RIPPLE, Circuit Judge.
Deborah Jackson, Linda Gonnella, and James Binkowski (collectively "the Plaintiffs") initially brought this action in Illinois state court against Payday Financial, LLC, and other defendant entities owned by, or doing business with, Martin A. Webb, an enrolled member of the Cheyenne River Sioux Tribe and also a named defendant (collectively "the Loan Entities" or "the Defendants"). The Plaintiffs alleged violations of Illinois civil and criminal statutes related to loans that they had received from the Loan Entities. After the Loan Entities removed the case to the district court, that court granted the Loan Entities' motion to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3). It held that the loan agreements required that all disputes be resolved through arbitration conducted by the Cheyenne River Sioux Tribe on the Cheyenne River Sioux Tribe Reservation, located within the geographic boundaries of South Dakota. The Plaintiffs timely appealed.
Following oral argument, we ordered a limited remand to the district court for further factual findings concerning (1) whether tribal law was readily available to the litigants and (2) whether arbitration under the auspices of the Cheyenne River Sioux Tribe, as set forth in the loan documents, was available to the parties. The district court concluded that, although the tribal law could be ascertained, the arbitral mechanism detailed in the agreement did not exist.
Based on these findings, we now conclude that the Plaintiffs' action should not have been dismissed because the arbitral mechanism specified in the agreement is illusory. We also cannot accept the Loan Entities' alternative argument for upholding the district court's dismissal: that the loan documents require that any litigation be conducted by a tribal court on the Cheyenne River Sioux Tribe Reservation. As the Supreme Court has explained, most recently in Plains Commerce Bank v. Long Family Land & Cattle Co., 554 U.S. 316, 128 S.Ct. 2709, 171 L.Ed.2d 457 (2008), tribal courts have a unique, limited jurisdiction that does not extend generally to the regulation of nontribal members whose actions do not implicate the sovereignty of the tribe or the regulation of tribal lands. The Loan Entities have not established a colorable claim of tribal jurisdiction, and, therefore, exhaustion in tribal courts is not required. Accordingly, we cannot uphold the district court's dismissal on this alternative basis.
The Loan Entities maintain several websites that offer small, high-interest loans to customers. The entire loan transaction is completed online; a potential customer applies for, and agrees to, the loan terms from his computer. Some loan agreements are assigned to CashCall, Inc. ("CashCall"), a California corporation, after they are executed and funds are advanced.
Each plaintiff applied for and received a $2,525 loan through one of the websites belonging to Mr. Webb's entities. Their
The Plaintiffs executed their loan agreements in 2010 and 2011, received loan funds and made payments on the loans. The record does not indicate whether any of the Plaintiffs have defaulted on the loans.
The Plaintiffs initially brought this action in Illinois state court and alleged violations of Illinois civil and criminal usury statutes as well as the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. They sought, among other relief, restitution, statutory damages, litigation costs, an injunction precluding the Loan Entities from further lending to Illinois residents, and a declaration that the arbitration clauses contained in the loan agreements are not enforceable. The Loan Entities removed the action to federal court; they then moved to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3) on the ground that the agreements required arbitration on the reservation. In reply, the Plaintiffs submitted that the agreements were void and thus the arbitration clauses were unenforceable. They additionally had argued that they executed the loan agreements under duress and that Illinois public policy precluded enforcement of the arbitration clause.
The district court dismissed the case for improper venue. It determined that (1) "the alleged illegality of the Loan Agreements has no bearing on the validity of the forum selection clause"; (2) the Plaintiffs' agreement to arbitrate was not made under duress; and (3) the Plaintiffs failed to
The Plaintiffs timely appealed. After oral argument, we determined that several factual matters critical to our resolution of the issues on appeal should be addressed in the first instance by the district court:
In the subsequent proceedings before the district court, the parties submitted arguments and documentary evidence in support of their respective positions. After considering this evidence, the district court found that the first inquiry could be answered in the affirmative. The court observed that "[e]ach party was able to secure a copy of the Tribal Law" and therefore concluded that "the law c[ould] be acquired by reasonable means."
In reaching its conclusion, the district court examined the manner in which an arbitrator had been selected in a similar dispute being litigated in the United States District Court for the Southern District of Florida. See Inetianbor v. CashCall, Inc., 962 F.Supp.2d 1303 (S.D.Fla.2013). The district court observed:
The parties submitted supplemental briefs in response to the district court's findings.
