UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

DEBORAH JACKSON, et al., )

)

Plaintiffs, ) 

)

v. ) 11 C 9288

)

PAYDAY FINANCIAL, LLC, et al. )

)

Defendants. )

MEMORANDUM OPINION

CHARLES P. KOCORAS, District Judge:

Now before the Court is Defendants’ motion to dismiss under Federal Rule of 

Civil Procedure 12(b)(6). For the following reasons, Defendants’ motion is denied in 

part and granted in part. 

BACKGROUND

For the purposes of the instant motion, the following well-pleaded allegations 

derived from Plaintiffs' second amended complaint are accepted as true for the 

purposes of this motion. The Court draws all reasonable inferences in favor of 

Plaintiffs. Purdue Research Found v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782-83 

(7th Cir. 2003). 

Three Illinois consumers have initiated suit against an internet lender, 

numerous corollary businesses associated with the lender, and two debt collection 

companies for allegedly charging annual interest rates well above 100%, in violation 
of Illinois’ civil and criminal usury statutes and a consumer fraud statute. Between 

2010 and 2011, Illinois residents Deborah Jackson (“Jackson”), Linda Gonnella 

(“Gonnella”), and James Binkowski (“Binkowski”) (collectively the “Plaintiffs”) each 

obtained loans for $2,525 from the Defendant Western Sky Financial, LLC (“Western 

Sky”), a “pay day loan” business chartered in Timber Lake, South Dakota. The 

interest rate assessed on Jackson’s and Binkowski’s loans was 139.33%, and the 

interest rate charged on Gonnella’s loan was 138.99%. Defendant WS Funding, LLC 

(“WS Funding”) now owns the debt owed by Gonnella. 

Defendant Martin Webb (“Webb”) owned and controlled Western Sky, in 

conjunction with Defendants Payday Financial, LLC; Great Sky Finance, LLC; Red 

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

River Ventures, LLC; High County Ventures, LLC; and Financial Solutions, LLC 

(collectively the “Webb Entities”). Webb ran the Webb Entities as a common 

enterprise, and each entity listed the same Timber Lake, South Dakota address as its 

principal place of business. Webb is a member of the Cheyenne River Sioux Tribe 

(the “Tribe”). He is not a Tribal official, and the Tribe maintains no role or 

relationship in the ownership or operation of the Webb Entities, which is noted on 

Payday Financial LLC’s website.

The Webb Entities advertised through the internet and via televised 

commercials to Illinois customers, offering loans between $300 and $2,525. The 

loans charged interest rates over 100% despite the Webb Entities not holding a 

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banking charter or a license from the Illinois Department of Financial and 

Professional Regulation, whose authorization is required for lenders to charge interest 

rates greater than 9%. To receive a loan from the Webb Entities, borrowers must 

agree to and sign a six-page contract (“Loan Agreement”) which delineates the rights 

of each of the parties with respect to the loan. 

On October 11, 2011, Jackson and Gonnella filed a four count class action 

lawsuit against Webb, the Webb Entities and WS Funding, LLC, in the Circuit Court 

of Cook County. See Jackson v. Payday Financial, LLC, Case No. 11-CH-35207 (Oct. 

11, 2011). The suit was subsequently removed to this Court under the Class Action 

Fairness Act. 28 U.S.C. § 1332(d). After removal, Plaintiffs amended their complaint 

to add Binkowski as a Plaintiff and CashCall Inc. (“CashCall”), another debt 

collection agency that purchased and owns debts from the Webb Entities, as a 

Defendant. Plaintiffs’ four count complaint alleges that Webb, the Webb Entities, and 

the collection agencies CashCall and WS Funding (collectively the “Defendants”) 

violated the Illinois’ Interest Act and the Illinois Criminal Usury statute, 815 ILCS 

205/4(1) and 720 ILCS 5/17-59, and the Illinois Consumer Fraud and Deceptive 

Business Practices Act (“ICFA”), 815 ILCS 505/2, by unlawfully charging high 

interest rates. Count Four seeks declaratory and injunctive relief from enforcement of 

the arbitration clause. 

On July 9, 2012, this Court issued its memorandum opinion granting 

Defendants’ motion for improper venue. Jackson v. Payday Financial, LLC, 11-cv-

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9288, 2012 WL 2722024 (N.D. Ill. July 9, 2012). Plaintiffs appealed and the Seventh 

Circuit Court of Appeals found that the arbitration provision was unreasonable and 

was “procedurally unconscionable under federal, state and tribal law.” Jackson v. 

