Trawick v. Netcredit Loan Services, LLC
1:24-cv-07481
N.D. Ill.Aug 22, 2025Background
- Plaintiff Janet Trawick, an Indiana resident, obtained an online loan from NetCredit Loan Services, LLC at a 64.75% interest rate, which she believes violates Indiana's usury laws (IUCCC).
- The loan agreement included both a choice-of-law clause for Kentucky law and a mandatory arbitration clause.
- Trawick filed a proposed class action in federal court, seeking damages for the allegedly usurious loan.
- NetCredit moved to compel arbitration based on the loan’s arbitration provision.
- Trawick opposed, arguing the arbitration agreement was unenforceable because it would deny her nonwaivable IUCCC protections.
- The Court is asked to decide if the arbitration clause is enforceable, particularly in light of the Kentucky law provision and Indiana public policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the arbitration clause enforceably waive IUCCC rights via Kentucky law? | Clause forces arbitrator to apply KY law, blocking unwaivable IUCCC rights | Arbitration clause lets arbitrator apply applicable law, including Indiana law | Arbitration clause does not foreclose application of IUCCC rights |
| Is the arbitration clause unconscionable for denying statutory rights? | Same as above; unconscionable due to prospective waiver | Arbitration clause is not unconscionable; Kentucky law clause does not control | Not unconscionable; argument rejected as duplicative of first |
| Should the court or arbitrator decide if Kentucky law must apply? | Court should decide, as it affects the validity of arbitration agreement | Arbitrator should decide, as it concerns entire contract, not arbitration provision | Court will decide, as issue directly concerns the arbitration forum |
| Does the FAA require arbitration despite usury law concerns? | Arbitration shouldn’t be compelled if it blocks state statutory claims | FAA supports enforcement; subsequent judicial review is available | Arbitration compelled; future review remains possible |
Key Cases Cited
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (application of the prospective waiver doctrine to arbitration agreements)
- AT&T Techs., Inc. v. Commc'ns Workers of America, 475 U.S. 643 (boundary between court and arbitrator in deciding scope/enforceability)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (severability of arbitration clauses from potentially void contracts)
- Am. Exp. Co. v. Italian Colors Restaurant, 570 U.S. 228 (arbitration agreements that prospectively waive statutory rights)
- Nautilus Ins. Co. v. Reuter, 537 F.3d 733 (choice of law decisions in federal courts)
- E. Associated Coal Corp. v. United Mine Workers of Am., Dist. 17, 531 U.S. 57 (circumstances where arbitral awards may be vacated for violating public policy)