(respondent) moneymutual, llc, appellant, vs. scott rilley
TRANSCRIPT
No. A14-1307
Scott Rilley, et a.I.,
vs.
MoneyMutual, LLC, Appellant.
RESPONDENTS' BRIEF
NICHOLS KASTER, PLLP E. Michelle Drake (#0387366) Daniel C.Btyden (#0302284) John G. Albanese (#0395882) 80 SouthEighth Street 4600 IDS Center Minneapolis, MN 55402 (612) 256-3200
HEANEY LAW·FIRM, .LLC MarkHeaney (#0333219) 13911 Ridgedale Drive,Suite110 Minnetonka, MN 55305 (952) 933-9655
Attorneysfor Respondents
WINTHROP & WEINSTINE, P.A.Joseph M. Windler (#0387758) Christina Rieck Loukas (#0388036) 225 South Sixth Street, Suite3500 Minneapolis, MN55402 (612) 604-6400
PUTTERMAN LOGAN Donald J. Putterman (pro hac vice)580 CaliforniaStreet, Suite1200SanFrancisco, CA94104 (415) 839-8779
Attorneys for AppellantMoneyMutual, LLC
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TABLE OF CONTENTS
TABLE OF AUTHORITIES ............................................................................................. iii
STATEMENT OF THE ISSUES ......................................................................................... 1
A. Issue No. 1 ...................................................................................................... 1
B. Issue No. 2 ...................................................................................................... 1
INTRODUCTION ................................................................................................................ 2
STATEMENT OF THE CASE AND FACTS ..................................................................... 3
A. Statement of the Case ..................................................................................... 3
B. Statement of Allegations and Facts ................................................................ 5
1. MoneyMutual Targets Its Advertising and Other Business Communications at Minnesotans ........................................................ 5
2. The Payday Loans MoneyMutual Arranges to Minnesotans Violate Minnesota Law .................................................................................... 9
ARGUMENT ..................................................................................................................... 11
A. Standard of Review ...................................................................................... 11
B. The District Court Properly Held It Has Personal Jurisdiction Over Money Mutual ............................................................................................... 12
1. Minnesota Courts Apply a Five-Factor Test to Determine If They Have Personal Jurisdiction Over a Party ......................................... .12
2. Application of the Five-Factor Test Demonstrates that the District Court Has Personal Jurisdiction Over MoneyMutual.. ..................... l3
a. The "Quantity of Contacts" Factor Weighs in Favor of Exercising Personal Jurisdiction ............................................ 13
b. The Nature and Quality of Contacts Factor Also Strongly Supports Exercising Personal Jurisdiction ............................. 16
c. Respondent's Causes of Action Arise Directly From MoneyMutual's Contacts With Minnesota, Which Shows the "Nexus" Between MoneyMutual's Contacts and This Litigation ................................................................................ 20
d. Minnesota Has a Strong Interest In Providing a Forum for Minnesotans Harmed by MoneyMutual's Violations of Minnesota Law ...................................................................... 22
e. Minnesota is the More Convenient F arum ............................ 23
3. The Court Has Jurisdiction Under the Calder/Griffis Test.. ............. 23
C. The District Court Did Not Abuse Its Discretion By Denying MoneyMutual's Motion to Dismiss For Failure To Join Indispensable Parties ........................................................................................................... 26
CONCLUSION .................................................................................................................. 29
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TABLE OF AUTHORITES
Cases Page No.
Aros v. Beneficial Arizona, Inc., 194 Ariz. 62 (1999) ......................................................................................................... 9
Am. Gen. Life & Accident Ins. Co. v. Wood, 429 F .3d 83 (4th Cir. 2005) .......................................................................................... 27
Austin v. Ala. Check Cashers Ass 'n., 936 So.2d 1014 (Ala. 2005) ............................................................................................ 9
Bode v. Minnesota Dep't of Natural Res., 594 N.W.2d 257 (Minn. Ct. App. 1999) ....................................................................... 27
Bode v. Minnesota Dep 't of Natural Res., 612 N.W.2d 862 (Minn. 2000) ..................................................................................... 27
Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593 (E.D. Pa. 2007) ............................................................................ 21
Burger King v. Rudzewicz, 471 U.S. 472 (1985) ...................................................................................................... 20
Butler v. JLA Indus. Equip., Inc., 845 N.W.2d 834 (Minn. Ct. App. 2014) ................................................................ 11, 13
C.H Robinson Worldwide, Inc., 772 N.W.2d 528 (Minn. Ct. App. 2009) ....................................................................... 13
Calder v. Jones, 465 U.S. 783 (1984) ............................................................................................... 12, 25
Cash America Net of Nev., LLC v. Pennsylvania, 978 A.2d 1028 (Pa. Cornrow. Ct. 2009) ......................................................................... 9
Citizen Band Potawatomi Indian Tribe of Oklahoma v. Collier, 17 F.3d 1292 (lOth Cir. 1994) ...................................................................................... 29
Croix Retail, Inc. v. Logiciel, Inc., No. A03-220, 2003 WL 22181537 (Minn. Ct. App. Sept. 23, 2003) .................................................. 13
1ll
Dent-Air, Inc. v. Beech Mountain Air Serv., Inc., 332 N.W.2d 904 (1983) ................................................................................................ 17
Dillon v. BMO Harris Bank, NA., 16 F. Supp. 3d 605 (M.D.N.C. 2014) ........................................................................... 27
Domtar, Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25 (Minn. 1995) ....................................................................................... 14
Goetz v. LUVRAJ, LLC, 986 A.2d 1012 (R.I. 2010) ...................................................................................... 15-16
Griffis v. Luban, 646 N.W.2d 527 (Minn. 2002) ........................................................................ 12, 23, 24
Hardrives, Inc. v. City of LaCrosse, 240 N.W.2d 814 (Minn. 1976) .................................................................................... .13
Havel v. Honda Motor Europe Ltd., No. CIV.A. H-13-1291, 2014 WL 4967229 (S.D. Tex. Sept. 30, 2014) ............................................................. 25
Herpich v. Wallace, 430 F.2d 792 (5th Cir. 1970) ........................................................................................ 29
Hoyt Props., Inc. v. Prod. Res. Grp., L.L.C., 716 N.W.2d 366 (Minn. Ct. App. 2006) ........................................................... 11-12, 27
Hoyt Props., Inc. v. Prod. Res. Grp., L.L. C., 736 N.W.2d 313 (Minn. 2007) ......................................................................... 11-12, 27
Illinois v. Hemi Group, LLC, 622 F.3d 754 (7th Cir. 2010) .................................................................................. 18-19
IMO Indus., Inc. v. Kiekert AG, 15 5 F .3d 254 (3d Cir.1998) .......................................................................................... 24
International Shoe Co. v. Washington, 326 U.S. 310.(1945) ...................................................................................................... 12
Jensen v. Modern Aero, Inc., A09-657, 2010 WL 88229 (Minn. Ct. App. Jan. 12, 2010) ........................................................ .20
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Johnson v. Cash Store, 68 P.3d 1099 (Wash. Ct. App. 2003) .............................................................................. 9
Juelich v. Yamazaki Mazak Optonics Corp. 682 N.W.2d 565 (Minn. 2004) .............................................................................. 12, 16
Kisch v. Skow, 233 N.W.2d 732 (Minn. 1975) .................................................................................... .28
KSTP-FM, LLC v. Specialized Commc'ns, Inc., 602 N. W.2d 919 (Minn. Ct. App. 1999) ...................................................................... .20
Lakin v. Prudential Sec., Inc., 348 F.3d 704 (8th Cir. 2003) ........................................................................................ 18
