Gingras v. Think Finance, Inc.

16-2019-cv (L)
Gingras v. Think Finance, Inc.

In the
United States Court of Appeals
For the Second Circuit

August Term, 2016

Argued: May 12, 2017
Decided: April 24, 2019

Docket Nos. 16-2019-cv (L); 16-2132-cv;
16-2135-cv; 16-2138-cv; 16-2140-cv (Con)

JESSICA GINGRAS, ON BEHALF OF HERSELF AND
OTHERS SIMILARLY SITUATED, ANGELA C.
GIVEN, ON BEHALF OF HERSELF AND OTHERS
SIMILARLY SITUATED,

Plaintiffs-Appellees,

v.

THINK FINANCE, INC., TC LOAN SERVICE, LLC,
KENNETH E. REES, FORMER PRESIDENT AND
CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF
THE BOARD OF THINK FINANCE, TC DECISION
SCIENCES, LLC, TAILWIND MARKETING, LLC,
SEQUOIA CAPITAL OPERATIONS, LLC,
TECHNOLOGY CROSSOVER VENTURES, JOEL
ROSETTE, OFFICIAL CAPACITY AS CHIEF
EXECUTIVE OFFICER OF PLAIN GREEN, TED
WHITFORD, OFFICIAL CAPACITY AS A MEMBER
OF PLAIN GREEN’S BOARD OF DIRECTORS, TIM
MCINERNEY,

Defendants-Appellants.
 Appeal from the United States District Court
for the District of Vermont
No. 15-cv-101 – Geoffrey W. Crawford, Judge.

Before: LEVAL, HALL, and CHIN, Circuit Judges.
Plaintiffs Jessica Gingras and Angela C. Given borrowed money from
Plain Green, LLC, an online lending operation owned by the Chippewa Cree
Tribe of the Rocky Boy’s Indian Reservation in Montana. The terms of their
loan agreements provide for interest rates well in excess of caps imposed by
Vermont law. Gingras and Given sued, alleging violations of Vermont and
federal law. They seek an injunction against tribal officers in charge of Plain
Green and an award of money damages against other Defendants.

Some Defendants moved to dismiss, arguing that tribal sovereign
immunity barred the suit. All Defendants moved to compel arbitration under
the terms of the agreements. The district court (Geoffrey W. Crawford, Judge)
denied both motions. We hold that tribal sovereign immunity does not bar this
suit because Plaintiffs may sue tribal officers under a theory analogous to Ex
parte Young for prospective, injunctive relief based on violations of state and
substantive federal law occurring off of tribal lands. We further hold that the
arbitration clauses of the loan agreements are unenforceable and
unconscionable.

AFFIRMED.

COLLEEN SINZDAK, Hogan Lovells US LLP,
Washington, DC (Morgan L. Goodspeed, Neal
Kumar Katyal, Hogan Lovells US LLP,
Washington, DC; Richard J. Zack, Matthew
B. Homberger, Pepper Hamilton LLP,
Philadelphia, PA, on the brief), for
Defendants-Appellants Joel Rosette, Ted
Whitford, and Tim McInerney.

LEWIS S. WIENER, Sutherland Asbill &
Brennan LLP, Washington, DC (Kymberly
Kochis, Sutherland Asbill & Brennan LLP,
New York, NY; Ritchie E. Berger, Dinse
Knapp McAndrew, Burlington, VT; Stephen
D. Hibbard, Jones Day, San Francisco, CA;
Todd R. Geremia, Jones Day, New York, NY;

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 Stephen D. Ellis, Ellis Boxer & Blake PLLC,
Springfield, VT; Richard L. Scheff, David F.
Herman, Montgomery McCracken Walker &
Rhoads LLP, Philadelphia, PA; Thomas
Hefferon, Sabrina Rose-Smith, Matthew
Sheldon, Goodwin Procter LLP, Washington,
DC, on the brief), for Defendants-Appellants
Think Finance, Inc., TC Decision Sciences,
LLC, Tailwind Marketing, LLC, TC Loan
Service, LLC, Technology Crossover Ventures,
Kenneth E. Rees, and Sequoia Capital
Operations, LLC.

MATTHEW B. BYRNE, Gravel & Shea PC,
Burlington, VT (Kathleen M. Donovan-
Maher, Steven J. Buttacavoli, Anne F.
O’Berry, Steven L. Groopman, Berman
DeValerio, Boston, MA, on the brief), for
Plaintiffs-Appellees.

Jeffrey R. White, Julie Braman Kane,
American Association for Justice,
Washington, DC, as amicus curiae in support
of Plaintiffs-Appellees.

Scott L. Nelson, Allison M. Zieve, Public
Citizen Litigation Group, Public Citizen, Inc.,
Washington, DC, as amicus curiae in support
of Plaintiffs-Appellees.

HALL, Circuit Judge:

The federal government and many states have laws designed to protect

consumers against predatory lending practices. In this case, we must

determine what happens when those laws conflict with the off-reservation

commercial activities of Indian tribes. In so doing, we probe the boundaries of

tribal sovereign immunity and hold that, notwithstanding tribal sovereign

immunity, federal courts may entertain suits against tribal officers in their

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official capacities seeking prospective, injunctive relief prohibiting off-

reservation conduct that violates state and substantive federal law. We also

consider the specific lending agreements between these Plaintiffs and these

Defendants and hold that the agreements’ arbitration clauses are

unenforceable and unconscionable.

