IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN … · 2015-01-07 · The Payday Loan Reform Act claim fails because Plaintiff’s is not a ... Plaintiff’s Loan Agreement’s

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

BEN SCHERR, Plaintiff,

v. WESTERN SKY FINANCIAL LLC, et al., Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No. 1:13:cv-1841 Hon. Robert W. Gettleman

DEFENDANTS’ MEMORANDUM IN SUPPORT OF

THEIR RENEWED MOTION TO DISMISS

Barry Levenstam

Michael T. Brody Daniel T. Fenske Jenner & Block LLP 353 North Clark Street Chicago, Illinois 60654

Counsel for Defendants October 2, 2014

Case: 1:13-cv-01841 Document #: 40-1 Filed: 10/02/14 Page 1 of 48 PageID #:155

TABLE OF CONTENTS

Page(s)

INTRODUCTION ...........................................................................................................................1

BACKGROUND .............................................................................................................................2

ARGUMENT ...................................................................................................................................4

I. This Court Is An Improper Venue Under Section 1391. .....................................................4

II. Plaintiff Fails To State A Claim Because The Dormant Commerce Clause Precludes Applying Illinois Law To Plaintiff’s Loan Agreement, Which Formed Outside Of Illinois................................................................................................................6

A. Illinois law cannot apply to loan agreements formed outside Illinois. ....................6

B. A lender’s contacts with a foreign state do not give the foreign state jurisdiction over loans made by the lender in its home jurisdiction. .......................8

III. Alternatively, Plaintiff Fails To State Any Valid Claim Under Illinois Law. ...................11

A. The Interest Act claim fails because Plaintiff fails to allege facts showing that Defendants “knowingly” received unlawful interest. ....................................11

B. The Payday Loan Reform Act claim fails because Plaintiff’s is not a “payday loan” under the statute. ............................................................................13

C. Illinois’s criminal usury statute does not provide for a private right of action. .....................................................................................................................14

D. This Court should dismiss the Consumer Fraud Act (CFA) claim for multiple reasons. ....................................................................................................14

1. A party does not commit an unfair or deceptive act where “legitimate disagreement” exists about whether the conduct at issue is unlawful. ........................................................................................15

2. A CFA claim cannot be based on a violation of the Interest Act or CILA. .........................................................................................................16

3. Plaintiff does not plausibly allege that Defendants’ alleged deception proximately caused his injury....................................................17

E. This Court should dismiss the Consumer Installment Loan Act (CILA) claim because Plaintiff’s loan was not made “pursuant to” CILA and CILA does not provide a cause of action against Mr. Webb or CashCall. ............18

i


IV. Alternatively, This Court Does Not Have Personal Jurisdiction Over Mr. Webb. ............20

V. The Complaint Should Be Dismissed Under The Forum-Selection Clause And The Tribal Exhaustion Doctrine (For Preservation Only). ................................................21

A. The Forum-Selection Clause should be enforced and Plaintiff’s Claims dismissed under federal law. ..................................................................................21

B. Alternatively, the doctrine of tribal exhaustion requires dismissal........................23

CONCLUSION ..............................................................................................................................26

ii


TABLE OF AUTHORITIES

Page(s) CASES

Atl. Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Tex., 134 S. Ct. 568 (2013) .........................................................................................................22, 23

Bertelsen v. Monsanto Co., No. 4:12-cv-04077-SLD-JEH, 2014 WL 1213474 (C.D. Ill. Mar. 24, 2014) .........................23

Bonny v. Society of Lloyd’s, 3 F.3d 156 (7th Cir. 1993) .......................................................................................................22

Bremen Cmty. High School Dist. No. 228 v. Cook Cnty. Comm’n on Human Rights, 2012 IL App. (1st) 112177.......................................................................................................19

Brio Corp. v. Meccano S.N., 690 F. Supp. 2d 731 (E.D. Wis. 2010) .....................................................................................21

Brown–Forman Distillers Corp. v. N.Y. State Liquor Authority, 476 U.S. 573 (1986) ...................................................................................................................6

Cahnman v. Agency Rent-A-Car Sys., Inc., 299 Ill.App.3d 54 (1st Dist. 1998) ...........................................................................................15

Capiccioni v. Brennan Naperville, Inc., 339 Ill.App.3d 927 (2d Dist. 2003) ..........................................................................................18

Casaccio v. Habel, 14 Ill.App.3d 822 (1st Dist. 1973) ...........................................................................................11

Cheyenne River Tele. Co. v. Pearman, No. 89-006-A, slip op. at 3 (CRST Ct. App. 1990) .................................................................24

Dean Foods Co. v. Brancel, 187 F.3d 609 (7th Cir. 1999) ...................................................................................................10

Dish Network Corp. v. Tewa, No. CV 12-8077-PCT-JAT, 2012 WL 5381437 (D. Ariz. Nov. 1, 2012) ...............................23

DISH Network Serv. L.L.C. v. Laducer, 725 F.3d 877 (8th Cir. 2013) ...................................................................................................25

Dolgencorp, Inc. v. Miss. Band of Choctaw Indians, 746 F.3d 167 (5th Cir. 2014) .............................................................................................25, 26

Eric M. Berman, P.C. v. City of New York, 895 F. Supp. 2d 453 (E.D.N.Y. 2012) .................................................................................9, 10

iii


F.T.C. v. Payday Financial, LLC, 935 F.Supp.2d 926 (D.S.D. 2013) .............................................................................7, 8, 13, 16

Felland v. Clifton, 682 F.3d 665 (7th Cir. 2012) ...................................................................................................21

Fin. Mgmt. Servs., Inc. v. Coburn Supply Co., 2003 WL 255232 (N.D. Ill. Feb. 5, 2003) .............................................................................4, 5

FMC v. Shoshone-Bannock Tribes, 905 F.2d 1311 (9th Cir. 1990) .................................................................................................24

Grand Canyon Skywalk Dev., LLC v. ‘Sa’ Nyu Wa, Inc., 715 F.3d 1196 (9th Cir. 2013) .................................................................................................24

Healy v. Beer Institute, 491 U.S. 324 (1989) ...................................................................................................................6

Heldt v. Payday Financial, LLC, 2014 WL 1330924, at *14 (D.S.D. Mar. 31, 2014) ...........................................................13, 25

Ideal Ins. Agency, Inc. v. Shipyard Marine, Inc., 213 Ill. App. 3d 675 (2d Dist. 1991) ....................................................................................7, 25

IFC Credit Corp. v. Aliano Bros. Gen. Contractors, Inc., 437 F.3d 606 (7th Cir. 2006) ...................................................................................................21

In re C.C., 2011 IL 111795 ........................................................................................................................17

In re Skidmore, 2011 IL App (2d) 100730 ........................................................................................................19

Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9 (1987) .....................................................................................................................23

Jiali Tang v. Synutra Int’l, Inc., 656 F.3d 242 (4th Cir. 2011) ...................................................................................................23

Johnson v. Masselli, 2008 WL 111057 (N.D. Ind. Jan. 4, 2008) ................................................................................4

Lee v. Nationwide Cassel, L.P., 174 Ill.2d 540 (1996) ...............................................................................................................15

Lightcast Inc. v. Lightcast Inc., 2014 WL 3721584 (M.D. Ala. July 28, 2014) ...........................................................................4

iv


McCarthy v. Kunicki, 355 Ill. App. 3d 957 (1st Dist. 2005) .......................................................................................14

Midwest Title Loans, Inc. v. Mills, 593 F.3d 660 (7th Cir. 2010) .............................................................................................6, 8, 9

Montana v. United States, 450 U.S. 544 (1981) ...........................................................................................................23, 24

Moran Indus., Inc. v. Higdon, 2008 WL 4874114 (N.D. Ill. June 26, 2008) .............................................................................5

Muzumadar v. Wellness Int’l Network, Ltd., 438 F.3d 759 (7th Cir. 2006) ...................................................................................................22

Nat’l Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845 (1985) .................................................................................................................23

Parks v. Wells Fargo Home Mortg., Inc., 398 F.3d 937 (7th Cir. 2005) ...................................................................................................14

Paxson v. Bd. of Educ. of School Dist. No. 87, Cook Cnty., 276 Ill.App.3d 912 (1st Dist. 1995) .........................................................................................17

People ex. rel. Daley v. Grady, 192 Ill.App.3d 330 (1st Dist. 1989) .........................................................................................17

People v. Moulton, 282 Ill.App.3d 102 (3d Dist. 1996) ..........................................................................................11

Petrich v. MCY Music World, Inc., 371 Ill. App. 3d 332 (1st Dist. 2007) .................................................................................20, 21

Plains Commerce Bank v. Long Family Land & Cattle Co., 554 U.S. 316 (2008) .................................................................................................................25

Pourier v. South Dakota Department of Revenue, 658 N.W.2d 395 (S.D. 2003) ...................................................................................................24

Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773 (7th Cir. 2003) ...................................................................................................20

Rhodes v. Mill Race Inn, Inc., 126 Ill. App. 3d 1024 (2d Dist. 1984) ......................................................................................14

Rincon Mushroom Corp. v. Mazzetti, 490 F. App’x 11 (9th Cir. 2012) ..............................................................................................23

v


Rollins v. Ellwood, 141 Ill.2d 244 (1990) .........................................................................................................20, 21

Sanderson v. Spectrum Labs, Inc., 248 F.3d 1159, 2000 WL 1909678 (7th Cir. 2000) ...................................................................5

Saskill v. 4-B Acceptance, 117 Ill.App.3d 336 (1st Dist. 1983) .........................................................................................11

Saskill v. 4-B Acceptance, 139 Ill.App.3d 143 (1st Dist. 1995) .........................................................................................11

Siegel v. Shell Oil Co., 612 F.3d 932 (7th Cir. 2010) ...................................................................................................17

Stern v. Norwest Mortg., Inc., 284 Ill.App.3d 506 (1st Dist. 1996) ...................................................................................15, 16

United Fin. Mortg. Corp. v. Bayshores Funding Corp., 245 F. Supp. 2d 884 (N.D. Ill. 2002) .........................................................................................4

United States v. Phillips, 731 F.3d 649 (7th Cir. 2013) (en banc) .............................................................................11, 12

Washington Economic Dev. Fin. Auth. v. Grimm, 837 P.2d 606 (Wash. 1992)......................................................................................................19

Wiegel v. Stork Craft Mgf., Inc., 946 F.Supp.2d. 804 (N.D. Ill. 2013) ........................................................................................17

Williams v. Lee, 358 U.S. 217 (1959) .................................................................................................................26

Woodke v. Dahm, 70 F.3d 983 (8th Cir. 1995) .......................................................................................................4

Zekman v. Direct Am. Marketers, Inc., 182 Ill.2d 359 (1998) .........................................................................................................14, 17

STATUTES

205 ILCS 670/11(a) .......................................................................................................................19

205 ILCS 670/20(d) ...................................................................................................................3, 19

205 ILCS 670/9(a)(1) .....................................................................................................................19

720 ILCS 5/17-59 ......................................................................................................................3, 14

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815 ILCS 122/1-10 ........................................................................................................................13

815 ILCS 122/1-15(a) ....................................................................................................................19

815 ILCS 122/4-10(h) ......................................................................................................................3

815 ILCS 205/0.01 ...........................................................................................................................3

815 ILCS 205/6 ..............................................................................................................................11

815 ILCS 505/1 ................................................................................................................................3

815 ILCS 505/2 ..............................................................................................................................14

815 ILCS 505/2Z ...........................................................................................................................16

28 U.S.C. § 1391 ..........................................................................................................................1, 4

OTHER AUTHORITIES

Black’s Law Dictionary 950 (9th ed. 2009) ...................................................................................12

Federal Rule of Civil Procedure 4 .................................................................................................20

Rule 12(b)(2) ..................................................................................................................................26

Rule 12(b)(3) ..................................................................................................................................26

Rule 12(b)(6) ............................................................................................................................11, 26

U.S . CONST. ARTICLE I, § 8, CL. 3 ....................................................................................................6

vii


INTRODUCTION

Defendant Western Sky Financial LLC (“Western Sky”) is a consumer lender that

operated from its headquarters on the Cheyenne River Indian Reservation in South Dakota under

the laws of the Cheyenne River Sioux Tribe, or CRST. Defendant Martin Webb is an enrolled

member of the CRST, and is the sole member of Western Sky. Defendant CashCall, Inc.

