United States District Court, N.D. Illinois, Eastern Division
Samuel Pearson, for himself and a class, Plaintiff: Cathleen
M. Combs, James O. Latturner, Thomas Everett Soule, Daniel A.
Edelman, Edelman, Combs, Latturner & Goodwin LLC, Chicago,
United Debt Holdings LLC, Defendant: Justin M Penn, LEAD
ATTORNEY, Hinshaw Raven Elizabeth Burke, & Culbertson,
Chicago, IL; Jason L Santos, Hinshaw & Culbertson, LLP,
OPINION AND ORDER
M. Kendall, United States District Judge.
Samuel Pearson filed a class action complaint against United
Debt Holdings, LLC (" UDH" ) alleging that UDH
violated the Fair Debt Collection Practices Act, 15 U.S.C.
§ 1692 et seq., when it attempted to collect
debts that Pearson alleges were void and unenforceable. UDH
moved to compel arbitration on an individual basis and
dismiss the Complaint. (Dkt. No. 27). Specifically, UDH
argues that the loan agreement into which Pearson entered
contained a binding arbitration provision and a class action
waiver. In the alternative, UDH argues that that the Court
should dismiss or stay the case based on the doctrine of
tribal exhaustion because the loan itself was issued under
the laws of the Chippewa Cree Tribe. For
the reasons that follow, the motion is denied in its
2014, Pearson began to receive calls from UDH attempting to
collect a debt that Pearson allegedly owed on a loan. (Compl.
¶ 8). The loan did not originate with UDH, but with a
company called Plain Green. The underlying loan agreement is
not attached to the Complaint. The Complaint is sparse on
specifics with respect to the loan itself, but is clear that
the interest rate on the loan exceeded 200% and Plain Green
was not licensed by the Illinois Department of Financial and
Professional Regulation to provide loans whose interest rates
exceeded 20%. ( Id. ¶ 15). Because the interest
rate on Pearson's loan exceeded the Illinois statutory
limit, Pearson argues that it was void and unenforceable. (
Id. ¶ 18). UDH nonetheless attempted to collect
on the illegal debt in violation of the FDCPA, according to
Pearson. ( Id. ¶ 19). Pearson also seeks to
represent a class of other individuals in Illinois from whom
UDH attempted to collect debts made at interest rates
exceeding the statutory limits.
responded by moving to compel arbitration on an individual
basis. (Dkt. No. 27). UDH attached to its motion a document
that it claims is the loan agreement into which Pearson
entered. ( See Dkt. No. 27-1). That document states
that Plain Green is a lender organized under the laws of the
Chippewa Cree Tribe and that the loan is subject to the laws
and courts of the Chippewa Cree Tribe. ( Id. p.
2). The document also contains a provision requiring
arbitration of " any controversy or claim between
[Pearson] and [Plain Green], its marketing agent, collection
agent, any subsequent holder of this Note, or any of their
representative agents, affiliates, assigns, employees,
officers, managers, members or shareholders." (
Id. p. 8). The document provides for arbitration
conducted by the American Arbitration Association, JAMS, or
any arbitration organization upon which the parties agreed.
Arbitration under the agreement is " governed by the
chosen arbitration organization's rules and procedures
applicable to consumer disputes, to the extent that those
rules and procedures do not contradict either the law of the
Chippewa Cree Tribe or the express terms of" the
agreement. ( Id. ). The document also contains a
waiver of ability to participate in a class action. (
Id. p. 9).The validity, effect, and enforceability
of that waiver " is to be determined solely by a court
of competent jurisdiction located within the Chippewa Cree
Tribe, and not by the arbitrator." ( Id. ).
countered that UDH failed to provide sufficient evidence to
authenticate the purported agreement and suggested that the
document attached to UDH's motion to compel arbitration
was not the loan agreement into which he entered. UDH did not
provide an affidavit of an employee of UDH or Plain Green or
any other evidence to authenticate the document attached to
its motion to compel arbitration. Pearson submitted an
affidavit acknowledging that he entered into a loan
agreement, but disputing that he had ever seen any of the
provisions of the document that UDH attached to its motion to
compel arbitration. ( See Dkt. No. 34-1). Pearson is
no longer in possession of any document containing the terms
of the loan agreement into which he entered.
enacted the Federal Arbitration Act (" FAA" ), 9
U.S.C. § 1 et seq., against " centuries of
judicial hostility to arbitration agreements . . . to place
arbitration agreements upon the same footing as other
contracts." Volkswagen of Am., Inc. v. Sud's of
Peoria, Inc., 474 F.3d 966, 970 (7th Cir. 2007)
(citations and internal quotation marks omitted). Under the
FAA, agreements to arbitrate are " valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract." 9 U.S.C.
§ 2. " Under the Federal Arbitration Act,
arbitration may be compelled if the following three elements
are shown:  a written agreement to arbitrate,  a
dispute within the scope of the arbitration agreement, and
 a refusal to arbitrate." Zurich Am. Ins. Co. v.
Watts Indus., Inc., 417 F.3d 682, 687 (7th Cir. 2005)
(citing 9 U.S.C. § 4). The procedure ...