Argued: March 24, 2017
from the United States District Court for the Middle District
of North Carolina, at Greensboro. Catherine C. Eagles,
District Judge. (1:13-cv-00897-CCE-LPA)
Scott Ranlett, MAYER BROWN LLP, Washington, D.C., for
A. Zavareei, TYCKO & ZAVAREEI LLP, Washington, D.C., for
Nale, Debra Bogo-Ernst, MAYER BROWN LLP, Chicago, Illinois;
Mary K. Mandeville, ALEXANDER RICKS PLLC, Charlotte, North
Carolina, for Appellant.
E. Siegel, Steve Six, J. Austin Moore, STUEVE SIEGEL HANSON
LLP, Kansas City, Missouri; Jeffrey M. Ostrow, KOPELOWITZ
OSTROW P.A., Fort Lauderdale, Florida; Darren T. Kaplan,
DARREN KAPLAN LAW FIRM, P.C., New York, New York; F. Hill
Allen, THARRINGTON SMITH, L.L.P., Raleigh, North Carolina;
Jeffrey D. Kaliel, TYCKO & ZAVAREEI LLP, Washington,
D.C., for Appellee.
DUNCAN, KEENAN, and THACKER, Circuit Judges.
BARBARA MILANO KEENAN, Circuit Judge
appeal, we consider the enforceability of an arbitration
agreement included in the terms of a "payday loan"
obtained over the internet. Plaintiff James Dillon brought
this civil action against defendant BMO Harris Bank, N.A.
(BMO Harris), alleging that BMO Harris violated the Racketeer
Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.
§ 1961 et seq., when BMO Harris used its role
within a network of financial institutions "to conduct
and participate in the collection of unlawful payday
on the Federal Arbitration Act (FAA), BMO Harris sought to
enforce an arbitration agreement for the loan at issue, which
was entered into by Dillon and the lender, Great Plains
Lending, LLC (Great Plains). The district court held that the
arbitration agreement was unenforceable under this
Court's opinion in Hayes v. Delbert Services
Corp., 811 F.3d 666 (4th Cir. 2016), and denied BMO
Harris' motion to compel arbitration. BMO Harris appeals
from the district court's order. Upon our review, we hold
that the arbitration agreement between Dillon and Great
Plains is unenforceable, and we affirm the district
court's order denying BMO Harris' motion.
Dillon is a resident of North Carolina. In December 2012,
Dillon applied for and received a "payday
loan" through the website of Great
Plains, a lender wholly owned by the Otoe-Missouria Tribe of
Indians. Although North Carolina usury law generally
prohibits interest rates in excess of 16%, N.C. Gen. Stat.
§ 24-1.1, Great Plains has no physical presence in North
Carolina and charged an interest rate of 440.18% for
Dillon's loan. Dillon authorized Great Plains to deposit
and withdraw funds in Dillon's bank account through the
Automated Clearing House Network (ACH Network), a transaction
processing system that facilitates electronic transfer of
funds between financial institutions, usually on behalf of
order to complete the loan transaction, Dillon electronically
signed a contract (the Great Plains Agreement) that
contained: (1) terms governing the loan (the underlying loan
agreement); and (2) an agreement to submit disputes to
arbitration (the arbitration agreement). The Great Plains
Agreement included choice of law provisions both in the
underlying loan agreement and in the arbitration agreement.
These choice of law provisions required the application of
Otoe-Missouria tribal law and disclaimed the application of
state or federal law. For example, the Great Plains Agreement
by its terms was "subject solely to the exclusive laws
and jurisdiction of the Otoe-Missouria Tribe of Indians, a
federally recognized Indian Tribe, " and provided that
"no other state or federal law or regulation shall apply
to this Agreement, its enforcement or interpretation."
the arbitration agreement within the Great Plains Agreement
provided that "any dispute . . . will be resolved by
arbitration in accordance with the law of the Otoe-Missouria
Tribe of Indians, " and instructed the arbitrator to
"apply the laws of the Otoe-Missouria Tribe of
Indians." For borrowers who opt out of arbitration
within 60 days of receiving the loan, "any disputes . .
. shall nonetheless be governed under the laws ...