(“CashCall”) is a California corporation that, among other things, services Western Sky loans.

Each Western Sky loan agreement clearly discloses in plain English the principal balance of the

loan, the interest rate, the annual percentage rate, the term of the loan, and that it is governed

solely by CRST law and subject to jurisdiction solely in the CRST courts.

In October of 2012, Plaintiff took out a $10,000 loan from Western Sky. Like most

Western Sky borrowers, Plaintiff did so by submitting an application through Western Sky’s

website from his home. After making a single payment of less than $1,000, Plaintiff has sued to

void the loan and thus keep the remaining proceeds. In his Complaint, Plaintiff alleges that his

loan is illegal because its interest rate exceeds the maximum rate allowed under Illinois law. He

seeks an order (1) declaring that his loan is illegal under Illinois law; (2) declaring that the

provisions of the contract governing his loans stating that the loans are governed by CRST law

and that only the CRST courts may hear disputes under the loan are unenforceable; (3) granting

an injunction against further enforcement of the loan; and (4) granting statutory penalties,

attorneys fees, and litigation costs.

This Court should dismiss Plaintiff’s complaint for multiple reasons. First, this Court is

an improper venue under 28 U.S.C. § 1391. Second, the Dormant Commerce Clause bars

applying Illinois law to Western Sky loans, which are consummated outside of Illinois. Third,

even if Illinois law applies, Plaintiff has failed to adequately plead essential elements of each of

his claims. Fourth, this Court lacks personal jurisdiction over Mr. Webb. Fifth, and finally,


Plaintiff’s Loan Agreement’s forum-selection clause requires that this case be heard only in the

CRST courts and the tribal exhaustion doctrine requires this Court to stay this case pending

Plaintiff exhausting his tribal remedies. As to this last point, Defendants acknowledge that a

recent Seventh Circuit decision holding that the CRST courts do not have jurisdiction over

Western Sky loans precludes this Court from granting Defendants relief on this basis. Defendants

include arguments relating to the forum-selection clause and tribal jurisdiction to preserve this

issue for further review.

BACKGROUND

Plaintiff is an Illinois resident who took out a loan from defendant Western Sky. (Cmplt.

¶¶ 23-25.) Western Sky is a South Dakota limited liability company incorporated under the laws

of the State of South Dakota and licensed to do business by the CRST on the Cheyenne River

Indian Reservation (“Reservation”), which is in South Dakota. (Ex. 1, Lawrence Aff. ¶¶ 3-4.)

Western Sky is owned by defendant Martin A. Webb, an enrolled CRST member. (Cmplt. ¶¶ 10,

12; Ex. 1, Lawrence Aff. ¶ 3.) According to the complaint, Western Sky offered loans to Illinois

consumers through its website and radio and television advertising. (Cmplt. ¶ 24.) The

Complaint acknowledges that Western Sky disclosed that it is not owned by the CRST on its

website, where it stated that Western Sky “is owned wholly by an individual Tribal Member of

the Cheyenne River Sioux Tribe and is not owned or operated by the Cheyenne River Sioux

Tribe or any of its political subdivisions.” (Id. ¶ 15.) As to CashCall, the complaint alleges that it

“is engaged in the business of making or arranging high-interest loans to consumers over the

Internet, and also the servicing of such loans made by others (either as a purchaser of such loans

or otherwise). (Id. ¶ 18.)

Plaintiff alleges that his loan is unlawful under Illinois law because it exceeds the 9%

presumptive cap on interest rates for loans. (Cmplt. ¶ 30.) Plaintiff took out a loan with a

2


principal amount of $10,000, at an annual percentage rate of 89.63%. (Id. ¶ 26 & Ex. A at 1.)

Plaintiff alleges that after Western Sky originated his loan, and “CashCall arranged to service

Mr. Scherr’s loan.” (Id. ¶¶ 7, 19, 25.)

The Complaint alleges that “Defendants knew that its loan to Mr. Scherr was

unenforceable and fraudulent under Illinois law.” (Id. ¶ 28.) The sole fact alleged in support of

that allegation is that Western Sky issued the loan to Plaintiff after Plaintiff’s attorneys brought

suit on behalf of other Western Sky borrowers against Western Sky and related entities alleging

that “CashCall was liable for conduct similar to that which was alleged herein.” (Id.)

Plaintiff acknowledges that the contract governing his loan (“Loan Agreement”) contains

a choice-of-law provision stating that the “Loan Agreement is subject solely to the exclusive

laws and jurisdiction of the Cheyenne River Sioux Tribe, Cheyenne River Indian Reservation.”

(Ex. A at 1.)1 The Loan Agreement also contains a clause (“Forum-Selection Clause”) stating

that “[b]y executing this Loan Agreement, you, the borrower, hereby acknowledge and consent

to be bound to the terms of this Loan Agreement, consent to the sole subject matter and personal

jurisdiction of the Cheyenne River Sioux Tribal Court, and that no other state or federal law or

regulation shall apply to this Loan Agreement, its enforcement or interpretation.” (Id.)

Plaintiff does not plead separate claims based upon particular statutes or legal theories.

The Complaint, however references a number of Illinois statutes that Plaintiff alleges Defendant

violated: (1) the criminal usury statute, 720 ILCS 5/17-59; (2) the Illinois Interest Act, 815 ILCS

205/0.01; (3) the Illinois Consumer Fraud and Deceptive Business Practices Act (“CFA”), 815

ILCS 505/1; (4) the Consumer Installment Loan Act (“CILA”), 205 ILCS 670/20(d); and (5) the

Payday Loan Reform Act, 815 ILCS 122/4-10(h)). (Cmplt. ¶¶ 29-48.)

1 “Ex. A” refers to Exhibit A to the Complaint, which is a copy of Plaintiff’s Loan Agreement.

3


ARGUMENT

I. This Court Is An Improper Venue Under Section 1391.

Plaintiff cannot establish that venue is proper under the general venue statute, 28 U.S.C. §

1391. The only potentially applicable ground under that statute is if “a substantial part of the

events or omissions giving rise to the claim occurred” in this district. Id. § 1391(b)(2). “[B]y

referring to ‘events or omissions giving rise to the claim,’ Congress meant to require courts to

focus on relevant activities of the defendant, not of the plaintiff.” Woodke v. Dahm, 70 F.3d 983,

985 (8th Cir. 1995). Thus, the “analysis centers on where the Defendants’ acts took place.”

Johnson v. Masselli, 2008 WL 111057, at *4 (N.D. Ind. Jan. 4, 2008). Specifically, the location

where the plaintiff suffers harm is not a proper venue on that basis because otherwise “a plaintiff

could always bring suit at its home base on the premise that it has suffered harm there,” which

would “eviscerat[e]” Congress’s conscious choice not to allow venue on the basis of the

plaintiff’s place of residence. Fin. Mgmt. Servs., Inc. v. Coburn Supply Co., 2003 WL 255232, at

*2 (N.D. Ill. Feb. 5, 2003) (emphasis removed). Further, venue is not proper where “the

overwhelming majority of the events” underlying the claim occurred outside the district. United

Fin. Mortg. Corp. v. Bayshores Funding Corp., 245 F. Supp. 2d 884, 896 (N.D. Ill. 2002).

Mere advertising that can be seen or accessed by residents of a district because a website

is accessible from anywhere or advertising is conducted nationwide does not render every district

in the country a proper venue. “[T]he mere fact of a website accessible in the district cannot be

sufficient for venue or else ‘the reach of the internet alone would make venue proper in any

district in the United States . . . regardless of whether any acts were directed at the forum itself.’”

Lightcast Inc. v. Lightcast Inc., 2014 WL 3721584, at *3 (M.D. Ala. July 28, 2014) (quoting

Cabot Oil & Gas Corp. v. Water Cleaning Servs., Inc., 2012 WL 2133589, at *3 (S.D. Tex. June

4


12, 2012)). Western Sky’s alleged website or television advertising is thus insufficient to

establish venue here.

The focus on Defendants’ actions further makes clear the venue is not proper here.

Western Sky is incorporated outside this district, has its sole office on the Reservation outside

this district, and considered and approved Plaintiff’s loan application from that office outside this

district. Likewise CashCall is incorporated in California, has its offices there, and undertook any

servicing of Plaintiff’s loan from there. The only allegations in the complaint connecting any

Defendant to Illinois is the allegation that Plaintiff resided in Illinois when he took out his loan,

and that Western Sky advertised on television and over the internet nationwide, which the

complaint alleges in collusory fashion “targeted” Illinois. (Cmplt. ¶¶ 7, 23-24.) But the location

of Plaintiff is irrelevant. See Fin. Mgmt. Servs., 2003 WL 255232, at *2. Further, although

Plaintiff alleges that Western Sky advertising targeted Illinois, he does not allege advertising

targeted specifically at this district. Contacts with Illinois, however, do not establish that venue is

proper in the Northern District of Illinois. Sanderson v. Spectrum Labs, Inc., 248 F.3d 1159,

2000 WL 1909678, at *4 (7th Cir. 2000) (unpublished table disposition) (affirming dismissal

where the “complaint alleged in a conclusory fashion that [defendants] transacted business and

conducted activities in Indiana, but Mr. Sanderson made no attempt to allege that this business or

activity took place in the Northern District.”).

In sum, “though some events related to the contract occurred in Illinois, and [P]laintiff[s]

may have felt the impact of” Defendants’ alleged conduct “here, Illinois is not where a

substantial part of the events underlying the . . . claims occurred.” Moran Indus., Inc. v. Higdon,

2008 WL 4874114, at *5 (N.D. Ill. June 26, 2008).

5


II. Plaintiff Fails To State A Claim Because The Dormant Commerce Clause Precludes Applying Illinois Law To Plaintiff’s Loan Agreement, Which Formed Outside Of Illinois.