Maritz, Inc. v. Cybergold, Inc., 947 F. Supp. 1328 (E.D. Mo. 1996) ............................................................................. 15
Marquette Nat'/ Bank of Minneapolis v. Norris, 270 N.W.2d 290 (Minn. 1978) ..................................................................................... 12
Morris v. Barkbuster, Inc., 923 F.2d 1277 (8th Cir. 1991) ...................................................................................... 20
MRL Dev. I, LLC v. Whitecap Inv. Corp., No. CV 2013-48, 2014 WL 5441552 (D.V.I. Oct. 26, 2014) ................................................................... 25
Multi-Tech Sys., Inc. v. Voca/Tec Commc'ns, Inc., 122 F. Supp. 2d 1046 (D. Minn. 2000) ........................................................................ .18
O'Connor v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312 (3d Cir. 2007) ......................................................................................... 24
Rostad v. On-Deck, Inc., 372 N.W.2d 717 (Minn. 1985) .................................................................................... .21
Schuler v. Meschke, 435 N.W.2d 156 (Minn. Ct. App. 1989) ...................................................................... .14
Shepherdv. Stade, A07-1220, 2008 WL 2246259 (Minn. Ct. App. June 3, 2008) ................................................ 26, 27
v
SoftBrands Mfg., Inc. v. Missing Link Consulting, Inc., CIV.04-3900 ADM/AJB, 2004 WL 2944112 (D. Minn. Dec. 20, 2004) .............................................................. 22
State by Humphrey v. Granite Gate Resorts, Inc., 568 N.W.2d 715 (Minn. Ct. App. 1997) .......................................................... 15, 20,22
Sunnarborg Well Drilling, Inc. v. Thompson's Well Pump & Drilling, Inc., A04-2159, 2005 WL 1331722 (Minn. Ct. App. June 7, 2005) ................................................ 18, 20
Temple v. Synthes Corp., Ltd., 498 U.S. 5 (1990) .......................................................................................................... 28
Trivedi, LLC v. Lang, No. Al3-2087, 2014 WL 2807981 (June 23, 2014) .............................................................................. 23
Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408 (Minn. 1992) ..................................................................................... 13
Vang v. Whitby Tool & Eng'g Co., Ltd., 484 F. Supp. 2d 966 (D. Minn. 2007) ........................................................................... 20
Volkman v. Hanover Investments, Inc., 843 N.W.2d 789 (Minn. Ct. App. 2014) ....................................................................... 23
Walden v. Fiore, 134 S. Ct. 1115 (2014) .................................................................................................. 24
Whittaker v. Collins, 25 N.W. 632 (Minn. 1885) ........................................................................................... 28
World-Wide Volkswagen Corp. v. Woodson 444 U.S. 286 (1980) ...................................................................................................... 12
Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997) ....................................................................... 17-18
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Rules & Statutes
Minn. R. Civ. P. 19 ............................................................................................................. 26
Minn. Stat. § 47.60 ...................................................................................................... 10, 11
Minn. Stat.§ 47.601 ........................................................................................ 10, 11, 26, 28
Minn. Stat. §480A.08 ......................................................................................................... 13
Other Authorities
Advisory Comm. Notes-1968 Amend. to Minn. R. Civ. P. 19 ....................................... 27
7 Federal Practice and Procedure§ 1607 (3d ed. 2001) .................................................... 27
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STATEMENT OF THE ISSUES
A. Issue No. 1
Appellant's description of the personal jurisdiction issue on appeal does not set
forth the many contacts it had with Minnesota. Accordingly, Respondent offers an
alternative Statement of the Issue: Did the District Court properly exercise personal
jurisdiction over Appellant where it: 1) arranged payday loans to over 1,000 Minnesotans
who indicated on their loan applications that they resided in Minnesota; 2) routinely
advertises on television broadcast into Minnesota; 3) marketed to Minnesotans online by
paying to be a "sponsored result" and an "exact match" when someone searches on
Google for "payday loan Minnesota" or "payday loan Minneapolis;" and 4) routinely sent
emails soliciting business to persons it knew were Minnesotans.
Apposite Authority:
• State by Humphrey v. Granite Gate Resorts, Inc., 568 N. W.2d 715 (Minn. Ct. App. 1997).
• Schuler v. Meschke, 435 N.W.2d 156 (Minn. Ct. App. 1989).
B. Issue No. 2
Appellant argued below that the payday lenders in its network were "necessary"
parties to the litigation under Minn. R. Civ. P. 19. Appellant's description of the issue on
appeal, however, does not adequately explain why the District Court held these lenders
were not necessary. Accordingly, Respondent offers an alternative Statement of the
Issue: Did the District Court properly determine that the lenders in Appellant's network
were not necessary parties where it found that 1) complete relief can be afforded among
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the parties without the presence of these lenders; 2) Respondent's claims are more akin to
tort claims than contract claims; 3) Minnesota's payday loan laws impose duties on
Appellant that are separate and distinct from the duties placed on the lenders themselves;
and 4) Respondent's consumer protection claims were based on misrepresentations made
by Appellant, not the lenders.
Apposite Authority:
• Minn. R. Civ. P. 19.
• Dillon v. BMO Harris Bank, NA., 16 F. Supp. 3d 605 (M.D.N.C. 2014).
INTRODUCTION
In this civil action, four Minnesotans who received payday loans through a
Nevada limited liability company named MoneyMutual, LLC ("MoneyMutual" or
"Appellant") brought suit asserting that the terms of the payday loans they received
violate virtually all of the substantive restrictions on payday lending under Minnesota
law. The Plaintiffs also alleged that MoneyMutual misrepresented the loans in its
marketing. Money Mutual primarily challenges the District Court's exercise of personal
jurisdiction over these Minnesotans' claims brought under Minnesota law. MoneyMutual
has had a robust advertising campaign in Minnesota for years, including extensive
television advertising using the celebrity spokesperson Montel Williams. In addition,
MoneyMutual specifically targets Minnesotans searching for payday loans online, emails
borrowers it knows are Minnesotans to solicit business, and has arranged many payday
loans to borrowers it knew were Minnesotans over the years. In short, Money Mutual has
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countless contacts with Minnesota, far more than is required to satisfy due process.
Accordingly, the Dakota County District Court should be affirmed.
STATEMENT OF THE CASE AND FACTS
A. Statement of the Case.
Money Mutual is a prominent broker of payday loans. It is well-known because it
engages in widespread marketing on television using a high-profile celebrity
spokesperson. Its business practices, however, have recently come under intense
scrutiny, as law enforcement actions have been brought by regulators in Pennsylvania
and Illinois which allege MoneyMutual violated those states' payday lending and usury
laws. The State of New York recently announced it had subpoenaed Money Mutual, and
the federal Consumer Financial Protection Bureau, which has jurisdiction over payday
lending, announced it was investigating MoneyMutual. Private lawsuits pending in other
jurisdictions allege MoneyMutual is engaged in a RICO conspiracy to violate state usury
and payday loan laws. Compl., ~~ 26-27.
The claims asserted by Respondents here are in a similar vein. Respondents assert
that Money Mutual arranges payday loans to Minnesotans that violate Minnesota's usury
caps on payday lending. Respondents allege that Money Mutual's payday loans also
violate restrictions under Minnesota law that are designed to prevent borrowers from
being caught in the "debt trap" or "cycle of debt" which can be highly profitable for
lenders but financially disastrous to payday loan borrowers. Respondents further allege
MoneyMutual arranges payday loans between Minnesotans and lenders that have been
ordered to cease lending in Minnesota by the Minnesota Department of Commerce, or
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have been sued by the Minnesota Attorney General for extending payday loans to
Minnesotans that violate Minnesota law, or are otherwise operating illegally. The
Complaint asserts claims under Minnesota's payday lending laws, Minnesota consumer
protection statutes, and the common law. See id., ~~ 1-7.
