United States District Court, D. Vermont
JESSICA GINGRAS and ANGELA C. GIVEN, on behalf of themselves and all others similarly situated, Plaintiffs,
JOEL ROSETTE, TED WHITFORD, TIM MCINERNEY, THINK FINANCE, INC., TC LOAN SERVICE, LLC, KENNETH E. REES, TC DECISION SCIENCES, LLC, TAILWFND MARKETING, LLC, SEQUOIA CAPITAL OPERATIONS, LLC and TECHNOLOGY CROSSOVER VENTURES, Defendants.
OPINION AND ORDER (DOCS. 123, 125, 126, 135, 136,
Geoffrey W. Crawford, Judge.
putative class action, Plaintiffs sue individuals and
companies involved in an online lending venture operated by
the Chippewa Cree Tribe of the Rocky Boy's Indian
Reservation in Montana (the Tribe), claiming that the
"payday" loans offered by Plain Green, LLC violate
federal and state law because the interest rates are usurious
and because the loans involve other unlawful features.
(See Doc. 18, First Amended Complaint
("FAC").) In an Opinion and Order filed May 18,
2016, the court denied Defendants' motions to compel
arbitration, and denied portions of Defendants' motions
to dismiss. See Gingras v. Rosette, No. 5:15-cv-101,
2016 WL 2932163 (D. Vt. May 18, 2016), appeal
docketed, No. 16-2019 (2d Cir. June 17, 2016)
[hereinafter, the "May 18 Order"]. Familiarity with
the May 18 Order is presumed.
motions are now pending. On June 1, 2016, TCV and Sequoia
filed a motion to clarify the May 18 Order, requesting that
the court grant their motions to dismiss for lack of personal
jurisdiction, but with leave to amend following completion of
jurisdictional discovery. (Doc. 123.) On June 3, 2016,
Plaintiffs filed a motion for entry of a discovery schedule.
(Doc. 125.) On June 13, Plaintiffs filed a motion for
sanctions against TCV and Sequoia, alleging that they had
failed to comply with the May 18 Order requiring
jurisdictional discovery. (Doc. 126.) On June 17, 2016, all
Defendants filed notices of appeal as to the May 18 Order,
seeking to appeal-among other things-the court's rulings
on tribal immunity and arbitrability. (See Docs.
130, 131, 133, 134, 140.) Also on that date, the Tribal
Defendants and Kenneth Rees filed motions for certificates of
appealability (Docs. 135, 141), and all Defendants filed or
joined motions to stay pending appeal (Docs. 136, 137, 143,
TCV and Sequoia's Motion to Clarify
court previously concluded that, absent RICO jurisdiction
over TCV and Sequoia under 18 U.S.C. § 1965(b), there
was an insufficient basis for making a ruling about minimum
contacts and due process requirements as to those Defendants
because the FAC alleged very little about their respective
roles in the Plain Green operation. (Doc. 122 at 24-25.) The
court also asserted, however, that it would exercise its
discretion to permit discovery on the question of personal
jurisdiction. (Id. at 25.) In its discussion of the
substantive RICO claims, the court limited its analysis to
the allegations in the FAC, and concluded that the
allegations did not describe TCV or Sequoia as having any
role in directing the affairs of the enterprise.
(Id. at 60- 63.) The court then stated, however,
that since it was permitting discovery as to TCV and
Sequoia's minimum contacts with Vermont, it would also
permit Plaintiffs to discovery facts related to their
"additional allegations" (Doc. 85-1) on the issue
of TCV and Sequoia's "participation" in the
affairs of the enterprise. (Id. at 63-64.)
Ultimately, the court denied TCV and Sequoia's motions to
dismiss without prejudice, and granted leave to renew
following discovery on the issue of personal jurisdiction.
(Id. at 73.)