We now turn to the merits of the Plaintiffs' appeal and begin by examining our jurisdiction and the applicable standard of review.
The jurisdiction of the district court was premised on the Class Action Fairness Act. See 28 U.S.C. § 1332(d). Under the terms of that statute,
Id. § 1332(d)(2). Another provision of the Act forbids a district court from exercising jurisdiction if the plaintiff class numbers less than one hundred. See id. § 1332(d)(5).
In this putative class action, the Plaintiffs are all citizens of Illinois who have borrowed money at usurious rates from the Loan Entities. According to the Loan Entities' removal papers, they have made loans to over one hundred individuals in Illinois.
Turning to the requirements for the Defendants, Mr. Webb is an enrolled member of the Cheyenne River Sioux Tribe and resides on its reservation. Mr. Webb is the sole member of the majority of the named entities.
The threshold amount in controversy also is met. In an affidavit submitted with the Loan Entities' removal papers, Mr. Webb states that he "ha[s] knowledge of and ready access to the business records of the [Loan Entities]" and that he examined the data from those records.
Our appellate jurisdiction is premised upon 28 U.S.C. § 1291, which gives us
The loan agreements' forum selection clause was the basis for the district court's dismissal for improper venue.
The parties agree that our review of the enforceability of a forum selection clause is de novo. See Cont'l Ins. Co. v. M/V Orsula, 354 F.3d 603, 607 (7th Cir. 2003). They disagree, however, as to whether the Plaintiffs are entitled to inferences in their favor. In Faulkenberg v. CB Tax Franchise Systems, LP, 637 F.3d 801, 806 (7th Cir.2011), we stated that in reviewing a district court's grant of a Rule 12(b)(3) motion, reasonable inferences from the facts should be construed in the plaintiffs' favor. This approach is consistent with that of other courts of appeals and commentators.
As the Supreme Court noted in Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 67, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010), the Federal Arbitration Act ("FAA") reflects the overarching principle that arbitration is a matter of contract. As a general rule, courts must "`rigorously
In addressing this question, we first must identify the law that governs the validity of the arbitration clause, which, as we have noted, is a specialized forum selection clause. Here, the district court's jurisdiction over the Plaintiffs' claims is based on the parties' diversity of citizenship.
When applied to the circumstances here, however, we are without clear guidance from the Supreme Court: It has not yet decided "the Erie issue of which law governs when," as here, "a federal court, sitting in diversity, evaluates a forum selection clause in the absence of a controlling federal statute." Wong v. PartyGaming Ltd., 589 F.3d 821, 826 (6th Cir.2009). At present, the majority of federal circuits hold "that the enforceability of a forum selection clause implicates federal procedure and should therefore be governed by federal law." Id. at 827 & n. 5 (collecting cases);
Id. at 423 (citations omitted). In contracts containing a choice of law clause, therefore, the law designated in the choice of law clause would be used to determine the validity of the forum selection clause. See id.; IFC Credit Corp. v. United Bus. & Indus. Fed. Credit Union, 512 F.3d 989, 991 (7th Cir.2008) ("Abbott Laboratories... held that the validity of a forum-selection clause depends on the law of the jurisdiction whose rules will govern the rest of the dispute.").
Applying the rule in Abbott Laboratories, we look to the choice of law clause in the loan agreements, which provides that the agreements are "governed by the Indian Commerce Clause of the Constitution of the United States of America and the laws of the Cheyenne River Sioux Tribe."
We have held that "[t]he presumptive validity of a forum selection clause can be overcome if the resisting party can show it is `unreasonable under the circumstances.'" Bonny v. Soc'y of Lloyd's, 3 F.3d 156, 160 (7th Cir. 1993) (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972)). Relying on the Court's decisions in M/S Bremen and Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991), we have identified three sets of circumstances that will render a forum selection clause "unreasonable":
Bonny, 3 F.3d at 160 (first alteration in original) (citations omitted) (quoting M/S Bremen, 407 U.S. at 18, 92 S.Ct. 1907).
