Consumer Financial Protection Bureau v. Think Finance
Filing
17
ORDER denying 4 Motion to Change Venue. IT IS FURTHER ORDERED that the undersigned will conduct a Telephonic Scheduling Conference on Tuesday, February 13, at 3:30 p.m. The Court will contact the parties with the call-in number. Signed by Judge Brian Morris on 2/6/2018. (TLO)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
GREAT FALLS DIVISION
CONSUMER FINANCIAL
PROTECTION BUREAU,
Case No. CV-17-127-GF-BMM
Plaintiff,
v.
ORDER
THINK FINANCE, LLC, formerly
known as Think Finance, Inc.,
Defendants.
Plaintiff Consumer Financial Protection Bureau (“CFPB”) commenced this
action on November 15, 2017. (Doc. 1.) The Complaint alleges four violations of
the Consumer Financial Protection Act. (Doc. 1 at 26-30.) Defendant Think
Finance, LLC (“Think Finance”) filed the instant Motion to Transfer Venue on
January 5, 2018. (Doc. 4.) Think Finance seeks an order transferring this action to
the U.S. District Court for the Northern District of Texas. Think Finance seeks this
transfer with the understanding that the U.S. District Court would refer the matter
to the U.S. Bankruptcy Court for the Northern District of Texas. (Doc. 5 at 6.)
I. BACKGROUND
Think Finance is a privately held company that performs critical functions
1
for lending businesses, including provision of software, analytics, and marketing
services. (Doc. 1 at 3-4.) CFPB is an independent agency of the United States
Government created under the Consumer Financial Protection Act of 2010
(CFPA), 12 U.S.C. § 5491(a). (Doc. 1 at 2.)
CFPB’s Complaint concerns three lending businesses owned by Indian tribes
(“Tribal Lenders”) for which Think Finance provided critical services. (Doc. 1 at
4.) One such lender, Plain Green, LLC (“Plain Green”) is located in the District of
Montana. (Doc. 1 at 5.) Plain Green did not make loans to Montana consumers.
CFPB alleges that the other two Tribal Lenders named in the Complaint originated
loans in Montana to Montana consumers. (Doc. 13 at 11 fn. 2.)
The Complaint alleges that Think Finance, through the Tribal Lenders (who
are not party to this action), collected loan payments that customers did not owe, as
the loans issued to those customers were void ab initio due to violations of state
law. (Doc. 1 at 26.) CFPB alleges that Think Finance nevertheless collected on
these void loans through unfair and abusive practices. (Doc. 1 at 28-29.) Finally,
CFPB alleges that Think Finance provided substantial assistance to Tribal Lenders
and other entities. (Doc. 1 at 30.) CFPB contends that Think Finance acted
knowingly or recklessly in providing this substantial assistance to the Tribal
Lenders. Id.
Think Finance and its subsidiaries filed voluntary petitions for relief under
2
Chapter 11 of Title 11 of the United States Code, 11 U.S.C. § 101 et seq., in the
U.S. Bankruptcy Court for the Northern District of Texas on October 23, 2017.
(Doc. 5 at 8.) CFPB filed this action three weeks later on November 15, 2017.
The Bankruptcy Court jointly administers the bankruptcy actions of Think
Finance and its subsidiaries. (Doc. 5 at 8.) The joint bankruptcy action has
triggered the automatic stay provision of 11 U.S.C. § 362(a). The automatic stay
provision has put on hold numerous other putative class action claims filed against
Think Finance in other states. Think Finance anticipates that the Bankruptcy Court
will resolve claims underlying those putative class actions. (Doc. 5 at 9.)
The Pennsylvania Attorney General filed a similar action against Think
Finance in 2014. Pennsylvania v. Think Finance, et al., No. 14-7139-JCJ (E.D.
Penn. 2014). The Pennsylvania action stands exempt from the automatic stay
provision, however, as it involves a police or regulatory action. 11 U.S.C. §
362(b)(4). Think Finance has moved to transfer the Pennsylvania case to the
Northern District of Texas. The U. S. District Court for the Eastern District of
Pennsylvania has not yet ruled on the transfer motion. (Doc. 5 at 10.)
Think Finance moves to transfer this action to the U.S. District Court for the
Northern District of Texas. Think Finance anticipates that the District Court in
Texas would refer the matter to the U.S. Bankruptcy Court for the Northern
3
District of Texas. (Doc. 5 at 6.) See In re Gugliuzza, 852 F.3d 884, 890 (9th Cir.
