Court: District Court, D. Colorado; December 26, 2011; Federal District Court
Plaintiff's motion to remand the case to state court for lack of federal question jurisdiction is granted by the Court, which declines to consider the defendant's motion to dismiss. The case originated in Denver District Court on April 5, 2011, where plaintiffs alleged that Western Sky Financial, LLC, a South Dakota company, offered loans to Colorado consumers with exorbitant interest rates. Martin A. Webb is identified as the sole manager and owner of Western Sky. Following an investigation, plaintiffs claimed that Western Sky was issuing unlicensed loans and imposing excessive finance charges, prompting them to seek injunctive relief and damages for violations of the Colorado Uniform Consumer Credit Code and the Colorado Consumer Protection Act.
Central to the jurisdiction dispute is the "Western Sky Consumer Loan Agreement," which stipulates that it is governed by the Indian Commerce Clause and Cheyenne River Sioux Tribe laws. The agreement requires borrowers to submit to the jurisdiction of the Cheyenne River Sioux Tribal Court and disallows the application of other laws. Defendants filed a notice of removal to federal court, citing federal question jurisdiction under 28 U.S.C. 1331, arguing that the plaintiffs’ state-law claims are preempted by federal law and that significant federal questions are raised.
The Court notes that federal jurisdiction is determined by the "well-pleaded complaint" rule, asserting that only cases with federal questions on the plaintiffs' complaint can be removed to federal court.
A plaintiff can maintain state jurisdiction by solely relying on state law, as seen in this case where plaintiffs allege that defendants' financial charges violate Colorado consumer protection laws. The complaint references defendants' claims that borrowers are bound by tribal laws and jurisdiction, but these claims are deemed as defenses rather than grounds for federal jurisdiction. The assertion of federal law defenses, such as tribal immunity, does not permit removal to federal court if the underlying claim is based on state law. A limited exception exists for "complete preemption," which transforms a state claim into a federal claim when Congress explicitly intends to preempt state law. However, defendants fail to identify any statute indicating such intent. Furthermore, even if Congress has preempted Indian affairs regulation, it does not apply here as plaintiffs' complaints concern activities conducted online in Colorado rather than on a reservation. Defendants have not disputed their business operations in Colorado, which supports the assertion of state jurisdiction. This case contrasts with scenarios where a federal question is intrinsic to a state claim, such as in instances involving injuries on Indian lands, where federal interests are directly implicated. Here, the activities do not pertain to commercial transactions on Indian land, reinforcing that the matter remains within the state court's jurisdiction.
Mr. Webb's membership in an Indian tribe and his company's operation within the reservation boundaries, which is neither owned nor operated by the Tribe, are not central to the plaintiffs' claims. The claims do not present a federal question necessary for prosecution. Issues of tribal immunity may serve as potential defenses but do not justify removal to federal court. The court concludes that the case does not meet the criteria for removal under the complete preemption doctrine, nor does it involve a significant federal question. The defendants failed to provide a reasonable basis for their argument regarding the regulation of Indian affairs or that federal law completely preempted the state law claim. It is established that tribal immunity, while a possible defense, does not warrant removal. The defendants also rejected the plaintiffs' request to agree to a remand. Consequently, the court, exercising discretion under 28 U.S.C. 1447(c), awards attorney’s fees and costs to the plaintiffs, excluding fees related to the defendants' motion to dismiss and only for those costs that were necessarily and reasonably incurred due to the improper removal. The plaintiffs’ motion to remand is granted, and the case is remanded to the District Court for the City and County of Denver with awarded costs and attorney’s fees.