The Complaint was filed in Dakota County District Court on March 18, 2014, and
MoneyMutual moved to dismiss the Complaint on June 20, 2014. MoneyMutual's
motion primarily argued that the Dakota County District Court lacked personal
jurisdiction. Appellant also moved to dismiss the Complaint on the theory that the
payday lenders in its network were necessary parties but had not been joined in the
litigation.
By Order dated July 16, 2014, the Dakota County District Court, the Honorable
Martha M. Simonett presiding, denied the motion to dismiss. In so holding, the District
Court held that because of the numerous contacts Appellant has had with Minnesota, and
"by generating profits by selling leads consisting of Minnesota residents seeking loans,"
Appellant had '"purposely availed itself of the benefits and protections of Minnesota.'"
Trial Court Order, dated July 16, 2014, at 7; Appl.'s Add. at 7. Accordingly, it held that
exercising personal jurisdiction over the claims asserted by Minnesotans under Minnesota
law was consistent with due process.
The District Court also denied Appellant's motion to dismiss for failure to join
necessary parties. In denying this portion of Appellant's motion, the District Court held
inter alia that that complete relief can be afforded among the parties without joining the
lenders in MoneyMutual's network, and that MoneyMutual faced separate and distinct
4
liability from its lenders under Minnesota law. Accordingly, the District Court denied the
motion to dismiss based on Minn. R. Civ. P. 19 as well.
This appeal followed.
B. Statement of Allegations and Facts.
1. MONEYMUTUAL TARGETS ITS ADVERTISING AND OTHER BUSINESS COMMUNICATIONS AT MINNESOTANS.
MoneyMutual has been advertising on television broadcast into Minnesota since at
least 2010, perhaps longer. See Affidavit of Michelle Kunza, ~ 2 ("Kunza Aff., ~ _");
Affidavit of Scott Rilley, ~ 2 ("Rilley Aff., ~ _"); Affidavit of Michael Gonzales, ~ 1
("Gonzales Aff., ~ _"). MoneyMutual's advertising on television broadcast into
Minnesota appears to be robust and long-running, as three Plaintiffs recall seeing
MoneyMutual's advertisements on television, and PlaintiffRilley saw the advertisements
multiple times. Kunza Aff., ~ 2; Rilley Aff., ~ 2; Gonzales Aff., ~ 1. In addition, a
private investigator and former law enforcement officer hired by Respondents recalls
seeing MoneyMutual advertising on television broadcast into Minnesota, and saw one
such advertisement as recently as June 4, 2014. Affidavit of Michael A. Grostyan, ~~ 3-4
("Grostyan Aff., ~ _"). A member of the proposed class named Sara Olson has also
seen many advertisements for MoneyMutual on television broadcast into Minnesota over
the years. Affidavit of Sara Olson,~ 1 ("Olson Aff., ~ _").
In addition to its television advertising, MoneyMutual targets Minnesotans with its
Google "ad words" marketing campaign. See Affidavit of Eleanor Frisch, ~~ 7-15.
("Frisch Aff., ~ __ "). Google, the online search engine, for a price will make a
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company a "sponsored result" when someone searches for certain words or phrases on
Google. See id., ,-r,-r 8, 14. For example, if a company sells cat food, for a price Google
will make it a "sponsored result" when someone searches for "cat food Minneapolis" on
Google, and will be an "exact match" if the company purchases the precise phrase "cat
food Minneapolis." See id., ,-r 14. MoneyMutual apparently has purchased this form of
advertising from Google for the phrases "payday loans Minnesota" and "payday loan
Minneapolis" because it is a "sponsored result" when these phrases are searched on
Google. !d., ,-r,-r 11-15. Indeed, Money Mutual is an "exact match" for those search terms.
!d. Accordingly, MoneyMutual's online marketing targets Minnesotans who search for a
payday loan online.
In addition to its direct marketing to Minnesotans, MoneyMutual routinely sends
communications to individuals who indicate on their payday loan application that they
live, work and bank in Minnesota. To apply for a MoneyMutualloan, the borrower must
go to www.moneymutual.com, and complete the online loan application. Grostyan Aff.,
,-r,-r 5-6 & Ex. B-C (screenshots of MoneyMutual online application); Kunza Aff., ,-r 4;
Rilley Aff., ,-r 2; Gonzales Aff., ,-r 2. MoneyMutual's loan application requires the
applicant to provide their home address, telephone number, place of employment, bank
name, bank routing and account numbers. Grostyan Aff., ,-r 6 & Ex. C; Kunza Aff., ,-r 4;
Rilley Aff., ,-r 3. Accordingly, Minnesota borrowers indicate on their MoneyMutualloan
application that they live in Minnesota, have a Minnesota telephone number, and provide
bank information indicating that their bank is in Minnesota. Grostyan Aff., ,-r,-r 5-6,
Kunza Aff., ,-r 4, Rilley Aff., ,-r 3; Compl., ,-r,-r 54, 66.
6
If an applicant begins but does not complete MoneyMutual's loan application,
MoneyMutual will send emails to the applicant urging him or her to finish the
application. See Grosystan Aff., Exs. D & E. MoneyMutual sends these applicants
emails which state "[ d]on't delay - finish filling out your application so you can get the
money you are looking for" and "[t]he funds you are looking for are still just a few clicks
away." !d. MoneyMutual sends these emails to applicants who indicate on their loan
applications that they live in Minnesota, and who have provided Minnesota telephone
numbers and zip codes to Money Mutual. Groystan Aff., ~~ 5-8; Exs. B & C.
If the Minnesotan completes the application and MoneyMutual approves it,
MoneyMutual then arranges a payday loan between the Minnesotan and a payday lender
in its network. Rilley Aff., ~ 3; Kunza Aff., ~~ 5, 8; Gonzales Aff., ~ 3; Compl., ~~ 37,
54, 62, 66, 79. MoneyMutual does this by selling "leads" to the lenders in its network.
Affidavit of Tim Madsen, ~ 8. In the case of Minnesota borrowers, Money Mutual sells
information about Minnesotans who completed its online application to the payday
lenders, presumably by sending the lender the borrower's application, including the
borrower's address and contact information. MoneyMutual then sends an email to
approved borrowers that states "Congratulations! You have been matched with [lender],
one of the lenders in the MoneyMutual network." Rilley Aff., ~ 4; Compl., ~ 68. Using
the bank account and routing information provided on the MoneyMutualloan application,
the payday loan is deposited directly into the Minnesotan's bank account through an
electronic transaction. See, e.g., Compl., ~ 79. The lender then begins taking payments
7
on the loan directly from the borrower's bank account, also by means of an electronic
transaction that debits the borrower's bank account. Kunza Aff., ,-[ 6; Rilley Aff., ,-[ 5.
When a Minnesotan pays off a payday loan she obtained through Money Mutual, it
then solicits that Minnesotan for more payday loans by sending emails offering special
deals or promotions, or more generally promoting MoneyMutual's payday loans. See
Olson Aff., ,-[ 3 & Exs. 1-42. For example, MoneyMutual sent Ms. Olson 42 emails in a
three month period after she received her first payday loan through MoneyMutual. !d.
These emails urged her to "hurry now and don't miss this exclusive offer" and to
"[c]heck out this premium daily offer" and that "[t]his exclusive offer is private and
discreet." See, e.g., Olson Aff., Exs. 1, 3, 4 (emphasis in original). Importantly,
MoneyMutual sends these emails to borrowers it knows are Minnesotans because they
provided their address, telephone number, and bank account numbers on their payday
loan applications. Olson Aff., ,-[ 3.