I.

Payday loans are ostensibly short-term cash advances for people who

face unexpected obligations or emergencies. The loans are typically for small

sums that are to be repaid quickly—in anywhere from several weeks to a year.

“Typically, online lenders charge fees and interest that, when annualized,

result in interest rates far in excess of legal limits or typical borrowing rates,

often exceeding 300%, 500%, or even 1,000%.” Vermont Attorney General’s

Office, Illegal Lending: Facts and Figures, at 1 (Apr. 2014). Many states

endeavored to curb such lending practices through usury laws that set caps on

interest rates. For example, Vermont laws prescribe a maximum interest rate

of 24% per annum. See Vt. Stat. Ann. tit. 9, § 41a.

A.

This suit involves payday loans made by Plain Green, LLC, an online

lending operation, which holds itself out as a ‘’tribal lending entity wholly

owned by the Chippewa Cree Tribe of the Rocky Boy’s Indian Reservation,

Montana.” J. App. 150. The borrowers are Plaintiffs-Appellees Jessica

Gingras and Angela Given, who are Vermont residents. In July 2011, Gingras

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borrowed $1,050 at an interest rate of 198.17% per annum. She repaid that

loan and borrowed an additional $2,900 a year later, this time with an interest

rate of 371.82%. She has not repaid the second loan. Also in July 2011, Given

borrowed $1,250 at a rate of 198.45%. Given paid off that loan in July 2012

and, within a few days of repayment, took out another loan for $2,000 at a rate

of 159.46%. She also borrowed $250 in May 2013 at a rate of 376.13%, which

she repaid quickly, and in July 2013 borrowed $3,000 at a rate of 59.83%.

Given has not repaid the most recent loan.

To receive their loans, Gingras and Given were required to sign loan

agreements. Those loan agreements provide for arbitration in the event of a

dispute between the borrower and Plain Green. One such provision is a

delegation clause whereby the parties agree that “any Dispute . . . will be

resolved by arbitration in accordance with Chippewa Cree tribal law.” Id. 114–

15. The agreement defines a “Dispute” as “any controversy or claim between”

the borrower and the lender, “based on a tribal, federal or state constitution,

statute, ordinance, regulation, or common law.” Id. 115. “Dispute” includes

“any issue concerning the validity, enforceability, or scope” of the loan

agreement itself or the arbitration provision specifically. Id. A separate

provision of the agreement vests authority to decide the validity of a class

action lawsuit waiver and class-wide arbitration waivers in Chippewa Cree

tribal court, not in an arbitrator. Id. 265.

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 The loan agreements also provide that Chippewa Cree tribal law

governs the loan agreement and any dispute arising under it. An arbitrator,

whom the borrower may select from the American Arbitration Association

(“AAA”) or JAMS, “shall apply Tribal Law” and any arbitral award must “be

supported by substantial evidence and must be consistent with [the loan

agreement] and Tribal Law.” Id. Chippewa Cree tribal courts are empowered

to set aside the arbitrator’s award if it does not comply with tribal law. See id.

The agreements’ command to apply tribal law also includes provisions

stating “[n]either this Agreement nor the Lender is subject to the laws of any

state of the United States,” id. 263, and the agreements are “subject solely to

the exclusive laws and jurisdiction of the Chippewa Cree Tribe of the Rocky

Boy Indian Reservation” such that “no other state or federal law or regulation

shall apply,” id. 258. To the extent that AAA or JAMS policies and procedures

conflict with tribal law, tribal law prevails.

The loan agreements allow borrowers to opt out of arbitration, but only

if they exercise that option within sixty days of receiving the loan. If a borrower

opts out, the agreements provide that their only recourse is to sue under tribal

law in tribal courts. Neither Gingras nor Given opted out.

B.

Gingras and Given allege that the loan agreements violate Vermont and

federal law. The loans originated from Plain Green, LLC. Plain Green’s Chief

Executive Officer is Defendant Joel Rosette; two members of Plain Green’s

6
Board of Directors, Ted Whitford and Tim McInerney, are also defendants.

Gingras and Given sued all three, whom we refer to as the Tribal Defendants,

in their official capacities for prospective declaratory and injunctive relief.

The suit also names as defendants Think Finance, Inc. and its former

President, Chief Executive Officer, and Chairman of the Board, Kenneth Rees.

Plain Green employs Think Finance and its subsidiaries, Defendants TC

Decision Sciences, LLC, Tailwind Marketing, LLC, and TC Loan Service, LLC,

to service Plain Green loans. Defendants Sequoia Capital Operations, LLC

and Technology Crossover Ventures provide funding for the lending operation.

Plaintiffs allege that Think Finance and the Tribe agreed on various

terms for the loans, including charging annual interest rates between 60% and

360% and establishing a maximum loan amount of $2,500. They allege that

this arrangement was created to “circumvent” the “stringent laws [that] have

been enacted to prescribe how loans can be made and to prevent lenders from

preying on indigent people,” and to “take advantage of legal doctrines, such as

tribal immunity, to avoid liability for their actions” in violating various federal

and state lending laws. Id. 29.

C.

Gingras and Given brought this class action in the District of Vermont,

seeking, among other relief, an order barring Defendants from continuing their

current lending practices. Relevant to this appeal, the Tribal Defendants

moved to dismiss, arguing that they are entitled to tribal sovereign immunity.