The Constitution’s Commerce Clause grants Congress broad authority to “regulate

Commerce . . . among the several States, and with the Indian Tribes.” U.S . CONST. ART. I, SEC.

8, CL. 3. By granting authority over interstate commerce exclusively to Congress, the Commerce

Clause necessarily withholds that authority from the States. Midwest Title Loans, Inc. v. Mills,

593 F.3d 660, 664-65 (7th Cir. 2010). Two principles that underlay the Dormant Commerce

Clause preclude applying Illinois law to Plaintiff’s loan: (1) a state may not regulate conduct that

occurs outside its borders; and (2) a lender’s decision to lend to a state resident, where the loan

contract forms outside the state, does not give the state authority to apply its laws to the loan.

A. Illinois law cannot apply to loan agreements formed outside Illinois.

The Dormant Commerce Clause limits the permissible “extraterritorial effects of state

economic regulation.” Healy v. Beer Institute, 491 U.S. 324, 336 (1989). Thus “no State may

force an out-of-state merchant to seek regulatory approval in one State before undertaking a

transaction in another.” Midwest Title Loans, 593 F.3d at 665 (quoting Healy, 491 U.S. at 337);

Brown–Forman Distillers Corp. v. N.Y. State Liquor Authority, 476 U.S. 573, 582 (1986). The

“Commerce Clause . . . precludes the application of a state statute to commerce that takes place

wholly outside of the State’s borders, whether or not the commerce has effects within the State.”

Healy, 491 U.S. at 336 (quoting Edgar v. MITE Corp., 457 U.S. 624, 642-643 (1982)). In a

Dormant Commerce Clause extraterritoriality analysis, “[t]he critical inquiry is whether the

practical effect of the regulation is to control conduct beyond the boundaries of the State.” Healy,

491 U.S. at 336. “[T]he Commerce Clause protects against inconsistent legislation arising from

the projection of one state regulatory regime into the jurisdiction of another State.” Id.

6


Those principles preclude applying Illinois law to loan agreements that form outside

Illinois. “‘The long-established rule in Illinois governing the making of contracts is that the place

where the last act necessary to give validity to the contract is done is the place where the contract

is made.’” Ideal Ins. Agency, Inc. v. Shipyard Marine, Inc., 213 Ill. App. 3d 675, 681 (2d Dist.

1991) (quoting Youngstown Sheet & Tube Co. v. Industrial Comm’n, 79 Ill.2d 425, 433 (1980)).

Under this principle, the place of contracting for every Western Sky loan was the Reservation in

South Dakota: in the Loan Agreements, the Plaintiff “expressly agree[d] that this Agreement is

executed and performed solely within the exterior boundaries of the Cheyenne River Indian

Reservation.” (Ex. A at 1.) That acknowledgement is consistent with the facts: the last act

necessary to form each Loan Agreement was Western Sky’s final underwriting review and

decision to fund each loan, which occurred at Western Sky’s offices on the Reservation and

outside Illinois.

The last act necessary to consummate any Western Sky loan thus occurred on the

Reservation in every instance. In F.T.C. v. Payday Financial, LLC, 935 F.Supp.2d 926 (D.S.D.

2013) the court addressed claims brought by the Federal Trade Commission against numerous

companies owned by Mr. Webb that operated from the Reservation, including Western Sky. Id.

at 930-31. Applying a site-of-contract-formation analysis, and noting the extent of activity

directed at the Reservation by those who borrow from Western Sky and similar Reservation-

based lending companies, the court rejected the FTC’s argument that the physical presence of the

borrowers outside the Reservation was dispositive as to whether the Tribal court had jurisdiction

over the borrowers. Id. at 938-40. While the court completed its analysis with different

considerations because of the different claims at issue in that case, the Payday Financial analysis

of where Western Sky’s loans were made—where the commerce occurred—is directly on point:

7


“Here, the contract between the Borrowers and Lending Companies appears to be formed on the

Reservation in South Dakota.” Id. at 938.

Given that Western Sky’s loans are consummated on the Reservation and that Wisconsin

may not regulate commercial activity that occurs outside of Wisconsin under the Dormant

Commerce Clause, it follows that Wisconsin may not regulate Western Sky’s loans. Indeed, the

Seventh Circuit has held that states may not regulate commercial transactions consummated in

another state, even those involving in-state residents with in-state economic effects. Midwest

Title Loans addressed whether, consistent with the Dormant Commerce Clause, Indiana could

apply a car title lending statute to an Illinois lender where the loan agreements with Indiana

residents were formed outside Indiana, at the lender’s Illinois office. 593 F.3d at 663. The

Seventh Circuit held that the Indiana statute could not constitutionally apply to the loans because

they were consummated in Illinois.2 “The contract was, in short, made and executed in Illinois,

and that is enough to show that the territorial-application provision violates the commerce

clause.” Id. at 669. Here, like in Midwest Title Loans, only the laws of the jurisdiction where the

loan agreements were made applies to those loan agreements. The Dormant Commerce Clause

therefore precludes applying Wisconsin law here.

B. A lender’s contacts with a foreign state do not give the foreign state jurisdiction over loans made by the lender in its home jurisdiction.

It does not matter that some activities relating to the loans—such as the fact that

borrowers submitted their application to Western Sky over the Internet from their homes—

occurred in Illinois.

2 States may not apply their laws to wholly extraterritorial conduct as a per se rule: a “class of nondiscriminatory local regulations is invalidated without a balancing of local benefit against out-of-state burden . . . where states actually attempt to regulate activities in other states.” Midwest Title Loans, 593 F.3d at 665 (emphasis added).

8


The Seventh Circuit has held that in-state activities related to a loan agreement do not

vest the state with regulatory authority where the agreement nonetheless formed out-of-state. In

Midwest Title Loans, for example, it did not matter that the Illinois lender engaged in collection

activities in Indiana, advertised in Indiana, registered its security interests in collateral with the

Indiana Bureau of Motor Vehicles, and even auctioned off repossessed automobiles in Indiana.

Id. As to advertising in Indiana, for example, the court held that “[a] state may not ‘take the

commercial speech that is vital to interstate commerce and use it as a basis to allow the

extraterritorial regulation that is destructive of such commerce.’” Id. (quoting Carolina Trucks

& Equipment, Inc. v. Volvo Trucks of North America, Inc., 492 F.3d 484, 491 (4th Cir. 2007)).

In Eric M. Berman, P.C. v. City of New York, 895 F. Supp. 2d 453 (E.D.N.Y. 2012), the

court similarly held that some in-state activity does not give the state regulatory authority over

contracts that formed out-of-state. There, New York City attempted to apply short-term lender

regulations against out-of-state entities that purchased and attempted to collect on loans made to

residents of the city. Explaining that the decisive consideration for whether “application of a law

impermissibly regulates extraterritorial commerce” is simply “where the transaction being

regulated was consummated,” the court concluded that a state may not regulate a transaction

consummated out of state “regardless of whether some other aspect of the commercial activity

occurs within the state.” 895 F.Supp.2d at 483. Neither “use of the product or service within the

state” nor “the subsequent in-state sale of the product or service” nor “prior negotiations or

advertising in-state that lead to the formation of the contract out of state” nor “the fact that one of

the parties is a state resident” provide a valid hook to bring an extraterritorial transaction within

the purview of a state. Id. “[T]he in-state presence of one party to the transaction cannot be used

9


as justification to regulate the other party . . . nor, critically to this case, can the in-state

performance of a counterparty be used to regulate the other party.” Id. (emphasis added).

Likewise, in Dean Foods Co. v. Brancel, 187 F.3d 609 (7th Cir. 1999), Wisconsin sought

to apply its regulations to milk purchases by Dean Foods. Dean Foods had previously bought

milk from dairy farmers at their farms in Wisconsin. However, when Wisconsin enacted new

regulations, Dean Foods modified its practice to only take title to the milk in Illinois solely to

circumvent the new Wisconsin regulations. The Seventh Circuit held that Wisconsin could not

apply its regulations to these sales where farmers reached outside Wisconsin to transact business

in Illinois, even though the effect of the sales was “felt, perhaps even predominantly, in

Wisconsin.” Id. at 619. “No agreement or meeting of the minds, as is required by contract

principles, occurred regarding the purchase of any shipment of milk until the product actually

arrived in Illinois.” Id. at 619. According to the court, “the fact that a particular transaction may

affect or impact a state does not license that state to regulate commerce which occurs outside of

its jurisdiction.” Id. at 619-20. Even though the farmers were physically located in Wisconsin at

the time of the sales in Illinois (the farmers “arranged to have haulers pick up their milk” to

transport it to Illinois, id. at 612), Wisconsin still had no jurisdiction over the sales.

Those cases preclude applying Illinois law to Western Sky loans. Under generally

applicable principles of contract law, Western Sky loans form on the Reservation, because

Plaintiff agreed that is where his Loan Agreement formed and that is where the last act necessary

to consummate each Loan Agreement occurs: Western Sky’s final underwriting review after the

consumer submits its application and Western Sky’s final decision to fund each loan. Under

Midwest Title Loans and Dean Foods, the fact that the Loan Agreements form outside Illinois is

10


dispositive: Illinois law may not apply to those loans. That Illinois residents took out the loans is

irrelevant.

III. Alternatively, Plaintiff Fails To State Any Valid Claim Under Illinois Law.

Should this Court reject Defendants’ venue, personal jurisdiction, and Dormant

Commerce Clause arguments, this Court should dismiss the complaint under Rule 12(b)(6).

Plaintiff fails to allege essential elements of each claim.

A. The Interest Act claim fails because Plaintiff fails to allege facts showing that Defendants “knowingly” received unlawful interest.

Plaintiff brings a claim under the Interest Act on the ground that the Loan Agreements

contain interest rates in excess of the Interest Act’s 9% cap. (Cmplt. ¶¶ 27, 29.) To state a valid

Interest Act claim, Plaintiff must allege that Defendants “knowingly contract[ed] for or

receive[d], directly or indirectly, . . . unlawful interest.” 815 ILCS 205/6. The complaint fails to

allege an Interest Act claim.

The complaint does not allege facts to suggest plausibly that Defendants “knowingly”

received “unlawful interest.” Id.; Casaccio v. Habel, 14 Ill.App.3d 822, 825-26 (1st Dist. 1973).

Under the Interest Act, “[w]hether a loan is usurious depends on whether the party intended to

charge unlawful interest.” Saskill v. 4-B Acceptance, 117 Ill.App.3d 336, 340 (1st Dist. 1983). To

have “knowingly” collected unlawful interest, Defendants must have subjectively understood

that the interest rates in the Loan Agreements were unlawful. United States v. Phillips, 731 F.3d

649, 652-53 (7th Cir. 2013) (en banc).3

Plaintiff’s conclusory allegation also fails to meet the requirement of Twombly/Iqbal. A

person does something “knowingly” only when he subjectively understands it to be true.