Applying this standard, we believe enforcement of the forum selection clause contained in the loan agreements is unreasonable. The loan agreements specify that disputes arising from the agreement "will be resolved by Arbitration, which shall be conducted by the Cheyenne River Sioux Tribal Nation by an authorized representative in accordance with its consumer dispute rules and the terms of this Agreement."
Under Illinois law, "[a] forum selection clause in a contract is prima facie valid and should be enforced unless the opposing party shows that enforcement would be unreasonable under the circumstances." IFC Credit Corp. v. Rieker Shoe Corp., 378 Ill.App.3d 77, 317 Ill.Dec. 214, 881 N.E.2d 382, 389 (2007). This is true, however, only of "agreement[s] reached through arm's-length negotiation between experienced and sophisticated business people"; "a forum selection clause contained in boilerplate language indicates unequal bargaining power, and the significance of the provision is greatly reduced." Id.
In an effort to make more concrete the standard of reasonableness articulated in M/S Bremen, Illinois courts typically have looked to six factors:
Id., 317 Ill.Dec. 214, 881 N.E.2d at 389-90 (citing Dace Int'l, Inc. v. Apple Computer, Inc., 275 Ill.App.3d 234, 211 Ill.Dec. 591, 655 N.E.2d 974, 977 (1995)). Even assuming that tribal law governs the formation and construction of the contract, another key element weighs against enforcement of the clause, namely that the clause was not the product of equal bargaining: It imposes on unsophisticated consumers a nonexistent forum for resolution of disputes in a location that is remote and inconvenient.
Although helpful in evaluating the mine-run of forum selection clauses that a court may encounter, these criteria are ill-suited for evaluating the forum designated in these particular loan agreements. The factors set forth in IFC Credit Corp. presuppose that the designated forum exists and is available to resolve the underlying dispute. Such is not the case here.
We do find helpful, however, the closely allied yet distinct concept of unconscionability. See Phoenix Ins. Co. v. Rosen, 242 Ill.2d 48, 350 Ill.Dec. 847, 949 N.E.2d 639, 647 (2011). Under Illinois law, a contractual provision may be unconscionable on either procedural or substantive grounds. Razor v. Hyundai Motor Am., 222 Ill.2d 75, 305 Ill.Dec. 15, 854 N.E.2d 607, 622 (2006). "Procedural unconscionability refers to a situation where a term is so difficult to find, read, or understand that the plaintiff cannot fairly be said to have been aware he was agreeing to it, and also takes into account a lack of bargaining power." Id. "Factors to be considered in determining whether an
Kinkel v. Cingular Wireless LLC, 223 Ill.2d 1, 306 Ill.Dec. 157, 857 N.E.2d 250, 267 (2006) (internal quotation marks omitted). Like other contractual provisions, forum selection clauses — even those designating arbitral fora — are not immune from the general principle that unconscionable contractual provisions are invalid.
The choice of forum provision at issue here is both procedurally and substantively unconscionable. Turning first to procedural unconscionability, although the district court held on remand that the substantive commercial law of the Cheyenne River Sioux Tribe was reasonably ascertainable, it did not reach this conclusion with respect to tribal rules for conducting arbitrations. Indeed, the record establishes that such procedures do not exist. The Tribe has neither a set of procedures for the selection of arbitrators nor one for the conduct of arbitral proceedings. Consequently, it was not possible for the Plaintiffs to ascertain the dispute resolution processes and rules to which they were agreeing. Moreover, even if the described arbitral forum were functional and its rules ascertainable, we agree with the Federal Trade Commission that "[t]he inconsistent language in the loan contracts, specifying both exclusive Tribal Court jurisdiction and exclusive tribal arbitration without reconciling those provisions, also ma[de] it difficult for borrowers to understand exactly what form of dispute resolution they [we]re agreeing to."
With respect to substantive unconscionability, the dispute-resolution mechanism set forth in the loan agreements — "conducted by the Cheyenne River Sioux Tribal Nation by an authorized representative in accordance with its consumer dispute
The Loan Entities nevertheless maintain that these state-law-based shortcomings are irrelevant because Section 2 of the Federal Arbitration Act "preempts arbitrator bias defenses because such defenses are not applicable to all contracts."