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The district court disagreed and denied their motion. It concluded that tribal

sovereign immunity does not bar suit against the Tribal Defendants in their

official capacities for prospective, injunctive relief under a theory analogous to

Ex parte Young, 209 U.S. 123 (1908). Specifically, the district court read the

Supreme Court’s decision in Michigan v. Bay Mills Indian Community, 572

U.S. 782 (2014), to condone that form of action to vindicate violations of state

law. See Gingras v. Rosette, No. 15-cv-101, 2016 WL 2932163, at *4–7 (D. Vt.

May 18, 2016).

All Defendants also moved to compel arbitration pursuant to the loan

agreements. The district court denied those motions. It concluded that the

arbitration agreements are unconscionable and unenforceable because they

insulate Defendants from claims that they have violated state and federal

laws. See id. at *13–18. In particular, it held that because the agreements

apply tribal law exclusively and restrict all arbitral awards review solely by a

tribal court, the neutral arbitral forum is illusory. All Defendants timely

appealed.

II.

We first ensure that we have appellate jurisdiction of this interlocutory

appeal. The district court denied two types of motions relevant to this appeal:

motions to compel arbitration and motions to dismiss. Appellate jurisdiction

over the motions to compel arbitration is easy enough—we exercise appellate

jurisdiction under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 16(a)(1)(C).

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 As for the portion of the Tribal Defendants’ motion to dismiss based on

the denial of tribal sovereign immunity, we have jurisdiction over that appeal,

too. Interlocutory review under the collateral order doctrine is available when

an order “conclusively determine[s] the disputed question, resolve[s] an

important issue completely separate from the merits of the action, and [is]

effectively unreviewable on appeal from a final judgment.” Coopers & Lybrand

v. Livesay, 437 U.S. 463, 468 (1978). As is the case here, denials of tribal

sovereign immunity at the motion to dismiss stage conclusively determine the

immunity question, and that question is one completely separate from the

merits of the action. See Burlington N. & Santa Fe Ry. Co. v. Vaughn, 509 F.3d

1085, 1090 (9th Cir. 2007). Like Eleventh Amendment immunity, foreign

sovereign immunity, and qualified immunity, tribal sovereign immunity is

immunity from suit, not merely immunity from liability. See Kiowa Tribe of

Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 754 (1998); Tamiami Partners, Ltd. v.

Miccosukee Tribe of Indians of Fla., 63 F.3d 1030, 1050 (11th Cir. 1995) (“Tribal

sovereign immunity would be rendered meaningless if a suit against a tribe

asserting its immunity were allowed to proceed to trial.”). Thus, because

denial of that immunity is “effectively unreviewable on appeal from a final

judgment,” Coopers & Lybrand, 437 U.S. at 468, we have jurisdiction over this

interlocutory appeal.

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 III.

We review de novo the district court’s legal conclusions in denying the

Tribal Defendants’ motion to dismiss based on tribal sovereign immunity. See

Garcia v. Akwesasne Hous. Auth., 268 F.3d 76, 84 (2d Cir. 2001). We review

the district court’s factual findings for clear error. Id.

Indian tribes occupy a unique space in our constitutional structure.

They are “domestic dependent nations” that, on one hand, “exercise inherent

sovereign authority,” but, on the other hand, are “subject to plenary control by

Congress.” Bay Mills, 572 U.S. at 788 (internal quotation marks omitted).

Indian tribes are “separate sovereigns pre-existing the Constitution,” Santa

Clara Pueblo v. Martinez, 436 U.S. 49, 56 (1978), and possess all core aspects

of sovereignty, at least until Congress says otherwise, see Bay Mills, 572 U.S.

at 788.

One of the “core aspects of sovereignty” that tribes enjoy is the “common-

law immunity from suit.” Id. (quoting Santa Clara Pueblo, 436 U.S. at 58).

That immunity extends even to suits arising from a tribe’s commercial

activities off Indian lands. See Kiowa, 523 U.S. at 760. Absent waiver or an

unequivocal abrogation of tribal sovereign immunity by Congress, tribes are

shielded from liability. See Santa Clara Pueblo, 436 U.S. at 58. Although the

origins and the “wisdom” of the tribal sovereign immunity doctrine have been

questioned, see Kiowa, 523 U.S. at 758; Bay Mills, 572 U.S. at 815 (Thomas, J.,

10
dissenting); New York v. Shinnecock Indian Nation, 686 F.3d 133, 148–49

(Hall, J., dissenting), its existence is settled law, and apply it we must.

The Tribal Defendants here argue that because Plain Green is an “arm

of the Tribe,” they are entitled to immunity from all state law claims as well as

Plaintiffs’ federal RICO claim. We disagree and hold that under a theory

analogous to Ex parte Young, tribal sovereign immunity does not bar state and

substantive federal law claims for prospective, injunctive relief against tribal

officials in their official capacities for conduct occurring off of the reservation.

A.

We consider in the first instance whether Plain Green is an “arm of the

tribe,” such that tribal sovereign immunity theoretically shields its officers.

Plaintiffs contend that it is not because, as we have said, “a tribe has no

legitimate interest in selling an opportunity to evade state law.” Otoe-

Missouria Tribe of Indians v. N.Y. State Dep’t of Fin. Servs., 769 F.3d 105, 114

(2d Cir. 2014). Plaintiffs thus argue that Plain Green is a “fraudulent

enterprise” that cannot be shielded by a purchased cloak of immunity.

