Achey v. BMO Harris Bank, N.A.

• Decision Date: 19 August 2014
• Docket Number: Case No. 13 C 7675
• Citation: 64 F.Supp.3d 1170
• Parties: Christina Achey, on Behalf of Herself and All Others Similarly Situated, Plaintiff, v. BMO Harris Bank, N.A., Defendant.
• Court: U.S. District Court — Northern District of Illinois

64 F.Supp.3d 1170

Christina Achey, on Behalf of Herself and All Others Similarly Situated, Plaintiff

v.BMO Harris Bank, N.A., Defendant.

Case No. 13 C 7675

United States District Court, N.D. Illinois, Eastern Division.

Signed August 19, 2014

Jeffrey M. Ostrow, Jason Henry Alperstein, Kopelowitz Ostrow PA, Fort Lauderdale, FL, Amy Elisabeth Keller, Edward Anthony Wallace, Mark Richard Miller, Wexler Wallace LLP, Chicago, IL, Darren T. Kaplan, Chitwood Harley Harnes LLP, New York, NY, Hassan A. Zavareei, Tycko

& Zavareei LLP, Washington, DC, Norman E. Siegel, Stueve Siegel Hanson LLP, Kansas City, MO, for Plaintiff.

Lucia Nale, Debra L. Bogo–Ernst, Matthew C. Sostrin, Mayer Brown LLP, Chicago, IL, Kevin S. Ranlett, Mayer Brown LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION AND ORDER

HARRY D. LEINENWEBER, United States District Judge

Plaintiff Christina Achey (“Achey”) brings this putative class action on behalf of herself and other similarly situated individuals, alleging that Defendant BMO Harris Bank, N.A. (“BMO”) assisted various online payday lenders in the collection of debts in states where payday loans are illegal. Achey asserts claims for violations of the Federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c) & (d), assumpsit, unjust enrichment, and aiding and abetting under Pennsylvania state lending and usury laws. BMO has moved to compel Achey to arbitrate her claims in accordance with the arbitration provision contained within the loan agreements she signed. For the reasons stated herein, the Court finds that Achey's claims against BMO fall within the scope of that arbitration provision.

I. BACKGROUND

A payday loan is a small, unsecured short-term loan that ordinarily becomes due on the borrower's next payday. Typically, these loans feature exceptionally steep interest rates that often translate to more than 400% annually. Many states have taken steps to eliminate payday lending, either by outlawing the practice entirely or by limiting the feasibility of such loans by imposing strict interest rate caps on lenders. In an effort to circumvent these bans, some payday lenders have moved their operations to offshore havens or Native–American reservations while continuing to offer payday loans via the internet to consumers in states where such loans are illegal.

To facilitate the transfer of loan proceeds to customers' bank accounts and the debiting of their accounts for amounts due at the conclusion of the loan term, online payday lenders rely on Originating Depository Financial Institutions (“ODFIs”), which are banks that function as middlemen between the lender and the Automatic Clearing House network (“ACH”), an electronic payment system that processes direct credit and debit transactions. Once the account holder authorizes a transaction with the lender, the ODFI bank transmits that authorization through the ACH system to the account holder's bank, which, in turn, posts the appropriate credit or debit to the customer's account.

Achey is a citizen of Pennsylvania, which is one of several states that have outlawed payday lending. On October 11, 2012, Achey applied for and received a $200 payday loan (the “2012 Loan”) from MNE Services, Inc. (“MNE”), a lending entity owned by the Miami Tribe of Oklahoma that offers loans through a website called ameriloan.com. The following year, on July 10, 2013, Achey applied for and received an additional payday loan from MNE in the amount of $350 (the “2013 Loan”). The nominal annual interest rate for these loans was 730% and 476%, respectively.

BMO is one of several ODFI banks that originate ACH debits and credits on behalf of various lenders. According to Achey, BMO is the ODFI responsible for originating debit entries on her account in connection with her 2012 and 2013 Loans. Achey alleges that BMO was aware of the fact that it was assisting MNE in the collection of usurious or unlawful loans through its role as an ODFI on those transactions and that its conduct thus violated federal and state laws.

For both the 2012 and 2013 Loans, Achey completed an online application and signed an electronic loan agreement (collectively, the “Loan Documents”). Although Achey did not attach the Loan Documents to her complaint, BMO provided the Court with copies that it obtained from AMG Services, Inc. (“AMG”), a company that services MNE's accounts and maintains records of MNE customer loan agreements. (See, Decl. of Natalie C. Dempsey, sworn to on Dec. 23, 2013 (“Dempsey Decl.”), ¶ 17 and Exs. 9–10, ECF No. 30–5).

