Williams et al v. Big Picture Loans, LLC et al, No. 3:2017cv00461 - Document 146 (E.D. Va. 2018)

Court Description: MEMORANDUM OPINION. Signed by District Judge Robert E. Payne on 07/27/2018. (tjoh, )
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Williams et al v. Big Picture Loans, LLC et al Doc. 146 p IN THE UNITED STATES DISTRICT COURT E ill JJL 2 T 2u;8 1 I ili FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division CLERK, U.S. DISTRICT COURT RICHMOND, VA LULA WILLIAMS, et al., on behalf of themselves and all individuals similarly situated, Plaintiffs, Civil Action No. 3:17-cv-461 BIG PICTURE LOANS, LLC, et al.. PUBLIC VERSION^ Defendants. MEMORANDUM OPINION This LOANS AND matter is ASCENSION before the Court TECHNOLOGIES' on MOTION DEFENDANTS BIG PICTURE TO FOR LACK DISMISS OF SUBJECT MATTER JURISDICTION (EOF No. 22). Big Picture Loans, LLC ("Big Picture") and Ascension Technologies, Inc. ("Ascension") argue that the Court lacks subject matter jurisdiction over all claims asserted against them because they qualify as arms of the Lac Vieux Desert Band of Lake Superior Chippewa Indians ("the ^ This opinion was initially filed under seal on July 3, 2018. See Memorandum Op. (EOF No. 130). The Clerk provided copies of the sealed opinion to Plaintiffs, Big Picture, and Ascension, who were given fourteen days to request that certain information in the public version of the opinion remain sealed. See ECF No. 131 at 1-2. Following that order. Big Picture and Ascension indicated that the majority of the documents cited or discussed in the opinion could be unsealed, or could remain sealed with only limited redactions that would not affect the opinion. See Response to July 3 Order (ECF No. 133) at 4-9. The Court agreed with their proposed approach, and minor changes have been made to the opinion to account for the unsealing and re-filing of certain documents. See ECF No. 143. Dockets.Justia.com Tribe") and are thereby entitled to tribal sovereign iimnunity. For the reasons set forth below, the motion was denied. See ECF No. 124. BACKGROUND A. Factual Background 1. Tribal Regulatoiry Structure The Tribe is a federally recognized Indian tribe, and its members reside close to their ancestral homeland near Watersmeet, Michigan. 25 U.S.C. § 1300h(1)-(2). Its status as an "independent See tribal entity" has id. § 1300h-2(a). As a consistently result, the been Tribe is reaffirmed. a sovereign entity that can create its own laws and regulations. To that end, the Tribe adopted its current constitution on May 14, 1992 ("the LVD Constitution") for the Tribe's "government, protection and common welfare." ECF No. 23-1 at 1, 19. Among other things, the LVD Constitution established the Tribe's council ("the LVD Council"), granting it the authority to, inter alia, enact law, including ordinances and regulations; manage the Tribe's economic affairs; and "promote and protect the of the (f). The health, [Tribe] and safety, its education, members." Id. and art. general IV, welfare § 1(a)-(b), Council could also charter organizations and delegate them with the authority to manage the Tribe's pursued economic economic affairs. Id. § l(j). The Tribe opening a initially casino in the late 1990s. self-sufficiency The casino by provided significant revenue for the Tribe until 2008, when the recession severely limited the casino's revenue stream and forced the Tribe to explore other avenues to improve its finances. One of these steps was to start tribal businesses in certain areas, such as online lending, that would yield profits for the Tribe. Hazen Aff. (EOF No. 34-1) SISI 2-5. On July 8, 2011, the LVD Council enacted the Tribal Consumer Financial Services Regulatory Code ("the Code"), which legalized online lending by the Tribe. July 8, 2011 Resolution (ECF No. 23-5) at 1; Nov. 18, 2011 Resolution (ECF No. 23-3) at 1-2. The purpose of "[d]iversify and economy" order in sufficiency the expedite [and] to to Code the inter development "improve enable was, the the of Tribe's Tribe to alia: the (1) [Tribe's] economic better to self- serve the social, economic, educational, and health and safety needs of its members and visitors"; (2) to "[e]nsure that all consumer financial services profits are used for the benefit of the Tribe and [it]s provides community"; a and Tribal-based (3) forum to "[e]nsure for the that fair the and Tribe orderly resolution of consumer financial services disputes consistent with the Tribe's preservation of sovereign immunity." Code (EOF No. 23-4) §§ 1.1(a), 1.2(a), (c), (g). The Code required that all entities offering tribal consumer financial services obtain licenses which through licensees a particular had to licensing process, as part certify that they would "abide of by all applicable Tribal and Federal laws, regulations and policies." Id. §§ 1.3(d), rules for 5-7, certain 5.2(b)(8). financial It also services established specific transactions, including small loans transactions. See id. § 11. The Code Regulatory also Authority created ("the the Tribal TFSRA") to Financial enforce Services the Code and regulate licensees. Id. § 4.1. As a governmental subdivision of the Tribe, the TFSRA was "under the direction and control of the [LVD] Council." Id. § 4.4. However, the Code granted the TFSRA certain independent powers, including, as relevant here, the powers: (1) to "promulgate, adopt, and enforce regulations and rules furthering the purpose and provisions of the th[e] Code"; (2) to discipline licensees immediate compliance, suspending or revoking and issuing other fines any [Ijicense persons and "by ordering sanctions, pursuant to the and hearings and due process required by Section 4.18 of th[e] Code"; and (3) to investigate any licensee or 4 person engaging in consumer financial services within Id. § 4.13(a)-(d), (h)-(i); the Tribe's jurisdiction. §§ 4.14, 4.16, 4.18. In addition, the Code placed the TFSRA at the center of a three-tiered dispute resolution process for loan borrowers from tribal licensees. licensee's licensee. First, action The must licensee consumers submit must that a are "aggrieved" by written respond in complaint writing to within a the thirty days, and if it does not, it may be fined by the TFSRA in an amount equivalent to the greater of the outstanding principal loan amount or dissatisfied $1,500. with a Id. § licensee's 9.2(a)-(b). response Second, (or who consumers receive no response at all) may submit a written request for administrative review to the TFSRA within ninety days of the licensee's determination. The TFSRA may then "investigate the dispute in any manner it chooses," including by granting an administrative hearing. If such a hearing occurs, consumers can be represented by counsel at matters before manner. After their and any own expense, during hearing, the the and the hearing TFSRA in must TFSRA a can conduct quasi-judicial issue a written decision that contains its factual findings and conclusions of law, and "may grant or deny any relief as the [TFSRA] determines appropriate."^ Consumers can then request rehearing, which the TFSRA may grant or deny at its discretion. Id. § 9.3(a)-(g). Finally, consumers may appeal adverse TFSRA decisions by filing a written petition for review Court") within ninety days with the Tribal Court ("the LVD of the TFSRA's decision. The LVD Court's review is limited to the TFSRA's administrative record, and the Court must give deference to the TFSRA's interpretations and that applications is supported of the Code. "arbitrary by the and capricious, evidence," "[m]ere disagreement It can and must only reverse or not a decision that . . . is reverse because not of with the [TFSRA]'s factual findings." The LVD Court's subsequent opinion is final and cannot be appealed. Id. § 9.4. ^ Plaintiffs allege that the TFSRA's powers with regard to a hearing are constrained by TFSRA Regulation 1.1. Compl. fSl 7981. That regulation states that the TFSRA "will adhere to the dispute resolution procedures set out under section 9.3 of the Code." However, the regulation also indicates that the TFSRA: (1) " [m]ay grant a fair opportunity to be heard about the dispute if . . . the [TFSRA] finds the existence of a material issue as to whether or not the alleged act or practice is unfair or deceptive, or in violation of existing tribal consumer finance laws or regulations"; (2) "[w]ill not grant the consumer an opportunity to be heard if the only allegation contained in [a] consumer complaint is an allegation that the consumer finance service provided is illegal in a jurisdiction outside the jurisdiction of the Tribe"; and (3) "[m]ay resolve the dispute in favor of the consumer upon a finding that the [l]icensee has violated a law or regulation of the Tribe." 6 The latest development in the Tribe's history of economic regulation enacted occurred the Ordinance"). Business on August Business Aug. Ordinance 28 26, Entity Resolution created 2014, when Ordinance (EOF No. comprehensive the LVD ("the 23-6) Council Business at 1-2. procedures The for the creation, operation, and dissolution of various tribal entities, including limited liability companies ("LLCs"). See generally Business Ordinance (EOF No. 23-7). Relevant to this dispute, the Ordinance stated that a tribally-owned LLC with the Tribe as its sole member would "be considered a wholly owned and operated instrumentality of the Tribe and . . . have all the privileges and immunities of the Tribe, including but not limited to the Tribe's sovereign immunity from suit, except as explicitly waived by the [LVD] Council." Id. Ch. 5, § 8(E). The Ordinance further indicated that those LLCs would be subject to the LVD Court's jurisdiction, but that such any claim to sovereign immunity in provision state or would not federal waive court. Id. Ch. 1, § 3(A), (D). 2. Beginning of Tribal Lending Operations Soon after the Code was enacted, the Tribe began operating in the online lending arena when the LVD Council organized Red Rock Tribal Lending, LLC ("Red Rock") as a tribally-owned LLC on September 14, 2011. See Sept. 14, 2011 Resolution (ECF No. 237 8), The company was managed by two members of the Tribe, and the Tribe was Red Rock's sole member. Red Rock Arts, of Organization (EOF No. 23-9), Art. 7; Hazen Aff. SISI 6-7. The Complaint alleges that Matt Capital, Martorello LLC ("Martorello")—along ("Bellicose")^ and Bellicose's with Bellicose general counsel, Daniel Gravel ("Gravel")—associated with the Tribe to form Red Rock. Compl. (ECF No. 1) SISI 13, 29. Martorello, however, states that he was never a manager or member of Red Rock, nor were any of the companies that he owned or managed. Martorello Decl. (ECF No. 106-1) fi 18-21. Red Rock provided loans to consumers from its offices on and records the were Reservation, all located and its employees, computers, there. Moreover, as a tribal business. Red Rock was regulated by the TFSRA. Hazen Aff. If 89. Red Rock subsequently decided to contract with an outside entity to better learn the lending industry. The Tribe had identified Martorello as a potential consultant in mid-2011, but he was not involved in the creation of Red Rock. Martorello Decl. fSI 14, 17. Then, on October 25, 2011, Red Rock contracted with Bellicose Bellicose—for it VI, to LLC ("Bellicose provide ^ Martorello was the founder Bellicose. Compl. SI 14. Red and Rock VI")—a with chief subsidiary vendor executive of management officer of services, compliance development, and management assistance, risk modeling and data marketing material analytics development. Hazen Aff. f 10; Servicing Agm't'^ (ECF No. 83-2) at 1. On April 15, 2012, Bellicose VI assigned its interest in the contract to SourcePoint VI, LLC ("SourcePoint"), another Bellicose subsidiary. Hazen Aff. f 12; Servicing Agm't at 1. The Servicing Agreement detailed the revenue structure for duties to as Red that Rock's lending business. Under distributed first to Red Rock, business the which distribution and contract, each party's revenues were received 2% of all gross revenues "plus bad debt recoveries minus the sum of charge backs and bad debt charge-offs." Servicing Agm't §§ 2.25, 6.4.1. The remainder was then distributed in the following order: (1) to SourcePoint, to reimburse it for advances made to Red Rock and for servicing expenses; (2) to any of Red Rock's creditors, to pay outstanding debt that was then due; and (3) to SourcePoint, to pay its monthly servicing fee. Id. § 6.4.2-.5. The servicing fee was a variable performance-based fee equivalent to whatever cash was basis at a revenue minimum remained after the distributions above, $20,000. Id. § 3.5.1. Martorello claims and that ^ The parties have not provided the original servicing agreement between Red Rock and Bellicose VI, but there is no indication that its provisions were substantially different than those in the Servicing Agreement between Red Rock and SourcePoint. 9 the Tribe itself guaranteed monthly also suggested incentivizing income this for revenue the SourcePoint split Tribe's to help because general the fund Tribe it while grow its businesses. Martorello Decl. SI 36. In addition, aside from these distributions. Red Rock received and retained ownership of all intellectual property developed under the Servicing Agreement by SourcePoint. Id. SI 35. The Agreement SourcePoint. For also assigned instance, specific after noting responsibilities that SourcePoint to was being engaged as Red Rock's "independent contractor" to perform the services authority noted, the and interaction Agreement granted to SourcePoint "the responsibility whatsoever over [Red between all Rock] communication and each and service provider, lender and other agents of [Red Rock]." Id. § 3.1. The contract also business anywhere management prevented and Id. § 3.3.1. SourcePoint generated by otherwise agreed signatory and without addition, select Red a Rock's between transfer Rock using consulting In to Red from SourcePoint services the bank account and Rock authority for Servicing lending, Red operating over to lending provide those store required all funds SourcePoint—unless SourcePoint—the such its operations. Agreement gave and to its bank "sole accounts," as well as "sole authority to sweep monies from such bank accounts" 10 to distribute revenues under the priority structure. Id. § 4.4. Finally, the concerning Agreement the business, such providers and service day-to-day as: relationships and and on SourcePoint functioning (1) "[s]creening lenders, providers "[d]evelopment gave and of of promotion of on of other sound lending selecting service of and Rock] duties Rock's agreements behalf [Red Red and negotiating lenders behalf numerous [Red with Rock]"; positive with such the (2) business designated service providers and lenders"; (3) preparation of regulatory, compliance, training, accounting, website education, content, and financial reporting and marketing standards; (4) "providing pre-qualified leads to [Red Rock] and providing the necessary to Red credit-modeling Rock; and (5) employees . . . that data and "training operate [Red risk and assessment monitoring Rock]'s strategies" [Red call Rock] center." Id. § 4.2.1.