcy)
- New Horizon of NY LLC v. Jacobs, 231 F.3d 143 (4th Cir. 2000) (bankruptcy‑relatedness standard and context for § 1412 transfers)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (ambiguities about arbitrability resolved in favor of arbitration)
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) (strong federal policy favoring enforcement of arbitration agreements)
- Mitsubishi Motors Corp. v. Soler Chrysler‑Plymouth, Inc., 473 U.S. 614 (1985) (arbitration enforcement cannot bar vindication of federal statutory rights)