Here is the opinion in United States v. Johnson.
I. Whether there is a non-textual “integrality exception” to the mandatory requirement in the Federal Arbitration Act (“FAA”) that a substitute arbitrator “shall” be appointed by the court whenever the parties’ chosen arbitrator is unavailable for “any … reason”? 9 U.S.C. § 5.
Here is the opinion. An excerpt:
This appeal arises out of a disagreement between Abraham Inetianbor, who borrowed money at a high interest rate, and CashCall, Inc., the servicer of Mr. Inetianbor’s loan. Mr. Inetianbor filed a lawsuit against CashCall, which then sought to compel arbitration based on the loan agreement. The District Court ultimately refused to compel arbitration because the arbitration agreement in the loan document contained a forum selection clause that was integral to the agreement, and the specified forum was not available to arbitrate the dispute. CashCall appeals that decision here. After careful review, and with the benefit of oral argument, we affirm.
Lower court materials here.
Here is the opinion:
Based on these findings, we now conclude that the Plaintiffs’ action should not have been dismissed because the arbitral mechanism specified in the agreement is illusory. We also cannot accept the Loan Entities’ alternative argument for upholding the district court’s dismissal: that the loan documents require that any litigation be conducted by a tribal court on the Cheyenne River Sioux Tribe Reservation. As the Supreme Court has explained, most recently in Plains Commerce Bank v. Long Family Land & Cattle Co., 554 U.S. 316 (2008), tribal courts have a unique, limited jurisdiction that does not extend generally to the regulation of nontribal members whose actions do not implicate the sovereignty of the tribe or the regulation of tribal lands. The Loan Entities have not established a colorable claim of tribal jurisdiction, and, therefore, exhaustion in tribal courts is not required. Accordingly, we cannot uphold the district court’s dismissal on this alternative basis.
As should be expected by this time, payday lending in Indian country is creating bad law for tribal interests. This case involved a privately owned payday lending operation. Tribally-owned operations will be scrambling to distinguish themselves from this case. Particularly troublesome is the holding and (hopefully) dicta from the opinion that suggests tribal courts have no jurisdiction involving off-reservation lending operations, even though the operation is based in Indian country and even though the lending instrument includes a forum selection clause naming a tribal forum.
My initial recommendations to tribal leaders and counsel — shut down on-reservation-based payday lending operations operated privately immediately. My second recommendation is to ensure that tribal regulations of tribally owned payday lending operations are independent and robust. In other words, tribes must be able to withstand the kind of searching inquiry into their regulatory scheme that the federal court did in this case. Can tribal sovereign lenders say that?
Here are the materials in Brenner v. Bendigo (D. S.D.):
This is an original garnishment action brought in federal court pursuant to a state statute to enforce a tribal court judgment. Doc. 6. An action for a writ of garnishment filed in federal district court as an independent action does not arise under federal law; it arises under state law. See Berry v. McLemore, 795 F.2d 452, 456 (5th Cir. 1986) (“First, subject matter jurisdiction as defined in 28 U.S.C. § 1331, does not exist, because an action for a writ ofgarnishment arises from state law, not federal law. “). Even when taking all the facts pleaded in the Affidavit as true, this action does not arise under federal law and federal question jurisdiction is not proper.
Payday Financial Brief in Response to Amici TK
Prior briefs here, with supplemental briefing order.