^ However, the Servicing Agreement also limited the ultimate authority of SourcePoint over Red Rock's management decisions. ^ Based, presumably, on the Servicing Agreement, Plaintiffs allege that: Bellicose funded and underwrote Red Rock's loans; the money loaned was transferred from a bank account controlled by Bellicose and Martorello, which tribal officials could not access; Bellicose accepted consumer payments directly; and the only funds that Red Rock, Big Picture, or the Tribe ever received or handled was the specified revenue percentage under the Servicing Agreement. Compl. SISl 30-32, 36-37. 11 For instance, the provision allowing SourcePoint to provide leads and credit-modeling data to Red Rock also said that "[t]he criteria used to extend funds to individual borrowers will remain within the sole and absolute discretion of [Red Rock] and [Red Rock] shall execute all necessary loan documentation." Id. § 4.2.1(1). Similarly, SourcePoint "ha[d] no authority to engage in origination approve the activities, issuance of execute loans loan to documentation, third parties. or Final determination as to whether to lend to a consumer rest[ed] with [Red Rock]." Id. § 4.1.1. written consent "to pledge, assign, do SourcePoint any convey, of the encumber, also needed following: grant the Tribe's to borrow, (1) security interest in, guaranty, or otherwise restrict the assets of [Red Rock]; (2) to sell or otherwise dispose of all or substantially all of the assets of [Red Rock]; [or] (3) to waive the sovereign immunity of [Red duties, Rock]." although "reasonable Id. § 4.1.2. numerous, measures for In other were to be the words, orderly SourcePoint's limited to providing administration and management" of Red Rock. Id. § 4.2.1. Some evidence also indicates that Red Rock's role Servicing Agreement suggest. Red that, was more substantial Rock's co-manager, Michelle "[w]hile Red Rock received 12 than under the Plaintiffs Hazen ("Hazen"), says advice and consulted with Bellicose about operations, all final decisions about operations were made by Red Rock's managers." Hazen Aff. SI 11; see also ECF No. 83-4 (e-mail recommending SourcePoint). consultant,® from SourcePoint adoption of Similarly, direct employee mail Martorello to tribal campaign indicates members prepared that, as by a he "made suggestions and offered advice to Red Rock's co-managers," but "Red Rock's co-managers were ultimately responsible for all decisions regarding Red Furthermore, Martorello, Bellicose, and Rock's operation." SourcePoint never, on Red Rock's behalf, made lending decisions; originated a consumer loan; purchased a loan originated by Red Rock; or took any action to collect a Red Rock loan. Instead, Red Rock always made the final decision to lend to a Rock's co-managers, approved marketing including materials, particular consumer, and Hazen, including always the reviewed prescreening Red and of credit reports.^ Finally, Bellicose's and SourcePoint's access to ® As permitted by the Servicing Agreement, SourcePoint hired Bellicose employees, including Martorello, to perform certain services for Red Rock. Martorello Decl. SI 31. ^ Plaintiffs cite Big Picture's interrogatory response to assert that Red Rock's role in the lending process was limited to "final verification of the applicant's information in the loan agreement," including "the applicant's e-signature, the due dates, the payment schedule, [and] the applicant's bank information." Big Picture Interrogatory Responses (ECF No. 914) SI 24. This statement is misleading. First, the response addressed Big Picture's loan evaluation procedure, and thus had 13 Red Rock's bank accounts was limited by deposit access control agreements could provided terminate at by Red any Rock, time. which Red Furthermore, Rock or the Tribe although Martorello was a signatory on certain Red Rock accounts, he claims that he was listed that way only "to facilitate accounts payable, and never delegated without express contractual or authority." Martorello Decl. ff 22-28. Red Rock then began making loans to consumers, including some in New York. In February 2013, the New York Department of Financial Services ("the Department") sent cease-and-desist letters to a number of lending entities, including the Tribe, accusing them of "using the Internet to offer and originate illegal payday loans to New York consumers, in violation of New York's civil and criminal usury laws."® Otoe-Missouria Tribe of Indians v. N.Y. State Dep't of Fin. Servs., 974 F. Supp. 2d 353, 356 (S.D.N.Y. 2013) (internal quotations omitted). The Department also sent letters to third parties that credit and debit payday loan payments, advising them that the Department nothing to do with Red Rock. Second, the response did not concern Big Picture's relationship with third parties, and even noted that "[n]o third party participates in Big Picture's [loan] evaluation." Id. ® New York prohibits annual interest above 16% on loans greater than $250,000, N.Y. Gen. Obligations Law § 5-501; N.Y. Banking Law § 14-a(l), and criminalizes annual interest above 25%, N.Y. Penal Law § 190.40. 14 would pursue enforcement actions against lenders that refused to cease and desist. Id. caused the enforcement at 356-57. lending This threat entities' of business regulatory partners to limit or end their relationship with the entities, which in turn led the entities to seek a preliminary injunction preventing the Department from enforcing New York's anti-usury statutes against them—in part because any regulation would infringe entities' tribal sovereignty. See id. at 357-58. on the However, the court denied the entities' request, finding that they had not shown a likelihood of success on the merits because their online lending to activity, York's The New and York could consumers therefore non-discriminatory Second Circuit Otoe-Missouria Servs., 769 F.3d 105 of be this Indians (2d Cir. off-reservation properly regulated anti-usury laws. affirmed Tribe constituted See decision in v. id. State N.Y. 2014). The under at October 360-61. 2014. Dep't Tribe's New of See Fin. response to these decisions is unknown. 3. Expansion of Tribal Lending Business After 2011, relationship knowledge Martorello knowledge with of the through Bellicose online expand its and operation The online 15 of Martorello, lending Decl. S[f 47-48. to its the industry. Tribe lending Red wanted Tribe Hazen to platform Rock and gained Aff. 1 13; apply and that increase profitability acquire its for the vendors' Tribe, employ businesses so more that tribal the members, Tribe would and earn more money. Hazen Aff. SI 13. As part of that strategy, the LVD Council organized Big Picture on August 26, 2014. Aug. 26, 2014 Resolution (EOF No. 23-10). Big Picture was formed "as a wholly owned and managed by operated two instrumentality tribal members, of the Hazen Tribe," and and James was Williams ("Williams"). Id. at 2-3. Big Picture was meant to serve as an independent tribal lending entity that would "ultimately consolidate the business" of the Tribe's other lending entities. Red Rock and Duck Creek Tribal Financial, LLC. Id. at 1. On February 5, 2015, the LVD Council formed another entity. Tribal Economic Development Holdings, LLC ("TED"), to operate the Tribe's current and future lending companies. Feb. 5, 2015 TED Resolution (ECF No. 23-13). The Tribe was the sole member of TED, and Hazen and Williams were designated as its co-managers. Id. at 3; TED Arts, of Organization (ECF No. 23-14), Arts. 8-9. Big Picture's membership was also restructured so that TED became its sole member. Big Picture Arts, of Organization (ECF No. 23-13), Arts. 8-9. Then, also on February 5, the LVD Council formed Ascension engaging support in the as a marketing, Tribe's subsidiary of technological lending entities. 16 TED "for and the vendor Feb. 5, purpose of services" to 2015 Ascension Resolution wholly (ECF owned No. and 23-16) operated at 1. Ascension was created "as instrumentality of the a Tribe," with TED as its sole member, and was managed by Hazen and Williams. Id. at 2-3; Ascension Arts, of Organization (ECF No. 23-17), Arts. 8-9. Hazen and Williams named Brian McFadden ("McFadden") as Ascension's President. Feb. 5, 2015 Ascension Resolution at 3. 4. Tribe's Acquisition of Bellicose Since 2012, Martorello and the Tribe had engaged in multiple conversations about the potential sale of Martorello's consulting companies to the Tribe, which would allow the Tribe to engage in online lending without relying on outside vendors for support services. The creation of TED and Ascension and reorganization of Big Picture in February 2015 were undertaken to enable the Tribe to more easily purchase Bellicose, in part because those steps added layers to protect the Tribe from liability. Martorello Decl. 11 49-50; Martorello Sept. 11, 2015 E-mail (ECF that time, No. 83-8) the LVD at LVD-DEF00014697. Council formed In addition, Tribal Acquisition around Company, LLC ("TAC"), with TED as its sole member and Hazen and Williams as co-managers, without creating for a the nexus sole purpose between 17 TED of acquiring and Delaware. Bellicose Sept. 14, 2015 Merger Resolution (ECF No. 34-2) ("the Merger Resolution") at 2/ Martorello Sept. 11, 2015 E-mail at LVD-DEF00014697. In early 2015, the parties agreed on the basic framework of the merger: a seller-financed transaction with non-fixed payments over a seven-year term, with any outstanding amount due being forgiven at the end of that term. According to Martorello, the Tribe requested this structure because it would enable the Tribe to accomplish its goals of economic self-sufficiency more easily. Martorello Eventide managed Credit and Decl. SI 51. The Acquisitions, majority-owned seller-financier LLC by ("Eventide"), multiple would a entities be company of which Martorello was the president. Merger Resolution at 3; Eventide Operating Agm't, Sched. A (ECF No. 91-11). Eventide would provide a $300 million loan to TED, which TED would then use to purchase Bellicose. Merger Resolution at 3. After this structure was set, the next Martorello several continued months. negotiating Martorello with the Decl. St 52. Tribe over The parties reached a final agreement on September 14, 2015, memorializing the terms of the deal in a loan agreement ("the Loan Agreement") and a promissory note ("the Note"). Merger Resolution at 7-9; see generally Loan Agreement (ECF No. 83-17); Note (ECF No. 83- 11). As part of the transaction, the LVD Council approved a limited waiver of TED's and Big Picture's sovereign immunity in 18 connection with TED's repayment of the Eventide loan during its seven-year term. See Sept. 14, 2015 Immunity Waiver Resolution (ECF No. 34-3) at 2-8. On January 26, 2016, the Tribe finally completed its purchase of Bellicose, including subsidiaries like SourcePoint, and acquired all of Bellicose's data, software, and corporate goodwill. Martorello Decl. I 53; Hazen Aff. 5 22. Under the business are Picture revenues from distributed monthly in makes revenues. Note, a distribution Note § 1.2(a); to Big Picture's several steps. TED of Martorello Big lending First, Big Picture's Decl. SI 57. gross TED then distributes 2% of those gross revenues to the Tribe, until half of the total distribution loan amount percentage Note § 1.2(b)(1). The has been paid, increases parties agreed at from to which 2% increase time the to 4%. the monthly distribution from 2% to 3% in or around September 2016.® Note Addendum (ECF No. 91-18); Martorello Decl. SI 57. If TED defaults under the Loan Agreement, then the monthly distribution to the Tribe reduces to zero. Note § 1.2(b)(1); see also Loan Agreement § 6.1 (describing events triggering default). Second, TED pays an additional 2% of gross revenues to the Tribe to be ® That agreement also indicated that the percentage distribution would increase from 3% to 6% when half the loan had been repaid. Note Addendum; Martorello Decl. SI 57. 19 reinvested "in growing the loan portfolio."^® Note § 1.2(b)(2). That reinvestment amount must "stay in equity within [TED] or [Big Picture] Agreement payment conducting terminate. reduces to As lending" with zero if until the TED the and Loan distribution, first this defaults. Note Note § 1.2(b)(2). Third, TED and Big Picture must pay any interest and principal due to other creditors. Id. § 1.2(b)(3). Fourth, an amount necessary business Picture's lending non-tribal Those is deducted expenses" incurred business, vendors. including Id. § 1.2(b)(4); expenses may not exceed services, and TED to and Big pay in connection payments to Martorello reasonable Picture "[o]rdinary have and with Big tribal and Decl. 1 57. rates for particular a fiduciary duty to Eventide to ensure that they do not "undermine the [p]arties' intent to maximize the cash flows directed to retire the Note as soon as possible." Note § 1.2(b)(4). Accordingly, TED must The initial reinvestment amount was $1.3 million, but the amount was reduced to 2% of gross revenues for each month thereafter. Note § 1.2(b)(2). The Note also identifies certain " [n]on-deductible expenses," which are taken instead from the Tribe's 2% monthly distribution or the 2% reinvestment amount at TED's choice. These include: (1) any tax, fine, or licensing fee charged by the Tribe, except for certain regulatory fees or fines charged by the TFSRA; (2) any attorneys' fees award from a suit related to the Bellicose merger documents; or (3) any ordinary and necessary expenses that Eventide does not agree to pay and that, in the aggregate, exceed $25,000 per year. Note § 1.2(b)(5). 