UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

DEBORAH JACKSON, 

LINDA GONNELLA, and 

JAMES BINKOWSKI, on behalf of themselves and 

the class members described below 

 Plaintiffs 

v. 

PAYDAY FINANCIAL, LLC, 

d/b/a Lakota Cash, Big Sky Cash, and Big $ky Cash; 

WESTERN SKY FINANCIAL, LLC, 

d/b/a Western Sky Funding, Western Sky, 

and Westernsky.com; 

GREAT SKY FINANCE, LLC, 

d/b/a Great Sky Cash, Great $ky Cash, and Gsky; 

RED STONE FINANCIAL, LLC, 

d/b/a Red Stone Cash; 

MANAGEMENT SYSTEMS, LLC, 

d/b/a Gsky; 

24-7 CASH DIRECT, LLC; 

RED RIVER VENTURES, LLC; 

HIGH COUNTRY VENTURES, LLC; 

FINANCIAL SOLUTIONS, LLC; 

MARTIN A. ("Butch") WEBB; and 

DOES 1-5, d/b/a WS Funding LLC and under other 

names, 

 Defendants. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

)

)

)

)

)

)

)

)

)

)

)

)

) 

Case Number: 11−cv−09288 

Judge Charles P. Kocoras 

Magistrate Judge Jeffrey Cole 

MOTION TO DISMISS OR STAY THE CASE 

Defendants Payday Financial, LLC, Western Sky Financial, LLC, Great Sky Finance, 

LLC, Red Stone Financial, LLC, Management Systems, LLC, 24-7 Cash Direct, LLC, Red River 

Ventures, LLC, High Country Ventures, LLC, Financial Solutions, LLC, and Martin A. Webb 

(collectively, the “Payday Defendants”), through their undersigned attorneys, submit the 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 1 of 16 PageID #:781
2 

following Motion To Dismiss Or Stay The Case pursuant to the doctrine of tribal exhaustion, 

Federal Rules of Civil Procedure 12(b)(3) and 12(b)(6), and 9 U.S.C. § 3. 

I. PRELIMINARY STATEMENT 

Plaintiffs bring this case in an effort to challenge the terms of their loan agreements with 

Defendant Western Sky. However, the terms themselves – which were known to Plaintiffs at the 

time the loans were made – preclude this action. The loan Agreements’ choice-of-law, forumselection, arbitration, and class-action-waiver clauses prevent the Plaintiffs from pursuing their 

claims in this Court. Although dismissal is entirely appropriate, the Payday Defendants are 

equally amenable to a stay of this matter until arbitration can be completed pursuant to the 

Plaintiffs’ loan agreements. 

II. BRIEF STATEMENT OF FACTS 

The Payday Defendants are engaged in the business of internet lending. According to the 

Amended Complaint, Plaintiffs obtained loans from Defendant Western Sky sometime in 2010 

or 2011. (See Am. Compl. – Class Action (“Am. Compl.”) ¶¶ 48, 49, 50.) The details of these 

loans can be gleaned from the documents Plaintiffs attached to the Amended Complaint. (See

Am. Compl., Exs. A, B, Z.)1 Importantly for purposes of the present Motion, the Loan 

Agreement contains choice-of-law, forum-selection, class-action-waiver, and mandatory 

arbitration provisions, each of which precludes the perpetuation of the case in this Court. (See

Loan Agreement at 2, 4-6.) 

 

1

 The Plaintiffs entered into virtually identical loan agreements. For ease of reference, collective 

citation is made to the “Loan Agreement.” (See Am. Compl., Ex. A.) Furthermore, pin point 

citations are given based on the location in Plaintiff Jackson’s Loan Agreement and the page 

numbers printed in the upper right corner of each page. (See id.) 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 2 of 16 PageID #:782
3 

 In October 2011, Plaintiffs Jackson and Gonnella commenced this action, on their own 

behalf and on behalf of others similarly situated. On January 26, 2012, Plaintiffs filed an 

Amended Complaint, adding Plaintiff Binkowski. Basically, the Amended Complaint alleges 

that Defendants charged unlawful fees and interest in connection with Plaintiffs’ loans. To this 

end, the Complaint asserts four claims against the Defendants: (1) a claim for alleged violation of 

the Illinois Interest Act; (2) a claim for alleged criminal usury; (3) a claim for alleged violations 

of the Illinois Consumer Fraud and Deceptive Practices Act; and (4) a claim seeking the 

invalidation of the Arbitration Agreement contained in the Loan Agreement. The Payday 

Defendants now seek to have this case dismissed or stayed in favor of the binding arbitration 

required under the Loan Agreement. 