3 Because Section 6 of the Interest Act is a penalty provision, it “must be strictly construed” and limited to its “literal and obvious meaning.” People v. Moulton, 282 Ill.App.3d 102, 107 (3d Dist. 1996); Saskill v. 4-B Acceptance, 139 Ill.App.3d 143, 145 (1st Dist. 1995).

11


Phillips, 731 F.3d at 652-53. Defendants must therefore have had a subjective “awareness or

understanding” that the interest rates were unlawful such that they have “no substantial doubt

about the existence of th[at] fact.” Black’s Law Dictionary 950 (9th ed. 2009). In Phillips, for

example, the en banc Seventh Circuit stated that whether a statement is made “knowingly”

depends on “what the defendants understood to be the” case at the time. Phillips, 731 F.3d at

653.

The complaint alleges in cursory fashion that “Defendants knew that its loan to Mr.

Scherr was unenforceable and fraudulent under Illinois law.” (Id. ¶ 28.) The sole fact alleged in

support of that allegation is that Western Sky issued the loan to Plaintiff after Plaintiff’s

attorneys brought suit on behalf of other Western Sky borrowers against Western Sky and related

entities in a separate case, where they alleged that “CashCall was liable for conduct similar to

that which was alleged herein.” (Id.)

Here, the complaint’s allegations plausibly support only one inference: that Defendants

understood the loans to be legal under tribal law. The Loan Agreements make clear that they are

governed by tribal law. See p. 2 above. To allege the required state of mind, therefore, the

complaint would have to allege facts suggesting that Defendants had “no substantial doubt” that,

contrary to the Loan Agreements’ terms, Defendants believed that Illinois law nonetheless

applied and knew that the Loan Agreements violated Illinois law. Yet Plaintiff alleges no facts

suggesting that Defendants had “no substantial doubt” that Illinois law applied and that the loans

were illegal under Illinois law. Plaintiff points only to a single civil suit (brought by Plaintiff’s

attorneys on behalf of other borrowers) alleging the loans are illegal under Illinois law. The

complaint does not allege that the case has been resolved in such a manner that Defendants

would have “no substantial doubt” that the loans are illegal under Illinois law. To the contrary,

12


Defendants have contested the allegations in that and other similar proceedings, which suggests

that Defendants believe the loans are governed by tribal law and are legal under that law.

Further, a federal district judge has held that Defendants’ belief that the Loan Agreement

is governed by tribal, not Illinois, law is reasonable. In Heldt v. Payday Financial, LLC, Judge

Lange of the District of South Dakota held that there is at least a plausible argument that CRST

jurisdiction over Western Sky loans is proper under federal Indian law, and thus ordered the

plaintiffs there to exhaust their remedies in tribal court before they could challenge tribal

jurisdiction in federal court (that tribal action is ongoing). 2014 WL 1330924, at *14 (D.S.D.

Mar. 31, 2014). In a related case, that same judge noted that a number of facts, including that the

agreements “form[] on the Reservation,” show that under basic choice-of-law principles tribal

law may govern the loans. Payday Fin., 935 F. Supp. 2d at 939, 941-42. The concurrence of a

federal district judge thus demonstrates that Defendants have a good faith basis for believing

Western Sky loans are subject solely to tribal—and thus not Illinois—law. As a matter of law,

therefore, Defendants could have not have acted with the requisite knowledge that they were

violating Illinois law required to establish an Interest Act claim. The Interest Act claim should be

dismissed.

B. The Payday Loan Reform Act claim fails because Plaintiff’s is not a “payday loan” under the statute.

The complaint references the Payday Loan Reform Act (“PLRA”). (Cmplt. ¶ 32.) By its

terms, the PLRA only applies to “payday loans.” 815 ILCS 122/1-10. To qualify as a “payday

loan” under the statute, however, the loan term “must not exceed 120 days.” 815 ILCS 122/1-10.

Yet the Loan Agreement makes clear that it has a term of 84 months. (Ex. A at 1-2.) The PLRA

therefore does not apply to Plaintiff’s loan.

13


C. Illinois’s criminal usury statute does not provide for a private right of action.

Plaintiff alleges that Defendants violated Illinois’s criminal usury statute, 720 ILCS 5/17-

59. Because that statute does not have a private right of action, however, this claim should be

dismissed.

“In the analysis of whether a private right of action may be maintained, four questions are

material: (1) Were plaintiffs members of the class for whose benefit the statute was enacted; (2)

is implication of a private right consistent with the underlying purpose of the Act; (3) is

plaintiff’s injury one the statute was designed to prevent; (4) is implication of a civil private right

of action necessary to provide an adequate remedy for violations of the act.” Rhodes v. Mill Race

Inn, Inc., 126 Ill. App. 3d 1024, 1026 (2d Dist. 1984).

Here, these factors weight against implying a cause of action because “it does not appear

necessary to provision a remedy for violation of the [criminal usury statute] that a civil private

right of action be implied.” Id. at 1027. The reason is simple: the General Assembly has given

borrowers other statutory remedies for allegedly usurious loans in the Interest Act, the CILA, and

the PLRA. (See pp. 12-13 above.) Where other statutory or common law remedies exist, it is

inappropriate to infer a private cause of action in a criminal statute. See McCarthy v. Kunicki,

355 Ill. App. 3d 957, 969 (1st Dist. 2005) (“[A]n implied private cause of action is not necessary

where plaintiff's common law negligence action, in addition to criminal penalties, constitutes an

adequate remedy.”); Rhodes, 126 Ill. Ap. 3d at 1027.

D. This Court should dismiss the Consumer Fraud Act (CFA) claim for multiple reasons.

To state a CFA claim, Plaintiff must allege, among other things, facts demonstrating an

unfair or deceptive act or practice by the defendant that proximately caused his injury. 815 ILCS

505/2; Parks v. Wells Fargo Home Mortg., Inc., 398 F.3d 937, 943 (7th Cir. 2005); Zekman v.

14


Direct Am. Marketers, Inc., 182 Ill.2d 359, 373 (1998). Plaintiff alleges Defendants violated the

CFA by including in the Loan Agreement a provision designating non-Illinois law and by

representing that Plaintiff’s loan is enforceable when, Plaintiff alleges, it is not. (Cmplt. ¶ 41.)

Plaintiff fails to allege a CFA claim for multiple reasons.

1. A party does not commit an unfair or deceptive act where “legitimate disagreement” exists about whether the conduct at issue is unlawful.

Plaintiff bases his CFA claim on the allegation that Defendants (a) represented that tribal

law applies to the loan rather than state or federal law, and (b) that Plaintiff’s loan “was an

enforceable contract” when, Plaintiff contends, it was not. (Cmplt. ¶¶ 39-47.) Plaintiff thus

grounds his CFA claim in a disagreement over whether Illinois law applies to the loans and

whether those loans were legal. That is insufficient.

“The Consumer Fraud Act prohibits deception, not error.” Stern v. Norwest Mortg., Inc.,

284 Ill.App.3d 506, 513 (1st Dist. 1996). To state a CFA claim, “there must be a claim seated in

deceptive acts rather than a reasonable difference of opinion as to” the legality of the conduct at

issue. Id. Where there is “uncertainty about the applicable law” or the law is “arguably

ambiguous,” no CFA claim exists. Lee v. Nationwide Cassel, L.P., 174 Ill.2d 540, 550-51

(1996); Cahnman v. Agency Rent-A-Car Sys., Inc., 299 Ill.App.3d 54, 60 (1st Dist. 1998).

A CFA claim cannot rest on a “legitimate disagreement” about the law even if the

defendant is ultimately wrong and the conduct at issue is unlawful. Stern, 284 Ill.App.3d at 512-

13. In Stern, the Illinois Appellate Court held that the defendant violated the Illinois Mortgage

Escrow Account Act by charging an escrow waiver fee, but dismissed the plaintiffs’ CFA claim

based on the escrow statute. The court held that although “defendant has urged upon us a

position with which we do not agree [regarding whether its conduct violated the escrow statute],

we cannot say that such a position is the result of any ‘unfair or deceptive acts or practices’ nor

15


can the acts of defendant be characterized as ‘fraud, false pretense, false promise’ or

concealment of any material fact.” Id. at 512. Rather, the defendant had a “reasonable difference

of opinion as to the meaning of” the escrow statute, which cannot support a CFA claim. Id. at

513.

That principle supports dismissal here. The Loan Agreements state that they are governed

by tribal, not Illinois, law. (Ex. A at 1, 3.) As noted above, a federal judge has held that

Defendants have plausible arguments that tribal—and thus not Illinois—law applies to Western

Sky loans. See p. 16-20, below; Payday Fin., 935 F. Supp. 2d at 939, 941-42. Although the

Seventh Circuit in Jackson has subsequently suggested that tribal law may not govern the

loans—a proposition with which Defendants respectfully disagree—that does not change the fact

that when Western Sky issued Plaintiff’s loan and CashCall attempted to collect on it, both had a

reasonable, good faith basis to believe the loan was not governed by Illinois law. Plaintiff’s CFA

claim thus fails because there is at the very least a “reasonable difference of opinion” as to

whether the Loan Agreement is governed by Tribal or Illinois law. Stern, 284 Ill.App.3d at 513.

2. A CFA claim cannot be based on a violation of the Interest Act or CILA.

Plaintiff also appears to base his CFA claim on the contention that it violates the CFA to

“contract[] for, demand[] and attempt[] to collect finances charges, interest, and fees from an

Illinois consumer in excess of the amounts permitted by Illinois law,” because Plaintiff’s loan

allegedly violates the Interest Act and the Consumer Installment Loan Act (“CILA”). (Cmplt. ¶

39.) But the CFA does not allow a party to recover for a violation of either the Interest Act or

CILA.

The CFA enumerates particular statutes that, if violated, give rise to a CFA claim. 815

ILCS 505/2Z. Neither the Interest Act nor CILA are on that list. A basic principle of statutory

16


interpretation is “[w]hen a statute lists the things to which it refers, there is an inference that all

omissions should be understood as exclusions, despite the lack of any negative words of

limitation.” In re C.C., 2011 IL 111795, ¶ 34. The statute reaches unenumerated things only

when the legislature makes clear that the enumerated list is non-exclusive by using a word like

“including.” Paxson v. Bd. of Educ. of School Dist. No. 87, Cook Cnty., 276 Ill.App.3d 912, 921

(1st Dist. 1995). Based on those principles, the Illinois Appellate Court has held that a plaintiff

cannot base a CFA claim on the violation of a statute that is not specifically enumerated in the

CFA. People ex. rel. Daley v. Grady, 192 Ill.App.3d 330, 333 (1st Dist. 1989) (violation of Real

Estate Act not actionable under CFA). Here, the CFA lists numerous statutes, but does not

include the Interest Act or CILA, and does not indicate that other statutes are to be included.