2017).
II.
DISCUSSION
The parties disagree as to which change of venue statute this Court should
apply. (Docs. 5 at 14; 13 at 15.) Both 28 U.S.C. § 1404 and 28 U.S.C. § 1412
afford the Court discretion to transfer venue based on consideration of the same
factors: the interest of justice and the convenience of the parties (and witnesses).
28 U.S.C. § 1404, § 1412. The presumption or deference afforded to either party
represents the major difference between the two venue statutes. A second
difference between the two statutes arises from the fact that Congress drafted §
1412 in the disjunctive. Congress equipped a court with the discretion to transfer a
case to the bankruptcy court either for the interest of justice or for the convenience
of the parties. 28 U.S.C. § 1412.
Section 1404 defers to the plaintiff’s selection of forum. Reid-Ashman Mfg.,
Inc. v. Swanson Semiconductor Serv., LLC., No. C-06-04693 JCS, 2008 WL
425638, at *1 (N.D. Cal. Feb 14, 2008). CFPB argues that § 1404 should apply.
Section 1404 further requires that the party seeking the transfer -- Think Finance -demonstrate that both factors favor transfer. 28 U.S.C. § 1404. Section 1412, by
contrast, “carries a presumption in favor of” transfer to the bankruptcy court. Id.
4
Think Finance argues that § 1412 should apply. The Court will analyze the
pending motion under both statutes.
A.
Consideration of Police and Regulatory Actions
CFPB has chosen to file what it characterizes as a police and regulatory
action in the District of Montana. CFPB seeks injunctive relief as well as monetary
penalties, damages, disgorgement, and costs that will have an “effect” on Think
Finance’s bankruptcy estate. (Doc. 1 at 31.) CFPB does not dispute that this action
“relate[s] to” the bankruptcy case.
A court in the District of Montana previously transferred a civil breach of
contract claim “related to” a bankruptcy action pursuant to § 1412.
McGillis/Eckman Investments-Billings, LLC v. Sportsman’s Warehouse, Inc., CV
10-26-BLG-RFC-CSO, 2010 WL 3123266, at *7 (D. Mont. June 30, 2010),
adopted CV-10-26-BLG-RFC, 2010 WL 3153416 (D. Mont. Aug. 9, 2010). Other
district courts within the Ninth Circuit have reached differing conclusions
regarding the applicability of § 1412 to cases only “related to” bankruptcy actions,
as opposed to the bankruptcy actions themselves. See EnSource Investments, LLC
v. Tatham, No. 17-cv-79, 2017 WL 3923784, at *4 (S.D. Cal. Sept. 7, 2017)
(declining to apply § 1412); and Senorx, Inc. v. Coudert Bros., LLP, No. 7-1075,
2007 WL 2470125 (N.D. Cal. August 27, 2007) (applying § 1412). The Ninth
Circuit has not resolved this split.
5
The district court in EnSource determined that § 1412 does not provide for
transfer of matters “related to” bankruptcy actions. Ensource, 2017 WL 3923784,
at *4. The court declined, based on § 1404, to transfer venue to the Southern
District of Texas where one of the defendants had filed for bankruptcy protection.
Id. The court noted that the defendants had traveled to California to pitch an
investment opportunity to plaintiffs. Id. at 1. The court further indicated that it
would exercise its discretion to decline to transfer even under § 1412 because the
bankruptcy proceeding in Texas involved only one of the defendants. Id.
By contrast, the district court applied § 1412 and granted the motion to
transfer filed by a defendant New York law firm in Senorx, Inc. Plaintiffs had filed
professional negligence claims against the law firm in its representation of
plaintiffs on several international patent matters. Senorx, Inc., 2017 WL 2470125,
at * 1. The district court recognized that witnesses would be found in both
California, where plaintiffs had filed the case and where the law firm had provided
the legal advice, and in New York, the home office of the law firm. Id. at *2. The
district court also cited the fact that resolution of the case would “likely involve
numerous expert witnesses and issues of international law which favor neither
California nor New York.” Id.
None of these cases concerned a federal agency police or regulatory action.
The parties have pointed to no authority, and the Court has found none, in which a
6
court transferred a police or regulatory action brought by a federal agency to a
bankruptcy proceeding. CFPB seeks to distinguish this action based on its
representation that it involves a police or regulatory action to enforce consumer
protection laws. Think Finance does not dispute this interpretation. (Doc. 13 at 13.)
