Solomon v. American Web Loan, Inc.
4:17-cv-00145
| E.D. Va. | Mar 22, 2019Background
- Plaintiffs are borrowers who obtained high‑rate online loans from American Web Loan (AWL) and challenge the lending scheme as usurious and unlawful under federal and state law.
- Mark Curry designed and controlled a multi-entity structure: he owned note‑holder and service entities, served as AWL II CEO/board member, and arranged for the Otoe‑Missouria Tribe to acquire Curry‑owned companies (MacFarlane, AWLH, Bullet Hole) via Red Stone and a promissory note.
- The Promissory Note and related agreements (including a $1.933M/month consulting fee to Sol Partners) give Curry‑controlled entities board appointment power, security interests in tribal assets, priority payments from AWL II revenue, and broad default triggers for "Adverse Tribal Government Action" or changes in tribal law.
- Tribe ordinances formally created AWL entities and declared them tribal arms, but evidence at jurisdictional discovery and hearing showed the Tribe received a small share of revenue, had limited operational control, and waived immunity in ways that exposed the tribal treasury.
- Plaintiffs challenge sovereign immunity assertions, seek to litigate in Virginia (where borrowers reside and loans were made), and oppose motions to transfer venue and to compel arbitration based on tribal‑law arbitration clauses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AWL II and related corporations are entitled to tribal sovereign immunity (arm‑of‑the‑tribe) | Curry/control entities run scheme; Tribe is a vehicle to shield wrongdoing; documents show Tribe had little control and received limited revenue | Formal tribal formation, tribal ordinances, and stated intent assert AWL II is an arm of the Tribe and thus immune | Denied: Court applied Breakthrough factors (formal and functional) and found factors (purpose, control, financial relationship, waiver/indemnity) weigh against immunity — AWL II not an arm of the Tribe |
| Whether Curry is protected by official (sovereign) immunity for acts in his official capacity | Plaintiffs: Curry acted for personal profit, not tribal interests; relief sought is against Curry individually | Curry: actions were within his role as AWL II CEO/director and any impact would fall on the Tribe | Denied: Court found Curry acted for personal interests, not the Tribe; he may be sued in individual capacity |
| Whether venue should be transferred to Western District of Oklahoma | Plaintiffs: Virginia is proper and convenient for many plaintiffs and AWL targeted Virginia borrowers; key documents/witnesses are not concentrated in Oklahoma | Defendants: Tribe and tribal witnesses are in Oklahoma; AWL operations are located in Oklahoma, so transfer is appropriate | Denied: Court found plaintiffs' forum choice and interests of justice favor Virginia; defendants failed to show strong reasons to transfer |
| Whether arbitration clauses (tribal‑law forum, tribal arbitrator, tribal court review) are enforceable | Plaintiffs: Clauses attempt wholesale exclusion of federal/state law, are unconscionable and foreclose statutory remedies; conflicts of interest exist (note default triggers) | Defendants: Borrowers electronically agreed; clauses invoke tribal law plus Indian Commerce Clause so not a wholesale waiver of federal law | Denied: Court held arbitration provisions are unenforceable under Fourth Circuit precedent (Haves/Dillon), invade tribal governance and create conflicts of interest |
Key Cases Cited
- Kiowa Tribe of Oklahoma v. Manufacturing Technologies, 523 U.S. 751 (U.S. 1998) (tribal sovereign immunity applies to off‑reservation commercial activities absent abrogation or waiver)
- Michigan v. Bay Mills Indian Community, 572 U.S. 782 (U.S. 2014) (reaffirming tribal immunity for commercial acts and limits on abrogation)
- Breakthrough Management Group, Inc. v. Chukchansi Gold Casino & Resort, 629 F.3d 1173 (10th Cir. 2010) (set of factors for determining when an entity is an "arm of the tribe")
- Hayes v. Delbert Services Corp., 811 F.3d 666 (4th Cir. 2016) (arbitration clause imposing tribal‑law exclusivity unenforceable when it attempts to disclaim federal law and statutory protections)
- Dillon v. BMP Harris Bank, N.A., 856 F.3d 330 (4th Cir. 2017) (affirming Hayes approach; arbitration clauses that prospectively waive statutory remedies violate public policy)
- Williams v. Big Picture Loans, LLC, 329 F. Supp. 3d 248 (E.D. Va. 2018) (applied Breakthrough factors in the district and examined functional evidence of control and revenue sharing)
- Rent‑A‑Center, West, Inc. v. Jackson, 561 U.S. 63 (U.S. 2010) (courts decide gateway questions of arbitrability when arbitration agreement is challenged)
- Mitsubishi Motors Corp. v. Soler Chrysler‑Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (arbitration may encompass statutory claims, but a clause cannot prospectively waive substantive federal rights)