20 submit a monthly budget and expense report to Eventide, which Eventide uses to ensure that the expenses are reasonable and not inflated to deprive Eventide of payments it will receive under the Note. Id. § 1.2(c); expenses lending based on operations a Martorello "reasonable in light Decl. 1 59. expansion" of "industry The of Note Big climate allows Picture's and norms." Note § 1.2(b)(4)(b). Nonetheless, Eventide must approve a budget for such expansion to ensure that TED's repayment of the loan is not affected. unreasonably Id. Martorello withheld its claims consent that to Eventide expenses, has nor "never has it objected to the reasonable expansion of the business—even when expansion created additional debt for Big Picture which meant smaller (or no) payments to Eventide." Martorello Decl. 1 60. Finally, TED pays to Eventide the "Net Cash Available"—that is. Big Picture's gross revenues minus all the distributions and deductions principal, Martorello under the Eventide above. and That then explains, Note's will not amount is to unpaid because a interest. Eventide distribution receive applied first to principal it unpaid Note § 1.2. receives structure, any is payment As payments last possible that in some months The Note carries a fixed interest rate of 1.8% per year. Note at 1, which Martorello claims is "significantly below the rate at which [the Tribe] could go into the marketplace and borrow funds," Martorello Decl. SI 64. 21 because TED has no net income from which to make a payment. This situation has occurred on at least five occasions. TED, on the other hand, has always received all of Big Picture's net income, and is guaranteed to receive its 3% distribution and reinvestment amount every month. Martorello Decl. I 63. Each payment to Eventide under the waterfall structure is accompanied by a payment schedule. Note § 1.2(c). Based on these schedules, that TED and has other financial consistently paid statements, down its Martorello principal states under the Note, such that the Tribe has been receiving an equity interest in the lending Bellicose. support services that it He notes that, since the close Eventide's Note payments have amounted acquired of the to through acquisition. $21,375,922.10, whereas the total economic consideration obtained by the Tribe under the Note has been $28,184,007.69. Martorello Decl. SI 63; McFadden Aff. (ECF No. 106-17) SI 17. However, the exact basis of those figures is unclear. In fact. Plaintiffs cite two documents with different indicates Eventide was that, was numbers than as of June $17,968,528.36, $4,924,930.94 those provided 2017, the and the ($1,963,708.81 by Martorello. cumulative cumulative in repayment amount to distributions, One to TED and $2,961,222.13 in reinvestments). Pis. 0pp. (ECF No. 90) at 11, 21-22. The second shows slightly 22 higher numbers than those through December 2017. See id. Those figures are consistent with Big Picture's distributed assertion that, by $20.5 million approximately September in 2017, loan TED had payments to Eventide and nearly $5 million to the Tribe ($3,035,374.90 in distributions, and $1,948,999.53 in reinvestments). Big Picture Suppl. Interrogatory Responses (ECF No. 102-3) SI 1. Martorello's calculations might include amounts not accounted for in those spreadsheets, such as the economic value of Bellicose's data or corporate goodwill, but that is hard to discern. In any event, the Note is fixed to expire seven years after its execution date—thus, by September 14, 2022—at which time "the remaining balance is forgiven." Note § 1.3. The Tribe finished restructuring its lending businesses soon after the Bellicose purchase. TAG dissolved in late January 2016 after Arts, of control of Dissolution Bellicose's assets Bellicose (ECF were No. had been 91-9). assigned transferred Around to the to same Ascension TED. time. and its liabilities were assigned to Big Picture, and Bellicose ceased to exist. Shortly thereafter, on February 16, 2016, Big Picture engaged Ascension as an independent contractor to provide Big Picture with the servicing support services that Ascension had carried No. over from 91-17) § 3.1; Bellicose. see also Intratribal McFadden 23 Feb. Servicing 24, Agm't (ECF 2015 Letter (ECF No. 91-30) (noting that all Bellicose VI positions and operations would be merged into Ascension). The Intratribal Servicing Agreement is similar to the earlier Servicing Agreement between Red Rock and SourcePoint. In particular, the contract requires that Ascension "develop and recommend to [Big Picture] . . . reasonable measures for the orderly administration and management of [Big Picture] in the areas of financial reporting, financing, regulatory compliance, marketing, human resources, development of vendor relationships, collections and risk assessment," and then describes most of the same day-to-day operational had. Intratribal Servicing responsibilities Agm't § 4.2.1; that see SourcePoint also Servicing Agm't § 4.2.1. Ascension also receives a monthly fee, which is the sum of the following: (1) "[m]anpower charges," which are Ascension's salary costs, payroll taxes, and other employment expenses; (2) internal expenses, which are capped by Ascension's servicing based on expenses; budget; whether and (4) (3) Big a overhead expenses, in Picture bonus is plan the for different beneficiary Ascension's amounts of such employees. Intratribal Servicing Agm't § 3.4. Big Picture, however, retains the same managerial authority as Red Rock. To that end, the Intratribal Servicing Agreement specifically provides that "[t]he criteria used to extend funds 24 to individual borrowers will remain within the sole and absolute discretion of [Big Picture] . . . and [Big Picture] . . . shall execute all necessary loan documentations." Id. § 4.2.1(k;). Likewise, Ascension "has no authority to engage in origination activities, execute loan documentation, or approve the issuance of loans to consumers. Final determination as to whether to lend to a consumer addition, rests even with [Big Picture] . . . ." Id. § 4.1. In though McFadden and Simon Liang ("Liang"), Ascension's controller, were added as authorized signers for Big Picture's bank accounts, ECF No. 83-23, their authority is bound by deposit account control and lockbox agreements, Intratribal Servicing Agm't §§ 4.4, 4.7. The only real limitation on Big Picture's authority is the Loan Agreement, which prevents TED or Big Picture from amending or terminating the Intratribal Servicing Agreement during the loan's seven-year term without Eventide's written consent. Loan Agm't § 5.12. On the same day that Big Picture contracted with Ascension, the LVD Council also authorized Red Rock to assign the majority of its consumer loans and obligations to Big Picture. Hazen Aff. f 23; Feb. 16, 2016 Assignment Resolution (ECF No. 23-23) at 2-3; see unassigned generally loans subsequently were Assignment written dissolved. Hazen off Agm't as (ECF bad Aff. 5 23; 25 No. debt, Red 23-24). and Rock Red Arts. All Rock of Dissolution (ECF No. 23-27); Feb. 16, 2016 Dissolution Resolution (ECF No. 23-26). Hazen, as co-manager of Red Rock, gave the appropriate notice of dissolution to the TFSRA and to any party that might have claims against Red Rock. See ECF Nos. 23-28, 23-29. Big Picture then sent a notice of assignment to all consumers whose loans it had received, instructing them that Big Picture would begin collecting their loan payments effective February 17, 2016. ECF No. 23-25. 5. Current Management of Big Picture and Ascension TED now oversees both Big Picture and Ascension. All three entities have Operating their Agm't (ECF headquarters No. on 23-33) § 1.3; the Reservation. Big Picture TED Operating Agm't (ECF No. 23-30) § 1.3; Ascension Operating Agm't (ECF No. 23-18) § 1.3. Big Picture currently employs fifteen individuals on the most of Reservation. whom work satellite offices, Ascension outside employs the thirty-one Reservation Hazen Aff. fSI 24-25, which individuals, at Ascension's appear to be in (at least) Atlanta, Mississippi, and Puerto Rico, Compl. fSl 5053. Hazen and Williams, both LVD Council members, co-manage all three companies. Hazen Aff. ff 2, 15, 18-20; Williams Aff. (ECF No. 23-36) SISI 1, 11-13. That position grants them the broad authority to, in the case of Big Picture, "perform all actions as may be necessary or appropriate to carry out the business of 26 [Big Picture] including but not limited to the power to enter into contracts for services, to manage vendor relationships, to manage personnel issues and affairs of [Big Picture]." Big Picture Operating Agm't § 5.1(a).^^ Where the managers' power is limited by the operating agreements, the ultimate authority resides in the LVD Council. See id. § 5.2. Similarly, all three entities must submit quarterly reports to either the LVD Council (for TED) or TED (for Big Picture and Ascension). Id. § 5.8; TED Operating Agm't § 4.7; Ascension Operating Agm't § 5.8. Hazen has been Big Picture's CEO since December 2015. Hazen Aff. f 20. However, as for Ascension, Hazen and Williams have delegated to McFadden: (1) the "approval of Ascension strategic direction," which must be communicated at least quarterly to the co-managers; (2) "authority to execute documents on behalf of Ascension"; (3) "authority to open and maintain bank accounts"; (4) "authority to adopt, terminate, or change employee benefit plans or programs"; and (5) "authority regarding all matters necessary for . . . day to day management." Ascension Delegation of Authority Policy (ECF No. 91-13) § 1.4. McFadden must report regularly to Hazen and Williams about the authority exercised Hazen and Williams are granted similarly broad management authority under nearly identical provisions in TED's and Ascension's operating agreements. See TED Operating Agm't § 5.1(a); Ascension Operating Agm't § 5.1(a). 27 under those provisions and any matters that might fall under their purview. Id. § 1.5. McFadden also must obtain co-manager approval "for changes in operations, personnel, and distributions." McFadden Aff. S[ 8. Martorello asserts that he has had limited contact with the Tribe since it purchased Bellicose in January 2016. As he states, he has never been involved in TED's operations, made any decisions on its behalf, provided any consulting services to it, or solicited any investors on its behalf. Likewise, he has never provided any consulting services to Big Picture or Ascension; suggested marketing strategies, underwriting criteria, or other policies to them; accessed any of their software systems, databases, bank accounts, or records; or hired or fired their employees. Martorello when have they has interacted with Hazen requested Eventide's and permission to Williams undertake expenses for Big Picture that exceeded budgeted expenses under the Note, but Martorello never proposed that they incur those expenses, Decl. SIf nor did 70-97; says McFadden, see he object also neither to their McFadden Eventide requests. Aff. If 13-16. nor Martorello Martorello Furthermore, participates in Ascension's day-to-day operations, and Ascension does not seek Eventide's or Martorello's consent for those operations, except if Ascension needs to expand its 28 budget. Even in that case, explains McFadden, he would first obtain Hazen's or Williams' approval before contacting Eventide. McFadden Aff. fSI 10-12. Big Picture operates financial entity. regional bank, in some ways as an independent It maintains its operating account where it funds with all its loans, receives a all consumer payments, pays all payroll and vendors, deposits all its investments, and makes distributions to TED and the Tribe. Big Picture relies on private investors to fund its lending operation, including the loans themselves. These investments are made through traditional loan agreements and promissory notes, under which Big Picture is responsible to each investor. Hazen Aff. ISl 26-27. The Tribe itself has invested over $7 million. Williams Aff. 1 8. Moreover, Big Picture's lending operation has yielded concrete financial benefits for the Tribe. Any profits that Big Picture earns are allocated to its sole member, TED, which in turn allocates those profits to the Tribe. Big Picture Operating Agm't § 6.1; TED Operation Agm't § 6.1.^^ If Big Picture's cash As with Red Rock, Plaintiffs allege that Big Picture does not ever handle the money loaned to or paid by consumers. See Compl. SISl 30-32, 36-37. Ascension has an identical provision in its operating agreement. Ascension Operating Agm't § 6.1, but Ascension does not generate any profit that it could allocate. 