Sequoia request that the court clarify its May 18 Order and
grant their motions to dismiss for lack of personal
jurisdiction, but with leave to amend following completion of
jurisdictional discovery. (Doc. 123.) TCV and Sequoia assert
that dismissal with leave to amend would solve a
"procedural conundrum"; they say that unless
Plaintiffs amend their pleadings to allege new jurisdictional
facts, the deficient FAC provides no mechanism for further
motion practice. (Doc. 123-1 at 3.) Plaintiffs maintain that
there is nothing to clarify; that there is no
"procedural conundrum"; and that dismissal with
leave to amend will prejudice them because the
statute-of-limitations period will run while discovery is
conducted. (Doc. 128 at 1.) TCV and Sequoia reply that it
would be meaningless for them to renew their motions to
dismiss a complaint that has already been found deficient,
and that the more pragmatic approach is to dismiss the FAC
with leave to amend. (Doc. 150 at 2.) They also assert that
Rule 15(c)'s relation-back doctrine defuses any potential
statute-of-limitations problem. (See Id. at 3-4.)
deciding a Rule 12(b)(2) motion, the court "may
determine the motion on the basis of affidavits alone; or it
may permit discovery in aid of the motion; or it may conduct
an evidentiary hearing on the merits of the motion."
Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722
F.3d 81, 84 (2d Cir. 2013) (per curiam) (quoting Marine
Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.
1981)); see also Haber v. United States, 823 F.3d
746, 753 (2d Cir. 2016) ("In general, a plaintiff may
obtain discovery in connection with issues related to the
court's jurisdiction."). "[A] court should take
care to give the plaintiff ample opportunity to secure and
present evidence related to the existence of
jurisdiction." Haber, 823 F.3d at 753 (quoting
Amidax Trading Grp. v. S.W.I.F.T. SCRL, 671 F.3d
140, 149 (2d Cir. 2011)). When courts authorize discovery to
resolve a Rule 12(b)(2) motion, it is typically in cases
where the plaintiff has made less than a prima facie
showing, but has instead made "a threshold showing that
there is some basis for the assertion of jurisdiction"
or a "sufficient start" toward establishing
jurisdiction. See Cernansky v. Lefebvre, 88
F.Supp.3d 299, 309 (D. Vt. 2015); Ayyash v. Bank
Al-Madina, No. 04 Civ. 9201(GEL), 2006 WL 587342, at *5
(S.D.N.Y. Mar. 9, 2006) (quoting Daval Steel Prods, v.
M.V. Juraj Dalmatinac, 718 F.Supp. 159, 162 (S.D.N.Y.
1989) and Stratagem Dev. Corp. v. Heron Int'l
N.V., 153 F.R.D. 535, 547-48 (S.D.N.Y. 1994)).
although TCV and Sequoia contend that Plaintiffs have not
made a "sufficient start" to justify jurisdictional
discovery (Doc. 150 at 3), the court's prior decision to
exercise its discretion and permit such discovery suggests
otherwise. Indeed, the court noted Plaintiffs'
"additional allegations" regarding TCV and
Sequoia's "participation" in the affairs of the
enterprise. (Doc. 122 at 63.) Although the court was
unwilling to treat the "additional allegations" as
amending the complaint (Doc. 122 at 63), the court could
properly consider those allegations in determining whether
Plaintiffs had made a "sufficient start" toward
establishing jurisdiction. See Cernansky, 88
F.Supp.3d at 309 (denying Rule 12(b)(2) motion without
prejudice, and authorizing jurisdictional discovery, on the
strength of materials highlighted in plaintiffs brief in
opposition). Accordingly, the procedural posture on this
issue is properly the same as in Cernansky, and TCV
and Sequoia's motion to clarify will be denied.
Motions for Certificates of Appealability
separate motions, the Tribal Defendants and Defendant Rees
seek certificates of appealability under 28 U.S.C. §
1292(b). (See Docs. 135, 141.) The Tribal
Defendants assert that certification is appropriate on the
"discrete issue" of whether RICO confers a private
right to equitable relief. (Doc. 135-1 at 5.) Rees seeks
certification as to whether the court has personal
jurisdiction over him, and as to whether the pleadings are
sufficient against him. (See Doc. 141 at 1.)
Plaintiffs maintain that the motions are a "Trojan
horse, " and granting the motions would certify the
entire May 18 Order rather than just those three issues.
(Doc. 154 at 1.) Plaintiffs also argue that none of the
proposed certified issues meets the test for certification.
"denials of a motion to dismiss are not appealable as
'final decisions' of the district courts under 28
U.S.C. § 1291." Balintulo v. Daimler AG,
727 F.3d 174, 186 (2d Cir. 2013). However:
a district court may certify an appeal pursuant to 28 U.S.C.