We cannot accept this argument. The arbitration clause here is void not simply because of a strong possibility of arbitrator bias, but because it provides that a decision is to be made under a process that is a sham from stem to stern. Although the contract language contemplates a process conducted under the watchful eye of a legitimate governing tribal body, a proceeding subject to such oversight simply is not a possibility. The arbitrator is chosen in a manner to ensure partiality, but, beyond this infirmity, the Tribe has no rules for the conduct of the procedure. It hardly frustrates FAA provisions to void an arbitration clause on the ground that it contemplates a proceeding for which the entity responsible for conducting the proceeding has no rules, guidelines, or guarantees of fairness. See Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 940 (4th Cir.1999) ("By creating a sham system unworthy even of the name of arbitration, Hooters completely failed in performing its contractual duty."); cf. Penn v. Ryan's Family Steak Houses, Inc., 269 F.3d 753, 756, 758-61 (7th Cir.2001) (refusing to enforce an arbitration clause that is "hopelessly vague and uncertain as to the obligation
The Loan Entities also contend that section 5 of the FAA prevents our voiding the arbitration clause. That section provides, in relevant part, that, "if for any other reason there shall be a lapse in the naming of an arbitrator or arbitrators[,] ... the court shall designate and appoint an arbitrator or arbitrators ... who shall act under the said agreement with the same force and effect as if he or they had been specifically named therein." 9 U.S.C. § 5.
Like the Loan Entities' earlier argument, this submission assumes that the arbitration provision's only infirmity is the disability of a particular arbitrator or class of arbitrators. Here, however, the likelihood of a biased arbitrator is but the tip of the iceberg. Although the arbitration provision contemplates the involvement and supervision of the Cheyenne River Sioux Tribe, the record establishes that the Tribe does not undertake such activity. Furthermore, there are no rules in place for such an arbitration. Under these circumstances, the court cannot save the arbitral process simply by substituting an arbitrator.
This case is therefore distinctly different from the situation that we faced in Green v. U.S. Cash Advance Illinois, LLC, 724 F.3d 787 (7th Cir.2013). In Green, a lender moved to dismiss a plaintiff's claims under the Truth in Lending Act on the ground that the lending contract required submission of disputes to "arbitration by one arbitrator by and under the Code of Procedure of the National Arbitration Forum." Id. at 788 (internal quotation marks omitted). The National Arbitration Forum, however, had stopped taking consumer cases for arbitrations. The district court, therefore, denied the motion to dismiss on the ground that "the identity of the Forum as the arbitrator [wa]s `an integral
In Green, we noted that, if the particular arbitration clause before us had been shorn of all detail as to the number of arbitrators, the identity of the arbitrators or the rules that the arbitrators were to employ, the mere existence of the arbitration clause would have made it clear that the parties still would have preferred to submit their dispute to arbitration. Id. at 792-93.
Although such mutuality of intent might have been apparent in the contractual relationship in Green, it is not at all apparent in the situation before us today. The contract at issue here contains a very atypical and carefully crafted arbitration clause designed to lull the loan consumer into believing that, although any dispute would be subject to an arbitration proceeding in a distant forum, that proceeding nevertheless would be under the aegis of a public body and conducted under procedural rules approved by that body. The parties might have chosen arbitration even if they could not have had the arbitrator whom they had specified or even if the rules to which they had stipulated were not available. But even if these circumstances had been tolerable, a far more basic infirmity would have remained: One party, namely the loan consumer, would have been left without a basic protection and essential part of his bargain — the auspices of a public entity of tribal governance. The loan consumers did not agree to arbitration under any and all circumstances, but only to arbitration under carefully controlled circumstances — circumstances that never existed and for which a substitute cannot be constructed.
In sum, the arbitration clause is both procedurally and substantively unconscionable under Illinois law. It is procedurally unconscionable because the Plaintiffs could not have ascertained or understood the arbitration procedure to which they were agreeing because it did not exist. It is substantively unconscionable because it allowed the Loan Entities to manipulate what purported to be a fair arbitration process by selecting an arbitrator and proceeding according to nonexistent rules. It is clearly "unreasonable" under the standard articulated in M/S Bremen. Under such circumstances, the FAA does not preempt state law, nor does it operate to permit the creation, from scratch, of an alternate arbitral mechanism.
Having concluded that the arbitration clause contained in the loan agreements is unenforceable, we now turn to the Loan Entities' alternative argument for affirmance — that the agreements' forum selection clause requires any litigation to be conducted in the courts of the Cheyenne River Sioux Tribe.