3. Plaintiff does not plausibly allege that Defendants’ alleged deception proximately caused his injury.

To state a CFA claim, Plaintiff must allege that Defendants’ alleged deception

“proximately caused [their] injury.” Zekman, 182 Ill.2d at 373. For three reasons, Plaintiff’s

complaint does not allege proximate cause.

First, Plaintiff does not claim that he would not have taken out his loans in the absence of

Western Sky’s allegedly false statement that the loans were legal. Plaintiff must allege “that ‘but

for’ the defendants’ [unlawful] conduct, [he] would not have been damaged, i.e., [he] would not

have” taken out the loans. Siegel v. Shell Oil Co., 612 F.3d 932, 935 (7th Cir. 2010). Plaintiff

never alleges, however, that had Western Sky informed him that the loans (as Plaintiff claims)

contain an unlawful interest rate, he would have forgone his loan.

Second, in addition to alleging that he would have not taken out the loans, Plaintiff must

allege “that [he] would have been in a materially better position had [he] done so.” Wiegel v.

Stork Craft Mgf., Inc., 946 F.Supp.2d. 804, 809 (N.D. Ill. 2013). Plaintiff does not allege any

17


facts suggesting that he would have been better off without having taken out the loans in the first

place. The Loan Agreement contain interest rates of almost 90%. (Cmplt. ¶ 26 & Ex. A at 1.)

The Loan Agreement warned Plaintiff that “THIS LOAN CARRIES A VERY HIGH

INTEREST RATE. YOU MAY BE ABLE TO OBTAIN CREDIT UNDER MORE

FAVORABLE TERMS ELSEWHERE.” (Ex. A at 6.) The only plausible inference from the

fact that Plaintiff took out a loan with such terms is that he needed the money for compelling

reasons and could not find financing on better terms. Without the loan, therefore, this Court can

plausibly infer that Plaintiff would have suffered corresponding harm. In light of that reasonable

inference, Plaintiff must allege specific facts to contradict it and show how he would have been

better off without the loan funds. He alleges no facts in that regard, and so fails to allege that

Defendants proximately caused him any injury.

Third, Plaintiff cannot allege proximate harm from an alleged misrepresentation of law.

The basis of Plaintiff’s CFA claim is that Defendants’ deceived him as to the legality of his loan.

But “[g]enerally, a deceptive representation or omission of law does not constitute a violation of

the Consumer Fraud Act because both parties are presumed to be equally capable of knowing

and interpreting the law.” Capiccioni v. Brennan Naperville, Inc., 339 Ill.App.3d 927, 933 (2d

Dist. 2003). Because Plaintiff is “presumed to be equally capable of knowing and interpreting the

law,” under Plaintiff’s allegations he took out the loans knowing whether the loans were legal or

not. Id.

E. This Court should dismiss the Consumer Installment Loan Act (CILA) claim because Plaintiff’s loan was not made “pursuant to” CILA and CILA does not provide a cause of action against Mr. Webb or CashCall.

The complaint alleges that Plaintiff’s loan violates the Consumer Installment Loan Act

because Western Sky and CashCall do not hold an Illinois license. (Cmplt. ¶¶ 2-3, 30.) CILA

provides that “if any person who does not have a license issued under this Act makes a loan

18


pursuant to this Act to an Illinois consumer, then the loan shall be null and void and the person

who made the loan shall have no right to collect, receive, or retain any principal, interest, or

charges related to the loan.” 205 ILCS 670/20(d). Count II is defective in two ways.

First, Plaintiff’s loan was not made “pursuant to” CILA, as the statute requires. The

phrase “pursuant to” means “under the authority of.” Washington Economic Dev. Fin. Auth. v.

Grimm, 837 P.2d 606, 610 (Wash. 1992). Illinois authorities use the phrase “pursuant to” in that

way,4 as do other provisions of CILA.5 CILA therefore does not reach loans made “pursuant to”

the laws of a separate jurisdiction, such as the CRST.

The contrast between CILA and the PayDay Loan Reform Act makes clear that the

General Assembly did not intend CILA to apply to every consumer installment loan taken out by

Illinois consumers. The PayDay Loan Reform Act expressly provides that it “applies to any

lender that offers or makes a payday loan to a consumer in Illinois.” 815 ILCS 122/1-15(a). That

shows that when the General Assembly intends a statute to regulate any loan taken out by an

Illinois consumer, it says so in unequivocal terms. CILA, by contrast, contains no such express

statement. Reading CILA’s “pursuant to” phrase as reaching any consumer installment loan

taken out by an Illinois resident would ignore the General Assembly’s conscious choice of

different language when it intends to regulate all loans to Illinois residents. Id. Here, the Loan

4 See In re Skidmore, 2011 IL App (2d) 100730, ¶ 24 (“A deed executed pursuant to a judicial sale is made under the authority of a specific order of court.”) (quotation omitted); cf. Bremen Cmty. High School Dist. No. 228 v. Cook Cnty. Comm’n on Human Rights, 2012 IL App. (1st) 112177, ¶ 18 (“[T]he Commission operates pursuant to the exclusive authority of”).

5 205 ILCS 670/9(a)(1) (providing for disciplinary action against licensee that “fail[s] to comply with any provision of this Act or any order, decision, finding, rule, regulation or direction of the Director lawfully made pursuant to the authority of this Act”); 205 ILCS 670/11(a) (allowing regulators to inspect books and records to determine “whether the licensee is complying with … the rules and regulations promulgated pursuant to this Act”) (emphases added).

19


Agreements make clear that they were made pursuant to the “exclusive laws and jurisdiction of

the” CRST, not CILA. (Ex. A at 1 (emphasis removed).) The CILA claim therefore fails.

Second, CILA provides no remedy against CashCall or Mr. Webb because neither is the

original lender. CILA only provides a claim against the “person who made the loan,” i.e., the

lender. The complaint acknowledges, however, that only Western Sky “made the loan” to

Plaintiff, and that CashCall acted only as the loan’s “servicer.” (Cmplt. ¶¶ 2-3, 7, 19, 24-25, 30.)

CILA therefore provides no claim against CashCall or Mr. Webb.

IV. Alternatively, This Court Does Not Have Personal Jurisdiction Over Mr. Webb.

Mr. Webb has insufficient contacts with Illinois for an Illinois court to exercise personal

jurisdiction over him. (Ex. 2, Webb Aff.) The Complaint does not suggest otherwise. Instead,

the Complaint appears to base jurisdiction over Mr. Webb based solely on that fact that he owns

Western Sky. Under the fiduciary shield doctrine, that is not sufficient.

Federal Rule of Civil Procedure 4 provides that a federal court has personal jurisdiction

over a defendant to the same extent a court of the state in which the federal court sits would have

personal jurisdiction. Under Illinois law, the fiduciary shield doctrine provides that “the conduct

of a person in a representative capacity cannot be relied upon to exercise individual personal

jurisdiction over that person.” Rollins v. Ellwood, 141 Ill.2d 244, 276 (1990) (quotation omitted).

The doctrine thus “precludes exercising personal jurisdiction over . . . individual defendants

based on actions they took as employees or shareholders” of a corporate entity. Petrich v. MCY

Music World, Inc., 371 Ill. App. 3d 332, 345 (1st Dist. 2007) (emphasis added). Plaintiff bears

the burden of demonstrating personal jurisdiction. Purdue Research Found. v. Sanofi-

Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). At the pleading stage, “the plaintiff need

only make a prima facie showing of jurisdictional facts,” by alleging “well-pleaded facts . . . in

20


the complaint” sufficient to make that showing. Felland v. Clifton, 682 F.3d 665, 672 (7th Cir.

2012).

The fiduciary shield doctrine prohibits exercising personal jurisdiction over Mr. Webb

because the only allegations as to him are that he controls the company he owns, and thus is

somehow personally responsible for all of Western Sky’s acts, including its lending to a single

Illinois resident. (Cmplt. ¶ 11.) Those allegations are plainly insufficient to give this Court

personal jurisdiction over Mr. Webb, because if they did the fiduciary shield doctrine would be a

dead-letter as to corporate owners: each would ipso facto be subject to personal jurisdiction to

the same extent as they corporations they own. Yet the fiduciary shield doctrine exists to

preclude personal jurisdiction on that basis. Rollins, 141 Ill.2d at 276, 280-81; Petrich, 371 Ill.

App. 3d at 345.

V. The Complaint Should Be Dismissed Under The Forum-Selection Clause And The Tribal Exhaustion Doctrine (For Preservation Only).

A. The Forum-Selection Clause should be enforced and Plaintiff’s Claims dismissed under federal law.

Jackson held that the Loan Agreements’ Forum-Selection Clause designating the CRST

court for any in-court adjudication is unenforceable because the CRST court does not have

jurisdiction over disputes regarding Western Sky loans. 2014 WL 4116804, at *10-13. Although

CashCall acknowledges that Jackson binds this Court, Jackson is incorrect.

Forum-selection clauses receive “the same presumption of validity as attends . . . other

terms normally found in contracts[.]” IFC Credit Corp. v. Aliano Bros. Gen. Contractors, Inc.,

437 F.3d 606, 610 (7th Cir. 2006). For this reason, “the burden is on [the party resisting

enforcement] to make a clear showing that the clause . . . should not be enforced.” Brio Corp. v.

Meccano S.N., 690 F. Supp. 2d 731, 756 (E.D. Wis. 2010) (citation omitted). Enforcing the

parties’ agreed-upon forum “protects their legitimate expectations and furthers vital interests of

21


the justice system,” and “a valid forum-selection clause should be given controlling weight in all

but the most exceptional cases.” Atl. Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Tex.,

134 S. Ct. 568, 581 (2013). (quotations and alteration omitted).6 Further, Atlantic Marine,

which was a diversity case, made clear that its federal standard applies to determine the

enforceability of all forum-selection clauses in all cases in federal court. See id. at 583 n. 8.7

Under Atlantic Marine, the public-interest factors require dismissal. Atlantic Marine

significantly narrowed the grounds that parties may assert to void a forum-selection clause. The

Supreme Court held that where the “parties agree to a forum-selection clause, they waive the

right to challenge the preselected forum as inconvenient or less convenient for themselves or

their witnesses, or for their pursuit of the litigation.” 134 S. Ct. at 582. “As a consequence, a

district court may consider arguments about public-interest factors only,” and “should not

consider arguments about the parties’ private interests.” Id.8 A court may consider the following

factors: (1) “the interest in having the trial of a diversity case in a forum that is at home with the

law”; (2) “the local interest in having localized controversies decided at home”; and (3) “the

administrative difficulties” posed by each forum. Id. at 581 n.6 (internal quotations omitted); see

6 This Court cannot consider any argument that the Clause is unenforceable because it is allegedly contained within an unlawful, usurious contract. See Muzumadar v. Wellness Int’l Network, Ltd., 438 F.3d 759, 762 (7th Cir. 2006). The Court can only consider whether the “clause itself” is unenforceable. Id. (citation omitted).

