Plain Green on trial: Judge rejects tribal immunity claim, will allow lending suit

MATT VOLZ

Associated Press

HELENA — A federal judge in Vermont has rejected Montana tribal officials’ claims of sovereign immunity and said that he will hear a civil case alleging the tribe’s online payday lending company illegally preys on poor borrowers.

U.S. District Judge Geoffrey Crawford’s order Wednesday to proceed with the lawsuit against Plain Green LLC’s leaders and non-Native American backers is a setback for lenders who use tribal sovereign immunity to offer high interest short-term loans in states with laws that bar or cap such loans.

“It’s a very important result for investigating when tribal immunity is appropriate and when it is not,” said Matthew Byrne, the attorney for the two Vermont women who filed the lawsuit.

The women previously took out loans from Plain Green and are now suing the Chippewa Cree company’s tribal leaders and its Texas-based backers, saying they conspired in a predatory lending scheme that charges excessive interest rates and directly accesses borrowers’ bank accounts, among other allegations.

Jessica Gingras and Angela Given claim in their lawsuit that the Chippewa Cree Tribe’s ownership is a front, and its immunity as a sovereign Native American tribe is a shield for Fort Worth-based Think Finance Inc., which designed the company and takes 95 percent of its profits.

Plain Green and Think Finance say the tribe has full control over the business, and that Think Finance only provides support services. They asked Crawford to dismiss the lawsuit on grounds that tribal sovereignty and an arbitration clause included in the loan agreements make any disputes the domain of the Chippewa Cree’s laws and justice system.

Sovereign immunity is a U.S. doctrine that grants tribes the power of self-government and exempts them from state laws that infringe on that sovereignty. It also gives them immunity in many judicial proceedings.

Crawford rejected the bulk of the companies’ arguments. Plain Green’s lending activities take place outside of Montana’s Rocky Boy’s Indian Reservation, and there is nothing unfair about requiring representatives of a lender doing business in Vermont to defend their practices, he wrote in the order.

“Ultimately, tribal sovereign immunity may limit the shape and nature of the relief against the tribal defendants, but it is not a complete bar to a lawsuit against them,” Crawford wrote.

He added that the loan agreements’ arbitration clause — which says disputes must be settled by a mediator following Chippewa Cree laws — can’t be enforced because the tribe’s laws don’t include basic protections against predatory loan practices.

However, Crawford made other rulings in his order that favor Plain Green and Think Finance. The judge threw out two of the seven allegations the women made and said they can’t seek monetary damages from the tribal officials, but can seek monetary damages from the non-Native American companies.

He also dismissed three Think Finance subsidiaries as defendants, but refused to do the same for its former president, Kenneth Rees, and two venture capital firms the women say provided financial backing to Plain Green.

A spokeswoman for Plain Green did not have an immediate comment on the ruling Friday. The company’s officials and Think Finance can appeal part of the order, but it is not clear whether they will do so.