United States District Court, D. Montana, Great Falls Division
Morris, United States District Court Judge.
Consumer Financial Protection Bureau (“CFPB”)
commenced this action on November 15, 2017. (Doc. 1.) The
Complaint alleges four violations of the Consumer Financial
Protection Act. (Doc. 1 at 26-30.) Defendant Think Finance,
LLC (“Think Finance”) filed the instant Motion to
Transfer Venue on January 5, 2018. (Doc. 4.) Think Finance
seeks an order transferring this action to the U.S. District
Court for the Northern District of Texas. Think Finance seeks
this transfer with the understanding that the U.S. District
Court would refer the matter to the U.S. Bankruptcy Court for
the Northern District of Texas. (Doc. 5 at 6.)
Finance is a privately held company that performs critical
functions for lending businesses, including provision of
software, analytics, and marketing services. (Doc. 1 at 3-4.)
CFPB is an independent agency of the United States Government
created under the Consumer Financial Protection Act of 2010
(CFPA), 12 U.S.C. § 5491(a). (Doc. 1 at 2.)
Complaint concerns three lending businesses owned by Indian
tribes (“Tribal Lenders”) for which Think Finance
provided critical services. (Doc. 1 at 4.) One such lender,
Plain Green, LLC (“Plain Green”) is located in
the District of Montana. (Doc. 1 at 5.) Plain Green did not
make loans to Montana consumers. CFPB alleges that the other
two Tribal Lenders named in the Complaint originated loans in
Montana to Montana consumers. (Doc. 13 at 11 fn. 2.)
Complaint alleges that Think Finance, through the Tribal
Lenders (who are not party to this action), collected loan
payments that customers did not owe, as the loans issued to
those customers were void ab initio due to
violations of state law. (Doc. 1 at 26.) CFPB alleges that
Think Finance nevertheless collected on these void loans
through unfair and abusive practices. (Doc. 1 at 28-29.)
Finally, CFPB alleges that Think Finance provided substantial
assistance to Tribal Lenders and other entities. (Doc. 1 at
30.) CFPB contends that Think Finance acted knowingly or
recklessly in providing this substantial assistance to the
Tribal Lenders. Id.
Finance and its subsidiaries filed voluntary petitions for
relief under Chapter 11 of Title 11 of the United States
Code, 11 U.S.C. § 101 et seq., in the U.S. Bankruptcy
Court for the Northern District of Texas on October 23, 2017.
(Doc. 5 at 8.) CFPB filed this action three weeks later on
November 15, 2017.
Bankruptcy Court jointly administers the bankruptcy actions
of Think Finance and its subsidiaries. (Doc. 5 at 8.) The
joint bankruptcy action has triggered the automatic stay
provision of 11 U.S.C. § 362(a). The automatic stay
provision has put on hold numerous other putative class
action claims filed against Think Finance in other states.
Think Finance anticipates that the Bankruptcy Court will
resolve claims underlying those putative class actions. (Doc.
5 at 9.)
Pennsylvania Attorney General filed a similar action against
Think Finance in 2014. Pennsylvania v. Think Finance, et
al., No. 14-7139-JCJ (E.D. Penn. 2014). The Pennsylvania
action stands exempt from the automatic stay provision,
however, as it involves a police or regulatory action. 11
U.S.C. § 362(b)(4). Think Finance has moved to transfer
the Pennsylvania case to the Northern District of Texas. The
U.S. District Court for the Eastern District of Pennsylvania
has not yet ruled on the transfer motion. (Doc. 5 at 10.)
Finance moves to transfer this action to the U.S. District
Court for the Northern District of Texas. Think Finance
anticipates that the District Court in Texas would refer the
matter to the U.S. Bankruptcy Court for the Northern District
of Texas. (Doc. 5 at 6.) See In re Gugliuzza, 852
F.3d 884, 890 (9th Cir. 2017).
parties disagree as to which change of venue statute this
Court should apply. (Docs. 5 at 14; 13 at 15.) Both 28 U.S.C.
§ 1404 and 28 U.S.C. § 1412 afford the Court
discretion to transfer venue based on consideration of the
same factors: the interest of justice and the convenience of
the parties (and witnesses). 28 U.S.C. § 1404, §
1412. The presumption or deference afforded to either party
represents the major difference between the two venue
statutes. A second difference between the two statutes arises
from the fact that Congress drafted § 1412 in the
disjunctive. Congress equipped a court with the discretion to
transfer a case to the bankruptcy court either for the
interest of justice or for the convenience of the
parties. 28 U.S.C. § 1412.
1404 defers to the plaintiff's selection of forum.
Reid-Ashman Mfg., Inc. v. Swanson Semiconductor Serv.,
LLC., No. C-06-04693 JCS, 2008 WL 425638, at *1 (N.D.
Cal. Feb 14, 2008). CFPB argues that § 1404 should
apply. Section 1404 further requires that the party seeking
the transfer -- Think Finance --demonstrate that
both factors favor transfer. 28 U.S.C. § 1404.
Section 1412, by contrast, “carries a presumption in
favor of” transfer to the bankruptcy court.
Id. Think Finance argues that § 1412 should
apply. The Court will analyze the pending motion under both
Consideration of Police and Regulatory Actions
has chosen to file what it characterizes as a police and
regulatory action in the District of Montana. CFPB seeks
injunctive relief as well as monetary penalties, damages,
disgorgement, and costs that will have an
“effect” on Think Finance's bankruptcy
estate. (Doc. 1 at 31.) CFPB does not dispute that this
action “relate[s] to” the bankruptcy case.
in the District of Montana previously transferred a civil
breach of contract claim “related to” a
bankruptcy action pursuant to § 1412.
McGillis/Eckman Investments-Billings, LLC v.
Sportsman's Warehouse, Inc., CV 10-26-BLG-RFC-CSO,
2010 WL 3123266, at *7 (D. Mont. June 30, 2010),
adopted CV-10-26-BLG-RFC, 2010 WL 3153416 (D. Mont.
Aug. 9, 2010). Other district courts within the Ninth Circuit
have reached differing conclusions regarding the
applicability of § 1412 to cases only “related
to” bankruptcy actions, as opposed to the bankruptcy
actions themselves. See EnSource Investments, LLC v.
Tatham, No. 17-cv-79, 2017 WL 3923784, at *4 (S.D. Cal.
Sept. 7, 2017) (declining to apply § 1412); and
Senorx, Inc. v. Coudert Bros., LLP, No. 7-1075, 2007
WL 2470125 (N.D. Cal. August 27, 2007) (applying §
1412). The Ninth Circuit has not resolved this split.
district court in EnSource determined that §
1412 does not provide for transfer of matters “related
to” bankruptcy actions. Ensource, 2017 WL
3923784, at *4. The court declined, based on § 1404, to
transfer venue to the Southern District of Texas where one of
the defendants had filed for bankruptcy protection.
Id. The court noted that the defendants had traveled
to California to pitch an investment opportunity to
plaintiffs. Id. at 1. The court further indicated
that it would exercise its discretion to decline to transfer
even under § 1412 because the bankruptcy proceeding in
Texas involved only one of the defendants. Id.
contrast, the district court applied § 1412 and granted
the motion to transfer filed by a defendant New York law firm
in Senorx, Inc. Plaintiffs had filed professional
negligence claims against the law firm in its representation
of plaintiffs on several international patent matters.
Senorx, Inc., 2017 WL 2470125, at * 1. The district
court recognized that witnesses would be found in both
California, where plaintiffs had filed the case and where the
law firm had provided the legal advice, and in New York, the
home office of the law firm. Id. at *2. The district
court also cited the fact that ...