The Loan Documents for both loans contain an arbitration provision that requires Achey to arbitrate “any dispute” concerning her loans. The term “dispute,” which the provision specifies is to be accorded its “broadest possible meaning,” encompasses, among other things, (1) all claims, disputes, or controversies arising from or relating directly or indirectly to the signing of the loan agreement, including the validity and scope of the arbitration provision itself, (2) any claim, dispute, or controversy relating to the interpretation, applicability, enforceability, or formation of the loan agreement, (3) any federal or state law claims arising from or relating to the loan agreement, (4) all claims asserted against MNE or its agents, consultants, servicers, employees, directors, officers, shareholders, parents, subsidiaries, or any “affiliated parties,” which the Loan Documents refer to collectively as “related third parties,” and (5) all claims asserted as a representative or member of a class against MNE or any related third parties. The provision further states in bold letters: “YOU ARE WAIVING YOUR RIGHT TO FILE A LAWSUIT ... AGAINST [MNE] OR RELATED THIRD PARTIES.” (The wording of the 2012 Loan's arbitration provision differs slightly from that of the 2013 Loan, but the variance is not material).

The arbitration provision requires that all proceedings be conducted in the county of the consumer's residence and provides that any arbitration fees be reimbursed to the consumer, regardless of the outcome. The provision also allows the consumer to recover her reasonable attorneys' fees in the event that she prevails. Finally, the provision permits consumers to opt-out of arbitration by submitting a written request via e-mail within a short period of time after entering into the loan agreement. According to MNE's records, Achey did not opt out of the arbitration agreement for either the 2012 or 2013 Loans. (Dempsey Decl. ¶¶ 22–23).

At least eight other putative class actions asserting nearly identical claims against BMO have been filed in separate district courts across the country. See, Moss v. BMO Harris Bank, N.A., No. 13–cv–5438 (E.D.N.Y. Sept. 30, 2013); Graham v. BMO Harris Bank, N.A., No. 13–cv–1460, 2013 WL 5500349 (D.Conn. Oct. 4, 2013) ; Parm v. BMO Harris Bank, N.A., No. 13–cv–3326 (N.D.Ga. Oct. 4, 2013); Dillon v. BMO Harris Bank, N.A., No. 13–cv–897 (M.D.N.C. Oct. 8, 2013); Booth v. BMO Harris Bank, N.A., No. 13–cv–5968, 2013 WL 5694726 (E.D.Pa. Oct. 11, 2013) ; Elder v. BMO Harris Bank, N.A., No. 13–cv–3043 (D.Md. Oct. 11, 2013); Gunson v. BMO Harris Bank, N.A., No. 13–cv–62321, 2013 WL 5761265 (S.D.Fla. Oct. 23, 2013) ; Riley v. BMO Harris Bank, N.A., No. 13–cv–1677 (D.D.C. Oct. 28, 2013). In each of these copycat actions, BMO has moved to compel arbitration for the same reasons it advances here. Of the six courts that have ruled on these motions, all but one have compelled arbitration. Having considered the authorities cited by the parties together with the pleadings in this case, the Court joins the majority and finds that the Loan Documents require Achey to arbitrate her claims against BMO.

II. LEGAL STANDARD

The Federal Arbitration Act (“FAA”) provides that an arbitration clause “shall be 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. Thus, the FAA obliges courts to stay proceedings and compel arbitration when a claim is referable to arbitration pursuant to a valid agreement to arbitrate. Van Tassell v. United Mktg. Grp., LLC, 795 F.Supp.2d 770, 786 (N.D.Ill.2011).

A party seeking to compel arbitration must show that: (1) a written agreement to arbitrate exists, (2) the dispute at issue is within the scope of that agreement, and (3) the other party has refused to arbitrate. Zurich American Ins. Co. v. Watts Industries, Inc., 417 F.3d 682, 687 (7th Cir.2005). In determining whether the parties agreed to arbitrate their claims, courts generally “apply ordinary state-law principles that govern the formation of contracts.” First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). However, “due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself [must be] resolved in favor of arbitration.” Volt Information Sciences, Inc. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468, 476, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989).

III. ANALYSIS

A. Admissibility of the Loan Documents

At the outset, there is some dispute over whether the Loan Documents submitted by BMO are properly before the Court. In evaluating motions at the pleadings stage, courts ordinarily are limited to the four corners of the complaint. Documents outside of the complaint may be considered, however, if they are referred to in the pleadings and are central to the claims at issue. Cit a del Grp. Ltd. v. Wash. Reg'l Med. Ctr., 692 F.3d 580, 591 (7th Cir.2012). Although the Loan Documents were not attached to Achey's complaint, they are referred to throughout her pleadings and are integral to her claims in this action. Indeed, it is difficult to imagine how Achey could proceed without the Loan Documents, since they are the sole basis for her claim that the 2012 and 2013 Loans were usurious.

Despite their obvious significance, Achey contends that the Loan...