III. ARGUMENT 

A. Tribal Exhaustion Requires That the Case Be Dismissed or Stayed. 

“The doctrine [of tribal exhaustion] requires litigants, in some instances, to exhaust their 

remedies in tribal courts before seeking redress in federal courts.” Altheimer & Gray v. Sioux 

Mfg. Corp., 983 F.2d 803, 812 (7th Cir. 1993). The doctrine is motivated by the desire to 

support tribal self-determination and self-government; the belief that tribal courts are vital to 

tribal self-government; and the recognition that a tribal court’s authority is diminished by a 

federal court’s exercise of jurisdiction over reservation affairs. Id. at 813 (citing Iowa Mutual 

Ins. Co. v. LaPlante, 480 U.S. 9, 14-15 (1987); National Farmers Union Ins. Cos. v. Crow Tribe 

of Indians, 471 U.S. 845, 856 (1985)). 

The application of tribal exhaustion to the activities of non-Indians on reservation lands is 

presumed. See Altheimer, 983 F.2d at 813 (citing Iowa Mutual, 480 U.S. at 18). Even offreservation activity is subject to tribal exhaustion if, “at a bare minimum,” it impacts directly 

upon tribal affairs. Ninigret Dev. Corp. v. Narragansett Indian Wetuomuck Hous. Auth., 207 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 3 of 16 PageID #:783
4 

F.3d 21, 32 (1st Cir. 2000) (citing Altheimer, 983 F.2d at 814; Basil Cook Enters. v. St. Regis 

Mohawk Tribe, 117 F.3d 61, 66 (2d Cir. 1997)). Although the analysis of the impact on tribal 

affairs can be highly fact-dependant, there are at least three circumstances, any one of which 

undoubtedly satisfy the test: (1) where there is a direct attack on a tribal court’s jurisdiction, (2) 

where a case is pending in tribal court, and (3) where the dispute concerns tribal law more than it 

does state and federal law. Altheimer, 983 F.2d at 814. 

The present case satisfies the first and third items on the list.2 Count IV of the Amended 

Complaint directly attacks the appointment of the Arbitrators, a Tribal adjudicative body.3 (See

Am. Compl. ¶¶ 93-95.) Plaintiffs also attack the jurisdiction of the Tribal court by filing this 

case in Illinois, which violates Plaintiffs’ agreement to “consent to the sole subject matter and 

personal jurisdiction of the Cheyenne River Sioux Tribal Court.” (Loan Agreement at 2.) 

This case also requires the interpretation and application of the laws of the Cheyenne 

River Sioux Tribe.4 (See Loan Agreement at 2, 4.) Tribal exhaustion acknowledges a Tribal 

Court’s expertise regarding its own laws and protects a tribe’s ability to “interpret its own 

ordinance and define its own jurisdiction.” Altheimer, 983 F.2d at 814 (quoting Burlington 

Northern R.R. v. Crow Tribal Council, 940 F.2d 1239, 1246 (9th Cir. 1991)). 

If the Court prevents a Tribal adjudicator from hearing this case, a cascading erosion of 

the policy interests underlying tribal exhaustion would result. First, it “would place the two 

 

2

 The second item – a pending tribal court action – is not required for the application of tribal 

exhaustion. Ninigret, 207 F.3d 21 (citing cases). 

3

 The adjudicators’ status as Arbitrators, rather than Tribal Court Judges, is of no import. See 

generally Ninigret, 207 F.3d 21. 

