Williams v. Cashcall, Inc.
92 F. Supp. 3d 847
E.D. Wis.2015Background
- Western Sky Financial LLC operates on the Cheyenne River Indian Reservation and is owned by Tribal member Martin Webb.
- Plaintiffs Lisa Walker and Eric Williams, Wisconsin residents, obtained consumer loans from Western Sky; Walker for $2,525 at 139.12% APR, Williams for $1,000 at 233.91% APR.
- Loans were sold to WS Funding, LLC and serviced by CashCall, Inc.; plaintiffs filed a Wisconsin circuit court class action alleging usury under Wis. Stat. § 138.09 and seeking discharge under Wis. Stat. § 425.305.
- CashCall removed the case to federal court; the magistrate judge issued a decision converting a Rule 12(b)(6) motion to summary judgment and addressing arbitration issues.
- Arbitration clauses and forum-selection provisions in the loan agreements are central; Jackson v. Payday Financial guided the analysis, but the court applies federal law where tribal law is lacking.
- The court ultimately compels arbitration for Williams, denies arbitration for Walker, and denies summary judgment and a stay for Walker’s claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Williams's arbitration clause is enforceable | Williams argues the clause permits arbitration via AAA/JAMS or tribal means as appropriate. | CashCall argues the clause requires arbitration before the Tribe, or that the arbitrability is reserved for the arbitrator. | Williams must arbitrate; clause enforceable under FAA with non-tribal administering organization. |
| Whether Walker's arbitration clause is enforceable | Walker contends the clause is enforceable under federal arbitration law. | CashCall argues the tribal arbitration forum is illusory and unenforceable as in Jackson. | Walker’s arbitration clause is unenforceable; proceed with litigation. |
| What law governs enforceability of arbitration clauses | FAA governs enforceability; district court applies state choice-of-law rules for forum provisions when appropriate. | The forum selection clause should be analyzed under federal law designated by the contract; tribal law lacking leads to federal law application. | FAA governs; federal law applied to determine enforceability given lack of tribal rules addressing forum. |
| Whether Dormant Commerce Clause prevents Wisconsin usury application to Walker | Wisconsin usury statute should apply; Dormant Commerce Clause arguments fail on facts. | Wisconsin statute should not apply because loan occurred outside Wisconsin; Dormant Commerce Clause precludes extraterritorial application. | Summary judgment denied; unresolved as to Dormant Commerce Clause application at this stage. |
Key Cases Cited
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (delegation and arbitrability issues; arbitration clause validity)
- Jackson v. Payday Fin., LLC, 764 F.3d 765 (7th Cir. 2014) (illusory tribal forum; arbitration unenforceable when tribe lacks arbitration authority)
- Midwest Title Loans v. Mills, 593 F.3d 660 (7th Cir. 2010) (extraterritoriality and Dormant Commerce Clause implications for state licensing)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (challenge to contract validity vs. arbitration clause validity)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (separate proceedings for validity of arbitration clause vs. contract)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum-selection clause reasonableness factors)
- Green v. U.S. Cash Advance Illinois, LLC, 724 F.3d 787 (7th Cir. 2013) (FAA considerations and arbitration enforcement guidance)
- Alliant Energy Corp. v. Beie, 330 F.3d 904 (7th Cir. 2003) (Dormant Commerce Clause limitations in state regulation of out-of-state commerce)