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Gingras v. Think Finance

Vermont residents who claim that the payday loans violate Vermont usury and consumer protection laws as well as federal laws including the RICO statute sued the operators of an alleged predatory payday lending scheme, in which private investors whose payday lending business had been shut down by the FTC enlisted a native American tribe to set up an entity through which they would make loans over the internet nationwide. The plaintiffs sought monetary and injunctive relief. The defendants include tribal members who are officers of the tribal entity that nominally made the loans.

The tribal defendants claimed tribal sovereign immunity against the plaintiffs’ claims, which are limited to claims for injunctive relief. All the defendants also asserted that the claims are subject to arbitration under arbitration clauses included in the loan agreements. The U.S. District Court for the District of Vermont rejected those and other arguments made by the defendants in support of the dismissal of the actions, and the defendants appealed the rulings denying immunity and denying their motion to compel arbitration.

On appeal, Public Citizen submitted an amicus curiae brief in Second Circuit arguing that (1) tribal immunity does not bar claims for injunctive relief against tribal officers alleged to have violated state laws outside of tribal lands; and (2) the district court was correct in not requiring the plaintiffs to arbitrate their claims that the arbitration agreements are unconscionable and unenforceable. The court of appeals agreed, holding that tribal sovereign immunity does not bar the lawsuit, and that the plaintiffs may sue tribal officers under a theory analogous to Ex parte Young for prospective, injunctive relief based on violations of state and substantive federal law occurring off of tribal lands. The court also held that the arbitration clauses of the loan agreements are unenforceable and unconscionable.

One set of defendants filed a petition for a writ of certiorari asking the Supreme Court to review the Second Circuit’s holding concerning the enforce ability of the arbitration agreements. The Supreme Court denied certiorari in January 2020.