Payday Financial, LLC, 764 F.3d 765, 786 (7th Cir. 2014). The Seventh Circuit 

remanded the case back to this Court to proceed in accordance with its directives. 

On September 22, 2014, Defendants filed their renewed motion to dismiss the 

case pursuant to Federal Rule of Civil Procedure 12(b)(6).

 LEGAL STANDARD

A Rule 12(b)(6) motion to dismiss is used to test the legal sufficiency of a 

complaint. Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 

820 (7th Cir. 2009). Pursuant to Rule 8(a)(2), a complaint must contain “a ‘short and 

plain statement of the claim showing that the pleader is entitled to relief,’ sufficient to 

provide the defendant with ‘fair notice’ of the claim and its basis.” Tamayo 

v.Blagojevich, 526 F.3d 1074, 1084 (7th Cir. 2008) (quoting Fed. R. Civ. P. 8(a)(2); 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Additionally, the allegations 

in the complaint must “actually suggest that the plaintiff has a right to relief, by 

providing allegations that raise a right to relief above a speculative level.” Tamayo,

526 F.3d at 1084 (emphasis in original).

DISCUSSION

Defendants levy numerous arguments in support of their motion to dismiss the 

Plaintiffs’ second amended complaint. First, Defendants contend that the Dormant 

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Commerce Clause bars the application of Illinois law to Western Sky’s loans, which 

were consummated outside of Illinois. Second, assuming arguendo that Illinois law is 

applicable, Defendants posit that Plaintiffs have not pled the essential elements of 

their claims. Finally, Defendants assert that Plaintiffs have failed to allege that the 

numerous Webb Entities who were not directly involved in the issuance of the loans

in question should be dismissed. The Court will resolve each contention in turn.

1. Dormant Commerce Clause

 Defendants argue that the Dormant Commerce Clause precludes the application 

of Illinois law to Plaintiffs’ Loan Agreement, thereby justifying the dismissal of their 

complaint. The U.S. Constitution’s Commerce Clause grants Congress the authority 

to “regulate Commerce . . . among the several States.” U.S. Const. Art I, § 8, cl.3. 

“Th[e] ‘negative’ aspect of the Commerce Clause is often referred to as the ‘Dormant

Commerce Clause’ and is invoked to invalidate overreaching provisions of state 

regulation of commerce.” Alliant Energy Corp. v. Bie, 330 F.3d 904, 911 (7th Cir.

2003); see also Am. Trucking Ass'ns, Inc. v. Mich. Pub. Serv. Comm'n, 545 U.S. 429, 

433 (2005). The Dormant Commerce Clause limits the permissible “extraterritorial 

effects of state economic regulation.” Healy v. Beer Institute, 491 U.S. 324, 336 

(1989). Additionally, the “Dormant Commerce Clause . . . precludes the application 

of a state statute to commerce that takes place wholly outside of the State’s borders, 

whether or not the commerce has effects within the State.” Healy, 491 U.S. at 336 

(quoting Edgar v. MITE Corp., 457 U.S. 624, 642-43 (1982)). 

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 Defendants principally rely on the holding in Midwest Title Loans, 593 F.3d 

660, 664-65 (7th Cir. 2010), to support their contention that Plaintiffs’ pay day loan 

contracts were completed and formed in South Dakota (where Western Sky approved 

and funded the loans) which precludes the application of Illinois law. Defendants’ 

reliance on Midwest Title Loans is misplaced. In Midwest Title Loans, the plaintiff 

Midwest Title, an Illinois car title lender, sued to enjoin the application of Indiana’s

version of the Uniform Consumer Credit Code and premised their argument on the 

Dormant Commerce Clause. Indiana had enacted a “territorial application provision” 

which states a loan is deemed to occur in Indiana if a resident of Indiana entered into a 

loan transaction with a creditor in another state and the creditor had advertised or 

solicited loans in Indiana. Midwest Title Loans, 593 F.3d at 662. Midwest Title only 

maintained offices in Illinois and the car title loans were exclusively made within 

those offices. The borrower in the car title loan transaction was required to provide 

the keys to the vehicle subject to the loan in order to allow Midwest Title to exercise 

self-help repossession, if a default occurred. After finalizing the loan, Midwest Title 

would notify the Indiana Bureau of Motor Vehicles of the loan so that it would be 

noted on the official record of the borrower’s title. 