"[T]he inherent sovereign powers of an Indian[
The Loan Entities have not met their burden of establishing tribal court jurisdiction over the Plaintiffs' claims.
In Plains Commerce Bank, the Court explicitly noted that the nature of tribal court authority over non-Indians is circumscribed: "We have frequently noted, however, that the sovereignty that the Indian tribes retain is of a unique and limited character. It centers on the land held by the tribe and on the tribal members within the reservation." Id. at 327, 128 S.Ct. 2709 (emphasis added) (citation omitted) (internal quotation marks omitted). In short, "Montana and its progeny permit tribal regulation of nonmember conduct inside the reservation that implicates the tribe's sovereign interests." Id. at 332, 128 S.Ct. 2709 (additional emphasis added).
Here, the Plaintiffs have not engaged in any activities inside the reservation. They did not enter the reservation to apply for the loans, negotiate the loans, or execute loan documents. They applied for loans in Illinois by accessing a website. They made payments on the loans and paid the financing charges from Illinois. Because the Plaintiffs' activities do not implicate the sovereignty of the tribe over its land and its concomitant authority to regulate the activity of nonmembers on that land, the tribal courts do not have jurisdiction over the Plaintiffs' claims.
We also are unpersuaded by the Defendants' argument that the Plaintiffs "consented to tribal jurisdiction." Appellees' Br. 37. As the Court has noted on more than one occasion, tribal courts are not courts of general jurisdiction. See Nevada v. Hicks, 533 U.S. 353, 367, 121 S.Ct. 2304, 150 L.Ed.2d 398 (2001). Moreover, a tribal court's authority to adjudicate claims involving nonmembers concerns its subject matter jurisdiction, not personal jurisdiction. See id. n. 8, 121 S.Ct. 2304. Therefore, a nonmember's consent to tribal authority is not sufficient to establish the jurisdiction of a tribal court. As the Court explained in Plains Commerce Bank:
554 U.S. at 337, 128 S.Ct. 2709 (emphasis added) (citations omitted) (internal quotation marks omitted). The Loan Entities, however, have made no showing that the present dispute implicates any aspect of "the tribe's inherent sovereign authority."
The Loan Entities maintain, however, that the doctrine of tribal exhaustion requires that the issue of jurisdiction be decided, in the first instance, by a tribal court. The concept of federal court abstention in cases involving Indian tribes known as the "tribal exhaustion rule" generally "requires that federal courts abstain from hearing certain claims relating to Indian tribes until the plaintiff has first exhausted those claims in a tribal court." Garcia v. Akwesasne Hous. Auth., 268 F.3d 76, 79 (2d Cir.2001). It is not at all clear, however, that the doctrine of tribal exhaustion requires a federal court to abstain from exercising jurisdiction when that exercise will not interfere with a pending tribal court action. See Altheimer & Gray v. Sioux Mfg. Corp., 983 F.2d 803, 814 (7th Cir.1993) ("It is unclear as to how broadly Iowa Mutual [Insurance Co. v. LaPlante, 480 U.S. 9, 107 S.Ct. 971, 94 L.Ed.2d 10 (1987),] and National Farmers [Union Insurance Cos. v. Crow Tribe of Indians, 471 U.S. 845, 105 S.Ct. 2447, 85 L.Ed.2d 818 (1985),] should be read.... [T]he two Supreme Court cases dealt only with the situation where a tribal court's jurisdiction over a dispute has been challenged by a later-filed action in federal court.").
The Loan Entities argue that, "[t]o trigger the tribal exhaustion rule, only a `colorable' claim of tribal subject matter jurisdiction need be asserted."