Money Mutual has arranged payday loans to over 1,000 Minnesotans. See De f.
Mem. Supp. Prot. Order Stay Discovery at 6-7 (arguing that Respondents' discovery
requests regarding the payday loans MoneyMutual arranged to Minnesotans relate to
"over 1 ,000" Minnesotans and seek "a voluminous production of documents"). 1
At oral argument, Appellant sought to backtrack from the assertion made in its motion to stay discovery that it had arranged loans to over 1,000 Minnesotans. Instead, Appellant's counsel informed the District Court that "we actually do not know" and "I have not inquired" how many Minnesotans MoneyMutual has arranged loans to. June 20, 2014 Motion Hearing Transcript at 22. In either case, the Complaint alleges that MoneyMutual has arranged over 1,000 payday loans to Minnesotans, and MoneyMutual has offered no evidence to the contrary. Complaint,,-[,-[ 1, 7.
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Accordingly, MoneyMutual's marketing and commerce in Minnesota are widespread,
and it apparently sent thousands of emails to borrowers it knew were Minnesotans
soliciting their business and congratulating them on their payday loans.
2. THE PAYDAY LOANS MONEYMUTUAL ARRANGES TO MINNESOTANS VIOLATE MINNESOTA LAW.
The loans MoneyMutual arranges to Minnesotans are highly illegal under
Minnesota law. Minnesota, like most states in the union, strictly regulates payday
lending because payday loans often target vulnerable borrowers and, left unregulated, can
lead to disastrous results for the borrowers and the communities where they live. See
Johnson v. Cash Store, 68 P.3d 1099, 1105-06 (Wash. Ct. App. 2003) (describing the
"debt treadmill" that traps consumers in a "vicious cycle of indebtedness" and noting that
a payday lender "has not regard for the disastrous economic effect of his illegally high
rates or of his constant attempt to keep borrowers in debt by encouraging renewals, and
by making difficult the payment of the principal of the obligation") (citations omitted). 2
To combat this well-documented concern about the payday lending industry,
Minnesota caps the interest and other fees that may be lawfully charged on payday loans.
For short term loans under $350, the fee and interest caps are:
2 See also Austin v. Ala. Check Cas hers Ass 'n., 936 So.2d 1014, 1023 (Ala. 2005) (noting that before Alabama enacted its payday lending laws, "[t]hose whose chief motivation was greed" preyed upon vulnerable Alabama residents and that Alabamans sought "elimination of this evil"); Cash America Net of Nev., LLC v. Pennsylvania, 978 A.2d 1028, 1038 (Pa. Commw. Ct. 2009) (noting that Pennsylvania Supreme Court views payday lending as a "predatory lending practice" that uses "subterfuge" to attempt to "circumvent fundamental public policy"); Aros v. Beneficial Arizona, Inc., 194 Ariz. 62, 65, 66 (1999) (describing how Arizona's payday lending laws were designed to protect consumers from "unconscionable lending practices" and "abuses and predatory practices").
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Loan Fee Amount $0-$50 $5.50 $50-$100 10% of loan proceeds plus $5 administrative fee $100-$250 7% of loan proceeds with a minimum of $10 plus $5 administrative
fee $250-$350 6% of loan proceeds with a mmtmum of $17.50 plus $5
administrative fee
Minn. Stat. § 47.60, subd. 2. For loans above $350 and less than $1000, Minnesota law
caps the annual interest rate at 33%, and caps administrative fees at $25. Minn. Stat. §
47.601, subd. 2(a)(3)(ii); Compl. ~~ 17-18 & Ex. A. In addition, Minnesota law restricts
the number of times a payday loan can be renewed or "rolled over" in order to prevent
borrowers from being trapped in the downward cycle of debt that can result from
unregulated payday loans. Minn. Stat.§ 47.60 subd. 2(f).
Minnesota law also requires payday lenders to obtain a license from the Minnesota
Department of Commerce and provide certain reports to the Department about their
operations. Minn. Stat. § 47.601, subd. 2(a)(3)(i). The Minnesota Department of
Commerce maintains a list of the payday lenders who are licensed to lend in Minnesota,
which IS available on its website. See
http://www.commerce.state.mn.us/FSLicensees/sl.html. Accordingly, it would be easy
for MoneyMutual to determine which online payday lenders are licensed to offer payday
loans in Minnesota, and then only arrange payday loans to Minnesotans from those
lenders. Compl., ~ 44.
Instead, MoneyMutual brazenly flouts Minnesota law by arranging payday loans
to Minnesotans that violate virtually every substantive restriction on payday lending
10
under Minnesota law. Compl., ~~ 44-48. For example, MoneyMutual's website indicates
that "the typical representative APR range" of its online payday lenders "is somewhere
between 261% and 1304% for a 14 day loan." https://moneymutual.com/ (last visited
June 10, 2014). These APRs are far in excess of the interest payday lenders may charge
under Minnesota law. See Minn. Stat. § 47.60, subd. 2; Minn. Stat. § 47.601, subd.
2(a)(3)(ii).
Rather than arrangmg loans to Minnesotans that comply with Minnesota law,
MoneyMutual arranges loans with "Bottom Dollar Payday," which has been ordered to
cease and desist from lending to Minnesotans by the Minnesota Department of
Commerce; it arranges payday loans to Minnesotans with CashCure, whose loans the
Department of Commerce told Ms. Kunza were "void" under Minnesota law; and it
arranged payday loans to Minnesotans with Sure Advance, LLC, a Delaware lender who
was sued by the Minnesota Attorney General's Office for extending loans to Minnesotans
that violate Minnesota law. Com pl. ~~ 61; 64, 71 & Exs. C, F. In short, while
Money Mutual goes out of its way to target Minnesotans with its marketing, it makes no
effort to comply with Minnesota law.
ARGUMENT
A. Standard of Review.
The District Court's denial of MoneyMutual's motion to dismiss for lack of
personal jurisdiction is reviewed de novo. Butler v. JLA Indus. Equip., Inc., 845 N.W.2d
834, 839 (Minn. Ct. App. 2014). The denial of the MoneyMutual's motion to dismiss for
failure to join a necessary party is reviewed for abuse of discretion. Hoyt Properties, Inc.
11
v. Prod. Res. Grp., L.L.C., 716 N.W.2d 366, 377 (Minn. Ct. App. 2006) affd, 736
N.W.2d 313 (Minn. 2007).
B. The District Court Properly Held that It Has Personal Jurisdiction Over Money Mutual.
1. MINNESOTA COURTS APPLY A FIVE-FACTOR TEST TO DETERMINE IF THEY HAVE PERSONAL JURISDICTION OVER A PARTY.
The Minnesota Supreme Court uses a five factor analysis in conducting a
minimum contacts due process analysis. See Juelich v. Yamazaki Mazak Optonics Corp.,
682 N.W.2d 565, 570 (Minn. 2004). The five factors are: (1) the quantity of contacts
with the forum state; (2) the nature and quality of those contacts; (3) the connection of the
cause of action with these contacts; (4) the interest of the state providing a forum; and (5)
the convenience of the parties. !d. In addition, the court should consider whether
exercising personal jurisdiction would "offend 'traditional notions of fair play and
substantial justice."' Griffis v. Luban, 646 N.W.2d 527, 531-32 (Minn. 2002) (quoting
International Shoe Co. v. Washington, 326 U.S. 310, 319 (1945)). Importantly, a
Minnesota court would not violate the Due Process Clause by exercising personal over a
party if the party could "reasonably anticipate being haled into court" in Minnesota.