The Court notes that many matters “related to” a bankruptcy action remain
subject to an automatic stay pursuant to 11 U.S.C. § 362(a)(1). Congress expressly
has carved out an exception for police and regulatory actions, however, from the
automatic stay provision. 11 U.S.C. § 362(b)(4). This exception ensures that
bankruptcy does not provide a “haven for wrongdoers” to escape the reach of the
government’s police and regulatory powers. Lockyer v. Mirant Corp., 398 F.3d
1098, 1107 (9th Cir. 2005) (internal citations omitted). The Ninth Circuit in
Lockyer applied the exception to the automatic stay required by § 362(b)(1) to an
action brought by the California Attorney General to enforce federal antitrust law
against a debtor who had filed voluntary petitions to reorganize. Id. at 1109.
The public policy underlying the automatic stay generates inherent tension
with the public policy underlying the presumption of transfer in § 1412. Under §
1412, the question of “whether the requested transfer would promote the economic
and efficient administration of the estate” represents “the most important
consideration” that Courts must weigh in considering a venue transfer.
Sportsman’s Warehouse, 2010 WL 3123266, at *6 (citations omitted). Congress
7
has “expressly indicated” that police and regulatory actions present concerns
“more important than the goals of efficiency and maximizing the estate,” when it
excepted such actions from the automatic stay. In re First All. Morg. Co., 264 B.R.
634, 654 (Bankr. C.D. Cal. 2001).
Think Finance represented at oral argument that it filed the bankruptcy
action before CFPB filed its Complaint in this case. Think Finance suggested that
its bankruptcy filing in no way represented an attempt to avoid this enforcement
action by seeking the “haven” of bankruptcy court as contemplated by Lockyer.
The CFPB countered that Think Finance filed the bankruptcy action only after
settlement negotiations with the CFPB had failed. The Court recognizes the danger
that affording § 1412’s presumption of transfer to Think Finance under these
circumstances would contravene the public policy underlying the stay exception.
Lockyer, 398 F.3d at 1107. This public policy, combined with the plain language of
the statute, weighs in favor of applying § 1404.
B.
The Balance of Factors Under 28 U.S.C. § 1404
Section 1404 provides that the Court “may transfer” a civil action “[f]or the
convenience of parties and witnesses, in the interest of justice.” 28 U.S.C. §
1404(a). A district court should decide a motion to transfer venue based on an
“individualized, case-by-case consideration of convenience and fairness.” Stewart
Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (quotation omitted). The Court
8
must weigh a number of case-specific factors before determining whether a motion
to transfer venue under § 1404(a) would be appropriate. Stewart, 487 U.S. at 29
(1988) (citation omitted).
1.
Interest of Justice
The parties to this action ask the Court to consider the following factors in
evaluating the interest of justice: 1) judicial economy; 2) Montana’s local interests;
3) ability to receive a fair trial; 4) enforceability of the judgment; and 5) CFPB’s
original choice of forum. (Doc. 5 at 23) (citing Sportsman’s Warehouse, 2010 WL
3123266, at *7). Think Finance argues that judicial economy weighs heavily in
favor of the requested transfer. (Doc. 5 at 18.)
Think Finance asserts that this Court and the Bankruptcy Court may issue
inconsistent rulings on a key issue of “whether the underlying loans issued by
sovereign Native American Tribal lenders are subject to any state’s law in the first
instance.” (Doc. 5 at 19.) Think Finance further argues that litigating two
proceedings will waste its assets to the detriment of its creditors. (Doc. 5 at 19-23.)
Think Finance also suggests that the bankruptcy proceeding may outpace this case.
If that were the case, resolution of this dispute could delay resolution in the
bankruptcy proceeding. Think Finance argues finally that this action may generate
duplicate recoveries. Id.
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With regard to the remaining four factors, Think Finance argues first that
Montana has diminished local interests in this case. (Doc. 5 at 24.) Think Finance
points to the fact that the Tribal Lender located in Montana did not lend to
Montana residents. Id. Think Finance next contends that a monetary judgment in
this case could not be enforced absent action by the Bankruptcy Court. (Doc. 5 at
24-25.) Think Finance further argues that the Court should consider Plaintiff’s
choice of forum a neutral factor. (Doc. 5 at 25.) Think Finance contends that §
1412 contains a presumption in favor of transfer. (Doc. 5 at 25.) Think Finance
argues that CFPB has failed to allege any basis for bringing this action in this
particular district. (Doc. 5 at 25.) Think Finance concedes that the ability to
receive a fair trial factor should be considered neutral. (Doc. 5 at 24.)
