Brice v. Haynes Invs., LLC.

• Decision Date: 13 July 2021
• Docket Number: Case No. 19-cv-01481-WHO,Case No. 18-cv-01200-WHO
• Citation: 548 F.Supp.3d 882
• Parties: Kimetra BRICE, et al., Plaintiffs, v. HAYNES INVESTMENTS, LLC., et al., Defendants. Kimetra Brice, et al., Plaintiffs, v. Mike Stinson, et al., Defendants.
• Court: U.S. District Court — Northern District of California

548 F.Supp.3d 882

Kimetra BRICE, et al., Plaintiffs,

v.HAYNES INVESTMENTS, LLC., et al., Defendants.

Kimetra Brice, et al., Plaintiffs,

v.Mike Stinson, et al., Defendants.

Case No. 18-cv-01200-WHO

Case No. 19-cv-01481-WHO

United States District Court, N.D. California.

Signed July 13, 2021

Amy Leigh Austin, Pro Hac Vice, Consumer Litigation Associates, P.C., Richmond, VA, Craig Carley Marchiando, Consumer Litigation Associates, San Francisco, CA, Andrew J. Guzzo, Pro Hac Vice, Kristi Cahoon Kelly, Kelly Guzzo PLC, Fairfax, VA, Leonard Anthony Bennett, Pro Hac Vice, Consumer Litigation Associates, P.C., Newport News, VA, Maren Irene Christensen, Sabita J. Soneji, Tycko & Zavareei LLP, Oakland, CA, Mark Andrew Clifford, Pro Hac Vice, Anna C. Haac, Tycko and Zavareei, LLP, Washington, DC, for Plaintiffs Kimetra Brice, Jill Novorot, Earl Browne.

Anna S. McLean, Jacqueline Melissa Simonovich, Michael Andrew Lundholm, Sheppard Mullin Richter & Hampton LLP a Limited Liability Partnership, Including Professional Corp., San Francisco, CA, David Foster Herman, Armstrong, Teasdale, LLP, Philadlephia, PA, Jonathan P. Boughrum, Michael Christopher Witsch, Richard L. Scheff, Armstrong Teasdale LLP, Philadelphia, PA, for Defendant 7HBF No. 2, LTD.

Erin Sheffield Sanchez, Ralph Angelo Zappala, Busby Zappala & Sanchez LLP, Lafayette, CA, Anna S. McLean, Jacqueline Melissa Simonovich, Michael Andrew Lundholm, Sheppard Mullin Richter & Hampton LLP a Limited Liability Partnership, Including Professional Corp., San Francisco, CA, David Foster Herman, Pro Hac Vice, Jonathan P. Boughrum, Pro Hac Vice, Michael Christopher Witsch, Richard L. Scheff, Pro Hac Vice, Armstrong, Teasdale, LLP, Philadelphia, PA, Martyn B. Hill, Pro Hac Vice, Pagel Davis Hill PC, Houston, TX, for Defendant Startup Capital Ventures, L.P.

Anna S. McLean, Jacqueline Melissa Simonovich, Michael Andrew Lundholm, Sheppard Mullin Richter & Hampton LLP a Limited Liability Partnership, Including Professional Corp., San Francisco, CA, David Foster Herman, Pro Hac Vice, Jonathan P. Boughrum, Pro Hac Vice, Michael Christopher Witsch, Richard L. Scheff, Pro Hac Vice, Armstrong, Teasdale, LLP, Philadelphia, PA, for Defendants Stephen J. Shaper, Michael Stinson, Linda Stinson.

ORDER ON PENDING MOTIONS

Dkt. Nos. 178, 179, 181, 182, 183

William H. Orrick, United States District Judge

Defendants move for summary judgment and plaintiffs move for partial summary judgment and to exclude two of defendants’ experts in this class action case involving defendants’ alleged scheme to charge illegally high rates of interest to consumers. The defendants’ motion is DENIED. Material disputes of facts exist concerning each defendant's role in and benefit from plaintiffs’ loans secured through the Tribal Lending Scheme that preclude summary judgment. Plaintiffs’ motion for partial summary judgment is GRANTED in part. California law applies to plaintiffs’ claims. The defendants are not shielded by tribal immunity and the remaining claims do not impact any Tribe's immunity. Plaintiffs’ motions to exclude are GRANTED. The level of financial benefit to the Tribe is not disputed. While the issue of control over and direction of the Tribal Lending Scheme is disputed, that issue will be determined by the jury based on the documentary and percipient witness evidence. The proposed expert testimony is not directly relevant to the remaining legal and factual issues and its admission will unnecessarily risk jury confusion and inefficiencies in trial such that exclusion under Rule 403 is appropriate.