7 Before Atlantic Marine, the Seventh Circuit applied the following test to determine if a forum-selection clause is unenforceable: “(1) if [it] was the result of fraud, undue influence or overweening bargaining power; (2) if the selected forum is so gravely difficult and inconvenient that [a party] will for all practical purposes be deprived of its day in court; or (3) if enforcement of the clause[] would contravene a strong public policy of the forum in which the suit is brought. . . .” Bonny v. Society of Lloyd’s, 3 F.3d 156, 160 (7th Cir. 1993) (quotations and citations omitted). Atlantic Marine displaced that test.

8 Atlantic Marine made these statements in the context of “a court evaluating a defendant’s § 1404(a) motion to transfer based on a forum-selection clause,” 134 S. Ct. at 582, but later noted that “the same standards should apply to motions to dismiss for forum non conveniens in cases involving valid forum-selection clauses pointing to state or foreign forums,” id. at 583 n.8.

22


also Jiali Tang v. Synutra Int’l, Inc., 656 F.3d 242, 252-53 (4th Cir. 2011). Those public-interest

factors “will rarely defeat” a forum-selection clause. Atl. Marine, 134 S. Ct. at 582; see also

Bertelsen v. Monsanto Co., No. 4:12-cv-04077-SLD-JEH, 2014 WL 1213474, at *3 (C.D. Ill.

Mar. 24, 2014) (public-interest factors must “overwhelmingly disfavor” enforcing the clause).

Here, the Complaint never addresses the public interest factors, and therefore the Forum-

Selection Clause is enforceable under federal law.

B. Alternatively, the doctrine of tribal exhaustion requires dismissal.

Because the CRST court has colorable jurisdiction over this case, Plaintiff must exhaust

his remedies in that court.9 Under the “tribal exhaustion doctrine,” federal court abstention is

“mandatory” as a matter of comity if Defendants can establish (a) a colorable claim that tribal

jurisdiction is appropriate and (b) that Plaintiff has not first pursued remedies in tribal court

before turning to a federal forum. See Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 18-19 (1987);

Nat’l Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845, 856 (1985).

Montana’s consensual relationship exception applies here. There is at least a colorable

claim of tribal jurisdiction because this dispute arises from (1) a consensual commercial

relationship with (2) a tribal member and (3) the commercial conduct underlying the dispute

occurred on the Reservation. See Montana v. United States, 450 U.S. 544, 565-66 (1981).

1. Plaintiff entered into a consensual relationship with Western Sky when he

knowingly engaged in a commercial transaction with a tribal member that was consummated on

the Reservation. In Montana v. United States, the Supreme Court held that a “tribe may regulate,

9 The Court may consider evidence outside the pleadings when resolving a motion to dismiss for failure to exhaust tribal remedies. See Rincon Mushroom Corp. v. Mazzetti, 490 F. App’x 11, 13 (9th Cir. 2012) (unpublished) (relying on declarations in requiring exhaustion of tribal remedies); Dish Network Corp. v. Tewa, No. CV 12-8077-PCT-JAT, 2012 WL 5381437, at *2 (D. Ariz. Nov. 1, 2012) (classifying a motion to dismiss for failure to exhaust tribal remedies as an “unenumerated 12(b) motion” that allows the court to look beyond the pleadings).

23


through taxation, licensing, or other means, the activities of nonmembers who enter consensual

relationships with the tribe or its members, through commercial dealing, contracts, leases, or

other arrangements.” 450 U.S. at 565-66 (internal citations omitted).

Plaintiff’s contract with Western Sky qualifies as a consensual commercial relationship

under Montana. The Loan Agreements—which Plaintiff represented he reviewed before

executing (Ex. A at 6)—put Plaintiff on notice that he was engaging in commerce with a tribal

member that would be consummated on the Reservation. (Id. at 1, 3.) Cf. Grand Canyon Skywalk

Dev., LLC v. ‘Sa’ Nyu Wa, Inc., 715 F.3d 1196, 1206 (9th Cir. 2013) (finding that a clear

contractual relationship favors application of tribal law, and that “the first [Montana] exception

applies equally whether the contract is with a tribe or its members”); FMC v. Shoshone-Bannock

Tribes, 905 F.2d 1311, 1315 (9th Cir. 1990) (upholding tribal jurisdiction over a non-Indian

company operating on tribal land that violated tribal hiring ordinance).

2. Western Sky is treated as a CRST member for purposes of tribal jurisdiction. Mr.

Webb, the sole member of Western Sky, is an enrolled member of the CRST, a federally

recognized Indian tribe. (Ex. 1 ¶ 3.) By extension, Western Sky possesses all of Mr. Webb’s

rights and protections as a tribal member. The CRST tribal court has made clear that the “key to

the identity or character of [a] corporation is in its ownership,” and recognized that companies

owned by individual Indians are “Indian” under tribal law even if they are incorporated under

state law. Ex. 3, Cheyenne River Tele. Co. v. Pearman, No. 89-006-A, slip op. at 3 (CRST Ct.

App. 1990); see also Pourier v. S.D. Dep’t of Revenue, 658 N.W.2d 395 (S.D. 2003), aff’d in

part and vacated in part on other grounds, 674 N.W.2d 314 (2004), cert. denied, 541 U.S. 1064

(2004).

24


3. Plaintiff’s interactions with Western Sky constituted on-Reservation activity. As

already discussed (see p. 7 above), under Illinois law a contract forms “where the last act

necessary to give validity to the contract is done.’” Ideal Ins. Agency, 213 Ill. App. 3d at 681

(quotation omitted). Here, that occurred on the Reservation. (See pp. 7-9 above.)

4. Jackson erred in holding that a non-member must, in all circumstances, physically

enter the reservation for tribal jurisdiction to exist. 2014 WL 4116804, at *10-13. The Fifth

Circuit recently noted that “the Supreme Court has never explicitly held that Indian tribes lack

inherent authority to regulate nonmember conduct that takes place outside their reservations.”

Dolgencorp, Inc. v. Miss. Band of Choctaw Indians, 746 F.3d 167, 176 n.7 (5th Cir. 2014). The

Eighth Circuit has applied tribal exhaustion to a claim against a non-member that the court

assumed “occurred off tribal lands.” DISH Network Serv. L.L.C. v. Laducer, 725 F.3d 877, 884

(8th Cir. 2013). Further, Jackson ignored the nature of our modern economy. As the Heldt court

noted: “[I]n today’s modern world of business transactions through Internet or telephone,

requiring physical entry on the reservation” for tribal jurisdiction, “particularly in a case of a

business transaction with a consent to jurisdiction clause, seems to be requiring too much.”

Heldt, 2014 WL 1330924, at *14.

Finally, Jackson independently erred by requiring that, for a tribe to subject a consenting

nonmember to its laws or courts, the dispute must implicate tribal internal relations or self-rule.

See Jackson, 2014 WL 4116804, at *11-12 (interpreting language in Plains Commerce Bank v.

Long Family Land & Cattle Co., 554 U.S. 316, 337 (2008), to impose such a requirement).

Dolgencorp is clear, however, that the Fifth Circuit “do[es] not interpret Plains Commerce to

require an additional showing that one specific relationship, in itself, intrudes on the internal

relations of the tribe or threatens self-rule” to give rise to tribal court jurisdiction: “It is hard to

25


imagine how a single employment relationship between a tribe member and a business could

ever have such an impact.” Dolgencorp, 746 F.3d at 175 (internal quotations omitted); see also

Williams, 358 U.S. 217, 223 (1959) (holding that tribal jurisdiction over a non-member extended

to a single loan with a tribal member).

CONCLUSION

Defendants respectfully request that this Court: (1) dismiss this case for improper venue

under Rule 12(b)(3) or under the doctrine of forum non conveniens; (2) alternatively, dismiss this

case for lack of personal jurisdiction under Rule 12(b)(2); or (3) alternatively, dismiss this case

for failure to state a claim under Rule 12(b)(6).

Dated: October 2, 2014 Respectfully submitted, Defendants Western Sky Financial, LLC,

Martin A. Webb, WS Funding LLC, and CashCall, Inc., By: /s/ Michael T. Brody

Counsel for Defendants

Barry Levenstam Michael T. Brody Daniel T. Fenske Jenner & Block LLP 353 North Clark Street Chicago, Illinois 60654

26


Exhibit 1


IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

BEN SCHERR, Plaintiff,

v. WESTERN SKY FINANCIAL LLC, et al., Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No. 1:13:cv-1841 Hon. Robert W. Gettleman

AFFIDAVIT OF TAWNY LAWRENCE IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS

TAWNY LAWRENCE, being duly sworn, states the following:

1. My name is Tawny Lawrence. I reside in Dewey County, South Dakota. I am

over 21 years old and competent to submit this affidavit.

2. I am Senior Supervisor for Western Sky Financial, LLC (“Western Sky”). I was

hired to work at Western Sky in June 2011 in the position of Accounting Supervisor. I was

promoted to my current position in October 2012. As such, I have personal knowledge of certain

facts regarding the organization and operations of Western Sky relevant to this proceeding.

3. Western Sky is a wholly Tribal Member-owned-and-operated consumer

installment lender. Specifically, it is owned by Martin A. Webb, a member of the Cheyenne

River Sioux Tribe (the “CRST” or the “Tribe”), and its offices are located in Eagle Butte and

Timber Lake, South Dakota, on the Cheyenne River Indian Reservation (the “Reservation”).


4. Western Sky made loans to borrowers who contacted and applied for a Western

Sky loan either through Western Sky’s website or telephonically. Once completed, the

application would be submitted for underwriting pursuant to guidelines formulated by Western

Sky. All loan agreements entered into by Western Sky with borrowers are explicitly governed

by and subject to the laws of the Tribe.

5. Western Sky consummated these loans within the boundaries of the Reservation

and, pursuant to certain contractual relationships, subsequently sold the loans to WS Funding,

LLC, to be serviced by defendant CashCall, Inc. (“CashCall”). Pursuant to a servicing

agreement, which was also governed by the laws of the CRST, certain operations functions were

outsourced to CashCall. Whenever CashCall handled intake, for example, the customer would

be informed that they were speaking with a CashCall employee on behalf of Western Sky. This

arrangement was necessitated, in part, by infrastructure issues on the Reservation. However, in

all cases, Western Sky set the underwriting criteria by which potential borrowers were reviewed

and made the ultimate decision of whether to extend a loan. The critical final steps to accept

loan agreements and fund loans all occurred on the Reservation. This included a final auditing

review, performed after the borrower has completed a loan application by electronically signing

a loan agreement, to verify that the information provided by the prospective borrower, such as

regarding employment, was accurate and complete. If the information was not accurate or

complete, the application would not be accepted and the loan would not be funded. If the

information was satisfactory to Western Sky, Western Sky would notify its bank to fund the loan

from one of Western Sky’s bank accounts, none of which were located in Illinois. The borrower

would be sent an acceptance notice, informing him or her that the loan proceeds would be

electronically disbursed.