A Bankruptcy Court within the Ninth Circuit recognized that Congress has
“expressly indicated” that police and regulatory actions present concerns “more
important than the goals of efficiency and maximizing the estate” when it excepted
such actions from the automatic stay. In re First All. Morg. Co., 264 B.R. at 654.
The Court acknowledges the inconvenience of litigating in two forums. Congress
considered the potential adverse impacts of litigating two concurrent cases,
however, when it excepted police and regulatory actions from the automatic stay.
11 U.S.C. § 362(b)(4); In re Universal Life Church, Inc., 128 F.3d 1294, 1297 (9th
Cir. 1997), as amended on denial of reh'g (Dec. 30, 1997).
10
The Ninth Circuit in Universal Life Church determined that the IRS’s
decision to revoke the Universal Life Church’s tax exempt status during the
Church’s Chapter 11 bankruptcy proceedings met both tests for the exception to
the automatic stay under 28 U.S.C. § 362(b)(4). Universal Life Church, 128 F.3d at
1297. Bankruptcy “should not prevent” police or regulatory actions from
proceeding. Id. The decision by the IRS to revoke the church’s tax exempt status
resulted in an estimated $ 6,000,000 tax bill. Id. at 1296. The decision to declare
bankruptcy could not shelter the church from the IRS’s performance of a “law
enforcement” and “public policy function.” Id. at 1298.
Think Finance’s arguments might prove more persuasive in a matter that did
not involve a police or regulatory action. Think Finance’s arguments to transfer
this action fail to overcome the public policy underlying Congress’s desire to allow
police and regulatory actions to continue “free of the restrictions of the automatic
stay.” Universal Life Church, 128 F.3d at 1297. The Court will defer to CFPB’s
choice of forum under these circumstances.
The Court also considers this public policy in conjunction with Montana’s
substantial interest in hearing this matter. Plain Green did not lend directly to
Montana customers. (Doc. 1 at 12.) CFPB alleges that Think Finance, through
other Tribal Lenders identified in the Complaint, issued and collected loans to
people in Montana. (Doc. 1 at 24.) CFPB asserts that Montana represents a
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“unique” nexus as it represents the “only district” where both “relevant consumers
and current and former employees of a Tribal Lender” can be found. (Doc. 13 at
10.)
CFPB further alleges that the Complaint implicates the law of the state in
which this Court sits. Montana law renders void any loans made, or collected by,
any lender without a license. Mont. Code Ann. § 32-5-103(1), (4). The Complaint
asserts that Think Finance issued and collected loans that were void and
unenforceable pursuant to Montana law. (Doc. 13 at 11, 23.) The Complaint
contains no allegations that Think Finance collected on loans that would be void
under Texas law. The Complaint contains no allegations that Texas customers
received loans from Think Finance. These circumstances buttress CFPB’s choice
to bring this action in the District of Montana. Think Finance has failed to
surmount the deference typically afforded to CFPB’s choice of forum under §
1404. Reid-Ashman Mfg., Inc., 2008 WL 425638, at *1.
2.
Convenience of the Parties
The parties ask the Court further to consider the following factors in
evaluating the convenience of the parties: 1) the location of the parties; 2) access to
proof; 3) convenience of witnesses; 4) availability of subpoena power for unwilling
witnesses; 5) the expense of obtaining witnesses. (Doc. 5 at 23) (citing
12
Sportsman’s Warehouse, 2010 WL 3123266, at *7). Think Finance asserts that the
convenience of the parties weighs in its favor.
Think Finance first argues that the Northern District of Texas would serve as
a more convenient forum than Montana. Think Finance is located in Dallas, Texas.
Think Finance suggests that the CFPB more easily could travel from Washington,
DC to Dallas, Texas, than to Montana. (Doc. 5 at 25.) Think Finance reiterates that
it is located in Dallas to support its claim that the remaining factors weigh in its
favor. (Doc. 5 at 26-27.)