Appellee Br. at 21.

We need not definitively answer this question, however, because

Plaintiffs have not sued Plain Green. Rather, they have sued several of Plain

Green’s officers in their official capacities on a theory analogous to Ex parte

Young. It is sufficient for us, therefore, to assume that Plain Green and its

officers would ordinarily be immune save for some common law exception,

11
waiver, or congressional abrogation. As the district court did, we proceed on

that understanding.

B.

Tribal sovereign immunity notwithstanding, “[a]bsent express federal

law to the contrary, Indians going beyond reservation boundaries have

generally been held subject to non-discriminatory state law otherwise

applicable to all citizens of the State.” Mescalero Apache Tribe v. Jones, 411

U.S. 145, 148–49 (1973). The Tribal Defendants here engaged in conduct

outside of Indian lands when they extended loans to the Plaintiffs in Vermont.

But, as the Supreme Court has said, there is a difference between demanding

that tribes comply with a law and having the means available to force them to

do so. See Kiowa, 523 U.S. at 755.

Accordingly, Plaintiffs here rely on an exception to sovereign immunity

first announced in Ex parte Young, 209 U.S. 123. Ex parte Young permits

plaintiffs seeking prospective, injunctive relief to sue state government

officials for violations of federal law. Id. at 133. Given that tribal immunity

arises from tribes’ statuses as sovereigns, it is unremarkable that they too can

be sued for prospective, injunctive relief based on violations of federal law. The

question before us, however, is whether Plaintiffs can sue tribal officials, in

their official capacities, for prospective, injunctive relief to bar violations of

state law. We hold that they can.

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 The first and most obvious justification for our affirmative answer to

this question is that the Supreme Court has already blessed Ex parte Young-

by-analogy suits against tribal officials for violations of state law. In Bay Mills,

the Supreme Court considered Michigan’s lawsuit against the tribe for opening

a casino outside Indian lands. 572 U.S. at 785. The Court held that the federal

Indian Gaming Regulatory Act (“IGRA”) did not abrogate tribal sovereign

immunity, and thus Michigan’s suit was barred. Id. The Court made clear,

however, that Michigan could still “resort to other mechanisms, including legal

actions against the responsible individuals” to vindicate violations of Michigan

state law. Id. In exploring the limits of tribal sovereign immunity for conduct

beyond Indian land, the Supreme Court recognized that “Michigan could bring

suit against tribal officials or employees (rather than the Tribe itself) seeking

an injunction.” Id. at 796 (emphasis added); see Santa Clara Pueblo, 436 U.S.

at 59. We think this plain statement that tribal officials can be sued to stop

unlawful conduct by a tribe definitively resolves the issue here.1

The Tribal Defendants disagree and offer three arguments why the

Supreme Court did not intend to say what it did. None is persuasive.

First, the Tribal Defendants argue that the Supreme Court’s extended

discussion of alternative remedies available to Michigan was dicta—dicta that

accidentally overruled its “canonical” decision in Pennhurst State School &

1We join the Eleventh Circuit in so holding. See Alabama v. PCI Gaming Auth., 801 F.3d 1278,
1290 (11th Cir. 2015) (“[T]ribal officials may be subject to suit in federal court for violations of
state law under the fiction of Ex parte Young when their conduct occurs outside of Indian
lands.”).

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Hospital v. Halderman, 465 U.S. 89 (1984). But the Bay Mills opinion makes

clear that the availability of Ex parte Young-type actions for violations of state

law was both necessary to the holding and perfectly consistent with Pennhurst.

In considering whether the IGRA abrogated tribal sovereign immunity,

the Court noted that Congress intended to fix a hole in the law that prevented

states from suing over gaming violations on Indian lands. Bay Mills, 572 U.S.

790–93. It held that the IGRA did not abrogate tribal sovereign immunity for

gaming violations occurring off Indian lands, however, because states already

had other ways to vindicate state gaming law violations there. Id. at 794–95.

The petitioners in Bay Mills also asked the Court to revisit its decision in

Kiowa, which extended tribal sovereign immunity to off-reservation

commercial activity. Id. at 791. The Court declined, largely on stare decisis

grounds. It noted that “[a]dhering to stare decisis is particularly appropriate

here given that the State, as we have shown, has many alternative remedies:

It has no need to sue the Tribe to right the wrong it alleges.” Id. at 799 n.8.

Three distinct opinions in Bay Mills recognized the availability of Ex

parte Young actions for violations of state law. Id. at 796; id. at 809

(Sotomayor, J., concurring) (rejecting the dissent’s “concern that, although

tribal leaders can be sued for prospective relief,” (citing majority op.), Tribes’

purportedly growing coffers remain unexposed to broad damages liability.”

(citing dissenting op.)); id. at 822–24 (Thomas, J., dissenting). The ability to

14
sue tribal officials for violations of state law, then, was critical to the Court’s

analysis and necessary to its holding.