§ 1292(b) when it is "of the opinion that [the
relevant] order involves a controlling question of law as to
which there is substantial ground for difference of opinion
and that an immediate appeal from the order may materially
advance the ultimate termination of the litigation."
Id. (alteration in original) (quoting 28 U.S.C.
§ 1292(b)). Thus, a district court may grant leave to
file an interlocutory appeal under 28 U.S.C. § 1292(b)
if it determines that three conditions are met: "(1) the
ruling on which the appeal is sought involves a controlling
question of law; (2) there is substantial ground for a
difference of opinion as to that controlling question of law;
and (3) an immediate appeal will materially advance the
litigation." Patient A v. Vt. Agency of Human
Servs., No. 5:14-cv-00206, 2015 WL 8665349, at *1 (D.
Vt. Dec. 11, 2015) (internal quotation marks omitted).
"Section 1292(b) is intended to provide a 'rare
exception to the final judgment rule that generally prohibits
piecemeal appeals.'" Jenkins v. Miller, No.
2:12-cv-184, 2014 WL 5421228, at *1 (D. Vt. Oct. 24, 2014)
(quoting Koehler v. Bank of Bermuda Ltd., 101 F.3d
863, 865 (2d Cir. 1996)). Generally, the court construes the
requirements for certification strictly and grants
certification "only in 'exceptional cases where
early appellate review might avoid protracted and expensive
litigation.'" Patient A, 2015 WL 8665349,
at *1 (quoting Wool v. Pallito, No. 2:1 l-cv-169,
2012 WL 1952990, at *8 (D. Vt. May 30, 2012)).
determine whether an issue is a controlling question of law,
the court considers whether: "reversal of the district
court's opinion could result in dismissal of the action;
reversal of the district court's opinion . . . could
significantly affect the conduct of the action, or; the
certified issue has precedential value for a large number of
cases." Patient A, 2015 WL 8665349, at *1
(ellipsis in original) (quoting SEC v. Credit Bancorp,
Ltd., 103 F.Supp.2d 223, 227 (S.D.N.Y. 2000)). "The
controlling question of law certified for interlocutory
appeal 'must also be a pure question of law that the
reviewing court could decide quickly and cleanly without
having to study the record.'" Id. (quoting
Hart v. Rick's Cabaret Int'l, Inc., 73
F.Supp.3d 382, 393 (S.D.N.Y. 2014)). As to whether there is
substantial ground for difference of opinion, the court
considers whether there is "substantial doubt that the
district court's order was correct, [whether] there is
conflicting authority on the issue, [and whether] the issue
is particularly difficult and of first impression for the
Second Circuit." Id. (quoting Goldberg v.
UBS AG, 690 F.Supp.2d 92, 103 (E.D.N.Y. 2010)).
Private Right of Action for Equitable Relief under
May 18 Order, the court concluded that equitable relief is
available in private RICO actions. (Doc. 122 at 53.)
According to the Tribal Defendants, the court's
conclusion on that issue meets § 1292(b)'s test for
interlocutory appeal. Plaintiffs disagree.
Plaintiffs did not argue in their briefing that there was no
substantial ground for difference of opinion as to whether
equitable relief is available in private RICO actions, all of
the parties' briefing on this issue was filed before the
Second Circuit's very recent decision in Chevron
Corp. v. Donziger, Nos. 14-0826(L), 14-0832(C), 2016 WL
4173988 (2d Cir. Aug. 8, 2016). Plaintiffs have since called
the court's attention to that decision. (Doc. 166.) In
Donziger, the Second Circuit held that RICO does
authorize the granting of equitable relief to a private
plaintiff. Donziger, 2016 WL 4173988, at *52-55.
light of the Donziger opinion, the court concludes
that there is now no substantial ground for difference of
opinion (at least within the Second Circuit) regarding
whether equitable relief is available in private RICO
actions. See Kellogg v. Wyeth, 612 F.Supp.2d 437,
439 (D. Vt. 2009) (recent Supreme Court decision
substantially reduced the grounds for difference of opinion).
It is therefore unnecessary to reach the other two prongs of
the § 1292(b) inquiry on this issue. The court will
accordingly deny the Tribal Defendants' request for
certification as to whether equitable relief is available in
private RICO actions.
Personal Jurisdiction over Rees and ...