Rilley v. MoneyMutual, LLC

Background

The plaintiffs are consumer-borrowers pursuing a proposed class action related to payday loans. The defendants operate a lead-generating business: consumers submitted applications through the defendants’ website, and the defendants sold those applications to lenders, which independently decided whether to make loans.

The First Amended Complaint asserted claims under Minnesota payday-lending statutes, the federal Racketeer Influenced and Corrupt Organizations Act, Minnesota consumer-protection and advertising statutes, the Minnesota Uniform Deceptive Trade Practices Act, unjust enrichment, civil conspiracy and aiding and abetting, and alter ego or piercing the corporate veil. In an earlier order, the court denied a personal-jurisdiction motion but dismissed the RICO claim under Federal Rule of Civil Procedure 12(b)(6). The Second Amended Complaint added Jonathon Aldrich, Venus Colquitt-Montgomery, and Kendra Buettner and omitted the dismissed claims. The defendants then moved to dismiss the entire Second Amended Complaint for lack of personal jurisdiction.

Pendent Personal Jurisdiction

The court previously had concluded that it could exercise pendent personal jurisdiction over certain state-law claims because a colorable RICO claim allowed nationwide service of process. Because the RICO claim had been dismissed and the operative complaint asserted no claim allowing nationwide service of process, the court declined to exercise pendent personal jurisdiction. The court noted that the Eighth Circuit had not specifically adopted that doctrine.

Specific Personal Jurisdiction

The court next considered specific personal jurisdiction, which allows a court to hear claims connected to a defendant’s deliberate contacts with the forum state. Minnesota’s long-arm statute extends as far as federal due process permits, so the statutory and constitutional inquiries were effectively the same.

The court applied five factors: the nature and quality of the defendants’ Minnesota contacts, the quantity of those contacts, the connection between those contacts and the claims, Minnesota’s interest, and the parties’ convenience.

The court found that the first factor favored jurisdiction because the defendants sent emails to applicants after learning they were Minnesota residents, sent emails encouraging Minnesota borrowers to seek additional loans, advertised the MoneyMutual website directly to Minnesotans, and engaged Minnesota consumers in transactions involving their personal information.

The quantity factor also favored jurisdiction. The defendants had made thousands of contacts with known Minnesotans through emails, information transactions, and a Google AdWords campaign targeting Minnesota and potential Minnesota borrowers. The application process required consumers to provide information including their home address, employment, contact information, and bank information.

The court found the required connection between the contacts and the claims because the claims concerned the defendants’ role in facilitating payday loans, and the emails and advertising directed at Minnesotans concerned that same operation. The court also found that Minnesota had a strong interest in protecting its residents from predatory lending and enforcing its consumer-protection laws. The defendants offered no compelling reason why litigating in Minnesota would be inconvenient. The court therefore concluded that exercising jurisdiction was reasonable and consistent with due process.

Jurisdiction Over Selling Source

The court separately addressed jurisdiction over Selling Source. Discovery showed that Selling Source was the sole owner of MoneyMutual and PartnerWeekly; Selling Source and PartnerWeekly shared executives and a chief technology officer; Selling Source did not follow certain corporate formalities; counsel for Selling Source helped develop the MoneyMutual website; and Selling Source employees sent PartnerWeekly marketing emails to Minnesota consumers.

Based on these facts, the court found Selling Source sufficiently indistinguishable from MoneyMutual and PartnerWeekly for jurisdictional purposes. It concluded that all defendants had sufficient minimum contacts with Minnesota.

Disposition

The court denied the defendants’ Motion to Dismiss Plaintiffs’ Second Amended Class Action Complaint. The order resolved the personal-jurisdiction question and did not decide the merits of the remaining underlying claims.