4

 Each Loan Agreement contains a choice-of-law provision which states: “This Loan Agreement is 

subject solely to the exclusive laws and jurisdiction of the Cheyenne River Sioux Tribe, 

Cheyenne River Indian Reservation.” (Loan Agreement at 2 (bold type-face omitted).) 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 4 of 16 PageID #:784
5 

judicial systems in direct competition with each other, and thereby undermine the tribal court’s 

authority over tribal affairs.” Ninigret, 207 F.3d at 33. This, in turn, helps erode confidence in 

the authority and reputation of that institution. The weakening of Tribal legal institutions has a 

detrimental impact on the Tribe’s efforts toward self-government and autonomy. Tribal 

exhaustion exists to prevent these negative results. Therefore, the Court should apply tribal 

exhaustion and either dismiss or stay the present case. See Altheimer, 983 F.2d at 813 (the Court 

may choose between the two remedies). 

B. The Court May Dismiss this Case for Improper Venue. 

1. The Provisions of the Loan Agreement Preclude Litigation in Illinois. 

The Loan Agreement contains a forum-selection clause.5

 Accordingly, “any dispute [the 

borrower] ha[s] with Western Sky or anyone else under this loan agreement will be resolved by 

binding arbitration” which “shall be conducted in the Cheyenne River Sioux Tribal Nation.”6

 

(Loan Agreement at 2.) Irrespective of the Arbitration requirements, the forum-selection clause 

dictates that this case cannot proceed in the present forum. Because the case has been filed in an 

improper venue, a Rule 12(b)(3) motion to dismiss is properly granted. Thompson v. Fajerstein, 

No. 08 C 3240, 2008 WL 4279983, at *4 (N.D. Ill. Sept. 17, 2008) (Kocoras, J.) (citing 

Continental Ins. Co. v. M/V Orsula, 354 F.3d 603, 606-07 (7th Cir.2003)).

 

5

 The Court may consider the actual terms of the Loan Agreements. See FED. R. CIV. P. 10(c); 

Continental Cas. Co. v. American Nat’l Ins. Co., 417 F.3d 727, 733 (7th Cir. 2005); Venture 

Assoc. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993). 

6

 The Loan Agreements reiterate this point: “You agree that any Dispute, except as provided 

below, will be resolved by Arbitration, which shall be conducted by the Cheyenne River Sioux 

Tribal Nation by an authorized representative in accordance with its consumer dispute rules and 

the terms of this Agreement.” (Loan Agreements at 5.) 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 5 of 16 PageID #:785
6 

2. The Forum-Selection Clause Is Enforceable. 

“Contractual forum selection clauses are prima facie valid and should be enforced like 

any other contractual provision unless they are unreasonable or the product of fraud or undue 

influence.” Penn, L.L.C. v. New Edge Network, Inc., No. 03 C 5496, 2003 WL 22284207, at *2 

(N.D. Ill. Oct. 3, 2003) (Conlon, J.) (citing Northwestern Nat’l Ins. Co. v. Donovan, 916 F.2d 

372, 375–76 (7th Cir.1990); Bremen v. Zapata Off–Shore Co., 407 U.S. 1 (1972)).7

 The party 

who selects the venue bears the burden of establishing that it was properly chosen and that the 

forum-selection-clause is inapplicable. Penn, L.L.C., 2003 WL 22284207, at *1. 

In the present case, the forum-selection clause is enforceable because the Plaintiffs 

cannot establish that it is unreasonable, the product of fraud, or the product of undue influence. 

For example, the Plaintiffs were given ample notice of the forum selection. At least five 

statements in the Loan Agreement specifically convey or allude to the fact that any dispute will 

be resolved in the Cheyenne River Sioux Reservation. (See Loan Agreement at 2, 5, 6.) 

Moreover, the Plaintiffs separately acknowledged and agreed to the Arbitration Agreement, 

which itself contains multiple statements about the forum selection. (See Loan Agreement at 7.) 

The Plaintiffs made a highly discretionary choice when they entered into the Loan 

Agreement; neither Plaintiff was “‘a hapless consumer’ subjected to a gun-to-the-head moment.” 

Schwarz v. Sellers Markets, Inc., --- F. Supp. 2d ----, 2011 WL 3921425, at *3 (N.D. Ill. Sept. 

07, 2011) (Feinerman, J.). The Plaintiffs applied for loans at their own pace, over the internet. 

