Consumer Financial Protection Bureau v. Golden Valley Lending, Inc. et al

Filing 43

MEMORANDUM Opinion and Order. Signed by the Honorable Thomas M. Durkin on 9/8/2017. Mailed notice. (jjr, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CONSUMER FINANCIAL PROTECTION
BUREAU,
Plaintiff,

No. 17 C 3155

v.

Judge Thomas M. Durkin

GOLDEN VALLEY LENDING, INC.; SILVER
CLOUD FINANCIAL, INC.; MOUNTAIN
SUMMIT FINANCIAL, INC.; and MAJESTIC
LAKE FINANCIAL, INC.,
Defendants.
MEMORANDUM OPINION AND ORDER
Defendants are lending institutions owned and incorporated by the
Habematolel Pomo of Upper Lake Indian Tribe, a federally recognized Indian tribe
located in Upper Lake, California. The Consumer Financial Protection Bureau (the
“CFPB”) alleges that Defendants originate and collect usurious loans in violation of
the federal Consumer Financial Protection Act and the Truth in Lending Act.
Defendants have moved to transfer venue to the District of Kansas where they own
a separately incorporated call center that contacts potential borrowers and
administers the underwriting process for Defendants. For the following reasons,
that motion, R. 18, is granted.
A.

Legal Standard
Under 28 U.S.C. § 1404(a) “a district court may transfer any civil action to

any other district or division where it might have been brought” for “the

convenience of the parties and witnesses” and “in the interest of justice.” The
statute “is intended to place discretion in the district court to adjudicate motions for
transfer according to an individualized, case-by-case consideration of convenience
and fairness.” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988). “The statute
permits a ‘flexible and individualized analysis’ and affords district courts the
opportunity to look beyond a narrow or rigid set of considerations in their
determinations.” Research Automation, Inc. v. Schrader-Bridgeport Int’l, Inc., 626
F.3d 973, 978 (7th Cir. 2010) (quoting Stewart, 487 U.S. at 29). “The weighing of
factors for and against transfer necessarily involves a large degree of subtlety and
latitude, and, therefore, is committed to the sound discretion of the trial judge.”
Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 (7th Cir. 1986).
In considering these factors, the Court is “permitted [and] in some instances
[may be] required, to make whatever factual findings are necessary prior to issuing
a [transfer decision].” In re LimitNone, LLC, 551 F.3d 572, 577 (7th Cir. 2008). The
Court may consider affidavits in making such findings. See Bd. of Trustees of the
Auto. Mechanics’ Local No. 701 Union & Industry Welfare Fund v. Brown, 2014 WL
4057367, at *1 (N.D. Ill. Aug. 14, 2014); Simonian v. Monster Cable Prods., Inc., 821
F. Supp. 2d 996, 998 (N.D. Ill. 2010); Simonian v. Hunter Fan Co., 2010 WL
3975564, at *1 (N.D. Ill. Oct. 7, 2010). The party seeking transfer “has the burden of
establishing, by reference to particular circumstances, that the transferee forum is
clearly more convenient.” Coffey, 796 F.2d at 220-21.

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B.

Convenience
“With respect to the convenience evaluation, courts generally consider the

availability of and access to witnesses, and each party’s access to and distance from
resources in each forum.” Research Automation, 626 F.3d at 978. “Other related
factors include the location of material events and the relative ease of access to
sources of proof.” Id.
A Seventh Circuit decision cited by the CPFB—In re National Presto
Industries, Inc., 347 F.3d 662 (7th Cir. 2003)—is instructive on the convenience
analysis here. In Presto, the Securities and Exchange Commission sued a company
headquartered in Wisconsin. The company moved to transfer the case to Wisconsin
because “all” of the company’s witnesses were within the subpoena power of the
Western District of Wisconsin, but not that of the Northern District of Illinois. Id. at
664. The district court denied the company’s motion because the SEC’s Chicago
office had investigated and filed the case, and “emphasiz[ed] that . . . a plaintiff’s
choice of forum is entitled to considerable deference.” Id. at 663. The company
sought mandamus from the Seventh Circuit, which the court denied based on the
extraordinarily high standard for mandamus. In denying the petition, however, the
Seventh Circuit noted the preference for a plaintiff’s choice of forum is no more
significant than any other factor, but simply serves to break a “tie” when “the
inconvenience of the alternative venues is comparable.” Id. at 665. Indeed in Presto,
despite the SEC’s office in Chicago and the failure of the company to satisfy the