2



Exhibit 2




Exhibit 3


,----------------------------

2014-05-19 15:30 LAWOFFICE 16059648665 >> 6059647232 p 1/6 . • ! . ·: " · , ·I .... · . '· ., .. :t.~"' ···~ .. :. .. i

t~r::~;~ .. : ~ .'. ~ . . ~-- '·._) . '•, : ..... _:

. : : •. . . ~- .

• .... ·.· ._ ... . ... . : .. -._.,:- ·:_ .. ·. , -,

-··. In the

Cheyenne Rive~ Sioux Tribal

Court of Appeals

Cheyenne River Telephone )

~'/::·:·_.::~company, A Tribal Corporation, ~ .- ·:··' ·· ···

"' ... :.\>::.:-/,:" ·. ) ;~<~ j}')f,;,t : .··· Plain:~ff/Appellee l ! -~ ::l; ..... .-i ~~~;.:j:.:)~;:-:~- - - . ) •T ,,,, .. ,.;,~,.,.J ·,-·:= Robert Peat'111an, and Dakota )

tt.P-·::~1~~~~~b: · · ' ' . : •. , .;., .. ,,J:t': .;;,- .. Telecdmmunications Network, Inc. , ) ~tid· hi'itr£&-sL': · .... ·_·_:_ · ' · · ·> .,1~·:-· .~<.:;-;;-• : :~:,;·.':·:,· ·::: :.:: ·Defendants/ Appellants ) ....

·-·,:'

Memorandum . , ·: .. .

' ·. ·. ·. ; ~:. ' ~- ... ~ .... .. : ·:, ' .

..... ·. '\ ..

Opinion· · ' ~ .·

.· .· --~·· ··, _ . ~ , , -·. .

.:.:·::.:-

·'

89~006-~::::->:~,.:_ , ..... ""; "; ·. : .. .. ~·. . . :'.''.

l'il:lf.!!" ::k:::::ne River Telephone Company, the·::a~nt~;~r . _ . . :·,.,; .r' ·:: .': : ;:::•:· , • .' "~·. '·' • · •. •· •• ."-:',(:; :' ." ·• i~

. :, .. ·····' ·

;<<:·)~·Appellee herein, brought an action against Robert Pearman ·and ·:-:;:·:,:·}. ·,\· . ;'.',•·; .. ·

.• · .. -.·.,····· ·.: ': Dakota Telecounnunica.tions Network, Inc. (DTN), the Defendants/

.• ... ·:·'::; ' ~;_Appellants herein, for a judgment and valuation of the assets

._ ... ~' transferred by the Defendants/ Appellants to the Plaintiff/. .· .. ·-: · .. .

:_l_'~ .. ',,_ .......... '_ •• _,\;_,._; __ ~ .• _-,;_-,_::•~_;_.~.r.:_t.~.:_:_,_:,:.':i:.:_,._\:;·:.:::: l:::er::i:e:::::::~:;:t:::n: :i:n r:::: ~:~1i~~~~~::t~i~~~£-,•·-.. ,· ... . . · --·: - · · ·'.·:.;:: ~'·;)~?.~f: .:;:\~:r.y.~~~f:~v:~.:,;~0E!D/~'·,

:.\. -~~:.:.~~:~·]F>':·Battey in a federal district court proceeding in· · ·whicJt~Ap_pe.+J~~t:\·~s;:.):f:,-·:

' ':'\Pearman Pled guilty to the theft of approximate~y $~~iJ;~o~-O,I'~~;:rff)ii,r' · - >~-~; ;:·:.·:y; the App_ellee. · ~ ··.<: -~ :: '.: ."::;:."'. ~·<>

•. • .~:;~if. . The trial judge below gran t~d Appellee's ~~ti2;~o9s~,~~~[f ' -, · · ~<:\i judgment on or about February 2 7 , · 198 7 , in the amoun.~,o~ :w:0i~[j,J~?!' .

' ,, .$433, 300, based on it:s valuation of assets transferred from · · ·· • · · ·

1


2014·05·19 15:30 LAWOFFICE 16059648665 >> 6059647232 p 2/6

1r1~1r';;~,,~;:' ' , , , , , ~:~::"· ··-.=: -.'~>~· .)··_Appellant to the Appellee,. ··Those asseta incl.u4ed-~·:/': ·.:.

\-.J · .. --: -~-: ~,_?;::~/;Y> ~ -~ . . : .. : ... :=~·: ~-... :.

0 ,·. • .,, ... ·

~~ . ~.:::·~:;:-:. ·. ·. ~ \~~. - . . . ~ .... : ····:.-:;:~ . 1···::~~·;* . ,"'~:\· .. : .:~-:-1

~.;_~.\;1;: .. ii_~~~Di.·;r.::_~.·t~.::_;:~:.·-~--~,-~~,~-~-~:-~:-~~_.:~~ ~t s of Appe lle~, :. Dak~ta Te lecommunic~tiori.:S:\~~-~writk, . . ~ ~ 't ~ . . .... .' ... · -~~;:, :~.·~:·<~~:~~~:}''::::~·.:~~:. :· .......

l~~x;:~~~t,~~-~i~t ~~ .. _j,lid~~~t. of the cour~ was· bas~d on its · .. d~_t .. ~-0.Y'~~Ff.~~?.- ,_.. ,. ~~f">i(l~V21;.1_weig~ing- of.' t~e exper_t tes.timony ·_provided :.by:: .. ~.c~-~~~.P.4~tY..·;'a,s ; ~:.~_;:.:f :'2;{;;~~~~·,\._ ... ·, .. · ... .. -.·· . . . .·; ·.' }:-1; _, .•. , ..... :: ., .. ·: · ......

~}V:~;~: ·-· ·~:~)~:;.-~~;.~~~~-~~~-; o~·(· ~~e transf~:r~-~-~\·.~ssets· of ~TN,_~~,: ~-~j_"tl,_:f~~f~~::. . :fl~-,:.; h;~{accep~ed·~·va.luation, the ·triaf .court subtract-ed ·.:-.liabiltties · =!~: .. : ~} ¥~: ~;·~;;4~.t;:/·:,.. . . ~- .. · . . >· . . ·. ~ . ·. ::_/lj~~-~=.~~.i~ :::·.~ ~:-~·/:! :,:' ~~,._~·: ... '.'• ''".1''·<·gn«.{,..<

!i?~: .\?·.1. Z~i;_· .. ~f:?W)t of: approximately $218.,_862 ,.:.leaving a. ~ef·'··unpai~LJudJ~e:~~~-f~~{7~:.:J:~;\;. '"·:.r· ..... · -~ · · . - · · · · · ._· ._. ::_. : .)· .·:':?~-~-;~~r~~:(::~:,~;<-./.':_·,· .. ~.~~.-.\;.t.:_r!,_f ~~;$2 :4 • 4 38 • . This appeal followed.. · ... ·.· . ' } !:': / ·.:;; :,i;

~·-·" •· ·~·t.,,., __ Il'· t -·:'·,_,:·?·· · · ~f~ir~t~: ~~.:""··:tj;~~~~:::.· . .., 8~--~~~-~ . .. . . .. ·.· .

~'%'~~\,, ~dij,;\';, Th~ ;~ppe~~an ~ ; .rd~ e ~ : ~hr~e i~ ~ll~• • ·," , •

. ,':' .

• :. -l•' . ........ ...

· .. ·.:<: ~ . . . . .. . . . , ... • . ..

..,.

Whether the tr_iai·-.'-~ourt erred· ~n . ..

. lawsuit because .of a lack :·~f·. _jurisdiction;_

~:t~i~~~:;_j;) 2) . Whether , ... ~ •.• -., ... :\W..~· .. de.termination of the Appel~~nt ,··: _J;)~ko~~-- Te le:

the trial_. :.court , t_egally .' ......

~;~:-~;~-:~:-::;~::~t~>:.'_-:: ' • . . : . ,. . .. . .. .-.-: . .... .-.. ··:·,•····''· N~twork, . Inc., assets and liabilities ·that ·were .;:tt:ans·:fetr ~;~_,: ~ .. : ~~~~~·~:-~~~·{:-~::::;' .· . ·.¥··. ·_.··~. : . . . :· . . .. '·.. .· =.~-.. ~~~~:~: :~:.:l~~~~- .~· :::'•.: · ~ .

'i ''··'\:;/ /the Appellee, \ . . · •·<';,:::i~~t~;?;-;'> trial ·court · improperly .···admi·t:ted::~:~~:~~:t 3) Whether the

....

record evidence at .the trial.

· '>

~- ·:.' ,._ ,;..!.·i<:i:'·~:· III '-Discussion

~~,~;~~'.i~::;1~:The•e i.~ues may be r~~~ilY disposed of~• ~~~!~~·,:~.: '?:~,\ • ;;, . ~ . ; ' .. ' , ·• I ..

(·.t·· 'L~-:-~: .. :~· 2 ·· · .. . ' .. : . .. ·;· · .... _: .~\~::·:_:·_·:. :-·.

.. ·: .

.. ;.

·:· ·' . ·· -: · . .. !.' · ·:

.. .:· • ¥ ... : · • •

. ·=:· ... ~ - '·. :, ·.


2014-05-19 15:31 LAWOFFICE 16059648665 >> 6059647232 p 3/6

.. \_J -.: ·.·· :: .. ·.·. \:~·.:}t:.:~·t~~:.<.:·:·.: .. ·:··.::~?·.-i·-::~·:·: 0

. . .

. . ·~.. . . ·. ::.:<.:.-:x.::<: ~ .. :.~· .. · : · .~.· ,~ ... · ......

