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Gingras v. Rosette

United States District Court, D. Vermont

August 22, 2016

JESSICA GINGRAS and ANGELA C. GIVEN, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
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, 141, 143)

          Geoffrey W. Crawford, Judge.

         In this 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"].[1] Familiarity with the May 18 Order is presumed.

         Numerous 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, 144).

         I. TCV and Sequoia's Motion to Clarify

         The 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.)

         TCV and 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.)

         When 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)).

         Here, 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.

         II. Motions for Certificates of Appealability

         In separate motions, the Tribal Defendants and Defendant Rees seek certificates of appealability under 28 U.S.C. § 1292(b).[2] (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.

         A. Certification Standard

         Generally, "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)).[3]

         To 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)).

         B. Private Right of Action for Equitable Relief under RICO

         In its 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.

         Although 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.

         In 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.

         C. Personal Jurisdiction over Rees and ...


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