Civil Procedure – Arbitration

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U.S. Court of Appeals For the Seventh Circuit

Civil

Civil Procedure – Arbitration

A provision in a payday loan contract that disputes be arbitrated uner the supervision of an Indian tribe is invalid.

“The arbitration provision contained in the loan agreements is unreasonable and substantively and procedurally unconscionable under federal, state, and tribal law. The district court, therefore, erred in granting the Defendants’ motion to dismiss for improper venue based on that provision. Additionally, the courts of the Cheyenne River Sioux Tribe do not have subject matter jurisdiction over the Plaintiffs’ claims. Nor have the Defendants raised a colorable claim of tribal jurisdiction necessary to invoke the rule of tribal exhaustion. The district court’s dismissal, therefore, cannot be upheld on the alternative basis that this dispute belongs in tribal court. We therefore reverse the judgment of the district court granting the Defendants’ motion to dismiss and remand for further proceedings consistent with this opinion. The Plaintiffs may recover their costs in this court.”

Reversed and Remanded.

12-2617 Jackson v. Payday Financial, LLC

Appeal from the United States District Court for the Northern District of Illinois, Kocoras, J., Ripple, J.

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