Bay Mills also did not upset decades of immunity jurisprudence, as the

Tribal Defendants contend. It is true that in Pennhurst, the Supreme Court

declined to extend the Ex parte Young rationale to suits seeking to hold state

officials accountable for violations of that state’s laws. 465 U.S. at 106. The

Court said that “the Young doctrine has been accepted as necessary to permit

the federal courts to vindicate federal rights and hold state officials responsible

to ‘the supreme authority of the United States.’” Id. at 105 (quoting Ex parte

Young, 209 U.S. at 160). Indeed, for a suit seeking an injunction against an

official for violating his own state’s laws,

the entire basis for the doctrine of Young and
Edelman disappears. A federal court’s grant of relief
against the state officials on the basis of state law,
whether prospective or retroactive, does not
vindicate the supreme authority of federal law. On
the contrary, it is difficult to think of a greater
intrusion on state sovereignty than when a federal
court instructs state officials on how to conform their
conduct to state law.

Id. at 106.

That case and others subsequently declining to hold state officials

accountable for violations of their own state laws raise real concerns about

federal courts infringing on state sovereignty. But this case does not. There

is a minimal intrusion on sovereignty if federal courts are available as forums

for enforcing violations of a state’s law against tribal officials because tribes

15
cannot empower their officials to violate state law the way a state can interpret

its own laws to permit a state official’s challenged conduct. See Mescalero

Apache, 411 U.S. at 148–49. Put differently, concerns of sovereignty oblige the

federal courts not to instruct a state official how to conform her conduct to her

own state law and not to instruct a tribal official how to conform his conduct to

his own tribal law. There are no concomitant sovereignty concerns, however,

that prevent the federal courts from instructing a tribal official how to conform

that official’s conduct to either state or federal law. The Bay Mills Court’s

recognition that tribal officials may be sued for violations of state law thus

stands in harmony with Pennhurst.

The majority in Bay Mills acknowledged that its holding was anything

but novel. In discussing how Michigan could seek an injunction against tribal

officials for violating Michigan law, the Court cited Santa Clara Pueblo and

said “[a]s this Court has stated before, analogizing to Ex parte Young, tribal

immunity does not bar such a suit for injunctive relief against individuals,

including tribal officers, responsible for unlawful conduct.” Bay Mills, 572 U.S.

at 796 (citation omitted). Bay Mills was not a wayward departure from, but

rather a clear demarcation of, the outer limits of tribal sovereign immunity.

The Tribal Defendants offer a second reason why we should marginalize

Bay Mills’s observation: the Supreme Court must have intended to authorize

only individual capacity suits against tribal officials who violate state law. We

see no basis to give Bay Mills such a cramped reading. The majority opinion

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states that “Michigan could bring suit against tribal officials or employees

(rather than the tribe itself) . . . .” Id. It makes little sense that the Supreme

Court would take care to distinguish between tribal officials and employees, on

the one hand, and the Tribe itself, on the other, if the Court did not intend that

there be a difference. That passage is most logically read to mean that official

capacity suits are available against tribal officials, individual capacity suits

are also available to be brought, and tribal sovereign immunity bars only suits

against the Tribe itself.

In addition, the Tribal Defendants’ proffered reading makes little sense

because the only material difference between individual and official capacity

suits for prospective, injunctive relief is that a judgment against the latter is

enforceable against future successive officers whereas judgments against the

former are not. See, e.g., Lewis v. Clarke, 137 S. Ct. 1285, 1291 (2017). From

an efficiency perspective, it is impractical to require a new lawsuit and a new

injunction each time a tribal official is replaced. We will not impose such a

requirement here.

Finally, the Tribal Defendants urge us to construe Bay Mills as

authorizing only states to sue tribal officials for prospective, injunctive relief

based on violations of state law and not as authorizing individuals to bring

those same suits. Yet “there is no warrant in [the Supreme Court’s] cases for

making the validity of an Ex parte Young action turn on the identity of the

plaintiff.” Va. Office for Protection and Advocacy v. Stewart, 563 U.S. 247, 256

17
(2011). The Supreme Court in Bay Mills faced a suit brought by a state. It

therefore makes sense that it would speak in terms of Michigan being able to

sue, without reference to individuals. Official capacity suits, however, have

long been available to private parties. See Larson v. Domestic & Foreign

Commerce Corp., 337 U.S. 682, 689–92 (1949); Shields v. Utah Idaho Cent. R.R.

Co., 305 U.S. 177, 183–84 (1938); see also Vann v. U.S. Dep’t of Interior, 701

F.3d 927, 929 (D.C. Cir. 2012) (permitting official-capacity suits of travel

officials by private parties under analogy to Ex Parte Young). States often rely

on private parties to act as “private attorneys general” to enforce state law.

See, e.g., Vt. Stat. Ann. tit. 9, § 2461 (authorizing private enforcement of the

Vermont Consumer Protection Act). We see no reason to depart from that

tradition now.

Our holding balances the competing interests of tribes and states as

separate sovereigns. Absent this mechanism for a state to enforce its laws

against out-of-state tribal officials, the state and its citizens would seemingly

be without recourse. Tribes and their officials would be free, in conducting

affairs outside of reserved lands, to violate state laws with impunity. Given

the unique geographic and political position of Indian tribes, allowing such

conduct by tribes is especially fraught. The Constitution vests original

jurisdiction in the Supreme Court for states to sue other states (a

relinquishment of sovereignty originating from the Constitutional Convention,

in which, regrettably, Indian tribes were not allowed to participate), see U.S.