The Complaint alleges that Think Finance voluntarily conducted business in
Montana. (Doc. 1. at 2.) CFPB highlights the numerous potential non-party
witnesses located in Montana, including current and former employees of Plain
Green, and relevant consumers. (Doc. 13 at 25.) The Court declines to adopt a rule
that the rural nature of the District of Montana presents grounds for transfer for
convenience alone. Think Finance has failed to demonstrate that transfer to the
United States District Court for the Northern District of Texas, for referral to the
Bankruptcy Court for the Northern District of Texas, serves the interest of justice
and would be more convenient to the parties, as required by 28 U.S.C. § 1404.
C.
The Balance of Factors Under 28 U.S.C. § 1412
This Court separately will analyze Think Finance’s transfer motion pursuant
to the factors contained in 28 U.S.C. §1412, out of an abundance of caution. Think
13
Finance must show by a preponderance of the evidence that transfer is warranted.
Sportsman’s Warehouse, 2010 WL 3123266, at *6. Section 1412 affords a
presumption of transfer to the bankruptcy court either in the interest of justice, or
for convenience of the parties. 28 U.S.C. § 1412. Section 1412 applies to “case[s]
or proceeding[s] under title 11.” 28 U.S.C. § 1412.
Think Finance argues that the Court broadly should read “under title 11” as
used in § 1412 to include cases “related to” bankruptcy cases. (Doc. 5 at 14.) This
interpretation would conform to the language in 28 U.S.C. § 1334(b) that confers
jurisdiction on district courts of all civil proceedings “arising in or related to cases
under Title 11.” 28 U.S.C. § 1334(b) (emphasis added). A civil proceeding relates
to a bankruptcy case if the “the outcome of the proceeding could conceivably have
any effect on the estate being administered in bankruptcy.” In re Fietz, 852 F.2d
455, 457 (9th Cir. 1988) (quoting Pacor, Inc. v. Higgins¸743 F.2d 984, 994 (3d
Cir. 1984)).
The United States Supreme Court has instructed that “significance and effect
shall, if possible, be accorded to every word” when interpreting a statute, so that
“no clause, sentence, or word shall be superfluous, void, or insignificant.”
Washington Mkt. Co. v. Hoffman, 101 U.S. 112, 115-16 (1879) (internal citations
omitted). When a term appears “in several places in a statutory text,” the Court
should read that term “the same way each time it appears.” Ratzlaf v. U.S., 510
14
U.S. 135, 143 (1994). Finally, where Congress “includes particular language in one
section of a statute but omits it in another” Courts should presume “that Congress
acts intentionally and purposely in the disparate inclusion or exclusion.” Ensource,
2017 WL 3923784, at *4 (quoting Keene Corp. v. United States, 508 U.S. 200, 208
(1993) (internal citations omitted)).
Title 28 of the U.S. Code addresses the judiciary and the judicial process.
Section 1334(b) confers original jurisdiction on the district courts in bankruptcy
cases. 28 U.S.C. § 1334(b). Section 1404 empowers a district court to consider the
appropriate venue for any civil action. 28 U.S.C. § 1404. Section 1412 similarly
empowers a district court to consider the appropriate venue for a bankruptcy
action. 28 U.S.C. § 1412.
Congress drafted § 1412 to allow a district court to evaluate possible transfer
of “case[s] or proceeding[s] under title 11.” Section 1334(b) does not address the
question of the appropriate venue for an action. Section 1334(b) provides only that
“the district courts shall have original but not exclusive jurisdiction of all civil
proceedings arising under title 11, or arising in or related to cases under title 11.”
Id.
Thus, § 1412, as a transfer statute, differs in two important ways from §
1334(b). Section 1412 addresses venue and the possibility of transferring an action
to a more appropriate forum. Section 1334(a) confers jurisdiction of certain cases
15
on the district courts. Section 1334(b) expressly applies to actions “related to”
bankruptcy cases. 28 U.S.C. § 1334(b). Section 1412 applies to a case or
proceeding “under Title 11” and nowhere contains the more expansive words
“related to.”