 

7

 The citation to federal law in this brief is not a waiver of the Loan Agreement’s choice-of-law 

clause. As a general matter, Cheyenne River Sioux Tribal courts are guided by federal law as 

they apply Tribal law. See, e.g., Ducheneaux v. Cheyenne River Sioux Tribe Election Bd., 2 Am. 

Tribal Law 39 (Cheyenne River Sioux C.A. May 25, 1999); Deschuquette v. Cheyenne River 

Sioux Tribe Housing Auth., 1 Am. Tribal Law 53 (Cheyenne River Sioux C.A. Feb. 20, 1998) 

(appointment of counsel). Therefore, federal law provides an indication of how Tribal courts 

would decide the matters, and does not serve as a waiver of the selection of Tribal law. 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 6 of 16 PageID #:786
7 

(See Am. Compl. ¶ 33; see generally Loan Agreement.) There was no deadline or other pressure 

to sign the Loan Agreements immediately, and the Plaintiffs could have walked away at any 

moment. Instead, each of the Plaintiffs made the conscious decision to enter the Loan 

Agreement and “is presumed to know its terms and consent[] to be bound by them.” Bonny v. 

Society of Lloyd’s, 3 F.3d 156, 160 n.10 (7th Cir. 1993). 

Furthermore, proceeding on the Reservation will not impose such difficultly or 

inconvenience on the Plaintiffs to justify the invalidation of the forum-selection clause. See AAR 

Int’l, Inc. v. Nimelias Enters. S.A., 250 F.3d 510, 525 (7th Cir. 2001) (requiring that “the selected 

forum [be] so gravely difficult and inconvenient that the complaining party will for all practical 

purposes be deprived of its day in court” (alteration marks omitted)). To the contrary, the Loan 

Agreement explicitly allows the Plaintiffs to appear by telephone, to the extent they need or wish 

to do so. (See Loan Agreement at 5 (“[Y]ou will not be required to travel to the Cheyenne River 

Sioux Tribal Nation”).) 

Enforcement of the forum-selection clause is in line with Illinois’ public policy, the 

forum in which this suit was originally brought. See AAR, 250 F.3d at 525. Under Illinois law, 

consumer protection and usury laws do not constitute public interests which are strong enough to 

invalidate contractual choice-of-forum provisions. See Amaro v. Capital One Bank, No. 97 C 

4638, 1998 WL 299396, at *7-8 (N.D. Ill. May 21, 1998) (Grady, J.). Instead, as was the case in 

Carnival Cruise Lines, Inc. v. Shute, (1) some portion of the Defendants do business with 

customers in a variety of locations and have a special interest in limiting the fora in which they 

can be sued; (2) the clause dispels confusion about where suit can be brought; (3) by limiting the 

fora in which Defendants can be sued, customers receive a benefit by way of a reduced rates; and 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 7 of 16 PageID #:787
8 

(4) there is no evidence that the Plaintiffs were physically or financially unable to litigate in the 

agreed-upon forum. See 499 U.S. 585, 587 (1991). 

3. Dismissal is Appropriate. 

Therefore, the forum-selection clause requires the Plaintiffs to bring their suit in South 

Dakota on the Cheyenne River Reservation.8

 The Payday Defendants may insist that the case be 

dismissed based on the forum-selection clause and Rule 12(b)(3).9 See, e.g., Continental Cas. 

Co. v. American Nat’l Ins. Co., 417 F.3d 727, 733 (7th Cir. 2005). Once again, the Payday 

Defendants are entitled to insist that the forum-selection clause be enforced and the case be tried 

in a Tribal forum. However, the Payday Defendants would be willing to forego this right if the 

Plaintiffs agree to submit the case to individual binding Arbitration in Illinois, as more fully 

discussed below. 

C. The Arbitration Agreement Prevents the Case from Proceeding in This Court. 

There is a strong federal policy in favor of arbitration and the enforcement of arbitration 

agreements. See AT&T Mobility LLC v. Concepcion, --- U.S. ----, 131 S. Ct. 1740, 1745 (2011). 