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Const. art. III, § 2, cl. 2, but it provides no parallel avenue for disputes between

states and tribes. An Ex parte Young-type suit protects a state’s important

interest in enforcing its own laws and the federal government’s strong interest

in providing a neutral forum for the peaceful resolution of disputes between

domestic sovereigns, and it fairly holds Indian tribes acting off-reservation to

their obligation to comply with generally applicable state law.

C.

Apart from arguing that the Ex parte Young-like theory is unavailable

for violations of state law, the Tribal Defendants also take issue with the

application of Ex parte Young for alleged violations of the federal Racketeer

Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961 et seq.

We hold that Plaintiffs’ RICO claims may proceed.

As the Tribal Defendants acknowledge, Ex parte Young suits are

available for alleged violations of federal law. We have said, however, that the

federal law under which a plaintiff seeks the injunction must provide the

plaintiff with a private right of action, and the law must apply substantively

to the tribe. See Garcia, 268 F.3d at 88. The Tribal Defendants contend that

Plaintiffs’ RICO claim fails on both counts. We disagree.

First, as the Tribal Defendants concede, binding Circuit precedent

compels us to hold that RICO authorizes private rights of action for injunctive

relief. See Chevron Corp. v. Donzinger, 833 F.3d 74, 137 (2d Cir. 2016) (holding

that “a federal court is authorized to grant equitable relief to a private plaintiff

19
who has proven injury to its business or property by reason of a defendant’s

violation of [18 U.S.C.] § 1962”).

Second, we hold that in these circumstances, RICO applies

substantively to the Tribe. The Tribal Defendants argue that government

entities like the Tribe, and “arms of the Tribe” like Plain Green, are not subject

to RICO liability because they are incapable of forming the mens rea necessary

to commit a predicate act. They argue that specific intent to defraud is an

element of the predicate acts of mail and wire fraud, and thus the payday

lending entity cannot be subject to RICO liability.

Some district courts (and at least one treatise) endorse a rule that

government entities, and their officers sued in their official capacities, cannot

ordinarily be sued under RICO. See, e.g., Frooks v. Town of Cortlandt, 997 F.

Supp. 438, 457 (S.D.N.Y. 1998); Nu-Life Constr. Corp. v. Bd. of Educ. of the

City of N.Y., 779 F. Supp. 248, 251 (E.D.N.Y. 1991); Gregory P. Joseph, Civil

RICO: A Definitive Guide § 11A, at 109–13 (4th ed. 2015). At least as to suits

for prospective, injunctive relief, their reasoning is not persuasive. We agree

with the Third Circuit that courts exempting municipalities from RICO

liability on the ground that they are incapable of forming a RICO mens rea

have failed to furnish a defensible explanation for their conclusion, see Genty

v. Resolution Trust Corp., 937 F.2d 899, 909 (3d Cir. 1991), particularly given

that private corporations are routinely held liable for damages under RICO.

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 It appears that the reasoning in these and other decisions has less to do

with the inability of a public entity to form a criminal intent than with concern

over the appropriateness of imposing the burden of punitive damages on

taxpayers based on misconduct of a public official. For example, while the

Ninth Circuit in Lancaster Community Hospital v. Antelope Valley Hospital

District, 940 F.2d 397 (9th Cir. 1991), summarily asserts that “government

entities are incapable of forming a malicious intent,” it relies on the fact that

“the taxpayers[] will pay if Lancaster’s RICO claim is successful,” and, in light

of RICO’s treble damages provisions, be “made liable for extraordinary

damages as a result of the actions of a few dishonest officials.” Id. at 404. This

outcome, the court observes, would offend “public policy.”2 Id.

But concern for the inappropriateness of saddling the taxpayers with

the financial burden of punitive damages imposed on a government entity is

plainly not implicated where, as here, the relief sought is an injunction and not

money damages. Accordingly, we hold that Plaintiffs’ RICO claim applies

substantively to the Tribal Defendants in this case.

2 Furthermore, the Supreme Court’s ruling in Newport v. Fact Concerts, Inc., 453 U.S. 247
(1981), on which Lancaster and other decisions rely, did not base its analysis on the inability
of municipalities to form “criminal” or “willful” intent. Rather, in holding that Congress did
not intend for punitive damages to be available under § 1983, the Court relied on the fact that
“municipal immunity from punitive damages was well established at common law by 1871,”
such that Congress would have explicitly stated its intention to displace that common law
doctrine if it intended to do so. Id. at 263. The Court cited state common law holdings, which
were in most cases explained in terms of avoiding an undue financial burden on taxpayers,
although in some cases based on the inability of municipalities to form “criminal” or “willful”
intent necessary to support punitive damages. But Newport did not adopt that rationale. It
was merely mentioned as the justification some states had given for not allowing punitive
damages against municipalities. See id. at 260–66.

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 IV.

We turn next to the motions of all the Defendants to compel arbitration.

The district court denied these motions, concluding that the dispute belongs

instead in federal court because the loan agreements effectively insulate

Defendants from claims that they have violated federal and state law. See

Gingras, 2016 WL 2932163, at *18. We affirm the district court’s ruling.

A.

The first question is who decides arbitrability, a question we review de

novo to determine “whether the issue of arbitrability is for the court or for the

arbitrator.” Bell v. Cendant Corp., 293 F.3d 563, 565 (2d Cir. 2002).