29 account balance distribution exceeds and $500, transfer it the must excess declare to an TED. immediate Big Picture Operating Agm't § 6.2. It is unclear if this always occurs, as e-mails from Liang to Martorello about repayment of Eventide's loan contain language indicating that Big Picture's cash balance was greater than $500, but that Big Picture "would like to keep [the balance] for lead acquisition and loan origination in future months." See, e.g., EOF No. 83-24 at MARTORELLO_000218. In any event, beyond the profits obtained through the Note's revenue distributions, the Tribe also receives interest payments as a substantial Picture's investor business now of the Tribe's Big comprise general fund, and those 30% in Picture. more than profits could budget over the Proceeds 10% from of the Big Tribe's possibly fund more than next few years. Williams Aff. n 9-10. The Tribe relies on programs and services. revenues have been Big Picture's funds for governmental Id. f 10. used to, Specifically, in whole or Big in Picture's part: meet requirements necessary to secure $14.1 million in financing for the Tribe's new health clinic; refinance casino debt; fund college scholarships and pay for educational costs for members such as student housing, books, school supplies and equipment; create home ownership opportunities 30 for members through tribally-purchased homes; subsidize tribal members' home purchases and rentals; provide a bridge loan to complete the new tribal health clinic that offers services to the regional community; fund new vehicles for the Tribe's Police Department/ fund an Ojibwe language program and other cultural programs; provide foster care payments for eligible children, propane purchase assistance, and assistance for family care outside of the community; cover burial and other funeral expenses for members' families; fund renovations and new office space for the Tribe's Social Services Department; fund youth activities; renovate a new space for the LVD Court and bring in telecom services for remote court proceedings; and fund tribal elder nutrition programs and tribal elder home care and transport services. Hazen Aff. SI 31. 6. Big Picture's Lending Process As noted. Big Picture has its principal place of business on the Reservation, and its employees are all located there. The servers for Big Picture's websites are also stored on the Reservation. And, because all loan applications are approved by Big Picture employees on the Reservation, all consumer loans are originated there. Id. SISI 28, 30(a). To obtain a loan from Big Picture, consumers must log onto the company's website and complete and submit an application. 31 Big Picture then conducts a review using a software-based underwriting process application. and either 5 30(a)-(b). That accepts or denies software consolidates consumer credit data from third-party service providers to verify applicants' information and determine creditworthiness. Big Picture Interrogatory Responses 5 24. An applicant receives a notice of denial if the application is denied. Hazen Aff. SI 30(d). Even if an application is accepted, the consumer must complete several more steps before the loan is finalized. First, the website prompts applicants to select their desired loan amount, which may be as high as $5,000. Second, applicants must select the term of the loan, and Big Picture in turn provides an estimated annual underwriting percentage software's rate ("APR") determination of based an on the applicant's repayment ability. Third, applicants must review Big Picture's standard loan agreement, which includes the loan's APR and repayment schedule. Fourth, applicants must acknowledge their review of, and agree to, the loan agreement-including the choice-of-law, forum-selection, and jury trial waiver clauses- and Big Picture's privacy disclosures. Finally, applicants must select their payment method. Id. i 30(c)(l)-(6). 32 once a consumer signs the loan agreement, the contract goes to Big Picture for its employees' review. Employees on the Reservation perform a final verification of the applicant information in the loan agreement and other details. If there are no issues, the reviewing employee manually enters the date of disbursal of funds, which authorizes electronic approval of the agreement. This action also causes the loan to be originated and triggers the transmission of instructions for the particular application to a third-party payment processor, which then disburses the funds to the consumer. 5 30(c)(7)-(8). 7. Tribe's Lending Activities in Virginia The parties have not provided evidence regarding Red Rock's or Big Picture's lending activities in Virginia specifically. However, the Complaint alleges that Martorello and Gravel intentionally chose Virginia as a place where Red Rock and Big Picture would offer loans and collect payments, and they proceeded with this plan notwithstanding their knowledge that the loans would be illegal under Virginia's usury laws. Certain defendants then began marketing, initiating, and collecting loans in Virginia. Consumers were required to electronically sign the form loan agreement described above. Under the terms of that contract, the loans were subject to an APR that was much higher than 12%. However, neither the Tribe nor any of the 33 defendants had a consumer finance license permitting them to charge interest at such a high rate, and they never attempted to obtain such a license. Compl. M 54-57, 60. Lula Williams, Gloria Turnage ("Turnage"), George Hengle ("Hengle"), Dowin Coffy ("Coffy"), and Felix Gillison, Jr. ("Gillison"; with Lula Williams, Turnage, Hengle, and Coffy, collectively, "Plaintiffs") all entered into loans with Big Picture, and their loan agreements with Big Picture specified that interest would be charged at greater than 12% APR. Lula Williams' loan was subject to an APR of 649.8%; Turnage's loan was subject to an APR of 693.2%; Hengle's and Coffy's loans were subject to an APR of 607.5%; and Gillison's loan was subject to an APR of 627.2%. Based on those rates. Plaintiffs paid various amounts to Big Picture, most of which were credited as payment for interest or other loan-related fees. Id. If 58-59, 62-65. The loan agreements also contained the provisions: GOVERNING LAW AND FORUM SELECTION: This Agreement will be governed by the laws of the Lac Vieux Desert Band of Lake Chippewa Indians but limited not Superior ("Tribal law"), including to the [Tribal Consumer Financial Services Regulatory] Code as well as applicable federal law. All disputes shall be solely and exclusively resolved pursuant to the Tribal Dispute Resolution Procedure set forth in Section 9 of the Code 34 following and summarized below for your convenience. . . . TRIBAL DISPUTE RESOLUTION PROCEDURE: The Tribe has established a Tribal Dispute Resolution Procedure (the "Procedure") to review and consider any and all types of complaints made by You or on Your behalf relating to or arising from this Agreement. The Procedure is found at Section 9 of the Code. You can find the Code at [Big Picture's] website, . . . or You may request a physical copy mailed . . . to by the written Tribal request Financial Services Regulatory Authority, P.O. Box 249, Watersmeet, Michigan 49969. The Tribe and [Big Picture] intend and require, to the extent permitted by Tribal law, that any complaint lodged, filed, or otherwise submitted by you or on your behalf to follow the Procedure. Under the Procedure, a consumer who, in the course of his otherwise lawful and proper use of [Big Picture]'s business believes himself to be harmed by some aspect of the operation of any part of [Big Picture]'s business, shall direct his concerns or dispute to [Big Picture] in writing. A person's complaint to [Big Picture] shall be considered similar in nature to a petition for redress submitted to a sovereign government, without waiver of sovereign immunity and exclusive jurisdiction, and does not create any binding procedural or substantive rights for a petitioner. [Big Picture] will investigate the complaint and respond as soon as reasonably practicable, but no later than thirty (30) days from the receipt of the complaint. In the event that the consumer is dissatisfied with [Big Picture]'s determination, he may initiate Formal Dispute Resolution by requesting an administrative review of [Big Picture]'s determination by submitting such request in writing to the Tribal Financial Services 35 Regulatory Authority ("Authority"), P.O. Box 249, Watersmeet, MI 49969, no later than ninety (90) days after receiving [Big Picture]'s determination. EOF No. 1-1 at 4-5; see also Compl. fSI 70-71. These are the choice-of-law and forum-selection provisions referenced above. B. Procedural Background On June 22, 2017, Plaintiffs brought suit against Big Picture, Ascension, Martorello, Williams, Gertrude McGeshick, Susan McGeshick, Giiwegiizhigookway Martin,^® and Gravel. They asserted five class claims: (1) COUNT ONE, Declaratory Judgment, against all defendants, stating that the choice-of-law and forum- selection provisions in all loan agreements made by Big Picture or Red Rock to Virginia residents are void and unenforceable; (2) COUNT TWO, Violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c), against all defendants; Williams, the McGeshicks, and Martin (collectively, "the LVD Officers") are all members of the LVD Council: Williams is the Chairman, Gertrude McGeshick is the Secretary, Susan McGeshick is the Treasurer, and Martin Compl. ISl 17-20. 36 is the Vice-Chairwoman. (3) COUNT THREE, Violations of RICO, 18 U.S.C. § 1962(d), against all defendants; (4) COUNT FOUR, Violations of Virginia Usury Laws, against Big Picture, Martorello, Ascension, and Gravel; and (5) COUNT FIVE, Unjust Enrichment, against Big Picture, Martorello, Ascension, and Gravel. Compl. fSI 84-139. After some defendants indicated that they would seek dismissal of the Complaint on the basis of, among other grounds, lack of subject matter jurisdiction and personal jurisdiction, the Court ordered the discovery. ECF No. 17. ordered Defendants to parties to conduct jurisdictional Following discovery disputes, the Court produce some documents that it had previously withheld as privileged. ECF No. 49. That same day, the Court granted Plaintiffs' and Gravel's joint motion to dismiss Gravel from the action without prejudice. ECF Nos. 46, 50. The Court later granted the LVD Officers' motion to dismiss the claims against them on Rule 12(b)(6) grounds, and Plaintiffs chose not to file an Amended Complaint. ECF Nos. 117, 122. For Counts Two and Three, Plaintiffs seek injunctive relief only as to the LVD Officers, and both damages and injunctive relief as to Big Picture, Ascension, and Martorello. Compl. SI 95 n.8. 37 Accordingly, Big Picture and Ascension are the only remaining defendants besides Martorello. DISCUSSION I. Legal Standard Fed. R. Civ. P. 12(b)(1) tests whether the court has subject matter jurisdiction to resolve the claims before it.^® Sovereign immunity issues are generally considered jurisdictional in nature and, as a result, are appropriately resolved in the context of a Rule 12(b)(1) motion. See United States V. Jones, 225 F.3d 468, 469 (4th Cir. 2000) ("Sovereign immunity deprives a court of jurisdiction."); Best Med. Belgium, Inc. V. Kingdom of Belgium, 913 F. Supp. 2d 230, 236 (E.D. Va. 2012) ("Subject matter jurisdiction encompasses the scope of sovereign immunity."). When a defendant seeks dismissal under Rule 12(b)(1), the plaintiff bears the burden of proving subject matter jurisdiction. Richmond, Fredericksburg & Potomac R. Co. V. United States, 945 F.2d 765, 768 (4th Cir. 1991); see also Lucas V. Henrico Cty. School Bd., 822 F. Supp. 2d 589, 599 (E.D. Va. 2011). Nonetheless, as explained below, there is some Big Picture and Ascension also assert that the Court lacks personal jurisdiction over them, but they spend little time arguing this point given the Fourth Circuit's broad reading of RICO's nationwide service of process provision. See ESAB Grp., Inc. V. Centricut, Inc., 126 F.3d 617, 627 (4th Cir. 1997). Thus, the Court will not address any personal jurisdiction issues in this opinion. 38 disagreement here about which party bears the burden with respect to tribal sovereign immunity. Two types of Rule 12(b)(1) motions exist: First, a complaint 12(b)(1) motion may attack on its face, asserting that the the complaint fails to state a claim upon which subject matter jurisdiction can lie. In such a challenge, a court assumes the truth of the facts alleged by plaintiff, thereby functionally affording the plaintiff the same procedural protection he or she would receive under Rule 12(b)(6) consideration. However, a 12(b)(1) motion may also . . . challenge the existence of subject matter jurisdiction in fact, apart from the pleadings. In such a challenge, no presumptive truthfulness attaches to the plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for the merits of jurisdictional claims. Lucas, 822 F. Supp. Moreover, in the defendant asserts 2d latter at 599 (internal citations situation—including sovereign immunity—the itself where, omitted). as court "may here, a consider evidence outside the pleadings without converting the proceeding to one for summary judgment." White Tail Park, Inc. v. Stroube, 413 F.3d 451, 459 (4th Cir. 2005) (internal quotations omitted); see also Blitz v. Napolitano, 700 F.3d 733, 736 n.3 (4th Cir. 2012) ("[On] a Rule 12(b)(1) motion to dismiss, the district court may regard the pleadings as mere evidence on the issue and may consider evidence outside the 39 pleadings . . . ." (second alteration court in then original) must (internal "weigh[] jurisdiction." Adams v. the Bain, quotations evidence 697 F.2d to 1213, omitted)). The determine its 1219 (4th Cir. 1982). II. Tribal Sovereign Immunity A. Legal Standard 1. In General Federally-recognized Indian tribes are "separate sovereigns pre-existing the Constitution" that, "unless and until Congress acts, . . . retain their historic sovereign authority." Michigan V. Bay Mills Indian Cmty., 572 U.S. , 134 S. Ct. 2024, 2030 (2014) (internal quotations omitted). "Among the core aspects of sovereignty that tribes possess . . . is the common-law immunity from suit shields traditionally tribes enjoyed from by sovereign liability powers," "absent which congressional authorization (or a waiver)." Id. at 2030-31 (citing Kiowa Tribe of Okla. V. Mfg. Techs., Inc., 523 U.S. 751, 756 (1998)). The Supreme Court has on multiple [tribal] immunity . . . to governmental occasions transactions activities." Kiowa, 523 on U.S. refused to "confine reservations at 754-55; and see to also Bay Mills Indian Cmty., 134 S. Ct. at 2036 (declining to revisit Kiowa and reservation recognize "any conduct"). exceptions Thus, even 40 for though commercial this broad or off- scope of immunity may have "unfortunate consequences," it F. law." Everette v. Mitchem, 14 6 2015) Bay Mills Indian (citing Supp. Cmty., 3d is "settled 720, 723 (D. 134 S, Ct. at Md. 2052 (Thomas, J., dissenting) ("In the wake of Kiowa, tribal immunity has also regulated been by exploited States. in For new areas instance, that payday are often heavily lenders . . . often arrange to share fees or profits with tribes so they can use tribal immunity legality.")); see that tribal as a also immunity shield Kiowa, is for 523 "settled conduct U.S. at of 756 law," even questionable (acknowledging if "[t]here are reasons to doubt the wisdom of perpetuating the doctrine").