Therefore, “questions of arbitrability must be addressed with a healthy regard for the federal 

 

8

 In fact, because the Payday Defendants are members of the Tribe, or wholly owned thereby, their 

on-Reservation commercial activities are immune from state law, except where that immunity has 

been waived. See Williams v. Lee, 358 U.S. 217, 220-23 (1959). A contractual Arbitration clause 

may serve as a waiver regarding only the specifically listed claims and fora. See C & L Enters., 

Inc. v. Citizen Band Potawatomi Indian Tribe of Okla., 532 U.S. 411 (2001). Here, the immunity 

waiver in the Loan Agreement permits only adjudication in the Cheyenne River Reservation. 

9

 The Court also potentially could dismiss this case under Rule 12(b)(1) or the doctrine of forum 

non conveniens. See, e.g., Ninigret, 207 F.3d at 35 (Rule 12(b)(1)); 14D CHARLES A. WRIGHT,

ARTHUR R. MILLER, ET AL., FEDERAL PRACTICE & PROCEDURE § 3828 (3d ed.) (noting that 

reliance on forum non conveniens is appropriate for cases in federal court which cannot be 

transferred to the proper court). There is little difference between the analysis under forum non 

conveniens and the one under Rule 12(b)(3). The Loan Agreement contains a mandatory forumselection clause, so “the usual forum non conveniens analysis no longer applies, and the only 

question remaining for the district court to determine is whether the forum selection clause is 

enforceable under the standards set forth in [Bremen].” AAR, 250 F.3d at 524-25. 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 8 of 16 PageID #:788
9 

policy favoring arbitration” and “any doubts concerning the scope of arbitrable issues should be 

resolved in favor of arbitration . . . .” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 

460 U.S. 1, 24-25 (1983). 

In light of this policy, in order “[t]o compel arbitration, a party need only show: (1) an 

agreement to arbitrate, (2) a dispute within the scope of the arbitration agreement, and (3) a 

refusal by the opposing party to proceed to arbitration.” Mori v. East Side Lenders, LLC, No. 

1:11–CV–01324, 2011 WL 2518966, at *2 (N.D. Ill. June 24, 2011) (Coleman, J.) (citing Zurich 

Am. Ins. Co. v. Watts Indus., 466 F.3d 577, 580 (7th Cir. 2006)). 

1. The Loan Agreement Contains an Agreement to Arbitrate. 

The Loan Agreements attached to the Complaint contain Plaintiffs’ electronic signatures. 

(See Loan Agreement at 7.) Plaintiffs do not contend otherwise. (See, e.g., Am. Compl. ¶¶ 48, 

49, 50.) The Loan Agreement contains an Arbitration Agreement which requires that “all claims 

or demands,” regardless of the theory or relief sought, be submitted to binding Arbitration. 

(Loan Agreement at 5.) By entering into a Loan Agreement, the Plaintiffs “agree that [they] are 

waiving [their] right to a jury trial to have a court decide [their] dispute, to participate in a class 

action lawsuit, and to certain discovery and other procedures that are available in a lawsuit.” 

(Loan Agreement at 5.) “Arbitration shall be conducted in the Cheyenne River Sioux Tribal 

Nation by [the borrower’s] choice of either (i) a Tribal Elder, or (ii) a panel of three (3) members 

of the Tribal Council, and shall be conducted in accordance with the Cheyenne River Sioux 

Tribal Nation’s consumer dispute rules and the terms of this Agreement.” (Loan Agreement at 

5.) “This arbitration provision . . . shall be governed by the law of the Cheyenne River Sioux 

Tribe.” (Loan Agreement at 6.) When applying for their loans, each Plaintiff checked a box 

which specifically acknowledged the existence and effect of the Arbitration Agreement. (See

Loan Agreement at 7.) 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 9 of 16 PageID #:789
10 

(a) The Arbitration Agreement Is Valid. 