Parties to an arbitration agreement can, of course, “agree to arbitrate

‘gateway’ questions of ‘arbitrability.’” Rent-A-Center, W., Inc. v. Jackson, 561

U.S. 63, 68–69 (2010) (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S.

79, 83–85 (2002)). When an agreement “clearly and unmistakably” delegates

the issue of arbitrability to the arbitrator, we will enforce it. See id. at 69 n.1

(internal quotation marks omitted).

Defendants argue that the agreements unambiguously require the

parties’ disagreements to be arbitrated. The agreements refer “any dispute” to

“binding arbitration” and define “Dispute” to include “any issue concerning the

validity, enforceability, or scope of . . . the Agreement to Arbitrate.” J. App.

114–15. Although on its face this clause appears to give the arbitrator blanket

authority over the parties’ disputes, several issues give us pause. These

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include provisions governing class actions, such as this, and the actual scope

of the arbitrator’s authority, given the broad authority of tribal courts to set

aside the arbitrator’s award. See id. 116.

In any event, “[i]f a party challenges the validity under [9 U.S.C.] § 2 of

the precise agreement to arbitrate at issue, the federal court must consider the

challenge before ordering compliance with that agreement under § 4.” Rent-A-

Center, 561 U.S. at 71. Plaintiffs mount a convincing challenge to the

arbitration clause itself. Their complaint alleges that “[t]he delegation

provision of the Purported Arbitration Agreement is also fraudulent.” J. App.

55. That specific attack on the delegation provision is sufficient to make the

issue of arbitrability one for a federal court. See Rent-A-Center, 561 U.S. at 71;

see also 9 U.S.C. § 2. The district court was correct to decide it, and we properly

consider it on appellate review.3

B.

We next ask whether the arbitration agreements are enforceable. The

Federal Arbitration Act (“FAA”) expresses a preference for enforcing

arbitration clauses, “save upon such grounds as exist at law or in equity for the

revocation of any contract.” 9 U.S.C. § 2. Unconscionability is one such

ground. Under Vermont law, a contract provision may be unenforceable where

3Defendants would have us believe that the Supreme Court’s recent decision in Henry Schein,
Inc. v. Arthur & White Sales, Inc., 139 S. Ct. 524 (2019), requires a different outcome. But
Schein dealt with an exception to the threshold arbitrability question—the so-called “wholly
groundless” exception—not a challenge to the validity of an arbitration clause itself. See id. at
529–31. As such, Schein has no bearing on this case.

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the provision is procedurally unconscionable, substantively unconscionable, or

both. See Glassford v. BrickKicker, 35 A.3d 1044, 1048–49 (Vt. 2011). We

review de novo the district court’s denial of the motions to compel arbitration.

Lloyd v. J.P. Morgan Chase & Co., 791 F.3d 265, 269 (2d Cir. 2015).

This case, and the tribe-payday lending partnership it challenges, is not

unique. Courts across the country have confronted transparent attempts to

deploy tribal sovereign immunity to skirt state and federal consumer

protection laws. Bay Mills, 572 U.S. at 825 (Scalia, J., dissenting). Part of this

scheme involves crafting arbitration agreements like the ones here, in which

borrowers are forced to disclaim the application of federal and state law in

favor of tribal law (that may or may not be exceedingly favorable to the tribal

lending entity). Like the Fourth and Seventh Circuits, we are not sold. We

hold that the agreements here are both unenforceable and unconscionable. See

Hayes v. Delbert Servs. Corp., 811 F.3d 666 (4th Cir. 2016); Jackson v. Payday

Fin., LLC, 764 F.3d 765 (7th Cir. 2014).

First, we conclude that the arbitration agreements are unenforceable

because they are designed to avoid federal and state consumer protection laws.

Similar to the agreement in Hayes, Plaintiffs’ agreements here require the

application of tribal law only and disclaim the application of state and federal

law.4 See J. App. 116–17. The arbitration mechanism in these agreements

4Defendants point to the arbitration agreements’ definition of “disputes” to argue that, unlike
the agreement in Hayes, these agreements do not explicitly disclaim federal law. That
definition provides that a dispute includes claims based on a “federal or state constitution,
statute, ordinance, regulation, or common law.” J. App. 115. But it is far from clear what

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purports to offer neutral dispute resolution but appears to disallow claims

brought under federal and state law. And the Supreme Court has made clear

that arbitration agreements that waive a party’s right to pursue federal

statutory remedies are prohibited. See Am. Exp. Co. v. Italian Colors Rest.,

570 U.S. 228, 235–36 (2013). By applying tribal law only, arbitration for the

Plain Green borrowers appears wholly to foreclose them from vindicating

rights granted by federal and state law. We agree with the Fourth Circuit that

“[t]he just and efficient system of arbitration intended by Congress when it

passed the FAA may not play host to this sort of farce.” Hayes, 811 F.3d at

674.

Defendants’ argument that tribal law perhaps incorporates, or can be

supplemented with, some federal law or Montana law does not save the

agreements. It is altogether unclear what that incorporation or

supplementation would look like. Tribal law is generally unavailable outside

of the reservation, and Plaintiffs plausibly allege that any tribal law that would

be applied has been carefully tailored to protect Plain Green’s interests. See J.