Congress chose specifically in § 1334(b) to confer jurisdiction over
“proceedings under title 11, or arising in or related to cases under title 11” to the
district courts. 28 U.S.C. § 1334(b). To read “under title 11” in § 1412 to mean the
broader “under title 11 and related cases” when Congress has drafted § 1334(b)
also to include those proceedings “related to cases under title 11” would confer a
different meaning on the phrase “under title 11” in each usage. This interpretation
further would render superfluous and insignificant the phrase “related to cases
under title 11,” as drafted by Congress in § 1334(b). Washington Mkt. Co., 101
U.S. at 115-16. The Court declines to adopt Think Finance’s expansive
interpretation of § 1412, and, instead will evaluate its motion to transfer pursuant
to the plain language of § 1412.
1.
Interest of Justice
Think Finance primarily relies on the specter of inconsistent decisions to
support its argument that transfer of the case to the Bankruptcy Court would serve
the interest of justice. Think Finance points to the three weeks that elapsed
between its filing of the bankruptcy action on October 23, 2017, and CFPB’s filing
16
of the instant regulatory action on November 15, 2017. (Docs. 5 at 8; 1 at 32.)
Think Finance contends that this three-week period means that the Bankruptcy
Court may decide some common issues first.
Think Finance suggests that rulings by the Bankruptcy Court would require
CFPB to “withdraw its claims with respect to” such issues to avoid the risk of
inconsistent rulings. (Doc. 5 at 20.) Think Finance further warns that peremptory
rulings by the Bankruptcy Court could “effectively render this proceeding moot as
to the monetary relief sought against the debtors.” (Doc. 5 at 21.) This line of
argument fails to persuade the Court.
Think Finance cites the average time of 26.2 months from filing to trial in
civil proceedings in the District of Montana. (Doc. 5 at 21.) Think Finance could
provide no comparative information at oral argument about the press of business in
the courts of the Northern District of Texas. More importantly, it appears that
Think Finance has chosen to “cherry pick” data to suit its needs. The most recent
data from the Administrative Office of the U.S. Courts paints two very different
pictures for the workload facing district courts in the Northern District of Texas
and the District of Montana. The overall caseload statistics provide little insight as
the difference in population alone between the two districts skews the data. The
“Actions per Judgeship” provide more meaningful insight.
For example, each judge in the Northern District of Texas faced on average
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1,275 pending cases for the third highest total in the United States. Federal Court
Management Statistics – Profile at 34 (September 30, 2017). Each judge in the
District of Montana faced on average 355 pending cases for the 68th highest total in
the United States. Federal Court Management Statistics – Profile at 72 (September
30, 2017). The numbers for weighted filings prove similar. Each judge in the
Northern District of Texas had weighted filings of 539, for the 25th highest total in
the United States. Profile at 34. For the District of Montana, each judge faced on
average weighted filings of 383, for the 56th highest total in the United States.
Profile at 72. Despite these discrepancies in total cases, the District of Montana
managed to rank 6th in the United States in terms of trials completed while the
Northern District of Texas lagged in 32nd place. Profile at 34 and 72. The Court
declines to speculate on the timeline for resolution of CFPB’s pending action. The
Court anticipates no delay, however, in resolving expeditiously the underlying
issues.
Think Finance’s claims regarding the potential for mootness similarly prove
unavailing. CFPB seeks injunctive relief. (Doc. 1 at 31.) Think Finance
acknowledges the potential impact of injunctive relief. Think Finance suggests
that injunctive relief could “impair the ability of [Think Finance] to operate its
business.” (Doc. 5 at 16.)
Think Finance argues that any impairment could “mean the difference
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between [Think Finance] liquidating and effecting a reorganization.” Id. Think
Finance thereby acknowledges that meaningful remedies remain even if Think
Finance’s estate were to be exhausted in the bankruptcy proceeding. Think Finance
additionally concedes that the Bankruptcy Court would be capable of estimating
CFPB’s claims. The Bankruptcy Court’s ability to estimate CFPB’s claims
suggests that such resolution would not render moot CFPB’s monetary remedies.
Think Finance has failed to demonstrate that the interest of justice would be served
by transferring CFPB’s regulatory action to the Bankruptcy Court.
2.
Convenience of the Parties
Think Finance conceded at oral argument that its strongest argument
regarding convenience of the parties rests on the availability of four former
executives who reside in the Northern District of Texas. (See Doc. 5-2 at 4.) CFPB
counters that these employees possess indemnification agreements with Think
Finance that provide the ability for such witnesses to appear in this forum. Think
Finance did not contest this point directly. Counsel for Think Finance noted at oral
argument that he personally knew of only one such agreement.