The Loan Agreement and its Arbitration provisions are governed by the laws of the 

Cheyenne River Sioux Tribe. (See, e.g., Loan Agreement at 4, 6.) As discussed previously, 

Cheyenne River Sioux Tribal Courts look to federal law, such as the Federal Arbitration Act (or 

“FAA”), for guidance in applying Tribal law. Moreover, the procedural provisions of the FAA, 

such as 9 U.S.C. § 3, dictate the manner in which this Court should examine the present Motion, 

even though the parties’ substantive rights are governed by Tribal law. Therefore, contrary to 

Plaintiffs’ inconsistent contention,10 the Arbitration Agreement is enforceable under Tribal and 

Federal interpretations of the FAA. 

(b) The Arbitration Agreement Is Not Racially Discriminatory 

There is no inherent legal flaw in appointing Tribal members or Tribal council members 

as Arbitrators. See Ninigret Dev. Corp., 32 F. Supp. 2d at 504, 505, rev’d on other grounds, 207 

F.3d 21. Indeed, “[n]onjudicial tribal institutions have also been recognized as competent lawapplying bodies.” Santa Clara Pueblo v. Martinez, 436 U.S. 49, 66 (1978). Moreover, the 

“Choice of Arbitrator” clause in the Loan Agreement does not establish a race-based 

requirement. (See Loan Agreement at 5.) The Cheyenne River Sioux Tribal is a political entity. 

Arbitrations conducted by Tribal institutions will be staffed by members of the Tribe. This is no 

different than, for example, the fact that an Arbitration by an English institution will be staffed 

by English citizens. Cf. Bremen v. Zapata Off–Shore Co., 407 U.S. 1 (1972) (enforcing forum-

 

10 The Plaintiffs’ Amended Complaint puts them in a Catch-22. On the one hand, they contend that, 

under the choice-of-law clause, federal and state law (both of which favor the enforcement of 

arbitration agreements) do not apply to the Loan Agreement. If they are correct that state law 

does not apply, then Plaintiffs’ claims, which are based on state law, must be dismissed. By 

asserting state-law claims, Plaintiffs presumably believe that the choice-of-law clause (which 

imposes Tribal law over the Loan Agreement) is inapplicable. If this were so, state and federal 

law indubitably command the submission of the entire action to binding individual arbitration. 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 10 of 16 PageID #:790
11 

selection clause naming England as the situs). The Arbitrators’ nationality – be it Tribal, British, 

Mexican, or what have you – is not a qualification, but rather is simply a product of the locale. 

Even if Plaintiffs could establish that this Choice of Arbitrator clause was in some way 

deficient, that would not invalidate the entire agreement. Instead, as required by the Arbitration 

Agreement’s severance clause, “[i]f any of this Arbitration Provision is held invalid, the 

remainder shall remain in effect.” (Loan Agreement at 6.); see Mori, 2011 WL 2518966, at *5 

(noting that severance clause allowed court to strike portion of Arbitration Agreement regarding 

the identity of the Arbitrator). In such a case, the Court can designate an Arbitrator. See 9 

U.S.C. § 5 (2006). 

(c) Potential Inconvenience to the Plaintiffs Is Not a Ground for 

Invalidating the Arbitration Agreement. 

“Increased cost and inconvenience are insufficient reasons to invalidate foreign forumselection or arbitration clauses.” Mitsui & Co. (USA), Inc. v. Mira M/V, 111 F.3d 33, 37 (5th 

Cir. 1997) (citing Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528 (1995); 

Carnival, 499 U.S. at 603). As discussed above, any alleged inconvenience incurred by the 

Plaintiffs is insufficient to invalidate the forum-selection clause. Again, the Loan Agreement 

lessens the potential burden on the Plaintiffs by allowing them to appear by telephone, rather 

than in person. 

Once again, even though the Payday Defendants are entitled to enforce the arbitration 

clause as written, they are willing to waive the forum-selection clause, in lieu of individual 

arbitration in Illinois, thus eliminating any concern regarding the inconvenience of a South 

Dakota forum. 

