Court Opinion

ID: 4173634
Source: CourtListenerOpinion
Date Created: 2017-06-01 17:03:58.849345+00
Date Added: 2024-06-11T14:24:15.122981
License: Public Domain

FILED
                                                                    United States Court of Appeals
                      UNITED STATES COURT OF APPEALS                        Tenth Circuit

                             FOR THE TENTH CIRCUIT                           June 1, 2017
                         _________________________________
                                                                        Elisabeth A. Shumaker
                                                                            Clerk of Court
KEITH FINN,

      Plaintiff - Appellant,

v.                                                         No. 16-6348
                                                   (D.C. No. 5:16-CV-00415-M)
GREAT PLAINS LENDING, LLC,                                (W.D. Okla.)

      Specially-Appearing
      Defendant - Appellee.
                       _________________________________

                             ORDER AND JUDGMENT*
                         _________________________________

Before TYMKOVICH, Chief Judge, McKAY and LUCERO, Circuit Judges.
                 _________________________________

      The district court dismissed Keith Finn’s lawsuit against Great Plains Lending,

LLC, based on tribal sovereign immunity. Finn appeals, contending that the district

court should have granted his request for limited discovery into matters relevant to

immunity. Exercising jurisdiction under 28 U.S.C. § 1291, we vacate the judgment

and remand for further proceedings.

      *
        After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
                                            I

      Great Plains is a limited liability company formed by the Otoe-Missouria Tribe

of Indians, a federally recognized tribe. Great Plains offers short-term loans at high

interest rates. After the company made numerous automated calls to Finn’s cell

phone, he sued under the Telephone Consumer Protection Act, 47 U.S.C. § 227.

      Great Plains filed a motion to dismiss under Fed. R. Civ. P. 12(b)(1), asserting

that it was entitled to tribal sovereign immunity. Finn argued that sovereign

immunity should not protect Great Plains because the company is actually controlled

by and exists for the benefit of a non-tribal entity, Think Finance, Inc. He requested

limited jurisdictional discovery to substantiate this claim. The district court

dismissed based on tribal sovereign immunity and denied Finn’s request for

jurisdictional discovery. Finn appeals.

                                           II

      “As a matter of federal law, an Indian tribe is subject to suit only where

Congress has authorized the suit or the tribe has waived its immunity.” Kiowa Tribe

of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 754 (1998). “Tribal immunity extends to

subdivisions of a tribe, and even bars suits arising from a tribe’s commercial

activities.” Native Am. Distrib. v. Seneca-Cayuga Tobacco Co., 546 F.3d 1288, 1292

(10th Cir. 2008); see also Michigan v. Bay Mills Indian Cmty., 134 S. Ct. 2024,

2036-39 (2014) (declining to limit tribal immunity for off-reservation commercial

activities). Tribal immunity is a jurisdictional issue. Bonnet v. Harvest (U.S.)

Holdings, Inc., 741 F.3d 1155, 1158 (10th Cir. 2014).

                                            2
       Finn appeals the district court’s denial of his request for limited jurisdictional

discovery. “[I]mmunity entitles a [sovereign] not only to protection from liability,

but also from suit, including the burden of discovery, as a party, within the suit.”

Univ. of Tex. at Austin v. Vratil, 96 F.3d 1337, 1340 (10th Cir. 1996). Nevertheless,

we have held that “[w]hen . . . there is a factual question regarding a . . . sovereign’s

entitlement to immunity, and thus a factual question regarding a district court’s

jurisdiction, the district court must give the plaintiff ample opportunity to secure and

present evidence relevant to the existence of jurisdiction.” Hansen v. PT Bank

Negara Indon. (Persero), TBK, 601 F.3d 1059, 1063-64 (10th Cir. 2010) (quotation

omitted).

       As with other types of discovery, district courts possess discretion to permit

jurisdictional discovery. See Sizova v. Nat’l Inst. of Standards & Tech., 282 F.3d

1320, 1326 (10th Cir. 2002). We review the denial of such discovery for abuse of

discretion. Breakthrough Mgmt. Grp., Inc. v. Chukchansi Gold Casino & Resort,

629 F.3d 1173, 1189 (10th Cir. 2010). “[A] refusal to grant [jurisdictional] discovery

constitutes an abuse of discretion if the denial results in prejudice to a litigant.