^® Consistent with the idea that "an arm or instrumentality of the State generally enjoys the same immunity as the sovereign itself," Lewis v. Clarke, 581 U.S. , 137 S. Ct. 1285, 1290 (2017), courts in other circuits have universally held that "an The Supreme Court has not addressed whether, under Kiowa, "immunity should apply in the ordinary way if a tort victim, or other plaintiff who has not chosen to deal with a tribe, has no alternative way to obtain relief for off-reservation commercial conduct." Bay Mills Indian Cmty., 134 S. Ct. at 2036 n.8; see also Kiowa, 523 U.S. at 758 ("[IJmmunity can harm those who are unaware that they are dealing with a tribe, who do not know of tribal immunity, or who have no choice in the matter, as in the case of tort victims."). However, Plaintiffs willingly chose to contract with Big Picture when obtaining their loans, and Big Picture's association with the Tribe (and possible protection by sovereign immunity) was obvious from the face of Big Picture's loan agreements, so none of those hypothetical situations present themselves here. 41 entity that functions as an arm of a tribe shares in the tribe's immunity," Alabama v. PCI Gaming Auth., 801 F.3d 1278, 1287-88 (11th Cir. 2015); 1010, 1025 (9th see Cir. also White 2014); v. Univ. Breakthrough of Cal., Mgmt. 765 Grp., F.3d Inc. v. Chukchansi Gold Casino & Resort, 629 F.3d 1173, 1183 (10th Cir. 2010); Ninigret Dev. Corp. v. Narragansett Indian Wetuomuck Hous. Auth., 207 F.3d 21, 29 (1st Cir. 2000); Hagen v. SissetonWahpeton Cmty. Coll., 205 F.3d 1040, 1043 (8th Cir. 2000); In re IntraMTA Switched Access Charges Litig., 158 F. Supp. 3d 571, 575 (N.D. Tex. 2015). Although the Fourth Circuit has implicitly approved of this conclusion, it has never affirmatively adopted it. See United States v. Ely, 510 F.3d 453, 465 (4th Cir. 2007) (Motz, J., concurring); Aleman v. Chugach Support Servs., Inc., 485 F.3d 206, 213 (4th Cir. 2007). Nonetheless, several courts in the Fourth Circuit have taken the consensus approach. See Howard v. Plain Green, LLC, No. 2:17CV302, 2017 WL 3669565, at *3 (E.D. Va. Aug. 7, 2017), report and recommendation adopted, 2017 WL 3669096 (E.D. Va. Aug. 24, 2017); Everette, 146 F. Supp. 3d at Casino, 723; No. Madewell 2:10CV8, 2010), report and v. 2010 Harrah's WL Cherokee 2574079, recommendation (W.D.N.C. 2010). 42 Smokey Mountains at *3 (W.D.N.C. adopted, 730 F. May Supp. 2d 3, 485 The parties do not dispute that Big Picture and Ascension would be immune from suit if they qualify as arms of the Tribe, so the sole question here is whether they do so. Federal and state courts have employed several tests to determine if an entity is an arm of a tribe, but the most common was laid out in Breakthrough. See 629 F.3d at 1187-88 & n.lO; Howard, 2017 WL 3669565, at *3 ("Federal courts have not settled on a uniform test, but the Tenth comprehensive . . . six factors to entities entities'] is Circuit's is the most Under that framework, courts consider decide if the close method analysis of enough relationship to creation; justify (2) between tribes immunity: their purpose; "(1) (3) and [the their structure, ownership, and management, including the amount of control the tribe has over the entities; (4) whether the tribe intended for the entities to have tribal sovereign immunity; (5) the financial relationship between the tribe and the entities; and (6) whether the purposes of tribal sovereign immunity are served by granting immunity to the entities."^® Breakthrough 20 The court did "not conclude[] that those factors constitute an exhaustive listing or that they will provide a sufficient foundation in every instance for addressing the tribal-immunity question." Breakthrough Mgmt., 629 F". 3d at 1187 n.lO (emphasis in original). However, the parties do not suggest that the Court should rely on any factors other than those listed, so this limitation is not meaningful here. 43 Mgmt., 629 factors only to entity's light F.3d "prior on the at 1183, the 1187-88. Courts entity claiming operations under inquiry." People should tribal immunity, [different] ex apply rel. Owen names v. these but may Miami the shed Nation Enters., 386 P.3d 357, 376 (Gal. 2016).^^ The central question "*is not whether business, which the is activity irrelevant may be under characterized Kiowa, but as whether a the entity acts as an arm of the tribe so that its activities are properly deemed to be those of the tribe.'" In re IntraMTA, 158 F. Supp. 3d at 576 (quoting Allen v. Gold Country Casino, 464 F.3d 1044, courts 1046 should "take[] considerations—in organizational Big (9th to into other and Miami 2006)). account words, relationship Picture citations Cir. Nation both not between Ascension In the the formal that and only criticize on resolving and functional the tribe legal the Plaintiffs' basis that issue, the or entity. frequent case's discussion of tribal immunity tried to align Breakthrough with California law, not federal law. But tribal immunity is a common-law immunity that operates the same way in state and federal court, so the location of the underlying lawsuit in Miami Nation does not make that case any less helpful here. Indeed, Breakthrough itself relied heavily on cases from state courts, including California courts. See 629 F.3d at 1187-88. Moreover, the Tenth Circuit, which authored Breakthrough, has agreed with Miami Nation's more practical view of tribal immunity (albeit to require more jurisdictional discovery, and not to decide the ultimate immunity question). See Finn v. Great Plains Lending, LLC, 689 F. App'x 608, 611 (10th Cir. 2017). Thus, Miami Nation can help explain the Breakthrough factors even if the tests in those cases are different. 44 but also the practical operation of the entity in the tribe." Miami considerations Nation^ illuminate liability on the 386 the entity would P.3d at degree relation to 365. "These to which functional imposition of practically impair tribal self- governance." Id. at 371. 2. Burden of Proof Before turning to the merits of the jurisdictional dispute, the Court must first address which party bears the burden of proof as to a tribal arm's entitlement to sovereign immunity. Big Picture and Ascension contend that this question is easily answered because, in the Fourth Circuit, a plaintiff responding to a Rule 12(b)(1) motion must prove that subject matter jurisdiction exists. Richmond, Fredericksburg & Potomac R. Co., 945 F.2d at complexity 768. of However, the this cursory jurisdictional issues assertion raised ignores by the sovereign immunity. It is well-settled that the plaintiff bears the burden of showing immunity—like subject any matter sovereign jurisdiction, and immunity—"Meprives that a tribal court jurisdiction'" over a defendant. Everette, 146 F. Supp. 3d 723 (quoting not of at Jones, 225 F.3d at 469). But those statements do necessarily imply that tribal immunity is a matter of subject matter jurisdiction in the traditional sense—like, for instance, diversity of citizenship—or, instead, a factual issue 45 with jurisdictional implications. In fact, "the jurisdictional nature of tribal immunity has never been definitively settled," and has sometimes been discussed in terms of personal jurisdiction, at least in California courts. Miami Nation, 386 P.3d at 370. Federal courts have also reached differing conclusions on the point. Compare Miner Elec., Inc. v. Muscoqee (Creek) Nation, 505 sovereign F.3d immunity is 1007, 1009 (10th a matter Cir. of 2007) ("Tribal subject matter jurisdiction . . . .") with In re Prairie Island Dakota Sioux, 21 F.3d 302, jurisdictional 305 (8th Cir. consideration 1994) (tribal separate from immunity "is a subject matter jurisdiction"). This categorization is important: pure subject matter jurisdictional issues, unlike tribal immunity, cannot be waived, and must be raised sua sponte by a court if it might lack the ability to hear a case. See Miami Nation, 386 P.3d at 370. Given these contrasts, it is possible that the burden for tribal immunity issues should be allocated differently than the burden for subject matter jurisdictional issues. Moreover, even assuming that tribal immunity is a question of subject matter jurisdiction, that should not necessarily put the burden on Plaintiffs to prove that Big Picture and Ascension are not entitled to sovereign effectively assume the truth immunity. of Big 46 Such Picture's placement would and Ascension's assertion that they should be immune from suit in the same way as the Tribe itself. "Arm-of-the-tribe cases, however, require the court to decide an antecedent question: whether [the entities] can claim sovereign immunity in the first instance." Id. (alteration in original) (internal quotations omitted). Big Picture and received can Ascension extensive prove that Big may be right information Picture from and that Plaintiffs, jurisdictional Ascension are not having discovery, entitled to tribal immunity just as easily as those entities can prove that they are entitled to it. At the same time, even if the parties can access the same evidence, one side must present it in a way that there convinces is no the Court to that Big reason make a Picture particular and decision, Ascension should and be freed from having to do so before the Court finds that they are entitled to tribal immunity. Stated differently, it would be odd to treat Big Picture and Ascension as immune entities without making them show it first. See id. at 371 ("An entity that is formally distinct from the tribe will be immune from suit only insofar as it benefits from the tribe's own immunity. . . . But until the entity has proven it should be treated as an extension of the tribe, it is no more immunity than any other party."). 47 entitled to a presumption of With these considerations in mind, most courts have concluded that an entity seeking tribal immunity must show by a preponderance of the evidence that it is entitled to that immunity, either as an arm of the tribe or as the tribe itself. See Gristede^s Foods, Inc. v. Unkechuage Nation, 660 F. Supp. 2d 442, 465 (E.D.N.Y. 2009); City of N.Y. v. Golden Feather Smoke Shop, Inc., No. 08-CV-3966, 2009 WL 705815, at *4 (E.D.N.Y. Mar. 16, 2009); Miami Nation, 386 P.3d at 371. But see Cash Advance & Preferred Cash Loans v. State, 242 P.3d 1099, 1113 (Colo. 2010) (requiring plaintiff to prove by a preponderance of the evidence that tribal entities are not entitled to immunity because tribal immunity "bears a substantial enough likeness to subject matter jurisdiction to be treated as such for procedural purposes"). Besides the practical aspects noted above, those courts found considerable support in cases involving arms of the state, in which courts have held that the governmental entity invoking the Eleventh Amendment must show that it qualifies as an arm of the state. See, e.g. . Golden Feather, 2009 WL 705815, at *4; see also U.S. ex rel. Oberg v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131, 147 (4th Cir. 2014) (Traxler, C.J., concurring in judgment in part and dissenting in part) ("[T]he circuits that have considered uniformly similar concluded assertions that it is 48 an of arm-of-state affirmative status defense have to be raised and established by the entity claim' --use u.e a™.e.-u,e-.u..e Z/l^ " —3 a. .uec^ouen. .eu.ee. . immunity context .> s IS Illogical to place th^ k different parties in each situation. u parties m sovereign P ce the burden on The problem here i. .-u that the Fourth r-i addressed which party bears the burden on the arm of t-h ^--icn. clal„ tUe rourt, C' d.eu3e.» p. 0 •ats 17 (geotlng oberg, 745 F 7b . • °PP(Traxler, C.J s ncurring in judgment in part and dis nr. P--'. -t eouteutlou pi.., . ^ is from Chief Judge Traxler's o ' • concurrina in ' ^ raxler s opinion ^ fho • ^ and dissenting, which i, indgment ho"ever, did acknowledge that precedent. The majority m Oberg, . "arm-of-the-state constitute an aff tare affirmative defense a , in ev, "®" related stlttr Eleventh -Via. on that brief entity a'sserting sovereign immunity bearsconcludedburden the the that of demonstrating that it is ^n arm ^ -Lc IS an = p. of the n i Pole V. Pa. 13 P. supp. 3d 518, 522 ,P.o. Va. 2014); se^^ ^g£^-21^^a£Mell_Ct^ch. p.t. »o. 1:16-CV-01627-JMC, 2017 «L 114874I, at M ,0.3.0. Mar. 28, 2017). Accordingly, the arm-of-the-state framework is just as influential here in determining which side has the burden in the arm-of-the-tribe inquiry as it Feather. As a result, the was in Court Miami Nation will join and those Golden courts in concluding that the entities claiming tribal sovereign immunity— here. Big Picture and Ascension—bear the burden of establishing by a preponderance of the evidence that they are entitled to context of that immunity as arms of the tribe. B. Application of Breakthrough Factors Reviewing the six Breakthrough factors in the the parties' jurisdictional discovery, the Court concludes that Big Picture and Ascension have not met their burden of proof and, therefore, are not entitled to sovereign immunity. 