Court: District Court, D. Maryland; November 19, 2015; Federal District Court
Alicia Everette is pursuing a class action lawsuit against several defendants, including Joshua Mitchem, Jeremy Shaffer, Scott Tucker, NDG Financial Corporation, MobiLoans, LLC, and Riverbend Finance, LLC, on behalf of consumers who received payday loans from specified companies between May 1, 2012, and May 1, 2015. She seeks certification of the lawsuit as a class action, damages for violations of Maryland commercial laws and the Electronic Fund Transfer Act, along with litigation costs and attorney's fees.
Currently, MobiLoans and Riverbend have filed motions to dismiss based on a lack of jurisdiction, while Everette has requested a motion for discovery. An order of default against NDG Financial Corporation was entered on August 6, 2015. The court has determined that a hearing is unnecessary as the issues have been fully briefed.
Everette's loan history includes a loan from MobiLoans and two loans from Riverbend Cash in 2013. She alleges that both companies engaged in illegal lending and collection practices. MobiLoans and Riverbend assert that they are entitled to tribal sovereign immunity because they are considered "arms of the tribe," established under tribal law, fully owned by the tribes, and serve to fund governmental services for tribal members. Conversely, Everette argues that these companies should not qualify for sovereign immunity as they are merely businesses operating off-reservation, and that a ruling in their favor would deny her access to judicial remedies.
The court notes that under Federal Rule of Civil Procedure 12(b)(1), a motion to dismiss for lack of jurisdiction should be granted only if the jurisdictional facts are undisputed and the moving party is entitled to prevail as a matter of law. The burden of proof for establishing subject matter jurisdiction rests with the plaintiff. The court may consider evidence outside the pleadings when evaluating such motions. MobiLoans and Riverbend have provided significant documentation supporting their claims of tribal ownership and operation under tribal law to generate revenue for the tribes.
Everette has not provided specific facts to support her claim against the ownership and control of MobiLoans and Riverbend by tribes. Courts may deny jurisdictional discovery when a plaintiff relies on speculation or conclusory statements, as established in Carefirst of Maryland, Inc. v. Carefirst Pregnancy Centers, Inc. and White v. Univ. of California. The absence of evidence regarding tribal ownership and control, along with the potential undermining of the sovereign immunity doctrine, leads to the denial of the plaintiff's motion for jurisdictional discovery.
Tribal sovereign immunity is a long-recognized principle that protects Indian tribes from lawsuits unless explicitly waived or authorized by Congress. Sovereign immunity limits a court's jurisdiction, and tribes retain this immunity even during off-reservation commercial activities, as affirmed by the Supreme Court in cases like Michigan v. Bay Mills Indian Community and Kiowa Tribe of Oklahoma v. Manufacturing Technologies Inc.
Congress, not the courts, is responsible for determining the limits of tribal immunity, which has implications for entities that may exploit this immunity in questionable legal contexts. Sovereign immunity can extend to tribal subdivisions involved in economic activities, contingent upon a close relationship with the tribe. Courts assess several factors to determine if an entity qualifies as an 'arm of the tribe' for immunity purposes, including its creation, purpose, structure, tribe control, intent for immunity, financial connections, and whether immunity serves the principles behind it.
The sixth factor assesses the policies supporting tribal sovereign immunity and its implications for tribal economic development, focusing on whether granting immunity to tribal economic entities serves these policies. Key policies include protecting tribal finances, maintaining cultural autonomy, supporting self-determination, and fostering commercial relationships with non-Indians. Applying the Breakthrough factors to MobiLoans and Riverbend indicates both are "arms of the tribe" entitled to immunity.
1. **Creation and Method**: MobiLoans is organized under the Tunica-Biloxi Tribe's laws, while Riverbend operates under the Fort Belknap Indian Community’s tribal law, supporting the immunity claim.
2. **Purpose**: Both entities aim to financially benefit their tribes and support governmental functions. MobiLoans generates revenue for the Tunica-Biloxi Tribe, funding various governmental and social services, while Riverbend promotes welfare and economic development for the Fort Belknap Indian Community.
3. **Structure, Ownership, and Management**: MobiLoans is a wholly owned limited liability company of the Tunica-Biloxi Tribe, with a board composed of tribal members and significant tribal oversight on operations. Riverbend is similarly structured, being wholly owned by the Fort Belknap Indian Community, with tribal council regulation of its ventures.
In conclusion, all factors weigh in favor of granting sovereign immunity to MobiLoans and Riverbend, as both entities serve essential economic and governmental functions for their respective tribes.
Riverbend operates on a tribal reservation and is staffed by tribal members, with loans originating from tribal employees. Approximately 70 tribal members are employed in the tribe's lending operations, including Riverbend. The tribes intended for their lending companies to share in their sovereign immunity, as confirmed by the MobiLoans charter and operating agreement, which affirm the companies' immunity from lawsuits in any jurisdiction. Similarly, Riverbend's articles of organization grant it sovereign immunity as a wholly-owned tribal entity.
The tribes utilize the revenue generated from MobiLoans and Riverbend to fund governmental services for tribal members, supporting the argument for sovereign immunity. This immunity serves the purpose of protecting the tribe’s revenue sources, thereby safeguarding the tribe's treasury, a historical aim of sovereign immunity. All six factors indicate that MobiLoans and Riverbend qualify as "arms of the tribe" and are entitled to sovereign immunity. As a result, the plaintiff's claims against these entities are barred, leading to the dismissal of the claims for lack of subject matter jurisdiction. The court will deny the plaintiff's discovery motion and grant the motions to dismiss from MobiLoans and Riverbend.
