Tribe Payday Loans? Rodella Smith vs. Western Sky:

Another Western Sky Ruling

RODELLA SMITH, : CIVIL ACTION Plaintiff, : : No. 15-3639 v. : : WESTERN SKY FINANCIAL, LLC, et al., : Defendants. : MARCH 4, 2016

“This case presents an unusual and disconcerting collision between federal consumer protection laws and the sovereignty of Native American tribes and their courts.”

“Defendants here make “payday” loans across the United States through the Internet, and they seek to have their loan agreements governed by tribal law and challenged only in certain tribal courts or arbitral forums.”

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“Given the historic injustices visited upon Native Americans, the Supreme Court has understandably admonished that federal courts should tread lightly when it comes to intruding upon their sovereignty. See Iowa Mutual Insurance Co. v. LaPlante, 480 U.S. 9 (1987).”

“Defendants here invoke these principles in moving to dismiss Plaintiff’s case. For the reasons set forth below, I have concluded that Native American sovereignty is not at stake in this case, and I agree with the Fourth Circuit (among others) that Defendants seek “to avoid federal law and game the system.” Hayes v. Delbert Servs. Corp., No. 15-1170, 2016 WL 386016, at 9 (4th Cir. Feb. 2, 2016).”

“Defendants’ Motion to Dismiss will be denied.”

“I. Facts of this Case Plaintiff Rodella Smith alleges that she is the victim of a high-cost payday lender who has cloaked himself in the protections of tribal sovereignty and a series of shell companies to Case 2:15-cv-03639-GAM Document 27 Filed 03/04/16 Page 1 of 12 2 avoid complying with state and federal laws.”

“On March 7, 2012, Plaintiff Rodella Smith took out a loan from Defendant Western Sky Financial, LLC in the amount of $5,000. First Amended Complaint (“FAC”) at ¶ 8; Western Sky Consumer Loan Agreement (“Loan Agreement”), Ex. A to Defs.’ Mot. Dismiss, at 1.”

“According to the terms of the Loan Agreement, which she viewed online and signed electronically, the loan was subject to an annual percentage rate of 116.73%, and the repayment term was set for a period of about seven years, resulting in a total payment of $41,172.61. Loan Agreement at 1.”

“Almost immediately, the loan was sold to Defendant CashCall, Inc. on March 10, 2012, and then subsequently sold to Defendant Delbert Services Corp. on September 30, 2013. Defs.’ Mot. Dismiss at 7. Plaintiff alleges that Western Sky is a limited liability company registered…” Link to Western Sky Decision.

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