United States District Court, N.D. Illinois, Eastern Division
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For Deborah Jackson, Deborah Jackson, Plaintiffs: Cathleen M. Combs, Daniel A. Edelman, James O. Latturner, Thomas Everett Soule, Edelman, Combs, Latturner & Goodwin LLC, Chicago, IL.
For James Binkowski, on behalf of themselves and the class members described, Plaintiff: Thomas Everett Soule, Edelman, Combs, Latturner & Goodwin LLC, Chicago, IL.
For Payday Financial, LLC, doing business as Lakota Cash, doing business as Big Sky Cash, doing business as Big $ky Cash, Western Sky Financial, LLC, doing business as Western Sky Funding, doing business as Western Sky, doing business as Westernsky.com, Great Sky Finance, LLC, doing business as Great Sky Cash, doing business as Great $ky Cash, doing business as Gsky, Red Stone Financial, LLC, doing business as Red Stone Cash, Management Systems, LLC, doing business as Gsky, 24-7 Cash Direct, LLC, Red River Ventures, LLC, High Country Ventures, LLC, Financial Solutions, LLC, Martin A. Webb, (" Butch" ), Does, 1-5; and under other names, doing business as WS Funding LLC, CashCall, Inc., Defendants: Michael Timothy Brody, Barry Levenstam, Daniel Thomas Fenske, LEAD ATTORNEYS, Jenner & Block LLP, Chicago, IL.
Charles P. Kocoras, United States 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.
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 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-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 ...