 In determining the applicability of Indiana’s laws to an Illinois company, the 

Seventh Circuit deemed the commute of Indiana residents across the states shared 

border with Illinois, to Midwest Title’s Illinois offices, was the operative fact which 

justified not imposing Indiana’s consumer protection laws against Midwest Title. “To 

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allow Indiana to apply its law against title loans when its residents transact in a 

different state that has a different law would be arbitrarily to exalt the public policy of 

one state over another.” Midwest Title Loans, 593 F.3d at 667-68. In the case at bar, 

Defendants ignore the significant contacts that the Plaintiffs maintained with Illinois 

that were not shared with the Indiana borrowers in Midwest Title Loans. The 

Plaintiffs applied for the loans via the internet while in Illinois, the Defendants made 

their offer to lend to the Plaintiffs in Illinois and the Defendants wired the Plaintiffs’

the loaned money to Illinois. 

Underlying the Defendants’ position that Dormant Commerce Clause bars the 

application of Illinois law lurks their overarching assertion that South Dakota law

should govern the Loan Agreement. In evaluating the viability of the Loan 

Agreements mandatory arbitration provision in the case at bar, the Seventh Circuit 

noted that a “more-than -colorable argument can be made that the loan agreements’ 

choice of law clause should not be enforced and that Illinois law ought to govern.” 

Jackson, 764 F.3d at 775 n. 23. Although the Seventh Circuit did not explicitly 

determine that Illinois law should apply to this case, the court strongly suggests a 

rejection of the Defendants’ choice of law argument. 

“Illinois respects a contract's choice-of-law clause as long as the contract is 

valid and the law chosen is not contrary to Illinois' fundamental public policy.” 

Thomas v. Guardsmark, Inc., 381 F .3d 701, 704–05 (7th Cir. 2004) (finding that 

Illinois law permitted the court to recognize the choice-of-law clause in the parties' 

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agreement). A choice of law clause is unenforceable if it is unconscionable, immoral, 

illegal, contrary to public policy, or injures the public welfare. Thomas v. 

Guardsmark Inc., 381 F.3d 701, 705-706 (7th Cir. 2004). The Plaintiffs’ have pled 

that the interest rates charged by the Defendants which exceeded 100% are contrary to 

Illinois’ fundamental public policy, as articulated in the Illinois Interest Act. The 

Illinois Interest Act indeed declares that charging interest rates over 9% is against 

public policy. 

For present purposes, the Court need not make a definitive determination 

concerning the application of Illinois law to the case at bar. The Plaintiffs’ have pled 

that they were physically present in Illinois when the contract was offered, accepted 

and formed. Construing the complaint in the light most favorable to the Plaintiffs, the 

Court finds Plaintiffs’ have sufficiently pled that a valid contract was formed under 

Illinois law. Additionally, the Plaintiff have alleged that the Loan Agreements are 

unenforceable under Illinois law as being contrary to the public policy. At this stage 

of the proceedings, we view Illinois law to be applicable to the issues before the 

Court. The Defendants’ motion to dismiss Plaintiffs’ complaint based on the Dormant 

Commerce Clause is denied. 

2. Plaintiffs Failure to State a Claim

 Defendants argue that even if Illinois law is applicable, Plaintiffs have failed 

to sufficiently state a claim under the Illinois Interest Act, the Illinois Criminal Usury 

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statute, and the ICFA. The Court will sequentially resolve the merits of each of 

Defendants’ arguments.

 A. Illinois Interest Act

Defendants argue that Plaintiffs’ allegations concerning a violation of the 

Illinois Interest Act must be dismissed because the complaint does not allege that the 

Defendants had actual knowledge that their loans were unlawful. Under the Illinois’ 

usury statutes, “[w]hether a loan is usurious depends on whether the party intended to 

charge unlawful interest.” Saskill v. 4-B Acceptance, 453 N.E.2d 761, 765 (Ill. App. 

1983). Plaintiffs’ allege that Defendants knowingly lent money to the Plaintiffs’ and 

charged interest rates over 130%, well over the 9% cap established by the Illinois 

Interest Act. The complaint further specifies that the Defendants were aware that the 

interest rates charged were unenforceable under Illinois law. The Defendants counter 

that they were under the belief that their loans would be governed by Cheyenne River 

Sioux tribal law, as specified in the Loan Agreement. Despite the Defendants 

assertions of their subjective beliefs, the present posture of the case does not support 

determining the facts of the case. Id. (a question of fact concerning the intent of the 

parties is “determined by the nature and substance of the transaction rather than its 

form, to insure against evasion of the statute by a party’s ingenious scheme or 

device.”) At this juncture, the Plaintiffs’ well-pled allegations establish that the 

Defendants knew that the loans were unlawful under Illinois law. 