1. Method of Creation The first factor "focuse[s] on the law under which the entity was formed. Formation under tribal law weighs in favor of immunity, whereas formation under state law has been held to weigh against immunity." Miami Nation, 386 P.3d at 372 (internal citations omitted). Consistent with that statement, courts have found that entities' this formation factor supports documents showed sovereign that they immunity were where organized under and operated pursuant to tribal law. See White, 765 F.3d at 1025; Breakthrough Mgmt., 629 50 F.3d at 1191-92; Allen, 464 F.3d at 1046; Howard, 2017 WL 3669565, at *3; Everette, 146 F. Supp. 3d at 724; In re IntraMTA, 158 F. Supp. 3d at 576; Miami Nation, 386 P. 3d at 376. In contrast, this factor has weighed against sovereign immunity where it was clear that the purported tribal entities were incorporated under state law. See Somerlott V. Cherokee Nation Distributors, Inc., 686 F.3d 1144, 1149 (10th Cir. 2012); J.L. Ward Assocs., Inc. v. Great Plains Tribal Chairmen^s Health Bd., 842 F. Supp. 2d 1163, 1176 (D.S.D. 2012). Applying that rationale here, this factor weighs in favor of immunity. through Big Picture resolutions by and the Ascension LVD were Council, both which organized was itself exercising the power given to it by the LVD Constitution, and the entities operated pursuant to the Tribe's Business Ordinance. See Aug. 26, 2014 Resolution at 1-2 (Big Picture); Big Picture Arts, of Organization at 1; Feb. 5, 2015 Ascension Resolution at 1-2; Ascension Arts, of Organization at 1. The same is true of Red Rock, the loans of which were assigned to Big Picture after TED acquired Bellicose. Sept. 14, 2011 Resolution at 1; Red Rock Arts, of Organization at 1. As in the cases noted above, these tribal formation documents justify Big Picture's and Ascension's claims to sovereign immunity. Plaintiffs contend that looking only to the documents under which Big Picture and Ascension were organized fails to account 51 for other circumstances surrounding their formation—namely, the cease-and-desist Department of letter issued Financial to Red Services, Rock the by the "mounting New York pressure" against rent-a-tribe schemes, and Hazen's inability to explain who decided to create Big Picture. Pis. 0pp. at 18. It is true that "[t]he occurred, circumstances including under whether which the the tribe entity's initiated formation or simply absorbed an operational commercial enterprise," may be relevant to this telling factor. that Big Miami Nation, Picture and 386 P.3d Ascension at 372. Here, were not formed it is until after the Tribe was denied an injunction against the New York cease-and-desist. See Otoe-Missouria, 974 F. Supp. 2d at 353. Plaintiffs have presented credible evidence that, following that decision, Martorello restructure Red Rock's and the lending Tribe looked operation in for order ways to to reduce exposure to liability. Indeed, several steps in February 2015— the formation of TED and Ascension, the reorganization of Big Picture with TED as its sole member, and the initiation of the Tribe's Bellicose purchase—were apparently taken with that very goal in mind. Moreover, although Red Rock was formed as a tribal entity. Bellicose and its subsidiaries, like SourcePoint, were a critical part of Red Rock's business. Thus, by creating Big Picture and Ascension, the Tribe was not starting an independent 52 lending operation but rather facilitating the absorption of Red Rock's fully-functioning decidedly Big non-tribal Picture knowledge and on character, Ascension about meaningful lending the given may own. Bellicose's be right to decision its enterprise—which create But, had involvement. that Hazen's lack Big viewed Picture is in a context, of not Hazen's unawareness teaches that the impetus behind the formation of Big Picture and Ascension was Martorello and Bellicose's desire to avoid liability, more so than the Tribe's interest in starting its own extent business. to which Consequently, this factor these weighs circumstances in favor limit of the sovereign immunity. Moreover, the real significance of this evidence is in the second Breakthrough factor: the purpose factor. However, Plaintiffs' second assertion—that Ascension's registration as a foreign LLC in Puerto Rico also affects the formation factor—is much less persuasive. Somerlott held that the Breakthrough factors are "inapplicable to entities which are legally distinct from their members and which voluntarily subject themselves to the authority of another sovereign which allows them to be sued." Somerlott, 686 F.3d at 1149-50. Plaintiffs point out that, although Ascension may be organized under tribal possibility of law, it being subjected sued in itself Puerto 53 to Rico the laws and the by registering as a foreign LLC there. See P.R. Laws tit. 14, §§ 3522(a), 3806(b), 4021(a)(1). But Somerlott's holding was premised entirely on the entity's incorporation under state law, which distinguished the case from others in which entities claiming to be arms of a tribe were "organized, in some form or another, under tribal law." 686 F.3d at 1149; see also J.L. Ward, 842 F. Supp. 2d at 1176 (entity was "created by incorporation under South Dakota, rather than tribal, law" (emphasis added)). Plaintiffs' attempt to skirt this limitation is unsupported by Somerlott, which demonstrated its holding by explaining that a corporation owned by the United States but incorporated under New York law would not share the United States' sovereign immunity. 686 F.3d at 1150. Ascension's background is obviously different, as it is both owned by the Tribe and incorporated under its laws. See Rassi V. Fed. Program Integrators, LLC, 69 F. Supp. 3d 288, 291 (D. Me. 2014) subordinate (distinguishing entity under Somerlott similar where tribe circumstances). formed Thus, this argument misses the mark. As a result, the first Breakthrough factor supports a finding of sovereign immunity for both Big Picture and Ascension, albeit with the caveat noted above. 2. Purpose of Entities The second factor "encompasses both the stated purpose for which the entity was created and the degree to which the entity 54 actually serves that purpose." Miami Nation^ 386 P.3d at 372; see also Breakthrough Mqmt. ^ 629 F.3d at 1192-93 (considering both elements). The initial question is whether the entity has a stated purpose that "relates to broader goals of tribal self- governance" separate from the entity's commercial activities, like developing the tribe's economy or funding governmental services, or whether "the entity was created solely for business purposes and without any declared objective of promoting the tribe's general tribal or economic development." Miami Nation, 386 P.3d at 372 (internal quotations omitted). If such a purpose exists, the inquiry then turns to the entity's "execution" of that purpose; the "fit . . . need not be exact, but the closer the fit," the more it supports tribal immunity. Id. For instance, evidence of "the number of jobs [the entity] creates for tribal members or the amount of revenue it generates for the tribe" suggests that it is an arm of the tribe, but "evidence that the entity engages in activities unrelated to its stated goals or that [it] actually operates to enrich primarily persons outside of the tribe or only a handful of tribal leaders" shows the opposite. Id. at 373. Miami Nation cites no case law in support of this required "fit" between purpose and execution. See 386 P.3d at 372-73. Nonetheless, Miami Nation's conclusion makes sense logically, and Breakthrough supports the more exacting inquiry called for 55 The relate stated to the Picture's purposes Tribe's stated of both goal of purpose Big Picture and Ascension economic self-sufficiency. is "[t]o engage in the Big business of operating one or more Tribal lending business(es)," Big Picture Arts, of Organization, Art. 5, which it does as part of the LVD Council's "strategic economic development efforts" that are aimed at "diversify[ing] the economy of the Tribe's reservation in order to improve the Tribe's economic self-suffiency," Aug. 26, 2014 Resolution at 1. Similarly, Ascension's stated purpose is "[t]o engage in the business of operating one or more Tribal marketing, technology and vendor service business(es)," Ascension Arts, of Organization, Art. 5, which helps fulfill the same tribal Ascension economic development efforts, see Feb. 5, 2015 Resolution at 1. Those stated purposes must also be read in conjunction with that of TED, the sole member of both entities, which works "[t]o promote the economic development of the Tribe through the development of business opportunities." TED Arts, of Organization, Art. 5. Along the same lines, TED's management development These activities of the are intended Tribe." Feb. 5, goals—development and "to further 2015 TED execution of an the economic Resolution online at 1. lending by Miami Nation. See Breakthrough Mgmt., 629 F.3d at 1192-93 (examining entity's revenue allocation in considering purpose). 56 business to gain revenue for the Tribe's economic benefit—are extremely similar to those that other courts have found relate to tribal self-governance. See Breakthrough Mgmt., 629 F.3d at 1192 (casino was created to "further[] the economic prosperity of the Tribe"); Howard^ 2017 WL 3669565, at *3 (stated purposes included "increase[ing] [sic] Tribal revenues [sic] the Tribe's determination" Supp. 3d related the at (Minn. (alterations 724 (entity's activities Tribe"); Gavle 1996) financial economic or self-sufficiency in original)); purpose that will v. Little Six, purpose was (stated general and enhance[ing] was "to generate welfare" 146 engage lending 555 in revenues N.W.2d "improv[ing] the self- Everette, additional Inc., of and the entity 284, F. for 294 business, and tribe (alteration in original)). On the surface, these Picture and Ascension. stated However, as purposes set out seem in to favor Section Big II.B.l above, the record shows that the formation of Big Picture and Ascension, and indeed, much of the tribal restructuring, was for the real purpose of helping Martorello and Bellicose to avoid liability, rather than to help the Tribe start a business. And, that finding means that Big Picture and carried their burden on the purpose factor. 57 Ascension have not Plaintiffs also contend that Big Picture and Ascension do not fulfill their stated purposes in practice. First, they say. Big Picture and Ascension have not provided any information about the number of jobs created for the Tribe or the amount of revenue received by the Tribe from their business. Second, they note that Ascension does not employ any tribal members and generates no revenue for the Tribe. Third, they assert that Big Picture is structured such that the primary beneficiaries are Hazen (who is paid more than the other tribal employees of Big Picture) and Martorello (given that TED uses most of Big Picture's revenue to make loan payments to Eventide). All three arguments have merit. First, Plaintiffs are wrong to claim that Big Picture and Ascension have provided no information about the revenue generated for the Tribe; Williams has explained that money from Big Picture constitutes more than 10% of the Tribe's general fund, and may contribute more than 30% of the fund within the next few years. Williams Aff. 1 10. Plaintiffs also argue that Red Rock's distribution of limited revenue to the Tribe in 2014 and 2015 should influence the Court's decision. However, Red Rock is a defunct entity that made distributions pursuant to a servicing agreement with another entity, SourcePoint, that also no longer exists, and that agreement has no bearing on the parties asserting tribal immunity (the relationship of which is governed by an entirely different situation contract). Given those differences. Red Rock's does not "shed light on the [purpose] inquiry" and will not affect the Court's consideration Nation, 386 P.3d at 375. 58 of this factor. Miami The Tribe obtains these funds both through TED's monthly 3% distributions, and as interest on its substantial investment in Big Picture's assessing much an enterprise. entity's business 629 "clearly id. SIf 8-10. execution revenue the tribe Breakthrough, See of Nonetheless, courts purpose have examined how actually received from the entity. See F.3d at 1192-93 benefit[ed] the (concluding Tribe" that based on entity's percentage allocation of revenue to certain tribal governmental functions); Everette, 146 F. Supp. 3d at 724 (noting that revenue was used "to fund various services" that and regard, to tribal provide Hazen's governmental, educational, specified statement that "essential those and social services"). funds "support In LVD governmental essential services and support the LVD community" in numerous ways, sheds no light on Hazen Aff. i 31, is far too general, as it how much Big Picture's revenue helped fund those services. That money might, for instance, constitute only a small, insignificant part of the funding for the services that Hazen has identified. If that is true, then Big Picture would not be effectively serving the Tribe's economic development. The evidence provided by Big Picture and Ascension, which bear the burden of proof here, is too possibility. 59 vague to eliminate that Furthermore, even if Big Picture's revenue is a meaningful portion of the Tribe's general fund, the revenue received by the Tribe is a sliver of Big Picture's total earnings. The entity seeking immunity in Breakthrough provided 100% of its revenue to various tribal services. 629 F.3d at 1192-93. Here, in contrast, the Note expressly limits the funds available to the Tribe to 5% of Big Picture's monthly revenue—the 3% monthly distribution and the 2% reinvestment amount, if current benefit to the Tribe. not specify reached to any revenue reflect an the latter is treated as a See Note § 1.2. Breakthrough did allocation adequate percentage fit that between must purpose be and execution, but Miami Nation noted that a similarly small revenue distribution—a monthly payment of either 1% of the entity's revenue or $25,000—would not economically benefit the tribe. See 386 P.3d at 377-78. The evidence here further indicates that Big Picture has, over time, given the Tribe a little less than $5 million, whereas Plaintiffs TED assert has that made this loan amount repayments is not a to Eventide current of benefit because TED will not receive any reinvestment amount if it defaults on the loan. No evidence shows that TED is likely to default in the near future, and the Big Picture balance sheets cited by Plaintiffs appear to treat that reinvestment amount as a current asset. Plaintiffs' assertion thus relies on the wholly speculative premise that TED will, at some future date, take some action that qualifies as an event of default. See Loan Agm't § 6.1. The Court will not base its conclusion about Big Picture's purpose on a guess about the future. 