Federal Court Orders Arbitration in Western Sky/CashCall Payday Lending Dispute

Here are the materials in Kemph v. Reddam (N.D. Ill.):

51 CashCall Motion to Dismiss-Compel Arbitration

58-1 Plaintiffs’ Response

91 DCT Order

An excerpt:

Plaintiffs’ argument that the loan agreements are unconscionable because JAMS and AAA would never agree to preside over the arbitration is speculative and unconvincing. (See Resp. at 2—3, 13—14; Sur-Reply at 1—3.) Although the arbitration agreements provide that “the arbitrator will apply the laws of the Cheyenne River Sioux Tribal Nation,” (Agreement at 5), the arbitrator, once chosen, would have the authority to determine whether that choice-of-law provision is valid. See Nitro-Lift Technologies, L.L.C. v. Howard, 133 S. Ct. 500, 503 (2012) (holding that once the court determines the validity of the arbitration provision, the remainder of the contract is left for the arbitrator to decide); Vimar Seguros Y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 541, 115 S. Ct. 2322, 2330 (1995)(ruling that the arbitrator should decide choice-of-law in the first instance); CNA Reinsurance Co. v. Trustmark Ins. Co., No. 01 C 1652, 2001 WL 648948, at *6 (N.D. Ill. June 5, 2001); see also Prostyakov v. Masco Corp., 513 F.3d 716, 725 (7th Cir. 2008)(upholding the arbitrator’s interpretation of the choice-of-law clause because it was not the court’s “place to determine whether [the arbitrator’s] interpretation was correct as a matter of law”). This is particularly true because, as discussed, the loan agreements explicitly provide that the arbitrator can decide “any issue concerning the validity, enforceability, or scope of . . . the Arbitration agreement,” which includes [18]  the enforceability of the choice-of-law clause. (Agreement at 4.) Therefore, potential arbitrators need not refuse the dispute in order to comply with internal due process standards. Nor would they be required to violate Illinois public policy by applying tribal law if they chose to accept it. They could instead accept the dispute, find the choice-of-law provision is unenforceable, and determine what default law should apply.

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