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Additionally, Defendants contend that the Illinois Interest Act solely applies to 

individuals and corporations actually in this state. Due to their lack of Illinois 

contacts, Defendants argue that the Illinois Interest Act does not apply to them. 

Defendants point to the language of the Illinois Interest Act which states, in pertinent 

part: “in all written contracts it shall be unlawful for the parties to stipulate or agree 

that 9% per annum, or any less sum of interest, shall be taken and paid . . . in any 

manner due and owing from any person to any other person or corporation in this state 

. . . except as herein provided.” 815 ILCS 205/4(1). Defendants asserted limitation 

on the reach of the Illinois Interest Act is not persuasive. The Illinois Interest Act and 

other Illinois usury laws exist to broadly protect a “necessitous borrower” from an 

“unscrupulous lender.” See Rogus v. Continental Illinois Nat. Bank & Trust Co. of 

Chicago, 281 N.E.2d 346, 348 (Ill. App. 1972). The portion of the Illinois Interest 

Act relied on by the Defendants merely enunciates the lawful nature of a 9% interest 

rate. If an individual or company wishes to exceed the cap interest rate, it must fall 

into one of the many established exceptions, which Defendants do not argue that they 

fit into.

Furthermore, another section of the Illinois Interest Act provides, 

When any written contract, wherever payable, shall be 

made in this state, or between citizens or corporations of 

this state, or a citizen or a corporation of this state and a 

citizen or corporation of any other state, territory or country 

(or shall be secured by mortgage or trust deed on lands in 

this state), such contract may bear any rate of interest 

allowed by law to be taken or contracted for by persons or 

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corporations in this state, or allowed by law on any contract 

for money due or owing in this state. 815 ILCS 205/8

(emphasis added).

 The permissibility of charging “any rate of interest allowed by law” in a 

contract made by any individual of any state defeats the Defendants limited 

interpretation of the Illinois Interest Act. The Defendants’ motion to dismiss 

Plaintiffs’ Illinois Interest Act claim is denied.

 B. Illinois Criminal Usury Statute

 Plaintiffs have alleged that Defendants are in violation of the Illinois Criminal 

Usury statute, 720 ILCS 5/17-59. The statute provides:

(a) A person commits criminal usury when, in exchange for 

either a loan of money or other property or forbearance 

from the collection of such a loan, he or she knowingly 

contracts for or receives from an individual, directly or 

indirectly, interest, discount, or other consideration at a rate 

greater than 20% per annum either before or after the 

maturity of the loan.

(b) When a person has in his or her personal or constructive 

possession records, memoranda, or other documentary 

record of usurious loans, the trier of fact may infer that he 

or she has violated subsection (a) of this Section. 720 ILCS 

5/17-59.

The Illinois Criminal Usury statute does not expressly grant individuals a 

private right of action for a violation of its provisions. However, this lack of express 

permission is not fatal to Plaintiffs’ claims. A court may determine that a private right 

of action is implied in a statute. Rodgers v. St. Mary’s Hospital, 597 N.E.2d 616 (Ill. 

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1992). Illinois has determined that courts should consider four factors in weighing if 

a private right of action may be implied from a statute. Implication of a private right 

of action is appropriate if: (1) the plaintiff is a member of the class for whose benefit 

the statute was enacted; (2) the plaintiff's injury is one the statute was designed to 

prevent; (3) a private right of action is consistent with the underlying purpose of the 

statute; and (4) implying a private right of action is necessary to provide an adequate 

remedy for violations of the statute. Id. at 619.

