United States District Court, E.D. Virginia, Richmond Division
JOHN A. GIBNEY, Jr., District Judge.
This matter comes before the Court on the defendant's motion to dismiss the amended complaint or, alternatively, to compel arbitration. (Dk. No. 30.) The plaintiffs, borrowers from internet payday lender Western Sky Financial, LLC, brought this action on behalf of themselves and others similarly situated against Delbert Services Corporation, a third-party debt collector. The plaintiffs allege Delbert violated the Fair Debt Collection Practices Act ("FDCPA") and the Telephone Consumer Protection Act ("TCPA") in the course of its collection efforts. Delbert moves to dismiss based on the Loan Agreements' forum-selection clause or on the basis of the tribal exhaustion doctrine. Alternatively, Delbert moves to compel arbitration.
The forum-selection clause does not reach third-party debt collectors such as Delbert, and the doctrine of tribal exhaustion does not apply under the facts of this case. The language of the arbitration agreement, however, covers disputes with third-party debt collectors.
Accordingly, the Court GRANTS the motion to compel arbitration under the terms of the Loan Agreement and DISMISSES the claim without prejudice.
I. Statement of Facts
James Hayes, Debera Grant, and Herbert White, residents of Virginia, each borrowed money from Western Sky through its website. Western Sky is wholly owned by Martin A. Webb, an enrolled member of the Cheyenne River Sioux Tribe ("CRST"), and operates exclusively on the CRST Reservation in South Dakota. Hayes' Loan Agreement, representative of the other plaintiffs' Agreements, states that in August 2012 he borrowed $2525 at an annual percentage rate of 139.12%, resulting in a finance charge of $11, 568.12 over the forty-eight-month life of the loan. (Dk. No. 16, Ex. B at 6.) After underwriting these loans, Western Sky originates them through its wholly owned affiliate WS Funding, LLC, which then transfers the Notes to Consumer Loan Trust. (Dk. No. 26 at 5.) Consumer Loan Trust contracts with Delbert to service these loans and collect on the debt if necessary.
When the plaintiffs missed payments on their loans, Delbert sent them dunning letters in an effort to collect the outstanding balances. (Dk. No. 16, Ex. A, B). The plaintiffs claim that these letters violated the FDCPA by (1) failing to identify the name of the actual creditor of the debt; (2) misrepresenting that Consumer Loan Trust was the actual creditor; (3) failing to disclose that the communication is from a debt collector; and (4) misrepresenting the character and legal status of the debt. The plaintiffs also claim that Delbert violated the TCPA when it used an auto-dialer or pre-recorded voice message to place collection calls to the plaintiffs' cellular phones without prior consent.
Delbert moves to dismiss this action, or, alternatively, to compel arbitration. The Court will address in turn the forum-selection clause, the tribal exhaustion doctrine, and the arbitration agreement.
A. The Forum-Selection Clause
"When parties to a contract confer jurisdiction and venue on a particular court, as a general matter federal common law directs courts to favor enforcement of the agreement, so long as it is not unreasonable." Albemarle Corp. v. AstraZeneca UK Ltd., 628 F.3d 643, 649 (4th Cir. 2010) (citing M/S Bremen v. Zapata Off-shore Co., 407 U.S. 1, 10 (1972)). "When construing forum selection clauses, federal courts have found dispositive the particular language of the clause." Id. at 650.
The forum-selection clause in the Loan Agreements at issue states:
This Loan Agreement is subject solely to the exclusive laws and jurisdiction of the Cheyenne River Sioux Tribe, Cheyenne River Indian Reservation. By 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.
(Dk. No. 26, Ex. 1-A at 1.) A subsequent paragraph in this section of the Loan Agreement defines the terms "[w]e, "us, "our, ' and Lender' to mean "Western Sky Financial, LLC, ... ...