Calder v. Jones, 465 U.S. 783, 790 (1984) (citing World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980)).
The Minnesota Supreme Court has instructed that when a district court is
considering a motion to dismiss for lack of personal jurisdiction, "the factual allegations
in the complaint and supporting affidavits are to be taken as true." Marquette Nat 'l Bank
of Minneapolis v. Norris, 270 N.W.2d 290, 292 (Minn. 1978) ("For purposes of a Rule
12
12.02, Rules of Civil Procedure, pretrial motion to dismiss for lack of personal
jurisdiction, the factual allegations in the complaint and supporting affidavits are to be
taken as true."). In addition, the facts alleged by the plaintiff are viewed "in the light
most favorable" to plaintiffs on a motion to dismiss for lack of personal jurisdiction. See
Croix Retail, Inc. v. Logiciel, Inc., No. A03-220, 2003 WL 22181537, at *1 (Minn. Ct.
App. Sept. 23, 2003) (Albanese Aff., Ex. A).3
A "prima facie" showing of personal jurisdiction is sufficient to defeat a motion to
dismiss for lack of personal jurisdiction. C.H Robinson Worldwide, Inc., 772 N.W.2d
528, 533 (Minn. Ct. App. 2009) (stating that plaintiffs need only make a "prima facie
showing of jurisdiction"). The Minnesota Supreme Court has repeatedly emphasized
that, in close cases, "doubts should be resolved in favor of retention of jurisdiction."
Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 411 (Minn. 1992); Butler v. JLA
Indus. Equip., Inc., 845 N.W.2d at 840 (quoting Hardrives, Inc. v. City of LaCrosse, 240
N.W.2d 814, 818 (Minn. 1976). This, however, is not a close case. As set forth below,
Respondents easily satisfy this standard.
2. APPLICATION OF THE FIVE-FACTOR TEST DEMONSTRATES THAT THE DISTRICT COURT HAS PERSONAL JURISDICTION OVER MONEYMUTUAL.
a. The "Quantity of Contacts" Factor Weighs in Favor of Exercising Personal Jurisdiction.
In applying the quantity of contacts factor, Minnesota courts count the number of
contacts a party has with Minnesota to determine if the party has sufficient minimum
3 In accordance with Minn. Stat. §480A.08, subd. 3, unpublished decisions are attached to the Affidavit of John Albanese. ("Albanese Aff., Ex. __ .")
13
contacts to exercise personal jurisdiction. See, e.g., Schuler v. Meschke, 435 N.W.2d
156, 160 (Minn. Ct. App. 1989) (finding personal jurisdiction where defendant had made
"numerous phone calls" and sent "numerous letters" into Minnesota). "A single contact
with the forum can be sufficient if the cause of action arises out of that contact." Domtar,
Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 31 (Minn. 1995). In a difficult case, a
court might wrestle with whether a handful of letters or telephone calls are sufficient to
satisfy this factor. The instant action, however, does not involve a mere handful of
contacts.
To the contrary, the record indicates that MoneyMutual has thousands of contacts
with Minnesota. It has been advertising on television in Minnesota since at least 2009,
and witnesses have seen the advertisements repeatedly. It has allegedly arranged payday
loans to over 1,000 Minnesotans. See Def. Mem. Supp. Prot. Order Stay Discovery at 6-
7 (admitting that the allegations in Respondents' complaint "relate[] to over "1 ,000
Minnesotans"). In addition, the record shows that MoneyMutual routinely communicated
with Minnesota loan applicants by email, congratulating them on receiving the loan and
soliciting additional loans from borrowers after their loans are paid off. See Statement of
Allegations and Facts, Section B.l., supra.
MoneyMutual protests that its emails to Plaintiffs and putative class members do
not support jurisdiction because the emails were "automated communications." Appl.'s
Br. at 25. This argument is meritless. Whether the emails were "automated" or not is
irrelevant because it is fully within MoneyMutual's control as to whether it is going to
send emails, automatically or not, to people that it knows live in Minnesota.
14
MoneyMutual surely has the ability to not send "automated" emails to people who enter a
Minnesota address into its system.
MoneyMutual's numerous contacts far exceed what is necessary to establish
personal jurisdiction. Directly on point is Granite Gate, where the Minnesota Attorney
General sued a company operating a gambling website under Minnesota's consumer
protection statutes. State by Humphrey v. Granite Gate Resorts, Inc., 568 N.W.2d 715,
718 (Minn. Ct. App. 1997). The Minnesota Court of Appeals found that Minnesota had
personal jurisdiction because "248 Minnesota computers accessed and 'received
transmissions from'" the website, Minnesotans had called the toll-free number, and the
defendant's mailing list included "at least one Minnesota resident." !d. at 718-19. In so
holding, the court noted that "Minnesota courts have concluded that defendants who
know their message will be broadcast in this state are subject to suit here." !d.
Specifically, the court found that in paying "for advertising in English on an American
commercial site indicates an intent to reach the American market, and by advertising their
services with a toll-free number, appellants indicated their intent to solicit responses from
all jurisdictions within that market, including Minnesota." !d. at 720.
The Granite Gate court concluded that defendants' "clear effort to reach and seek
potential profit from Minnesota consumers provide[ d] minimum contacts of a nature and
quality sufficient to support a threshold finding of personal jurisdiction." !d. at 720. See
also Maritz, Inc. v. Cybergold, Inc., 947 F. Supp. 1328, 1333 (E.D. Mo. 1996) (finding
jurisdiction where Missouri computers had accessed defendant's website 131 times);
Goetz v. LUVRAJ, LLC, 986 A.2d 1012, 1018-19 (R.I. 2010) (interpreting Minnesota law
15
and finding that defendant's customer list which included the "names and addresses of
120 Minnesota residents" was "sufficient to satisfy the quantity of contacts factor for
personal jurisdiction").
MoneyMutual's contacts with Minnesota far exceed the contacts that were
sufficient to establish jurisdiction in Granite Gate. Here, not only did many Minnesotans
access MoneyMutual's website and view its television advertising, MoneyMutual
repeatedly directed its marketing to individuals it knew were Minnesotans. There are
also many more Minnesotans who obtained payday loans through Money Mutual than had
accessed defendant's website in Granite Gate.
MoneyMutual's other attempt to distinguish Granite Gate is unpersuastve.
MoneyMutual maintains that in Granite Gate, "the Court emphasized that the
advertisement showed an intent to enter the Minnesota market by having WagerNet
contract with Minnesotans, and thus to ultimately profit from Minnesotans," and
MoneyMutual contends that it does not engage in such activities. Appl.'s Br. at 39. This
contention is unavailing as MoneyMutual does essentially the same thing: it arranges
payday loans with Minnesotans, and profits off of selling Minnesotans' personal
information. Accordingly, the quantity of MoneyMutual's contacts with Minnesota
weighs heavily in favor of personal jurisdiction.
b. The Nature and Quality of Contacts Factor Also Strongly Supports Exercising Personal Jurisdiction.
MoneyMutual's contacts with Minnesota relate directly to the illegal payday loans
it arranged to Minnesotans. It advertised its services in Minnesota, arranged payday
16
loans to Minnesotans who responded to its advertising, accepted payments from lenders
in exchange for leads on Minnesota residents, communicated with Minnesotans relating
to their loans, and solicited additional business by email from Minnesotans who received
a loan. By directing all these contacts into Minnesota, and by generating profits by
selling leads consisting of Minnesota residents seeking loans, MoneyMutual
"purposefully availed itself of the benefits and protections of Minnesota" such that
exercising personal jurisdiction comports with Due Process. See Juelich, 682 N.W.2d at
574 (citing Dent-Air, Inc. v. Beech Mountain Air Serv., Inc., 332 N.W.2d 904, 907
(1983)). The District Court's conclusion in this regard is amply supported by the record.