: .. · ·::h:~;1i·::-t). · .. · .l"be ·.Appellant··,.-cla~ms.· th~ ·. t.rial court'·'-·-··.~·::,..,_ · :. '·~~!i·~.:J~ctto~ ·.in this. ma~.~~;:~· . .-b~caus·~ ~~· DTN ~s :~.r.~x ..... ·· .. "·" .. ~.,.,.... .. · ... · .. :rfr-~(.·~r::..~- .. _: ·:_ : · .. · · ... · · ... \·=··-~.::~-::~~:·.:._ .... :.:._ .. ; . ...... · / :..... ~·-:<,..<:> .. ::~· .. ~·\ . OJ:'Iif,;&I.l4z,~t ~nder state· ·.l~w •. ::::.:i. ···:'1,1le. ·Appellant >.CQI\t·.1 ~t~~~~:~~~l~·~~~;~~~

. : -'t~-. ,;(_ ': . .. :~ -=: ... . . . :'"·,'~~~~>.::·.: ::~ ~~ ~ ·. ·.:... . := . . . : . . : •. -~ ... i:;:~~~

a :·.f.aet··~alone makes.·· it}&1>·~~non~lndian'!.;;cot::oo~aJt.1:.on.tr!siUbl.:t ·· . ~·.:1-;·.- -}~~-~- .. · · .: ::' ~:.'~;~_ :-.r~.::~~;.~·=· ,._< .. ·-: ... :· .:_ .. ·· · : ;.~··

~::~rte·::.;: ... reQuLr•~mEmt · of·'.the·<,Ch•yenne:· .. R£ver .:g ... . . . ~:~·~·~·:' '• - ' ,'• .. : . . ..... ·

~~·tl\tton. and .Bylaw V.C.l) (c:);.':~hich provides).:.. •<:: ... ···:'·.·,_:-: I'':~ :• ·< <·:. -_.:~ , ·.-: ·.' :.:>)_;' : '•; · · ... : . .' <'i ::::.;,. '· :

............ . .... .. . r,.::

.'· . · , .. ~Appe.l.la~~·.~~·~ rel~-a~~·~.::i~~~.'t.bis·\·p~ovis ., · · . , :;.:.. \.'~~<1'-:··~ndep~~d~~J/.~~~s .. ···~f~:rea~~~~ ·,: .,_ .... ,.,.,.,,,"·

.a.:/~O·rD•or:a~ io~ is . o~g;~i~i'~,1;r ~h·l~~~:: P.li:\iil~i.P.~~t:J:k"·1~·1'"'""' ... ",..·

q,~,1~ .. ~~.l .n-.. t i ve . ·cur eve~·.'. rel~Y._an.t.J ·.'as, .. ~ to:. wbe ·.··.;··.· ··.:·: .. :_. ·: ·:· ·· . :·: ... . · -·:~{;: .. i1·~-!~~{~~ :''i .. :':·:-...~~~- -:-: . : .. _., .. ·.' .. ··

uu...,·a,u'·'~:. or :. "non-lndian~~.<urtderi.~ this< -:~~-~::·. · ... -_· .· .... __ . · ··.-::··~·-:·~·r:-:·~!~-~;?.t{).=:~~-.<: . ~ ... ~ji· .. \ ..... ,... . -·;i· . .-· .. ·

·or'. character_. o£:¢;.the~::c·orp.,ita.t;lon.·.'.i ' • · ;_'·:. - J. • : ·_·_. • • • .:· ··<·~·~-~\~-~~r~J:!~:/.~\-~:..-.. :·:~·-~ ... _.~~~-- ·: · · ~ · :<. · -~--.:·~·:.i:~~-::t<

. ... . . ·.·is Indi~~(:; .. ~~~;:~,:t~e:: .. ~~j ~rity· .. .. ~~·~~ . .-~t: :- -~ · .. '. ,, .. . ::··· .· . . . ;..,:'.'';~~::;o'~t:f;;.~_ .. ;.· ... :.:: "::!-~~ ... -:~~{:~,~: . . . ·: ....

,..,.,,. ............ a· tion ~·:and ther.eforei::.nnFts'~~~.~Indian'',:i'· . · .. -~~· -_.. -.~ .~. ·> .. · . '.· .·.-·._-._··~::·t;~·.· ... ::·:·:·'"'j'~): ... <~.-- .. . .. ~~-~::·~ .-~·-"-. ·_. ' . : ._-: .· ..... ,,.,_:,~''"''"'

...... ~ ....... ·:.River:'Siaux.·:··T·ribt!·fsfConstitution · ... 6~ ... ,·!·1~~'

,,,~ ... _):~ .. , .. : .. -.' .·~ ",,D:~w','-' . ,. • ·:"·;;g~~~::1;t~I:·;:',:·.: :/•·, ~ ·. · .. . Second~y ,-·.~and :i~ 'th.~.?:·!:t;~.~~4t.lve, ~.,;:t.h~~: . · · ...

"·::-::.:~, 00~~~~ '.·.... ' • ,•', / ,'~!;:;,::.)•;i:;:--:\~·~t~-~;~', •', ,"_-,~•'' .. ,':•:! ·.,;~_~" 0

0: I

.. , ....... ~ •• t\was. clear ly-::me.t;0.f.ZJ.:::\this .:.:s i c.:..·~ • .-... ~-·.;- : .. :-- . . .... .. . ·.x:-. . :~~- ;-?:=\:~::. :·:~.:t. -: .. ·,' .. :-::.:-: . ·: ·: ·:·· . .-· , ..

···· .· l·~n£\~nd.'Appellee·,·~~t~;~d~/i~~~· .. ~'.: c.omp · ·: ·.::.<'.\ ',. ': ·... . . . : .. .. ·,. ..... ~;.'' :.·>..';' . . ··. :t:.::.,:·:·i'\:.,.•\1.• . ..,.,. ''·"' ;•·'.''.i·-;;;..-:·,o;'t,•"'i'

• ·• , • • : '··. ·..... ••• • • ' • ·: ·.:1

. • .. • ... ·· .. , . ._:: .. ·· ... ··. ·.J.. ;.·:· , .. .., •. ,"•w·:,,.,.,.,,,. . . . . ·.' .. ~ .: ' .. . ..

· ........ ·: .. :·. '

' . ~ : : .. '

. :~:-1:.- .. . <· .... ':· .. ' .. · .. ·. : ... ,;• ..

. :-.~--~ .. :. : .. .


2014-05·19 15:32 LAWOFFICE 16059648665 >> 6059647232 p 4/6

·~ ~: }··~If,r~r~:l;,~~~l!~il~!!;', business arrangemtmt to be: perform~d·: cpmplt!,t~.tY: .. ·.~Il:.:;.the>' :~.::·:!::.:{.:·;·>>_.: .· ·:·

" .. ·= • •. ·: . ·(i ~.:· :~}:)· ,~~ ·· · ~~·-~ . • :~\~::)·'·· .. :~:: ·~:~ ... ·. ~ .. ~ .. _:/:"!·· ·; .~~J ::~·-~·;.:;;r· :_~:. ~ · ~:· Sioux. Reserv.a~ion clearly cons.~~~~~~:~;,·,~~.·~·~!l.}l .. ~~~:~~ .. ~~:~;;:i~:~;~~Z{~t:·: .. ::·,:

. . . ·. ·.:· ··= .. ·/· ,=·: !:· :·=!.':" ... ·~:v:·:.~· .-: ';·~,.·~ ·::~.:·.·:·.-~:::.•.:.= : .. :· .. ;!.·~:-.·;~ . .:.:!~:;_ , .

subject 'the · Appellee'· .to the. j.uri,~d.tctio.n!:. . · ·. ·. ·~ .- :-·· 'r~:::·:· ·''->;. " M 0 O ·' ', .,:,,:': o .'. : : .' ::: ' ).~·~·.::.:··)::;~~~-~f·~~~ .. ~~: .. ~·.-::..O 0 :. 0 O O O O .·j.",~;., .":

See, fo~ .e.x,a~p~e, .. this Cour .. t.' · ·· ··i.i.t ::',. ·

' \J

· · e~a9·~ool:~A) ·~: · ·-see . : ' ::~ .. .'·: =· ...... /. :·.: . '-: .:.. . . . . . · ... ',8 ' ' ' • ·~. • •

<.~9.81).'( .. in which the United·.··Stat7es··.supreme.· .. ·. . ·· . . . . . . . : ..... ; ~:~ · .· ... ~ . . . . . ... . . .· . : . . .. ..

.. · . .. ·· ·~r~bat·: cour.t: jurisdiction over_ non-Indians., b •• ' • • • ' • ··:·\ -~ • • • ·~ : : • • • • • • • .: •• • •• j : •• : •• •• ),"·,;·} •

:~ ;,UilKJretum:mt·s ·'with~,· Indians or. tribaL entities: . ·:r.;.~':>.. .::;,<:: .~~:' .:·:· .... ·:··. . . . . , . ... : .. : ... :: ... : . .. ·.~·:::_; .. ... · . . . . . . ,:,landa.:.wi.thin the . reservat.ion.: ... ;. :'>~:

' ··.·· ':<·.',.:: .. ·" ·:./.,;:: ,'·:· ·...... . .. ·· ·.· :,.:: , .. , ... · .... ..... ·. ·. <:-:.:·: .. :·: ·.· ' .... ··.·: ·_:·.·l·.··.: .;_;' . . '• ... .

: .. ::: ·.2) .... · It ... :is. a well· ·.e~~~~i~~hed. ~~neral ·r~': .;,. ;., .. : ;..t.:.'~:;;ot~jii;~:: ·r:.:.·.;;;.~

· . ··.· · ·. , f!'d~ ~ i~ ciitil. cases. are. t~.~~~ determined . in .. ·u~.;·, ;;ux~QilH~.t "p;r:epo.\1-de-rance: of the evidenct:{~tandard. · !!N~e;!w~· ..!!:~~*~~~~

.. \ .. ,·~ .\·. :~~ <Ga~ne .... .. J03 u.s~ ·l.~l. · ·:,·.1~'9·38);~· .. : Th~. t .erm..:t' · _.;, . ,·· , .......... ... :; :· ~~·- : " . . . . . . ' ··. ·.

. yidence••>. means the. we~ght .-··.: ~re4'it. . . '• ~ . . '• . . . . . : ... . . . ' ':·:·{· .. _,_ ·. . '

·aggregate evidence on eithe.r. :side •. ?.~,.The

·. :; ·· .. ·~~~~.a;d' by.·~· · .. trial court<~a. ·:~:g~ne·r~·~l;. re:ve~.r..s.;~~~ke.:,\~·.9llt'·!~,:atpp·~• .': :· . ,. \;:i' .. _:'~ .. ': : .· . ··. . ...... : . ~... ... .... . . ; .' .. '. .. ,. ·. ·:. ·: . ..

· . . (.it ·. ·is.: shown :· tba t ·. the · tr.ial: court·.~ s ···de t ... T-rl~Cl""!',.-~ ... .,.. •. ,,..--. '•' ...... ·:i·.· ~.::~ :. · .. ; .. :•' '. •' . . . .. :: '. .' ~ .. .

... ;·sppp~r~e~ by substantial evidenc~ .. or . ~n ·. s~e.i·'·:~~-: ,:- '·.:.~~~~u~~~j·:···ihe. sta~dard, . ·of·.::~d~~~e~·: ·. is:. ~bt·.-·;:.:.2\~. 4· ·;~'ci''~-~;·:li~f:f:~~;~'~! .

.. ~·~ · .. ·.. ~ : . · . . . -~·:·~;.- .

. ' . '.\-~:·:;.. . . ::

;~. .. . . ·. . . . . .

{~{·:r. ': ··, · :.:· ·, .. ·:. ~: .:-;:· ·;;:.,.The .. Appellant does not :· idet:ttify any ~;~~.' · .. ~::· ··:. ~ · .. : ·. . ..:. · .. =_ :: . • . . . . ' . . . . . .-: ' .

<>, · ~/ · ·.: ·,· ·.:'>· st;andard ·for· determining. the adequacy of : .... .. j :.;· . "~· ' '• • .:::.- .: •• • •

4

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2014·05-19 15:33 LAWOFFICE 16059648665 >> 6059647232 p 5/6

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