60 about $20 million. Responses SI 1. In Big other Picture words, even Suppl. Interrogatory under this broader view— which accounts for the months in which Eventide has not received any distribution—the Tribe has only received about 20% of Big Picture's total revenue, still a relatively small percentage. That imbalance shows that Big Picture has not served its stated purpose very well. Eventide anything Note § 1.3, the And, even after the revenue if Note Big Picture will terminates in distribution not several disparity will owe years. almost certainly have increased in that period, assuming Big Picture's revenue stream remains similar to what it has been since the parties entered into the Note. Ascension supports revenue Big is in a Picture's itself, see very similar lending Intratribal position. operations Servicing That and company generates Agm't § 3.4, so no the purpose analysis for Big Picture applies to Ascension in much the same As way. noted, obtained more Some evidence Martorello economic also claims demonstrates that consideration the than that Tribe Ascension has Eventide actually since the Bellicose purchase. Martorello Decl. f 63. However, that assertion is based on his valuation of equity consideration from some unknown "audited financial statements." Id. Because Big Picture and Ascension have not provided those statements here, it is impossible to verify the accuracy of Martorello's statement in the face of conflicting evidence showing that the Tribe's actual economic benefit under the by Eventide's. 61 Note has been dwarfed fulfills its nominal purpose even less effectively than Big Picture. Whereas Big Picture's employees primarily belong to the Tribe and work on its reservation, Ascension does not employ any non-tribal members, instead relying mostly on employees that previously worked at Bellicose. That composition may have been justified when Ascension was formed in 2015 because the company needed individuals required with certain support services, and technical knowledge for the Bellicose's employees were the perfect candidates. But, in the several years since, Hazen's and Williams' more testimony than instructs encourage tribal that the members Tribe to has pursue done little educational opportunities that would allow them to work for Ascension and Big Picture in the future.^® Thus, Ascension has failed to contribute much to the Tribe's self-governance, either directly (by supporting Big Picture's minimal revenue generation) or indirectly (by hiring tribal employees). Finally, structures Big Picture's underscore the and companies' Ascension's poor compensation execution of their purposes. Despite what Plaintiffs claim, the evidence does not Plaintiffs' assertion that Ascension or the Tribe has not started any training programs for tribal members to work at the company assumes, without any apparent basis in the evidence, that the Tribe has both the capacity and the funds to do so. This failure to pursue some possibly unachievable hypothetical goal does not count against Ascension in the purpose analysis. 62 indicate that economic benefit sense P. 3d as the Martorello from Big non-tribal at 363, 378 himself has Picture, received certainly individuals in any not Miami substantial in the Nation. (noting that individuals used same See 386 alleged tribal entities' checks to pay for their personal expenses). However, Plaintiffs' breakdown of the compensation of Hazen, other tribal employees of Big Picture, all employees of Ascension, and the total amount illustrates Picture's paid two to Ascension things: lending (1) operation by Hazen far Big has more profited than members, and (2) Ascension's employees compared to Big Picture's employees. differences lead to the conclusion Picture are any that Big from other paid These clearly Big tribal handsomely compensation Picture and Ascension primarily benefit individuals and entities outside the Tribe, or only one tribal leader, both of which are inconsistent with the goal of economic development. See id. at 373. Given these circumstances—and even granting that the fit between purpose and execution need not be exact, id. at 372—Big Picture and Ascension stated purposes. have largely Accordingly, this sovereign immunity for both entities. 63 failed factor to fulfill weighs their against 3. Structure, Ownership, and Management of Entities, Including Amount of Tribe's Control This factor focuses primarily on the leadership of the entity claiming immunity. 1193. "Relevant Breakthrough Mqmt., 629 F.3d at considerations include the entity's formal governance structure, the extent to which it is owned by the tribe, and the entity's day-to-day management." Miami Nation, 386 P. 3d at 373. However, an entity's "outsourc[ing] management to a nontribal third party is not enough, standing alone, to tilt this factor against immunity." Id.; see also Gavle, 555 N.W.2d at 295 ("[C]ontrol of a corporation need not mean control of business minutiae; the tribe can be enmeshed in the direction and control of the business without being involved in the actual management."). In that case, the inquiry turns to the tribe's involvement despite the nontribal leadership. "Evidence that the tribe actively directs or oversees the operation of the entity weighs passive in favor of owner, exercises immunity; neglects little or no its evidence that governance control or the roles, oversight tribe or is a otherwise weighs against immunity." Miami Nation, 386 P.3d at 373. Big Picture is an LLC that is 100% owned and operated by its sole member, TED, which in turn is 100% owned and operated by its sole member, the Tribe. 64 Big Picture Arts. of Organization, Arts. 8-9; TED Arts, of Organization, Arts. 8-9. Big Picture is also managed by two tribal members, Hazen and Williams, who were appointed by majority vote of the LVD Council and must be removed in the same way. Hazen Aff. f 15; Williams Aff. 1 12; Big Picture Operating Agm't § 5.1(a), (d). As co- managers, Hazen and Williams are granted the broad authority to "bind [Big Picture] individually," and "to do and perform all actions as may be necessary or appropriate to carry out the business of [Big Picture] including but not limited to the power to enter into contracts for services, to manage vendor relationships, [and] to manage personnel issues and affairs of [Big Picture}." Big Picture Operating Agm't § 5.1(a). They are precluded only from restricting or selling Big Picture's assets or waiving its sovereign immunity, for which they must obtain TED'S consent (by majority vote of the LVD Council). Id. § 5.2. Furthermore, to the extent that Hazen and Williams are not involved in the day-to-day operations of Big Picture, the Tribe has a employs substantial a operations executive influence, number on the role of Breakthrough, Hazen 629 those tribal of is F.3d Big the at operations, members Reservation. leadership as in and Hazen company's 1193 65 conducts Aff. f Picture as 24. preserves CEO. (factor the all of its Finally, the the Id. SI 20; weighed entity both Tribe's see for also and against immunity where members but executive This some general directors structure of officers is to entity were assure were all non-tribal that Big tribal members). Picture is answerable to the Tribe at every level, which supports immunity. See Howard, 2017 WL 3669565, at *4; Everette, 146 F. Supp. 3d at 724-25; In re IntraMTA, 158 F. Supp. 3d at 577; J.L. Ward, 842 F. Supp. 2d at 1176-77. Plaintiffs structure role. In is claim, however, overcome support of in that practice this by assertion. Intratribal Servicing Agreement, Big Picture's Ascension's Plaintiffs formal substantial highlight the which, they contend, confers significant day-to-day responsibilities on Ascension and permits little oversight by Big Picture. They acknowledge that the Agreement does not grant Ascension the authority to "engage in origination the activities, issuance Agm't § Ascension 4.1. the of execute loans However, duties to they to loan documentation, consumers." note, give the or approve Intratribal Agreement "pre-qualified Servicing assigns leads" to to Big Picture and to provide "the necessary credit-modeling data and Plaintiffs are correct that the Intratribal Servicing Agreement and the Servicing Agreement delegate nearly identical responsibilities to Ascension and SourcePoint, respectively. See Intratribal Servicing Agm't § 4.2.1; Servicing Agm't § 4.2.1. However, it is unclear how this similarity affects the control inquiry, as Plaintiffs do not explain how the Servicing Agreement limited the Tribe's control over Red Rock. 66 risk assessment whether to strategies" issue a generally identifies credit reports consumers, verifying and loan. involvement is by Big Picture Id. § 4.2.1(k). then directs say, Big Picture's the loan approval at further shown by mass to Because potential loan applicants Plaintiffs details used Ascension by prescreening mailings role is stage. Williams' decide to limited This lack those of to minimal knowledge about entities owned by Big Picture. Plaintiffs' argument relies on two underlying contentions: (1) that the meaningless Tribe's given formal Ascension's oversight dominant of role Big in Picture Big is Picture's lending operations; and (2) that, assuming Ascension has such a role, that entity is not controlled by the Tribe. Both arguments are persuasive. As to the first assertion, it is true that the Intratribal Servicing Agreement also states that "[t]he criteria used to extend funds to individual borrowers will remain within the sole and absolute discretion" of Big Picture, and that Big Picture "shall execute all necessary loan documentation." Id. Nonetheless, considering that Ascension's responsibilities allow it to identify modeling borrowers system and based then consumers, it does not discretion to exercise prepare appear when on it 67 Ascension's mass that Big receives own mailings Picture credit- to has those much recommendations or documents from Ascension. Indeed, Ascension's actions in effect reduce Hazen's process to and pro William's forma review responsibilities and approval in of key the loan business decisions. See ECF No. 91-3; see also Big Picture Interrogatory Responses SI 24. Viewed in conjunction with Ascension's numerous other responsibilities under Section 4.2.1, this control is too limited to support a finding of tribal immunity. See Miami Nation, 386 P.3d at 373. Moreover, evidence that Williams is not familiar with three Big Picture subsidiaries shows that Hazen and Williams do little to oversee Big Picture's operations as co-managers. Big Picture and Ascension point to several documents that, they say, suggest just the opposite: that those individuals "actively direct[] or oversee[] Hazen and the operation Williams of have [Big Picture]." discussed items JA. like For instance, Big Picture's operating budget and employee handbook, ECF Nos. 102-15, 102-16; and approved company forms policies sent and by employees procedures, concerning, compliance inter management, alia, and personnel decisions, ECF No. 106-13. This evidence reflects that Hazen and Williams exercise some managerial oversight over Big Picture's operations. However, Williams' testimony about other issues, like his non-involvement in Big Picture's day-to-day and lack of knowledge about customer 68 service representatives' responsibilities operations, demonstrates that such oversight is narrow in both scope and depth. Consequently, Big Picture has not shown by a preponderance of the evidence that the Tribe, through Hazen and Williams, controls Big Picture, so this factor weighs against immunity for that entity. The question of Ascension's tribal control is not as close. Just like Big Picture, Ascension is an LLC that is 100% owned and operated Organization, by its Arts. sole member, 8-9. Hazen TED. and Ascension Williams Arts. also of manage Ascension, and the operating agreement gives them the same broad powers as with Big Picture and requires an LVD Council vote for their appointment Aff. SI 13; and Ascension removal. Operating Hazen Aff. 5 19; Agm't §§ 5.1-5.2. At Williams the same time, as in Breakthrough, the Tribe's control is diminished by the appointment of a non-tribal member, McFadden, as Ascension's president. most See 629 F.3d activities tribal outside members. In at 1193. Likewise, Ascension the light Reservation of this and employs non-tribal conducts only management, non- the Court must consider whether the Tribe is an active or passive owner. See Miami Nation, 386 P.3d at 373. Here, that inquiry revolves around the extent of Hazen and Williams' oversight of Ascension and the influence of non-tribal actors on Ascension's decisions. 69 Ascension has presented evidence that McFadden must obtain Hazen's or personnel, Williams' or approval for distributions," "changes McFadden in operations, Aff. SI 8, and that Ascension employees have submitted request and approval forms to Hazen and Williams for certain business decisions, ECF No. 106- 13. Ascension's operating agreement also reserves primary oversight of the company's actions for Hazen and Williams. See Ascension assertions Operating of Agm't § 5.1(a). oversight are undercut Nonetheless, materially those because Hazen and Williams have delegated to McFadden the authority to approve Ascension's "strategic direction, goals and targets"; execute documents on the company's behalf; open and maintain Ascension's bank accounts; adopt, terminate, plans; and oversee "all matters management of Policy § 1.4. that can decisions. Ascension." These And, the are affect employee Delegation all important an evidence change necessary for the Ascension actions significantly or entity's tends to day to day of Authority managerial directions show benefit that and the ones its real management function lies not with Hazen and Williams, but with McFadden. On balance, that evidence augurs against Ascension's immunity claim. Plaintiffs that prevent make TED and much of provisions Ascension from 70 in the modifying Loan the Agreement Intratribal Servicing Agreement or terminating or replacing any managers or officers of Ascension, among other entities, without Eventide's consent. Loan Agreement §§ 5.12, evidence that these presence is because they significant evidence confer control rights that on 5.14. have goes Although been exercised, against Eventide, mechanisms over there a and finding hence significant is their no mere of immunity Martorello, aspects of Ascension's operations. On balance, the control factor slightly favors a finding against immunity. At best for Big Picture and Ascension, it is neutral, and thus does not aid them in meeting their burden of proof. 