Given these extensive contacts with Minnesota, this case involves much more than
merely online commerce conducted through a website that was randomly accessed by
Minnesotans online. But even if we put aside MoneyMutual's direct marketing to
Minnesotans and focus entirely on Money Mutual's online lending to Minnesotans, its
contacts with Minnesota are still more than enough to establish personal jurisdiction. In
analyzing personal jurisdiction over online commerce, many courts-including the
Minnesota Court of Appeals-have cited the Zippo court's analysis:
At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise [of] personal jurisdiction. The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by
17
examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site.
Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997)
(citations omitted): see also Lakin v. Prudential Sec., Inc., 348 F.3d 704, 710-11 (8th Cir.
2003) (quoting same); Multi-Tech Sys., Inc. v. VocalTec Commc'ns, Inc., 122 F. Supp. 2d
1046, 1050 (D. Minn. 2000) (citing Zippo); Sunnarborg Well Drilling, Inc. v.
Thompson's Well Pump & Drilling, Inc., A04-2159, 2005 WL 1331722, at *5 (Minn. Ct.
App. June 7, 2005) (citing Zippo) (Albanese Aff., Ex. B). Applying the Zippo sliding
scale to the facts of this case, "the level of interactivity and commercial nature of the
exchange of information that occurs" strongly supports the exercise of personal
jurisdiction. Zippo, 952 F. Supp. at 1124.
It is readily apparent from Money Mutual's website that it could have chosen to not
arrange loans to Minnesotans, as the website provides: "This service is not available in all
states, and the states serviced by this Web Site may change from time to time and without
notice." www.moneymutual.com. Moreover, as emphasized by the District Court and
admitted to by Appellant, MoneyMutual has entered into a consent decree with the State
of Pennsylvania not to sell leads for Pennsylvania residents or to allow Pennsylvania
residents to access its website. Trial Court Order, dated July 16, 2014, at 7; Appl.'s Add.
at 7. Put another way, MoneyMutual specifically chooses to provide its services to
Minnesotans, even though it has the capability to screen out residents of specific states.
See Illinois v. Hemi Group, LLC, 622 F.3d 754, 757-58 (7th Cir. 2010) (finding that
online cigarette seller's decision to ship to 49 states other than New York demonstrated
18
that defendant "knew that conducting business with residents in New York could subject
it to jurisdiction there and also that it knew how to protect itself from being haled into
court in any particular state").
That MoneyMutual's website does not specifically mention Minnesota is
irrelevant as it is undisputed that MoneyMutual has arranged loans to Minnesotans. See
id. at 7 59 ("Although listing all forty-nine states by name [on its website] would have
made a stronger case for jurisdiction in this case, inasmuch as it would have expressly
stated that Hemi wanted to do business with Illinois residents, the net result is the same-
Hemi stood ready and willing to do business with Illinois residents"). These facts further
demonstrate that MoneyMutual has targeted Minnesotans in a manner that subjects it to
personal jurisdiction in Minnesota.
Nor were MoneyMutual's contacts with Minnesota residents solely due to
unilateral contact initiated by Minnesotans. Appl.'s Br. at 24-26. MoneyMutual
advertised in Minnesota, set up a website accessible to Minnesotans, sent emails to
known Minnesotans, and profited from selling Minnesotans' contact information,
including their address. These contacts all involve MoneyMutual reaching out to
Minnesotans and are more than sufficient to hale MoneyMutual into a Minnesota court.
See Hemi, 622 F.3d at 758 (finding defendant's description of contacts "as unilateral" to
be "misleading" because defendant set up "commercial, interactive websites" and
followed through with transactions initiated by consumers).
19
c. Respondent's Causes of Action Arise Directly From MoneyMutual's Contacts With Minnesota, Which Shows the "Nexus" Between MoneyMutual's Contacts and This Litigation.
It is well-established that "[ w ]hen a plaintiffs claim arises out of, or is connected
with, the defendant's activities in the forum state, 'maintenance of the action ...
generally does not offend traditional notions of fair play and substantial justice."' Vang
v. Whitby Tool & Eng'g Co., Ltd., 484 F. Supp. 2d 966, 972 (D. Minn. 2007) (quoting
Morris v. Barkbuster, Inc., 923 F.2d 1277, 1280 (8th Cir. 1991)). This is particularly true
where a party has taken affirmative acts directed at the forum state, as Money Mutual has
here. See KSTP-FM, LLC v. Specialized Commc'ns, Inc., 602 N.W.2d 919, 925 (Minn.
Ct. App. 1999) ("[j]urisdiction is proper ... where the contacts proximately result from
actions by the defendant himself that create a 'substantial connection' with the forum
State.") (quoting Burger King v. Rudzewicz, 471 U.S. 472, 475 (1985)); see also Jensen
v. Modern Aero, Inc., A09-657, 2010 WL 88229, at *5 (Minn. Ct. App. Jan. 12, 2010)
("A nonresident's contacts with the forum state, not with residents of the forum state,
determine whether minimal contacts exist.") (emphasis added) (Albanese Aff., Ex. C).
Applied here, the contacts described above all relate to the payday loans
MoneyMutual arranged to Minnesotans. The "nexus" between MoneyMutual's contacts
with Minnesota and this litigation is direct. Accordingly, this factor weighs heavily in
favor of this Court exercising personal jurisdiction over Money Mutual. See Granite Gate
Resort, Inc., 568 N. W .2d at 720 (holding that "[a ]dvertising contacts justifY the exercise
of personal jurisdiction where unlawful or misleading advertisements are the basis of the
plaintiffs claims."); Sunnarborg, 2005 WL 1331722, at *3.
20
Moreover, even if MoneyMutual's television advertising was not specifically
targeted at Minnesota, as claimed in the Madsen Affidavit but rebutted by Respondent's
evidence (see Frisch Aff.), if its national advertising campaign reaches Minnesota it is
subject to personal jurisdiction here. See, e.g., Rostad v. On-Deck, Inc., 372 N.W.2d 717,
722 (Minn. 1985) (noting defendant "wanted a national market, a market including
Minnesota, so it contracted with others to achieve its distribution goals" and therefore
defendant would "not now be allowed to hide behind the structuring of its distribution
system when [its] intent was to enter the market here and profit thereby"); Bragg v.
Linden Research, Inc., 487 F. Supp. 2d 593, 600-01 (E.D. Pa. 2007) (noting that
jurisdiction is proper "over defendants who have made representations in national media
when the dispute arose directly from those representations" and finding jurisdiction
because defendant's conduct was not an "isolated statement" but "an integral part of a
larger publicity campaign of national scope").
The nexus between Money Mutual's business model and its conducting business in
Minnesota is tight. Money Mutual makes money by selling customer contact information
or "leads" to payday lenders. The more leads MoneyMutual has, and the more detail it
has about those leads, the more profitable it can be. MoneyMutual profited from the fact
that it had leads who were in Minnesota. But perhaps more tellingly, it profited from its
sale of the borrowers' address information to the lenders in its network. The direct
nature of the contact and its tight nexus to Money Mutual profits make the "nexus" factor
weigh strongly in favor of exercising personal jurisdiction over Money Mutual.
21
d. Minnesota Has a Strong Interest In Providing a Forum for Minnesotans Harmed by MoneyMutua1's Violations of Minnesota Law.