 After careful consideration of the applicable factors, the Court concludes that 

the Illinois Criminal Usury statute does not imply a private right of action for 

individuals subject to loans charging usurious interest rates. The Court finds the 

fourth factor determinative in light of the fact that the Illinois Criminal Usury statutes 

overlap with a variety of other Illinois civil causes of actions. The Illinois Supreme 

Court has made it clear that a court should “imply a private remedy where there exists 

a clear need to effectuate the purpose of an act.” Board of Education v. A, C & S, Inc.,

546 N.E.2d 580, 599 (Ill. 1989). In support of their argument, Plaintiffs merely 

suggest that due to the criminal nature of the interest charges and the void legal status 

of the loan under Illinois law, the conduct warrants the application of the Illinois 

Criminal Usury statute. However, the legal status of the loan under Illinois law does 

not determine the availability of a private right of action for an Illinois criminal 

statute. Here, a private cause of action would be nearly identical to the Plaintiffs’

other Illinois claims. The Illinois Interest Act and the ICFA were designed to regulate 

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the conduct alleged in the complaint and provide a remedy for usurious practices. 

These civil claims serve to “make an injured plaintiff whole” when the defendant fails 

to comply with Illinois’ laws. See McCarthy v. Kunicki, 823 N.E.2d 1088, 1099 (Ill. 

App. 2005). Accordingly, an implied right of action under the Illinois Criminal Usury 

statute is not necessary where Plaintiffs’ Illinois Interest Act and ICFA actions serve 

as a sufficient remedy. Defendants’ motion to dismiss Count II is granted. 

C. ICFA

Defendants move to dismiss Plaintiffs’ ICFA claims due to: 1) a disagreement 

about the application of the ICFA; 2) the ICFA failing to allow for recovery based on 

a violation of the Illinois Interest Act; and 3) Plaintiffs’ failure to allege that they 

suffered an injury as a proximate cause of Defendants’ conduct.

a. Disagreement Concerning the Application of the ICFA

Defendants argue that the Plaintiffs’ ICFA claim should be dismissed because 

there exists a legitimate disagreement about whether the alleged conduct is unlawful 

under the ICFA. Defendants fortify their argument by relying on Stern v. Norwest 

Mort. Inc., 672 N.E.2d 296, 301 (Ill. App. 1996), for the proposition that the existence 

of a “reasonable difference of opinion as to the meaning” of a statute cannot support a 

ICFA claim. However, the Stern Court went on to state that “there must be a claim 

seated in deceptive acts rather than a reasonable difference of opinion as to the 

meaning of an act of the Illinois General Assembly.” Id. at 302. 

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 The ICFA “is a regulatory and remedial statute intended to protect consumers, 

borrowers, and business persons against fraud, unfair methods of competition, and 

other unfair and deceptive business practices.” Robinson v. Toyota Motor Credit 

Corp., 775 N.E.2d 951, 960 (Ill. 2002). It is to be liberally construed to effectuate its 

purpose. Cripe v. Leiter, 703 N.E.2d 100 (Ill. 1998). Courts have held that an 

individual can pursue two types of claims under the ICFA: 1) a claim alleging that the 

conduct is unfair; and 2) a claim alleging that the conduct is deceptive. See Siegel v. 

Shell Oil Co., 612 F.3d 932, 935 (7th Cir. 2010); see also Saunders v. Mich. Ave. Nat'l 

Bank, 662 N.E.2d 602 (Ill. App. 1996). Plaintiffs have alleged that the Defendants’ 

conduct was unfair for the purposes of pleading an ICFA claim. 

To show that particularized conduct constitutes an “unfair practice” under the 

ICFA, the practice must offend public policy, be immoral, unethical, oppressive, 

unscrupulous or cause substantial injury to consumers. Robinson, 775 N.E.2d at 961. 

“All three criteria do not need to be satisfied to support a finding of unfairness. A 

practice may be unfair because of the degree to which it meets one of the criteria or 

because to a lesser extent it meets all three.” Id. For present purposes, the Plaintiffs 

have pled that the Defendants engaged in unfair conduct in violation of the ICFA for 

“contracting for and collecting finance charges, interest, and fees, from Illinois

residents, in excess of the amounts permitted by Illinois law.” In light of Illinois’ 

enactment of several consumer protection statutes limiting the permissible interest 

charged to Illinois residents, the Court finds that the alleged assessment of interest 

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over 100% is unscrupulous and oppressive and sufficiently constitutes an unfair 

practice.

Defendants submit their argument concerning a “reasonable difference of 

opinion” as a guise for their ultimate contention that Illinois law should not be 

applicable to the Loan Agreements. It is not the contention of the Defendants that the 

ICFA is ambiguous or vague in defining the conduct it prohibits. Defendants go 

further and ultimately challenge the application of Illinois law to their conduct. 

Defendants have moved for dismissal based on Plaintiff’s failure to state a claim. 