4. Tribe's Intent with Respect to Sharing of Sovereign Immunity Big Picture's and Ascension's formation documents show that the Tribe intended for both entities to share its immunity. The resolutions organizing each company state: [T]he [LVD] Council believes it to be in the best interest of the Tribe to create such an entity which, as a wholly owned and operated instrumentality of the Tribe, shall be possessed of all the privileges of the Tribe, including but not limited to the sovereign immunity of the Tribe which shall not be waived unless authorized by the [LVD] Council . . . . Aug. 26 2014 Resolution at 2; Feb. 5, 2015 Ascension Resolution at 2. Each entity's articles of 71 organization reiterate that "[t]he sovereign immunity of the [entity] shall remain intact unless waived by [TED] pursuant to a duly authorized resolution of the [LVD] Council." Big Picture Arts, of Organization, Art. 7; Ascension Arts, of Organization, Art. 7. Other courts have found similar language sufficient for this factor to support tribal immunity. See Breakthrough, 629 F.3d at 1193-94; Howard, 2017 WL 3669565, at *4; Everette, 146 F. Supp. 3d at 725. Plaintiffs concede that this factor weighs in Big Picture's and Ascension's favor, but argue that the Court should accord it the least weight out of all the factors. Plaintiffs are right that the intent factor "reveals little about ^whether the entity acts as an arm of the tribe so that its activities are properly deemed to be those of the tribe,'" Miami Nation, 386 P.3d at 379 (emphasis in original) (quoting Allen, they mistake the 464 F.3d at 1046), but significance of that statement. Miami Nation simply held that tribal intent "cannot, without more, . . . tip the balance in favor of immunity" where that factor is the only one to point "unequivocally" in that direction. Id. (internal quotations omitted). Big Picture and Ascension do not ascribe to this factor such outsized importance in the immunity analysis; indeed, they discuss it the least of any Breakthrough factor. Moreover, neither Miami Nation nor any other case holds that the 72 intent factor should be given any less weight. Therefore, the Court will consider this factor as it would any other. But here the intent factor must be assessed in perspective of the context in which Big Picture and Ascension were created. As explained above, the record shows that those entities intended to Bellicose factor be from weighs vehicles that liability. against a would Then, on finding shield this of were Martorello record, immunity the and intent because to do otherwise is to ignore the driving force for the Tribe's intent to share its immunity. Here, the Tribe's intent no doubt was, in part, to help the Tribe, but to do so by providing its immunity to shelter outsiders from the consequences of their otherwise illegal actions. 5. Financial Relationship Between Tribe and Entities The "starting point" for this factor is "whether a judgment against the entity would reach the tribe's assets." Miami Nation, 386 P. 3d at 373; see also J.L. Ward, 842 F. Supp. 2d at 1176 (factor weighed against immunity because "[a] suit against [the entity] would not appear to affect, at least not directly, any particular tribal tribe's liability . . . is immunity nor a fiscal resources"). neither predominant a factor However, threshold in the "direct requirement overall for analysis." Miami Nation, 386 P.3d at 373; see also Breakthrough Mgmt., 629 73 F.3d at 1187 ("Although . . . the financial relationship between a tribe and its economic entities is a relevant measure of the closeness of their relationship, . . . it is not a dispositive inquiry.").^® After all, "[s]ome tribes rely on [an entity's] business entity revenues could to an effectively extent strike that a a judgment blow against against the the tribal treasury, regardless of whether the tribe is directly liable." Miami Nation, 386 P. 3d at 373. Consequently, courts consider the extent of the tribe's dependence on the entity "^for revenue to fund its governmental functions, its support of tribal members, and its search for other economic development opportunities.'" Id. (quoting Breakthrough Mgmt., 629 F.3d at 1195). Accordingly, "[i]f a significant percentage of the entity's revenue flows to the tribe, or if a judgment against the entity would significantly affect the tribal treasury, this factor will weigh in favor of immunity even if the entity's liability is formally limited." Id. Miami Nation specifically rejected holdings by other state courts that the tribe's direct liability (or lack thereof) was dispositive of the financial relationship factor. See 386 P. 3d at 373 (citing Sue/Perior Concrete & Paving, Inc. v. Lewiston Golf Course Corp., 25 N.E.3d 928, 935 (N.Y. 2014); Runyon ex rel. B.R. v. Ass'n of Vill. Council Presidents, 84 P.3d 437, 440-41 (Alaska 2004)). Given that Sue/Perior and Runyon represent the minority approach on this issue, the Court will not follow them here. 74 The against Tribe Big would not Picture be directly affected or Ascension. Each by any judgment entity's operating agreement contains a liability limitation provision that makes the entity's "debts, liabilities, and obligations" its own. Big Picture Operating Agm't § 4.3/ The entities' would not interrogatory be liable for Ascension Operating Agm't § 4.3. responses any confirm judgment that against the the Tribe entities because they are LLCs. Big Picture Interrogatory Responses f 23; Ascension Interrogatory Accordingly, neither Responses company can (EOF satisfy No. this 83-13) f 18. aspect of the Picture and financial relationship factor. Other evidence further establishes that Big Ascension lack a strong financial connection to the Tribe. The structure will only of the consist Note ensures of, at that most, 5% the of Tribe's Big monthly Picture's gains revenue. Thus, as described above, the Tribe has received a little less than 20% of the total revenue Because the Tribe receives a distributed under the Note. very small part of Big Picture's revenue, this factor does not cut the same way as in cases where "all of [the entity's] profits inure[d] to the benefit of the Tribe." Howard, 2017 WL 3669565, Mgmt., 629 F.3d at 1195 ("One at *4; see also Breakthrough hundred percent of the Casino's revenue goes to the Authority and then to the Tribe."). 75 Furthermore, Ascension First, claim the other weighs notwithstanding receives as an in evidence favor the of Big Big immunity interest investor in that is payments Picture, Picture and unconvincing. that Williams the Tribe Aff. M 8-9, the total distributions to the Tribe under the Note are limited. Consequently, although it might be true in theory that "any reduction in [Big Picture]'s revenue that could result from an adverse judgment against it would therefore reduce the Tribe's income," Breakthrough Mgmt., 629 F.3d at 1195, the actual effect on the Tribe appears to be insubstantial. Second, Big Picture's revenue does not play as important a role in the Tribe's general fund as in other cases where this factor supported immunity. See Breakthrough Mgmt., 629 F.3d at 1195 (tribe "depend[ed] heavily on the [entity]" for funding); Everette, 146 F. Supp. 3d at 724. As noted. revenue Big Picture allocation impossible has to to discern not provided different how the an tribal Tribe exact breakdown services, would be so it of is affected, if at all, if a judgment harmed Big Picture's operations. Third, there is evidence that Big Picture does not comply with its operating agreement's balances mandatory exceed cash $500. distribution See, e.g., EOF requirement No. when 83-24 at MARTORELLO_000218; see also Big Picture Operating Agmt' § 6.2. If Big Picture does not transfer 76 its funds to TED when it should, timely then the basis. Tribe Given likely these does not need circumstances, that this money factor on a weighs against Big Picture. Ascension's very financial different. generate By revenue its for relationship own itself with admission. or for the the Tribe Ascension Tribe, so is does a not not judgment against Ascension could not possibly affect the Tribe's revenue directly. However, given that Ascension performs critical services for Big Picture, any judgment that limited Ascension's operations or drastically forced reduce it Big to close Picture's would, revenue. by extension, This potential indirect effect on the Tribe's general fund is important in the financial F.3d at relationship 1195; Miami framework. Nation, 386 See P.3d Breakthrough at 373. Mgmt., Yet, for 629 the reasons detailed above, any reduction in Big Picture's revenue would not be felt strongly by the Tribe itself. Consequently, this factor also weighs against immunity for Ascension. 6. Fulfillment of Purposes Underlying Tribal Immunity The final factor assesses "the policies underlying tribal sovereign immunity and its connection to tribal economic development, and whether those policies are served by granting immunity to the economic entities." Breakthrough Mgmt., 629 F.3d at 1187. "Those policies include 77 protection of the tribe's monies, as well preservation commercial as of preservation tribal dealings of tribal self-determination, between Indians and cultural and autonomy, promotion non-Indians." Id. of at 1188 (internal citations and quotations omitted); of. Okla. Tax Common v. Citizen Band Potawatomi Indian Tribe of Okla., 498 U.S. 505, 510 (1991) (federal statutes affirming tribal immunity "reflect Congress' desire to promote the goal of Indian self- government, including its overriding goal of encouraging tribal self-sufficiency and economic development" (internal quotations omitted)). At first glance, granting sovereign immunity to Big Picture and Ascension more than Picture's would 10% appear to serve these purposes. of the revenue, and Tribe's that than 30% in the next few that those services funds and "are other general percentage fund As noted, from increase will comes to Big more years. In addition, Hazen has stated used benefits to for provide the a variety Tribe." of Howard, social 2017 WL 3669565, at *4. Even though Ascension does not make any money itself, it necessarily contributes to Big Picture's revenues by providing crucial technical and marketing services. As a result, both entities determination seem to through "promote revenue and fund generation 78 the and Tribe's the self- funding of diversified economic development." Breakthrough Mgmt. ^ 629 F.3d at 1195; see also Everette^ 146 F. Supp. 3d at 725. However, nor Ascension a closer fulfills look reveals that those goals very neither well, Big if at Picture all. The inadequacies of Hazen's general statements about the Tribe's use of Big Picture's revenues are detailed above. Because the extent to which the Tribe has actually used Big Picture's funds for the services noted whether by Hazen granting the . . . Tribe's is unclear, immunity treasury, the here which is Court cannot "directly one of tell protects the historic purposes of sovereign immunity in general." Allen, 464 F.3d at 1047. Moreover, operation Tribe's and that support self-development actions Eventide assuming Ascension's economic entities' like even have and, primarily Big have to Picture's contributed some enriched possibly, individuals lending extent, non-tribal like to the those entities Martorello. The Bellicose purchase, and the resulting Note and Loan Agreement, have undoubtedly limiting the yielded some benefits for the Tribe. Yet, by Tribe's monthly distribution to a very small percentage of Big Picture's revenue, the Note forces the Tribe to receive those benefits at substantial cost—a reality that is illustrated by the sharp disparity in distributions received by the Tribe and Eventide since TED 79 began repaying the loan. Consequently, as Plaintiffs note, granting immunity here might have the obtaining non-tribal unintended consequence favorable terms in entities would not of future be preventing business inclined to the Tribe from transactions, offer as repayment above a certain rate. Thus, even if the Tribe is not bound by the Note's distribution structure forever, the example will have been the set. core Therefore, although Big purposes immunity circumstances of cause tribal this factor to Picture and Ascension serve to weigh some extent, these against immunity for both entities. C. Weight of Factors For the reasons discussed above. Big Picture and Ascension have the burden preponderance of to the prove arm-of-the-tribe evidence. That means immunity the by weighing a of factors must permit a finding of immunity. On this record, that balance actually falls the other way, and weighing everything on the balance, the Court finds that neither entity qualifies as an arm of the Tribe. Therefore, Big Picture and Ascension are not immune from suit here. 80 CONCLUSION For the foregoing reasons, DEFENDANTS BIG PICTURE LOANS AND ASCENSION TECHNOLOGIES' MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION (EOF No. 22) was denied. It is so ORDERED. /s/ Robert E. Payne Senior United States District Judge Richmond, Virginia Date: July 2018 81