2. Plaintiffs’ Claims Are Within the Scope of the Arbitration Agreement. 

The Arbitration Agreement broadly covers any claims arising from the Loan Agreement: 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 11 of 16 PageID #:791
12 

Arbitration is a means of having an Independent third party resolve 

a Dispute. A “Dispute” is any controversy or claim between you 

and Western Sky or the holder of the Note. The term Dispute is to 

be given its broadest possible meaning and includes, without 

limitation, all claims or demands (whether past, present, or future, 

including events that occurred prior to the opening of this 

Account), based on any legal or equitable theory (tort, contract, or 

otherwise), and regardless of the type of relief sought (i.e. money, 

injunctive relief, or declaratory relief). A Dispute includes, by way 

of example and without limitation, any claim based upon 

marketing or solicitations to obtain the loan and the handling or 

servicing of my account whether such Dispute is based on a tribal, 

federal or state constitution, statute, ordinance, regulation, or 

common law, and including any issue concerning the validity, 

enforceability, or scope of this loan or the Arbitration agreement. 

(Loan Agreement at 5.) Plaintiffs assert four claims – three regarding the fees and interest 

charged under the loans, and one attempting to invalidate the Arbitration Agreement. It is 

without question that each of these claims is “concerning the validity, enforceability, or scope of 

[a] loan or the Arbitration agreement.” 

3. Plaintiffs Have Refused to Arbitrate. 

By filing the present action, Plaintiffs have sufficiently demonstrated their refusal to 

arbitrate their otherwise arbitrable claims. See, e.g., Laif X SPRL v. Axtel, SA, 390 F.3d 194, 198 

(2d Cir. 2004) (“A party has refused to arbitrate if it commences litigation” (citation omitted)); 

First Family Fin. Serv. v. Fairley, 173 F. Supp. 2d 565, 572 (S.D. Miss. 2001) (“The Court 

cannot conceive of a more explicit refusal to arbitrate than the bringing of an arbitrable claim in 

state court that one has contractually agreed to arbitrate.”); Solieri v. Ferrovie Dello SPA, No. 

97-8844, 1998 WL 419013, at *5 (S.D.N.Y. July 23, 1998) (court may compel arbitration “if the 

other party has proceeded to sue on claims which are arbitrable”). 

Therefore, the three requirements for compelling arbitration have been satisfied. See

Mori, 2011 WL 2518966, at *2. 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 12 of 16 PageID #:792
13 

4. The Court Should Stay This Case and Require the Plaintiffs to Pursue 

Arbitration Under the Loan Agreement. 

Having demonstrated that Arbitration is appropriate in this case, the proceedings in this 

Court should be stayed pending arbitration. The FAA requires: 

If any suit or proceeding be brought in any of the courts of the 

United States upon any issue referable to arbitration under an 

agreement in writing for such arbitration, the court in which such 

suit is pending, upon being satisfied that the issue involved in such 

suit or proceeding is referable to arbitration under such an 

agreement, shall on application of one of the parties stay the trial 

of the action until such arbitration has been had in accordance with 

the terms of the agreement, providing the applicant for the stay is 

not in default in proceeding with such arbitration. 

9 U.S.C. § 3 (2006). Therefore, the Payday Defendants request that the Court apply § 3 of the 

FAA, and stay these proceedings until arbitration can take place in accordance with the Loan 

Agreement. 

D. If the Court Declines to Otherwise Dismiss or Stay This Case, Dismissal Is Still 

Appropriate. 

If the Court dismisses or stays this case, the analysis ends there. See, e.g., Mori, 2011 

WL 2518966, at *5 (“If the district court determines that the agreement to arbitrate is valid, the 

court has no further power or discretion to address the issues raised in the complaint and must 

stay the proceedings and order arbitration.” (citing Volkswagen of Am., v. Sud’s of Peoria, Inc., 

474 F.3d 966, 971 (7th Cir. 2007)). If, for some reason, the Court declines such a dismissal or 

stay, other threshold challenges to Plaintiffs’ claims become ripe. 