In Ninigret Development Corp. v. Narragansett Indian Wetuomuck Housing
Elliott v. White Mountain Apache Tribal Court, 566 F.3d 842 (9th Cir.2009), is equally unhelpful to the Loan Entities in establishing a "colorable" claim of tribal court authority. Elliott concerned an action brought by the White Mountain Apache Tribe against a non-Indian, who had gotten lost on reservation lands. In an effort to attract attention, Elliott had set a signal fire, which grew into a substantial forest fire, burned over 400,000 acres, and caused millions of dollars in damage. The tribe brought suit in tribal court for damages, "alleging violations of tribal executive orders, the tribal game and fish code, the tribal natural resource code, and common law negligence and trespass." Id. at 845. The Ninth Circuit agreed with the tribe that this scenario raised a colorable claim of tribal jurisdiction:
Id. at 849-50 (emphasis added) (citations omitted) (quoting Hicks, 533 U.S. at 359, 121 S.Ct. 2304). Again, the Loan Entities have asserted nothing akin to the Tribe's right, as a landowner, "to occupy and exclude."
The present dispute does not arise from the actions of nonmembers on reservation land and does not otherwise raise issues of tribal integrity, sovereignty, self-government, or allocation of resources. There simply is no colorable claim that the courts of the Cheyenne River Sioux Tribe can exercise jurisdiction over the Plaintiffs. Tribal exhaustion, therefore, is not required.
The arbitration provision contained in the loan agreements is unreasonable and substantively and procedurally unconscionable under federal, state, and tribal law. The district court, therefore, erred in granting the Defendants' motion to dismiss for improper venue based on that provision. Additionally, the courts of the Cheyenne River Sioux Tribe do not have subject matter jurisdiction over the Plaintiffs' claims. Nor have the Defendants raised a colorable claim of tribal jurisdiction necessary to invoke the rule of tribal exhaustion. The district court's dismissal, therefore, cannot be upheld on the alternative basis that this dispute belongs in tribal court. We therefore reverse the judgment of the district court granting the Defendants' motion to dismiss and remand for further proceedings consistent with this opinion. The Plaintiffs may recover their costs in this court.
REVERSED and REMANDED
The Loan Entities argue that Faulkenberg v. CB Tax Franchise Systems, LP, 637 F.3d 801 (7th Cir.2011), is "an outlier" and note that "Faulkenberg itself cites Kochert v. Adagen Med. Int'l, Inc. for the standard of review, but Kochert makes no mention of drawing facts or inferences in any party's favor. 491 F.3d 674, 677 (7th Cir.2007)." Appellees' Br. 8. We are not persuaded. Faulkenberg cites Kochert for the proposition that a district court's dismissal under Rule 12(b)(3) is subject to de novo review; the fact that Kochert does not mention inferences in the non-moving party's favor does not render Faulkenberg's statement an outlier, as demonstrated by the number of cases from our sister circuits that clearly state this proposition.
The courts of Illinois will respect a choice of law clause if the contract is valid and if the law chosen is not contrary to Illinois public policy. Thomas v. Guardsmark, 381 F.3d 701, 705 (7th Cir.2004). Here, the Plaintiffs and amici maintain that several provisions of the loan agreements violate Illinois public policy. First, the Attorney General argues that "Illinois has a strong public policy against enforcing provisions requiring plaintiffs to adjudicate claims in a distant, inconvenient forum where, as in this case, the clause is embedded in contracts `involving unsophisticated consumers in small transactions in the marketplace without any real opportunity to consider [whether to accept the clause].'" Illinois Att'y Gen. Br. 12 (alteration in original) (quoting IFC Credit Corp. v. Rieker Shoe Corp., 378 Ill.App.3d 77, 317 Ill.Dec. 214, 881 N.E.2d 382, 394 (2007)); see also infra pp. 777-79. The Plaintiffs maintain that the contracts violate Illinois public policy against usury because they exceed the allowable interest rate under state law. See 815 ILCS 205/4(1) (stating that "in all written contracts it shall be lawful for the parties to stipulate or agree [to] 9% per annum, or any less sum of interest"). Small consumer loans, however, are exempted from this requirement, to the extent that they comply with the State's Consumer Installment Loan Act. See id. ("It is lawful to receive or to contract to receive and collect interest and charges as authorized by this Act and as authorized by the Consumer Installment Loan Act....").