In recent years, Minnesota's legislature and executive branch have both made the
enforcement of Minnesota's payday lending laws a priority. In 2009, the Minnesota
legislature amended Minnesota's payday lending laws to be clear that they applied to
transactions that occurred online, and provided for substantial penalties and attorney's
fees for private parties who bring suit to enforce these laws. See Compl., ~~ 23-25. It
would be contrary to Minnesota's public policy, as expressed by the State's actions, to
now deprive Minnesotans of a forum for litigating MoneyMutual's violations of
Minnesota's payday lending statutes.
Moreover, courts in Minnesota have consistently held that the state has a strong
interest in protecting its consumers and providing a forum for residents to litigate tortious
conduct. See, e.g, SoftBrands Mfg., Inc. v. Missing Link Consulting, Inc., CIV.04-3900
ADMIAJB, 2004 WL 2944112, at *7 (D. Minn. Dec. 20, 2004) ("Minnesota has an
interest in providing a forum for its citizens to litigate alleged tortious conduct and
enforce consumer protection suits") (Albanese Aff., Ex. D); Granite Gate, 568 N.W.2d at
721 ("[t]he state's interest in providing a forum to enforce its consumer protection laws
weighs in favor of exerting jurisdiction over appellants"). Here, all of the Respondents
and class members are Minnesotans and their claims arise under Minnesota's consumer
protection laws. Accordingly, Minnesota has a significant interest in providing a forum.
22
e. Minnesota is the More Convenient Forum.
This 1s a consumer protection case where all of the Respondents and class
members are Minnesotans, and the harm from MoneyMutual's conduct was felt m
Minnesota. The Respondents have suffered senous financial difficulties due to
Appellant's tortious conduct, and requiring the Respondents to travel to MoneyMutual's
preferred forum of Nevada would only exacerbate the Respondents' difficult financial
situation. Moreover, a "strong presumption exists in favor of a plaintiffs choice of
forum." Volkman v. Hanover Investments, Inc., 843 N.W.2d 789, 797 (Minn. Ct. App.
2014 ). Accordingly, this factor also supports the District Court's ruling.
3. THE COURT HAS JURISDICTION UNDER THE CALDERIGRIFFISTEST.
As it did below, MoneyMutual relies on Griffis v. Luban, 646 N.W.2d 527 (Minn.
2002), a factually inapposite case which applied the "effects test" set forth in Calder v.
Jones, 465 U.S. 783 (1984). In Griffis, an Alabama resident attempted to enforce in
Minnesota state court a default judgment obtained in Alabama state court for defamation
relating to posts made by a Minnesota resident on an internet message board. Griffis, 646
N.W.2d at 530. The Minnesota Supreme Court found that Alabama lacked personal
jurisdiction over the Minnesota resident and therefore the judgment was not enforceable.
!d. at 536-37.4 As explained in Griffis, instead of "focusing only on the defendant's
conduct within or contacts with the forum, the so-called 'effects test' approved in Calder
4 MoneyMutual also relies on the recent, unpublished decision in Trivedi, LLC v. Lang, No. Al3-2087, 2014 WL 2807981 (June 23, 2014). Albanese Aff., Ex. E. Trivedi involved similar facts to Griffis, with Arizona residents seeking to enforce an Arizona default judgment related to allegedly defamatory online posts made by a Minnesota resident.
23
allowed long-arm jurisdiction to be based on the effects within the forum of tortious
conduct outside the forum." Griffis, 646 N.W.2d at 532. The Calder "effects test" is a
"slightly refmed" version of the traditional test for specific jurisdiction that makes it
easier, not more difficult, to establish personal jurisdiction. O'Connor v. Sandy Lane
Hotel Co., Ltd., 496 F.3d 312, 317 n.2 (3d Cir. 2007); IMO Indus., Inc. v. Kiekert AG,
155 F.3d 254, 260-61 (3d Cir.1998) (explaining that Calder may "enhance otherwise
insufficient contacts with the forum"). As explained above, this action involves much
more than mere "effects" in Minnesota.
The other case emphasized by MoneyMutual, Walden v. Fiore, 134 S. Ct. 1115
(2014), is similarly inapposite. In Walden, a federal agent from Georgia seized money
from two Nevada residents at the Atlanta airport as the Nevada residents were travelling
from Puerto Rico to Las Vegas through Atlanta. !d. at 1119. The federal agent later
helped draft an affidavit to show probable cause to seize the funds. !d. The Nevadans
sued the federal agent in Nevada arguing that personal jurisdiction was proper because
the officer knew the affidavit would have effects on people with a connection to Nevada.
!d. at 1120. Noting that it is insufficient to assert personal jurisdiction solely based on a
"defendant's 'random, fortuitous, or attenuated contacts' or on the unilateral activity of a
plaintiff," the Supreme Court held that there was no personal jurisdiction over the agent
in Nevada because "no part of [the officer's] conduct occurred in Nevada." !d. at 1123,
1125 (internal quotations omitted).
MoneyMutual's emphasis on Griffis/Walden is misleading because as stated by the
District Court, "this particular case is not an 'effects only' case but rather, MoneyMutual
24
has significant direct contacts with Minnesota and its residents." Appl.'s Add. at 8. The
District Court consequently found that personal jurisdiction was proper under five-part
test articulated above or under the effects-test set forth in Griffis. !d. at 6-8.
Money Mutual nevertheless maintains none of the contacts that Money Mutual has
had with Minnesota and Minnesotans are sufficient for jurisdiction because these direct
contacts were not "expressly aimed" at Minnesota or initiated by MoneyMutual. This
contention is belied by MoneyMutual's thousands of targeted contacts initiated by
MoneyMutual with Minnesotans in Minnesota. Both before and after Walden, where a
defendant has substantial contacts with forum residents inside a forum, personal
jurisdiction is proper. See MRL Dev. I, LLC v. Whitecap Inv. Corp., No. CV 2013-48,
2014 WL 5441552, at *4 (D.V.I. Oct. 26, 2014) (Albanese Aff., Ex. F) (finding that
Walden stands for the proposition that "a defendant's contact with a resident of the forum
state, outside of the forum state, is insufficient to establish minimum contacts with the
forum state" and finding jurisdiction to be proper); Havel v. Honda Motor Europe Ltd.,
No. CIV.A. H-13-1291, 2014 WL 4967229, at *9-10 (S.D. Tex. Sept. 30, 2014)
(Albanese Aff., Ex. G) (finding contacts not to be "random, fortuitous, or attenuated"
where defendant had contacted Texas residents in Texas via phone and email).
Further, there is no question that MoneyMutual "expressly aimed" its conduct at
Minnesota and Minnesotans: it targeted extensive advertising at Minnesotans, marketed
to and communicated with people it knew lived in Minnesota, and profited from selling
Minnesotans' personal information, including their address information. See Calder, 465
U.S. at 789-90.
25
C. The District Court Did Not Abuse Its Discretion By Denying MoneyMutual's Motion to Dismiss For Failure To Join Indispensable Parties.
Respondents are not required under Minnesota Rule of Civil Procedure 19 to join
the lenders in MoneyMutual's network or face dismissal. As discussed below, while
these lenders may be joint tortfeasors with MoneyMutual, it is fundamental that a
plaintiff is not required to sue every conceivable joint tortfeasor when it brings an action
against one. Moreover, Minnesota's payday lending statutes specifically provide that a
party who "arranges" illegal payday loans faces liability under the statute, independently
of any liability that the lender faces. Accordingly, it would be contrary to Minn. Stat. §
4 7.601 to find that Money Mutual's lenders are "necessary parties" to this litigation.
Joinder analysis under Minn. R. Civ. P. 19 requires a two-part inquiry. Shepherd v.