1. Plaintiffs’ Claims Should Be Dismissed Based on the Choice-of-Law Clause. 

The Loan Agreement makes clear that the substantive laws of the Cheyenne River Sioux 

Tribe govern. (See, e.g., Loan Agreement 2, 5, 6.) “It is only under exceptional circumstances 

that a district court will not honor a reasonable choice-of-law provision.” Mori, 2011 WL 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 13 of 16 PageID #:793
14 

2518966, at *5 (citing Auto–Owners Ins. Co. v. Websolv Computing, Inc., 580 F.3d 543, 547 (7th 

Cir. 2009)). 11 

“When a contract contains a choice of law provision, the law of the state chosen by the 

parties will be applied to any issue which the parties could have resolved by an explicit provision 

in their contract.” DeJohn v. The .TV Corp. Int’l, 245 F. Supp. 2d 913, 922 (N.D. Ill. 2003) 

(Manning, J.) (citing Scientific Holding Co. v. Plessey Inc., 510 F.2d 15, 22 (2d Cir. 1974); 

RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 (1971)). Similarly, the parties cannot 

pursue claims under the laws of a state which has not been selected; any such claims must be 

dismissed. DeJohn, 245 F. Supp. 2d at 922. Consequently, Plaintiffs’ claims – which are 

uniformly raised under Illinois law – cannot proceed and should be dismissed for failure to state 

a claim under Rule 12(b)(6). See, e.g., Amaro, 1998 WL 299396, at *7-8 (noting that consumer 

protection and usury laws do not supersede a choice-of-law provision). 

2. Plaintiffs’ Class Claims Should Be Dismissed Based on the Class-ActionWaiver Clause. 

The Loan Agreement prevents the Plaintiffs from bringing class action lawsuits in 

connection with a loan. (See Loan Agreement at 4, 5, 6.) Class-action-waivers are enforceable 

both in conjunction with and separate from arbitration agreements. See AT&T Mobility LLC v. 

Concepcion, --- U.S. ----, 131 S. Ct. 1740 (2011); Bonanno v. Quizno’s Franchise Co., LLC, No. 

06-cv-02358-CMA-KLM, 2009 WL 1068744, at *11 (D. Colo. Apr. 20, 2009) (enforcing classaction waiver provision that did not accompany an arbitration clause). If the Court declines to 

dismiss or stay this case pending arbitration, the Payday Defendants request that the case be 

 

11 Once again, Defendants’ citation to federal law in this brief is not a waiver of the Loan 

Agreement’s choice-of-law clause. Rather – as discussed in note 5, supra – federal case law 

serves as a guide on how Cheyenne River Sioux Tribal courts would decide similar matters. 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 14 of 16 PageID #:794
15 

dismissed pursuant to Rule 12(b)(6) or relevant arbitration law because the class-action posture 

violates the class-action waiver in the Loan Agreement. 

IV. CONCLUSION 

WHEREFORE, Defendants Payday Financial, LLC, Western Sky Financial, LLC, Great 

Sky Finance, LLC, Red Stone Financial, LLC, Management Systems, LLC, 24-7 Cash Direct, 

LLC, Red River Ventures, LLC, High Country Ventures, LLC, Financial Solutions, LLC, and 

Martin A. Webb respectfully request that the Court dismiss this case or, in the alternative, stay 

the matter until Arbitration can be completed under the terms of the Arbitration Agreement. 

DATED this 3rd day of February 2012. 

Respectfully submitted, 

Payday Financial, LLC, Western Sky 

Financial, LLC, Great Sky Finance, LLC, 

Red Stone Financial, LLC, Management 

Systems, LLC, 24-7 Cash Direct, LLC, 

Red River Ventures, LLC, High Country 

Ventures, LLC, Financial Solutions, LLC, 

and Martin A. Webb, 

Defendants. 

By: /s/ Ralph T. Wutscher 

Ralph T. Wutscher One of Their Attorneys 

Jeffrey T. Karek 

MCGINNIS TESSITORE WUTSCHER LLP 

The Loop Center Building 

105 W. Madison Street, 18th Floor 

Chicago, Illinois 60602 

Tel. (312) 416-6170 

Fax: (312) 284-4751 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 15 of 16 PageID #:795
16 

Certificate of Service 

Ralph T. Wutscher, an attorney, hereby certifies that on February 3, 2012, service of a true 

and correct copy of this document and any referenced exhibits was accomplished pursuant to ECF 

on all parties who are Filing Users. 

 /s/ Ralph T. Wutscher 

 Ralph T. Wutscher 

 

Case: 1:11-cv-09288 Document #: 25 Filed: 02/03/12 Page 16 of 16 PageID #:796