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standard for mandamus, the court made the following statement about the balance
of the factors relevant to a motion to transfer:
We doubt that the balance of convenience actually favors
the SEC or even that we have a tie. Given the location of
documents, the limited subpoena power of the Northern
District of Illinois with regard to [the company’s] potential
witnesses, and the lighter docket in the Western District
of Wisconsin, we suspect that the balance favors the
Western District.
Id. at 665.
The Seventh Circuit’s reasoning—albeit in dicta—is persuasive here. The
CPFB admits that Defendants use the call center in Kansas to contact potential
borrowers and administer the underwriting of the loans. R. 1 ¶ 43. Defendants have
identified twelve employees of the call center who are potential witnesses and are
outside the Court’s subpoena power. See R. 18-2 ¶ 27. Moreover, unlike the SEC in
Presto, the CFPB is not litigating this case out of its Chicago office, but instead has
assigned attorneys from Washington, D.C. to travel to litigate the case. These
attorneys will be no more inconvenienced traveling to Kansas than Chicago.
The CFPB argues that the case should remain in Illinois because it is the
“situs of material events.” R. 30 at 6. The CFPB makes this argument based on
records of funds transfers from Defendants to consumer accounts with Illinois
addresses, indicating that there are thousands of potential victims in Illinois. See
id. at 6. Furthermore, the CFPB points out that it has not alleged that there are
victims in Kansas. Id. 1 The problem with this argument is that the CFPB admits

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At least some of the CFPB’s claims rely on the theory that Defendants violated
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that Defendants’ borrowers also reside in 16 other states besides Illinois, meaning
that these states are also part of the “situs of material events.” Id.; see also R. 1 at
22 (listing the states “in which Defendants’ loans are void in whole or in part”). In
other words, there is nothing special about Illinois for this case. To the extent the
CFPB will need to call victims as witnesses at trial, it is much more likely that some
of the alleged many thousands of victims will be willing to testify without subpoena,
than that the twelve employees of Defendants’ subsidiary will be willing to do so.
Moreover, the CFPB has not specifically identified any of these alleged victims.
Courts generally give greater weight to the convenience of already identified
witnesses. See Lee v. Love’s Travel Stops & Country Stores, Inc., 2015 WL 6742074,
at *3 (N.D. Ill. Nov. 3, 2015); Sojka v. DirectBuy, Inc., 2014 WL 1089072, at *3 (N.D.
Ill. Mar. 18, 2014) (citing Howell v. Joffe, 478 F. Supp. 2d 1014, 1023 (N.D. Ill.
2006)); Harris v. Illinois, 2010 WL 145790, at *4 (N.D. Ill. Jan. 12, 2010); Law
Bulletin Pub., Co. v. LRP Pubs., Inc., 992 F. Supp. 1014, 1018 (N.D. Ill. 1998).
Therefore, the Court finds that the District of Kansas is clearly more convenient
than this district.
C.

Interest of Justice
“The ‘interest of justice’ is a separate element of the transfer analysis that

relates to the efficient administration of the court system.” Research Automation,
federal law by attempting to collect loans that are void ab initio under state usury
laws. The CFPB alleges that Defendants have made loans “throughout the United
States,” R. 1 ¶ 45, but that only some “states have enacted laws that render
installment loans void if they exceed the usury limit.” Id. ¶ 116. Presumably,
Kansas does not have such a law, such that the CFPB cannot make its claims under
Kansas law.
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626 F.3d at 978. “For this element, courts look to factors including docket congestion
and likely speed to trial in the transferor and potential transferee forums; each
court’s relative familiarity with the relevant law; the respective desirability of
resolving controversies in each locale; and the relationship of each community to the
controversy.” Id. (internal citations omitted). “The interest of justice may be
determinative, warranting transfer or its denial even where the convenience of the
parties and witnesses points toward the opposite result.” Id.
Here, interest of justice does not favor either forum. Caseloads are lighter in
Kansas, and the time to disposition is only six days faster here. See R. 35 at 8 n. 5.
The CFPB also argues that Illinois law will be relevant in this case, which would
favor this Court. But the case is brought under two federal statutes, and according
to the complaint, Illinois law is no more relevant than the law of the other 16 states
cited. Thus, the interest of justice does not favor one district over the other.
Conclusion
For the foregoing reasons, Defendants’ motion to transfer, R. 18, is granted,
and the Clerk of Court is directed to transfer this case to the District of Kansas.
ENTERED:
______________________________
Honorable Thomas M. Durkin
United States District Judge

Dated: September 8, 2017

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