Prejudice is present where pertinent facts bearing on the question of jurisdiction are

controverted or where a more satisfactory showing of the facts is necessary.” Sizova,

282 F.3d at 1326 (citations and quotations omitted); see also Breakthrough Mgmt.

Grp., 629 F.3d at 1189. It is Finn’s burden, as the party seeking discovery, to

demonstrate his entitlement to jurisdictional discovery and the resulting prejudice

from its denial. Breakthrough Mgmt. Grp., 629 F.3d at 1189 n.11.

                                             3
       To determine whether a tribal entity is entitled to immunity, we consider the

following factors: (1) the method of the entity’s creation; (2) the entity’s purpose;

(3) the entity’s “structure, ownership, and management, including the amount of

control the Tribe has over the entit[y]”; (4) “whether the Tribe intended for [the

entity] to have tribal sovereign immunity”; (5) the financial relationship between the

Tribe and the entity; and (6) “whether the purposes of tribal sovereign immunity are

served by granting [the entity] immunity.” Id. at 1191. Finn argues that evidence

produced from limited discovery could support his allegations regarding

Think Finance’s effective control of Great Plains, affecting the analysis of factors

2, 3, 5, and 6.

       We conclude that a more satisfactory showing regarding the actual workings of

Great Plains and its financial relationship with the Tribe is necessary for a thorough

consideration of the Breakthrough factors. Finn’s allegations are specific and

plausible. They are also supported by several pieces of circumstantial evidence,

including website screenshots listing Great Plains as a Think Finance product, media

reports, and judicial pleadings in a different case against Think Finance. In that case,

Pennsylvania’s Attorney General alleged that Think Finance contracted with three

tribe-created payday lending companies, including Great Plains, to evade

Pennsylvania’s cap on interest rates and that the tribes received less than 5% of the

profits generated. Additionally, unlike in Breakthrough, 629 F.3d at 1189-90, in

which we affirmed the denial of jurisdictional discovery, Finn specifies which

                                           4
documents he would have sought in discovery and describes their relevance to the

immunity analysis.

       Further, a recent California Supreme Court decision illustrates the potential

importance of jurisdictional discovery in sovereign immunity cases involving

tribe-created payday loan companies. In People ex rel. Owen v. Miami Nation

Enters., 386 P.3d 357 (Cal. 2016), the California Supreme Court adopted the first five

Breakthrough factors, and applying that test, denied immunity to two tribe-created

payday loan companies. Id. at 371-73, 375. The court “[took] into account both

formal and functional considerations—in other words, not only the legal or

organizational relationship between the tribe and the entity, but also the practical

operation of the entity in relation to the tribe.” Id. at 365. In this regard, the court

noted that “the purpose factor considers the extent to which the entity actually

promotes tribal self-governance; the control factor examines the degree to which the

tribe actually, not just nominally, directs the entity’s activities; and the financial

relationship factor considers the degree to which the entity’s liability could impact

the tribe’s revenue.” Id. at 371. As the court recognized, “organizational

arrangements on paper do not necessarily illuminate how businesses operate in

practice.” Id. at 375.

       The district court in this case largely relied on such formal arrangements as set

forth in Great Plains’ organizational paperwork to hold that tribal sovereign

immunity applied. The court recognized that a contract detailing the profit ratio

between Think Finance and Great Plains could be material to its decision, but it

                                             5
denied Finn the opportunity to obtain any such document. Thus, practically

speaking, Finn has no way to secure evidence to verify—or disprove—his belief

about Great Plains’ lack of tribal control or benefit without engaging in the

jurisdictional discovery that the district court disallowed. See Ignatiev v. United

States, 238 F.3d 464, 467 (D.C. Cir. 2001) (holding that the district court erred in

denying limited jurisdictional discovery because although plaintiff suspected the

existence of policies relevant to sovereign immunity, he had no way to know if such

policies actually existed absent discovery).

      Under these circumstances, we conclude that there is a “need for further

factual development” regarding Great Plains’ actual operation. Sizova, 282 F.3d at

1328. Of course, “discovery should be ordered circumspectly and only to verify

allegations of specific facts crucial to an immunity determination,” and a discovery

order should be “narrowly tailored . . . to the precise jurisdictional fact question

presented.” Hansen, 601 F.3d at 1064 (quotations omitted).

                                           III

       The district court’s judgment is VACATED, and this case is REMANDED

for further proceedings consistent with this decision.

                                               Entered for the Court

                                               Carlos F. Lucero
                                               Circuit Judge

                                            6