BACKGROUND

The facts underlying these consolidated actions have been thoroughly identified in my prior Orders and I will not repeat them here.¹ Plaintiffs and named class representatives Kimetra Brice, Earl Browne, and Jill Novorot are (or for part of the class period were) California residents who took out short term loans ("Loan Agreements") with allegedly illegally high rates of interest from entities run through Native American Tribes; Great Plains Lending, LLC and/or Plain Green, LLC.² The remaining defendants in these cases are alleged to be founders, funders, or owners of now-defunct Think Finance, LLC, the entity through which the allegedly illegal "Tribal Lending Scheme" was organized, financed, and run.³

LEGAL STANDARD

Summary judgment on a claim or defense is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In order to prevail, a party moving for summary judgment must show the absence of a genuine issue of material fact with respect to an essential element of the non-moving party's claim, or to a defense on which the non-moving party will bear the burden of persuasion at trial. See Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant has made this showing, the burden then shifts to the party opposing summary judgment to identify "specific facts showing there is a genuine issue for trial." Id. The party opposing summary judgment must present affirmative evidence from which a jury could return a verdict in that party's favor. Anderson v. Liberty Lobby , 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

On summary judgment, the court draws all reasonable factual inferences in favor of the non-movant. Id. at 255, 106 S.Ct. 2505. In deciding the motion, "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Id. However, conclusory and speculative testimony does not raise genuine issues of fact and is insufficient to defeat summary judgment. See Thornhill Publ'g Co., Inc. v. GTE Corp. , 594 F.2d 730, 738 (9th Cir. 1979).

DISCUSSION

I. DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Defendants make a number of arguments in support of summary judgment, Dkt. No. 183, but those arguments implicate numerous disputed and material questions of fact to be resolved by the trier of fact.

A. Individual Person/Entity Liability⁴

1. Released-Directors

Defendants argue, as they did on their motion to dismiss, that Linda Stinson and Shaper cannot be liable for their conduct as directors of Think Finance, because those claims were released as part of the Think Finance bankruptcy. As I noted in ruling on the Motion to Dismiss:

The terms of the Final Order confirming the Chapter 11 Plan for Think Finance defined "Non-Released Parties" to include "Linda Stinson (except to the extent released in her capacity as a former director or officer)" and "Stephen J. Shaper (except to the extent released in his capacity as a former director or officer)." December 5, 2019 Final Order at § 1.1.113 [Dkt. No. 84-1]. The release for former officers and director specifies that they "shall not be released for purposes of imposing any liability on any shareholder/member solely in their capacity as a shareholder/member or former shareholder/member." Id. § 1.1.144.

There is no dispute, therefore, that to the extent plaintiffs’ claims are based on Linda Stinson and Shaper's acts as directors of Think Finance, those have been released and cannot be asserted here. Indeed, in their opposition plaintiffs "withdraw" their limited allegations relating to the action of these defendants in their "capacity as members of Think Finance's Board of Directors." Oppo. to Stinson and Shaper MTD at 3 [Dkt. No. 98].

Plaintiffs, however, continue to assert claims against Linda Stinson and Shaper in "their capacity as owners" of Think Finance, as those types of claims were carved out from the Final Order's release. See Complaint ¶14 (alleging Linda Stinson "operated and participated in the affairs of the rent-a-tribe lending scheme as a board of director of Think Finance and she received proceeds from the usurious loans through her joint ownership of Think Finance with her husband" (emphasis added)); ¶ 26 (alleging Shaper through his "ownership of Think Finance, [ ] operated and participated in the affairs of the rent-a-tribe lending scheme and had direct personal involvement in the creation and day-to-day operations of the illegal enterprise. He received a large distribution of his profits in Think Finance in the form of shares in Elevate, a publicly traded company that Think Finance spun-off to try to launder the profits of its unlawful enterprise.").

August 2020 Order, at Dkt. No. 110 (quoting "Bankruptcy Release").

There is no dispute, therefore, that liability cannot attach to Linda Stinson and Shaper as members of the Think Finance Board of Directors. The separate question, however, is what liability can attach to these two as shareholder/owners or through their other roles in support of Think Finance and the larger alleged RICO Enterprise. Defendants argue that plaintiffs fail to identify any acts that were performed by these two in their roles as shareholder/owners (as opposed to released-Directors) and contend they cannot be liable based merely on their receipt of dividends from Think Finance (where Shaper owned only 0.26% of Think Finance and Linda Stinson owned 20%).⁵

Neither side provides authority on how I should draw lines in recognition of that distinction. The question may, for example, turn on whether Shaper and Linda Stinson were acting more in their capacity as Board members – and fulfilling their required duty of loyalty to Think Finance – or were acting more in their capacity as shareholder/owners with the goal of advancing their own or their family's self-interest.

At this juncture, plaintiffs have identified evidence from which reasonable jurors could find that the Think Finance shareholders/owners directed to some extent the conduct of the Board and management of Think Finance. That evidence, combined with evidence suggesting that both Linda Stinson and Shaper were "key holders" with significant input in Think Finance's operation and that these shareholders invested in Think Finance...