Williams v. Big Picture Loans, LLC
329 F. Supp. 3d 248
| E.D. Va. | 2018Background
- The Lac Vieux Desert Band (the Tribe) created a regulatory Code and the Tribal Financial Services Regulatory Authority (TFSRA) to authorize and oversee tribal online lending; the Tribe later adopted a Business Entity Ordinance stating wholly owned LLCs have tribal immunity.
- The Tribe formed Red Rock (tribal lending LLC), later reorganized into Big Picture Loans (Big Picture) and created TED and Ascension as tribal subsidiaries; the Tribe purchased Bellicose (a lending-services vendor) and folded its operations into Ascension and Big Picture.
- Big Picture originates online consumer loans from servers and staff on the reservation, uses loan contracts with tribal-law choice-of-law/forum-selection clauses and the TFSRA dispute process, and collected high-APR loans to Virginia residents; several Virginia borrowers (Plaintiffs) sued for usury, RICO, unjust enrichment, and declaratory relief.
- Big Picture and Ascension moved to dismiss for lack of subject-matter jurisdiction, claiming they are arms of the Tribe and thus immune from suit; the court authorized jurisdictional discovery and evaluated whether the entities proved tribal sovereign immunity under multi-factor tests.
- Applying the Breakthrough six-factor framework (creation, purpose, structure/control, tribal intent, financial relationship, policy fit) and weighing the evidence, the court concluded defendants failed to prove arm-of-the-tribe immunity and denied the Rule 12(b)(1) motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Big Picture and Ascension are arms of the Tribe and immune from suit | Entities are private/commercial in function; structure and practice show outside control and limited tribal benefit so no immunity | Entities were formed under tribal law, wholly owned by TED/Tribe, managed by tribal managers, and intended to share tribal immunity | Denied—court found defendants did not prove arm-of-the-tribe immunity by preponderance |
| Which party bears burden to establish tribal-arm status | Plaintiffs argued defendants should bear burden to show immunity | Defendants argued plaintiffs must prove jurisdiction/non-immunity | Court held entities claiming immunity (Big Picture and Ascension) must prove it by a preponderance of the evidence |
| Application of Breakthrough factors (purpose/implementation) | Plaintiffs: stated tribal purpose is pretext; revenue distributions favor Eventide/outsiders; little tribal employment/benefit | Defendants: formed under tribal law with stated tribal economic-development purpose; Tribe receives distributions and uses revenues for tribal programs | Purpose and related factors weighed against immunity—entities failed to show they effectively serve tribal self-governance |
| Effect of contracts and external controls (Loan/Note and Eventide) on immunity | Plaintiffs: Note and servicing arrangements show Eventide and non-tribal actors control finances and limit tribal benefit; impedes tribal control and financial nexus | Defendants: contractual arrangements are consistent with tribal oversight and preserve tribal ownership/management authority | Court found contractual restraints (payments waterfall, Eventide consent rights) and practical operations undercut immunity claim |
Key Cases Cited
- Kiowa Tribe of Okla. v. Manufacturing Technologies, 523 U.S. 751 (recognizing broad tribal sovereign immunity including commercial acts)
- Michigan v. Bay Mills Indian Community, 572 U.S. 782 (2014) (reaffirming Kiowa and that tribal immunity bars suit absent waiver or congressional abrogation)
- Breakthrough Management Group, Inc. v. Chukchansi Gold Casino & Resort, 629 F.3d 1173 (10th Cir. 2010) (articulating six-factor test for arm-of-the-tribe analysis)
- People ex rel. Owen v. Miami Nation Enterprises, 2 Cal.5th 222 (Cal. 2016) (California Supreme Court application of Breakthrough factors; emphasizes functional fit between purpose and tribal benefit)
- United States v. Jones, 225 F.3d 468 (4th Cir. 2000) (noting sovereign immunity implicates a court’s jurisdiction and may be raised via Rule 12(b)(1))