The Defendants seize on this exception and note that, when the Plaintiffs entered into the loan agreements, "Illinois law imposed no cap on the interest rate allowed for small consumer loans," and, when the General Assembly amended the law, it imposed a maximum rate of ninety-nine percent. Reply Brief of Defendants-Appellees to Briefs of Amici Curiae [hereinafter Defendants' Reply Br.] 21. Defendants cannot invoke this exception, however, because they are not licensed providers as required by 205 ILCS 670/1; moreover, they do not maintain that they otherwise have complied with the consumer-protection provisions of the Consumer Installment Loan Act, see, e.g., 205 ILCS 670/14 (prohibiting a lender from "pledg[ing], hypothecat[ing] or sell[ing] a note entered into under the provisions of this Act by an obligor except to another licensee under this Act"). The Loan Entities tacitly admit that the licensure requirements may call the contract into question, but maintain that "[w]hether the licensure requirements cited by Plaintiffs apply here must still be decided[ ]in the forum the Parties agreed to." Appellees' Br. 19. n. 12. We need not decide the question of what law governs the validity and interpretation of the loan agreements, however, because whether federal, tribal, or Illinois law applies, the same result obtains. See infra pp. 775-79.
In their supplemental submission, the Defendants try to characterize the Illinois Attorney General's amicus brief as stating that "under federal law (and thus tribal) law, the forum selection clause is valid." Defendants' Reply Br. 23. The Defendants misread the Attorney General's submission. In her brief to this court, the Attorney General reviewed our decision in IFC Credit Corp. v. Aliano Brothers General Contractors, 437 F.3d 606 (7th Cir.2006), which noted that
Illinois Att'y Gen. Br. 13 (alteration in original) (quoting IFC Credit Corp., 437 F.3d at 611). The Attorney General then proceeds to argue that, under Illinois law, the choice of forum provision is invalid. The Attorney General does not analyze the choice of forum provision under federal law, nor does she make any predictions about what the outcome of such an analysis might be.
We note that other courts have refused to honor agreements to arbitrate, where the rules are inherently biased or are not formulated in good faith. See, e.g., Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 940 (4th Cir. 1999) ("By creating a sham system unworthy even of the name of arbitration, Hooters completely failed in performing its contractual duty."). Indeed, we have refused to enforce an arbitration agreement where the obligation was so one-sided as to make any genuine obligation illusory. Cf. Penn v. Ryan's Family Steak Houses, Inc., 269 F.3d 753, 756, 758-61 (7th Cir.2001) (observing that the agreement to arbitrate is "hopelessly vague and uncertain as to the obligation EDS has undertaken" and concluding that, "[f]or all practical purposes, EDS's promise under this contract makes performance entirely optional with the promisor" (emphasis added) (internal quotation marks omitted)).
We also cannot accept the Loan Entities' suggestion that the FAA preempts Illinois's rules on unconscionability with respect to the forum selection clause because they have a "`disproportionate impact on arbitration agreements.'" Defendants' Reply Br. 16 (quoting AT&T Mobility LLC v. Concepcion, ___ U.S. ___, 131 S.Ct. 1740, 1747, 179 L.Ed.2d 742 (2011)). According to the Loan Entities, subjecting arbitration agreements to unconscionability rules for forum selection clauses "would give States free rein to gut the FAA by labeling their policy applicable to `forum selection clauses' rather than arbitration provisions." Id. at 17. However, because the Supreme Court has treated arbitration provisions as forum selection provisions, see Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 630-31, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (treating an arbitration clause in an international agreement as it would other "freely negotiated contractual choice-of-forum provisions"), we perceive no impediments in allowing states to apply their generally applicable unconscionability rules to arbitration provisions in the same manner they would apply those rules to clauses designating non-arbitral fora.
We also note that, at several places in their submissions, the Loan Entities suggest that the dispute concerns "on reservation" activities because that is where Western Sky executed the contracts. See, e.g., Appellees' Br. 36; Defendants' Reply Br. 24. The question of a tribal court's subject matter jurisdiction over a nonmember, however, is tethered to the nonmember's actions, specifically the nonmember's actions on the tribal land. There simply is no allegation here that the dispute involves activities of the Plaintiffs on the reservation.
Id. at 175. In the present situation, there is no equivalent tribal concern that satisfied the requirement of Plains Commerce Bank.
Id. (parallel citations omitted). But see, e.g., United States v. Plainbull, 957 F.2d 724, 728 (9th Cir. 1992) (rejecting the Government's argument that "the district court abused its discretion by abstaining from the merits of this case because there was no concurrent action pending in the tribal courts" because "[w]hether a tribal action is pending, however, does not determine whether abstention is appropriate").