Plaintiffs’ have sufficiently alleged a violation of the ICFA under Illinois law. 

b. Basis for ICFA Claim

Defendants argue that the ICFA does not allow recovery for a violation of the 

Illinois Interest Act. Defendants contend that the ICFA prescribes numerous statutes 

that if violated give rise to a ICFA claim; the absence of the Illinois Interest Act from 

the delineated violations prohibits the application of the ICFA. Despite the 

Defendants’ protestations concerning the absence of the Illinois Interest Act from the 

list of statutes qualifying as a ICFA violation, Plaintiffs do not elicit the particular 

portion of the ICFA which relies on other violations to serve as a basis for an ICFA 

claim. Plaintiffs allege that the excessive interest and fees of the loans assessed by the 

Defendants in their loans was an unfair practice in violation of 815 ILCS 505/2 of the 

ICFA, which does not rely on a violation of another statute. Plaintiffs do not allege 

that a violation of the Illinois Interest Act represents a violation of 815 ILCS 505/2Z

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of the ICFA, which provides a remedy under the ICFA for violations of other Illinois 

consumer statutes. 

c. Failure to Establish the Proximate Cause of their Injury

Defendants finally contend that Plaintiffs have failed to establish that their

deception proximately caused Plaintiffs’ injuries. To prevail under ICFA, a plaintiff 

must demonstrate that the defendant's conduct is the proximate cause of the injury. 

Oliveira v. Amoco Oil Co.,776 N.E.2d 151, 160 (Ill. 2002) (“Unlike an action brought 

by the Attorney General under [ICFA], which does not require that ‘any person has in 

fact been misled, deceived or damaged[,]’ . . . a private cause of action brought under 

[ICFA] requires proof of ‘actual damage[]’ . . . [and] proof that the damage occurred 

‘as a result of’ the deceptive act or practice.” (citations omitted)); Oshana v. CocaCola Co., 472 F.3d 506, 514-15 (7th Cir. 2006); Avery v. State Farm Mut. Auto. Ins. 

Co., 835 N.E.2d 801, 861 (Ill. 2005) (“Proximate causation is an element of all private 

causes of action under the Act.”). Therefore, Plaintiffs must allege that “but for” the 

Defendants' unfair conduct, they would not have been damaged.

Plaintiffs allege that the loans provided by the Defendants unlawfully charged 

finance charges, interest, and fees that were not permitted under Illinois law. As a 

result of the paying the charged interest of over 100%, as opposed to the Illinois cap 

of 9%, the Plaintiffs were damaged. Plaintiff sufficiently pled the proximate cause of 

their injury was the Defendants conduct. Defendants’ motion to dismiss Plaintiffs’ 

ICFA claim is denied. 

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3. Failure of Complaint to Allege Liability of Defendants other than 

 CashCall, Western Sky and Webb

Defendants argue that the limited scope of Plaintiffs’ allegations do not support 

such a broad inclusion of all Webb Entities that were not alleged to be directly

included in the loan transaction. To survive a 12(b)(6) motion to dismiss for failure to 

state a claim, the complaint must first comply with Rule 8(a) by providing “a short 

and plain statement of the claim showing that the pleader is entitled to relief,” 

Fed.R.Civ.P. 8(a)(2), such that the defendant is given “fair notice of what the . . . 

claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555. Plaintiffs 

allege that they received loans from Western Sky, which was chartered under the laws 

of South Dakota at the behest of Payday Financial. Payday Financial, as the 

management entity, also caused the other Webb Entities to be chartered in South 

Dakota. Plaintiffs further specify that Webb owns and manages Payday Financial and 

“formulated, controlled, had the authority to control, or participated in acts and 

practices of the Webb Entities that constitute the common enterprise.” Webb’s reign 

over the Webb Entities are alleged to be part of a broader “internet lending business 

model.” Plaintiffs have sufficiently established that Defendants are part of a common 

enterprise supervised and controlled by Webb. The validity of the interplay between 

all the Defendants and Webb’s role in managing the Webb Entities is a fact question

which we are not in a position to determine. Accordingly, Defendants’ motion to 

dismiss all Defendants other than Western Sky, CashCall and Webb, is denied.

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 CONCLUSION

For the aforementioned reasons, the Court denies Defendants’ motion to 

dismiss for failure to state a claim concerning Count I and Count III. The Court 

grants Defendants’ motion to dismiss Count II.

_____________________________________

Charles P. Kocoras

United States District Judge

Dated: 2/3/2015

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