Montana is home to Plain Green, one of the Tribal Lenders implicated in this
action. Montana is home to 1,900 consumers who obtained allegedly void loans
that comprise the subject of CFPB’s Complaint. CFPB argues that Montana stands
alone among the sixteen states where consumers of the allegedly void loans reside
19
due to the presence of the one Tribal Lender. (Doc. 13 at 11-12.) Think Finance
dismisses the presence of these Montana consumers as making Montana’s interest
“no greater than any of the other states” where the consumers of the three Tribal
Lenders are located. (Doc. 15 at 12.)
CFPB did not file this action in Oklahoma or Louisiana where the other
Tribal Lenders are located. CFPB filed this action in the District of Montana.
Moreover, it is not just the location of the consumer that establishes Montana’s
interest and weighs against Think Finance’s assertion of convenience. A Tribal
Lender and the corresponding potential witnesses associated with that Tribal
Lender also reside within the District of Montana. The presence of a Tribal Lender
within the District of Montana distinguishes this case from CFPB v. Golden Valley
Lending, Inc., No. 17-C-3155, 2017 WL 3970514 (N.D. Ill. Sept. 8, 2017).
Think Finance cited Golden Valley Lending in its reply brief to suggest that
Montana’s interest differs in no material way from any of the sixteen other states in
which the borrowers live. The district court in Golden Valley Lending analyzed a
lender’s motion to transfer under 28 U. S. C. § 1404. Id. at *2. The presence of
alleged victims did not establish that the Northern District of Illinois provided the
more convenient forum when the CFPB’s Complaint identified potential victims in
sixteen separate states. Id. at *5-6. CFPB filed the action in the Northern District of
Illinois. Golden Valley Lending operated a call center in Kansas. The presence of a
20
California tribal lender failed to support CFPB’s convenience argument for the
Northern District of Illinois. The district court agreed with the lender that moving
the case to Kansas would serve the convenience of the parties. Golden Valley
Lending, 2017 WL 3970514, at *6.
Think Finance further argues that potential witnesses from Plain Green may
reside outside the subpoena power of this Court due to concerns of tribal sovereign
immunity. See Matt v. United States, CV-15-28-GF-BMM, 2015 WL 13560169, at
*4 (D. Mont. Oct. 6, 2015). This case involves three Tribal Lenders located in
Montana, Oklahoma, and Louisiana. (Doc. 1 at 4-5.) Think Finance conceded at
oral argument that this potential impediment could exist, too, in the Northern
District of Texas.
Furthermore, the power of a federal court to subpoena witnesses to appear at
a trial, hearing, or deposition is generally limited to 100 miles of where “the person
resides, is employed, or regularly transacts business in person.” Fed. R. Civ. P.
35(c)(1)(A). Where the subject of the subpoena is “a party or a party’s officer,” or
where the subject would not “incur substantial expense” to attend a trial, the
subpoena power extends throughout the state where the person “resides, is
employed, or regularly transacts business in person.” Fed. R. Civ. P. 35(c)(1)(B).
The three Tribal Lenders identified in CFPB’s Complaint are located in Oklahoma,
Louisiana, and Montana. (Doc. 1 at 4-5.) All potential tribal witnesses would
21
therefore sit “beyond the subpoena power” of the Bankruptcy Court.
Think Finance contended at oral argument that the question before the Court
is which venue serves “best” for resolution of this case. “No requirement exists
that the chosen venue represents the best choice.” W. Org. of Resource Councils v.
U.S. Bureau of Land Mgt., CV 16-21-GF-BMM, 2017 WL 374705, at *4 (D.
Mont. Jan. 25, 2017) (citing Cottman Transmission Sys., Inc. v. Martino, 36 F.3d
291, 294 (3d Cir. 1994)). The Court determines that the convenience of a few
indemnified witnesses formerly employed by Think Finance in Dallas, Texas fails
to establish that the Northern District of Texas would serve as the best venue to
resolve this case. The Court declines to exercise its discretion pursuant to § 1412 to
transfer this case to the Northern District of Texas.
III. ORDER
Accordingly, IT IS HEREBY ORDERED, that Defendant’s Motion to
Transfer Venue (Doc. 4) is DENIED.
IT IS FURTHER ORDERED that the undersigned will conduct a
Telephonic Scheduling Conference on Tuesday, February 13, at 3:30 p.m. The
Court will contact the parties with the call-in number.
DATED this 6th day of February, 2018.
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