App. 73 (“[The Tribe agreed to] adopt a finance code that is acceptable to all

import this provision provides given that two pages later the agreements specifically state that
“[n]either this Agreement nor the Lender is subject to the laws of any state of the United
States.” Id. 117 (emphasis added). Further, and despite the lack of a similar provision in the
arbitration agreement explicitly disclaiming the application of federal law, the loan
agreements themselves insist that the borrower “acknowledge[s] and consent[s] to be bound to
the terms of this Agreement, consent[s] to the sole subject matter and personal jurisdiction of
the Chippewa Cree Tribal Court, and further agree[s] that no other state or federal law or
regulation shall apply to this Agreement, its enforcement or interpretation.” Id. 109 (emphasis
added). At best, then, Defendants can claim that the agreements intentionally obfuscate, as
opposed to explicitly disclaim, the application of federal law.

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parties and provide for the licensing of an arm of the tribe to engage in

consumer lending.”). Tribal law provides no guarantee that federal and state

statutory rights could be pursued, much less vindicated, in this arbitral forum.

Second, we conclude that the arbitration agreements are substantively

unconscionable under Vermont law because the arbitral forum for which they

provide is illusory. While the agreements provide for arbitration to be

conducted by an AAA or JAMS arbitrator at a location convenient for the

borrower, the mechanism of tribal court review hollows out those protections.

Rather than the sharply limited federal court review of the arbitrators’

decisions as constrained by the FAA, the review by tribal courts under these

agreements hands those courts unfettered discretion to overturn an

arbitrator’s award. See id. 116 (any arbitral award “may be set aside by the

tribal court upon judicial review”). Ultimately, the tribal court is directed to

interpret its own law—alleged to be completely one-sided in favor of the tribe—

which effectively insulates the tribe from any adverse award and leaves

prospective litigants without a fair chance of prevailing in arbitration. See

Jackson, 764 F.3d at 778–79 (applying Illinois law).

Adding to the unconscionability of arbitrating under these terms are the

allegations of corruption in tribal government. Not only have several tribal

officers pleaded guilty to federal corruption crimes, but an FBI and Interior

Department investigation uncovered tribal judges who felt intimidated enough

to rule for the Tribe when they otherwise may not have. See J. App. 279–81.

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Requiring non-tribal plaintiffs to be subject to an illusory arbitration reviewed

in toto by a tribal court with a strong interest in avoiding an award adverse to

the lender is unconscionable.

Nor do the opt-out provisions save the agreements. Plaintiffs must opt

out within 60 days of entering the agreement, which is unlikely for

unsophisticated payday loan borrowers who may well be stuck in a cycle of debt

and require a stream of new loans to pay off old loans. Further, opting out

merely puts plaintiffs in tribal court—the same hostile forum in which they

would end up after arbitration.

C.

Finally, we must determine whether any clause ought to be severed from

the agreements. Under the FAA, “an arbitration provision is severable from

the remainder of the contract” unless there is a separate challenge “directed

specifically to the agreement to arbitrate.” Rent-A-Center, 561 U.S. at 71. We

are well aware of our obligation to “rigorously enforce arbitration agreements

according to their terms,” United Bhd. of Carpenters & Joiners of Am. v.

Tappan Zee Constructors, LLC, 804 F.3d 270, 274 (2d Cir. 2015) (internal

quotation marks omitted), but Plaintiffs mount a specific, separate challenge

to the arbitration clause. That that challenge overlaps with the challenges to

the balance of the loan agreement does not change our analysis.

And as the district court recognized, Plaintiffs’ substantive challenges

to the loan agreements are based on federal and state consumer protection

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laws. The challenge to the arbitration provisions is based on unconscionability,

which we have analyzed above. We find no basis therefore to sever any

particular provision of the arbitration agreement because, given the pervasive,

unconscionable effects of the arbitration agreement interwoven within it,

nothing meaningful would be left to enforce.

V.

Plain Green is a payday lending entity cleverly designed to enabled

Defendants to skirt federal and state consumer protection laws under the cloak

of tribal sovereign immunity. That immunity is a shield, however, not a sword.

It poses no barrier to plaintiffs seeking prospective equitable relief for

violations of federal or state law. Tribes and their officers are not free to

operate outside of Indian lands without conforming their conduct in these

areas to federal and state law. Attempts to disclaim application of federal and

state law in an arbitral forum subject to exclusive tribal court review fare no

better. The judgment of the district court is affirmed.5

5The district court correctly concluded that, because an Ex parte Young-style suit is limited to
prospective injunctive relief, it does not permit the type of constructive trust remedy for unjust
enrichment also sought here by Plaintiffs. See Gingras, 2016 WL 2932163, at *5, *26 n.26; see
also Edelman v. Jordan, 415 U.S. 651, 665–66 (1974) (“equitable restitution” remedy
impermissible under Ex parte Young because it effectively constituted a money judgment). A
further question may be whether an injunction barring the Tribe from recovering the principal
of its loans might cross the same line, either on the theory that the lent money belongs to the
Tribe, or that such injunctive relief “transfers” from the tribe’s coffers an asset (the receivable),
which is effectively equivalent to money. Without expressing any view, we note this issue for
the district court’s consideration at some appropriate point. As Plaintiffs’ demands include
injunctive relief that undoubtedly falls within the protected scope of Ex parte Young, the
question whether an injunction barring recovery of the principal of a loan is outside the scope
allowed by Ex parte Young might be deferred to a later stage in the proceedings.

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