Stade, A07-1220, 2008 WL 2246259, at *2 (Minn. Ct. App. June 3, 2008) (Albanese
Aff., Ex. H). First, the court must determine whether a person or entity is a "necessary
party." !d. A party is necessary if:
(a) in the person's absence complete relief cannot be accorded among those already parties, or (b) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (1) as a practical matter impair or impede the person's ability to protect that interest or (2) leave any one already a party subject to a substantial risk or incurring double, multiple, or otherwise inconsistent obligations by reason of the person's claimed interest.
Minn. R. Civ. P. 19.01. Even if the court finds a party is necessary, the party must be
joined only if feasible. Shephard, 2008 WL 2246259, at *2. If the party cannot feasibly
be joined, the court should dismiss the case only if the missing party is indispensable. !d.
An "indispensable party" is one "without whom the action could not proceed in equity
26
and good conscience." See id. (quoting Hoyt Props., Inc. v. Prod. Res. Group, L.L.C.,
716 N.W.2d 365,377 (Minn. Ct. App. 2006), aff'd, 736 N.W.2d 313). MoneyMutual has
the burden of proving that the unlicensed lenders are necessary parties. Am. Gen. Life &
Accident Ins. Co. v. Wood, 429 F.3d 83, 92 (4th Cir. 2005) ("The burden of proof rests on
the party raising the defense ... to 'show that the person who was not joined is needed for
a just adjudication"') (quoting 7 Charles Alan Wright, Arthur R. Miller & Mary Kay
Kane, Federal Practice and Procedure§ 1607 (3d ed. 2001)).5
The Middle District of North Carolina was recently faced with a similar fact
pattern and motion, and denied the defendant's motion to dismiss. In Dillon v. BMO
Harris Bank, NA., payday loan borrowers brought suit against a bank that initiated
electronic payments on allegedly illegal online payday loans out of the borrowers' bank
accounts. Dillon v. BMO Harris Bank, NA., 16 F. Supp. 3d 605 (M.D.N.C. 2014). The
borrowers alleged that the banks had conspired with online payday lenders to violate state
payday loan laws. The bank moved to dismiss, arguing that the online payday lenders
were necessary parties to the litigation. In denying the motion, the court held that the
borrowers' claims were "analogous to tort law" and that "[t]he lenders are at most joint
tortfeasors or co-conspirators" and not "necessary parties under Rule 19." Id. at 612-13.
5 Because Minn. R. Civ. P. 19 mirrors Fed. R. Civ. P. 19, federal joinder law offers persuasive guidance. See Advisory Comm. Notes-1968 Amend. to Minn. R. Civ. P. 19 (explaining that the rules are virtually identical and amending the Minnesota rule to conform to the federal rule); Bode v. Minnesota Dep't of Natural Res., 594 N.W.2d 257, 262 (Minn. Ct. App. 1999) affd, 612 N.W.2d 862 (Minn. 2000) (noting that "federal courts' interpretation of federal rules of procedure may provide guidance on interpretation of parallel state rules of civil procedure").
27
The result here should be the same. First, there is no senous argument that
complete relief cannot be afforded without the presence of the payday lenders in
MoneyMutual's network. There is no injunctive relief asked for in the Complaint that
MoneyMutual cannot provide, or any other relief that requires these third parties.
Second, as was the case in Dillon, Respondents' statutory and common law claims are
analogous to tort claims, not breach of contract claims, and it is well-established that a
plaintiff is not required to join every tortfeasor if it chooses to bring suit against one. See
Kisch v. Skow, 233 N.W.2d 732, 734 (Minn. 1975) ("[w]here there is joint and several
liability, plaintiffs may sue one, all, or any number of joint tortfeasors without violation
of Rule 19.01 ... . ");Temple v. Synthes Corp., Ltd., 498 U.S. 5, 7 (1990) (finding it was
reversible error to label joint tortfeasors as necessary parties); Whittaker v. Collins, 25
N.W. 632, 633 (Minn. 1885) (stating that joint tortfeasors do not need to be joined where
"the action is one of tort purely, although the existence of a contract may have been the
occasion or furnished the opportunity for committing the tort").
Moreover, Respondents' statutory claims are for violations of Minnesota law that
imposes duties on MoneyMutual separate and apart from any duties placed on the lenders
themselves. The Minnesota payday loan statute specifically contemplates that entities
who "arrange" loans can be liable under the statute and has no requirement that the
defendant be a party to the loan contract. Minn Stat. § 47.60l(e). Similarly,
Respondents' consumer protection statutory claims all relate to misrepresentations made
by MoneyMutual, not the lenders. There simply is no interest that the lenders could
assert with respect to these claims. Finally, Respondents also assert conspiracy and
28
adding and abetting claims, but co-conspirators are also not necessary parties. See
Herpich v. Wallace, 430 F.2d 792, 817 (5th Cir. 1970) (noting "the well-established
authority to the effect that joint tortfeasors or coconspirators are not persons whose
absence from a case will result in dismissal for non-joinder").
Money Mutual has also failed to offer even a shred of evidence that the lenders in
its network believe their interests might be impacted by this litigation. See Citizen Band
Potawatomi Indian Tribe of Oklahoma v. Collier, 17 F.3d 1292, 1293 (lOth Cir. 1994)
("[t]he proponent's burden can be satisfied by providing affidavits of persons having
knowledge of these interests as well as other relevant extra-pleading evidence.") (internal
quotations omitted). In sum, Money Mutual's joinder argument is without factual support
or basis in law, and the District Court did not abuse its discretion by denying
MoneyMutual's motion to dismiss.
CONCLUSION
For the above reasons, the Dakota County District Court should be affirmed.
Date: December 11, 2014
iel C. Bryden #03022 ~ E. Michelle Drake #0387366 John G. Albanese #0395882 80 South Eighth Street 4600 IDS Center Minneapolis, MN 55402-2242 Telephone: (612) 256-3200 Fax: (612) 338-4878 [email protected]
29
[email protected] [email protected]
HEANEY LAW FIRM, LLC Mark Heaney #0333219 13911 Ridgedale Drive, Suite 110 Minnetonka, MN 55305 Telephone: (952) 933-9655 Fax: (952) 544-1308 [email protected]
ATTORNEYS FOR PLAINTIFFS
30
~tate of JRinncsota
Oiount!! of Jfi cnncpin
) ) SS.SS. )
J\ffiOaUif Stephen M. West, being first duly sworn, states that he is an employee of Bachman Legal t Printing, located at 733 Marquette Avenue, Suite 109, Minneapolis, MN 55402. That on December 11,2014, he prepared the Respondents' Brief and Affidavit of John Albanese, J
case number A14-1307, and served 2 copies of each upon the following attorney(s) or responsible person(s) by Personal Hand-delivery, via courier.
WINTHROP & WEINSTINE, P.A. Joseph M. Windler Christina Rieck Loukas 225 South Sixth Street, Suite 3500 Minneapolis, MN 55402
Subscribed and sworn to before me on December 11, 2014
Signed
OFFICE OF APPeLLATE COURTS
DEC 1 1 2014
FILED
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Stephen M. West, being first duly sworn, states that he is an employee of Bachman Legal Printing, located at 733 Marquette Avenue, Suite 109, Minneapolis, MN 55402. That on December 11,2014, he prepared the Respondents' Brief and Affidavit of John Albanese, case number A14-1307, and served 2 copies of each upon the following attorney(s) or responsible person(s) by First Class Mail postage prepaid.
PUTTERMAN LOGAN Donald J. Putterman 580 California Street, Suite 1200 San Fran cisco, CA 94104
Subscribed and sworn to before me on December 11, 2014
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