Yaroma v. Cashcall, Inc.
130 F. Supp. 3d 1055
E.D. Ky.2015Background
- Plaintiff Monica Yaroma (Kentucky) obtained a high‑rate online loan from Western Sky (SD); she alleges the loan is usurious and void under Kentucky law and asserts FDCPA and FCRA claims after servicing/collection by CashCall and Delbert and reporting to Experian.
- Loan agreement contains a forum‑selection provision selecting Cheyenne River Sioux Tribal Court and a broad arbitration clause referencing tribal law but also a "Choice of Arbitrator" clause permitting the borrower to select AAA, JAMS, or another agreed forum.
- Defendants CashCall and Delbert moved to dismiss or compel arbitration, invoking the forum clause, tribal‑exhaustion doctrine, and the FAA.
- Yaroma argued the contract (and thus arbitration/forum clauses) is void ab initio for lack of Western Sky’s authority in Kentucky and that the tribal arbitral forum is unavailable/illusory.
- Court held a hearing; defendants stipulated that the Choice‑of‑Arbitrator clause allows selection of AAA/JAMS and that CRST law and commercial/tribal rules exist or can be supplemented by arbitrator/federal rules.
- Court concluded the arbitration clause is enforceable, the dispute falls within its broad scope, arbitration should proceed, and dismissed the case without prejudice pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of arbitration clause | Yaroma: clause is illusory/procedurally and substantively unconscionable because tribal forum/rules are unavailable | CashCall/Delbert: FAA applies; Choice‑of‑Arbitrator lets plaintiff pick AAA/JAMS; tribal law or AAA/JAMS rules can fill gaps | Court: arbitration clause enforceable; plaintiff failed to show forum unavailable or clause invalid |
| Scope of arbitration | Yaroma: some claims implicate state law (usury) and tribal exhaustion; contract void so not subject to arbitration | Defs: clause broadly covers "any Dispute," including validity/enforceability and statutory claims | Court: clause is broad; disputes (including contract validity, usury, tribal exhaustion) fall within arbitrator's scope |
| Attack on contract validity | Yaroma: entire contract void ab initio (lack of capacity/registration) so arbitration unenforceable | Defs: under Buckeye and FAA, challenges to the contract as a whole go to arbitrator unless arbitration clause itself is attacked | Court: challenge to whole contract must be decided by arbitrator; arbitration provision is severable and remains enforceable |
| Dismissal vs. stay | Yaroma: seeks judicial resolution; opposes dismissal | Defs: request dismissal (not just stay) because all claims are arbitrable | Court: where all claims are referable to arbitration, dismissal without prejudice is appropriate; case dismissed pending arbitration |
Key Cases Cited
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (challenge to whole contract is for arbitrator unless arbitration clause itself is attacked)
- Rent‑A‑Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (FAA enforcement and petition to compel arbitration under §4)
- AT&T Mobility, LLC v. Concepcion, 563 U.S. 333 (2011) (federal policy favors enforcement of arbitration agreements)
- Mitsubishi Motors Corp. v. Soler Chrysler‑Plymouth, 473 U.S. 614 (1985) (arbitration may be denied if forum would be so gravely difficult and inconvenient as to preclude effective relief)
- Stout v. J.D. Byrider, 228 F.3d 709 (6th Cir. 2000) (presumption of arbitrability; resolve ambiguities in favor of arbitration)
- Javitch v. First Union Sec., Inc., 315 F.3d 619 (6th Cir. 2003) (two‑part test: valid agreement and dispute within its scope)
- Fazio v. Lehman Bros., Inc., 340 F.3d 386 (6th Cir. 2003) (stay under §3 and application of state contract law to validity issues)