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Commonwealth v. Think Finance, Inc.

United States District Court, E.D. Pennsylvania

November 18, 2019

COMMONWEALTH OF PENNSYLVANIA by Attorney General JOSH SHAPIRO, Plaintiff,
v.
THINK FINANCE, INC., TC LOAN SERVICE, LLC, TAILWIND MARKETING, LLC, TC DECISION SCIENCES, LLC, FINANCIAL U, LLC, KENNETH E. REES, VICTORY PARK CAPITAL ADVISORS, LLC, VICTORY MANAGEMENT, LLC, GPL SERVICING, LTD., GPL SERVICING AGENT, LLC, GPL SERVICING TRUST, GPL SERVICING TRUST II, VPC/TF TRUST I, VICTORY PARK CREDIT OPPORTUNITIES MASTER FUND, LTD., and NATIONAL CREDIT ADJUSTERS, LLC, Defendants.

          MEMORANDUM

          JOYNER, J.

         I. INTRODUCTION

         Before this Court are Plaintiff's Motion for Partial Summary Judgment and the summary judgment motions of Defendants Kenneth Rees (“Rees”) and National Credit Adjusters, LLC (“NCA”). For the reasons set forth in this Memorandum, we deny all Motions for Summary Judgment as to all applicable Counts.

         II. FACTUAL AND PROCEDURAL HISTORY [1]

         Factual Background

         This action addresses high-interest rate, short-term loans made to Pennsylvania residents over the Internet. The Plaintiff, the Office of the Attorney General (“OAG”), alleges that Defendant Rees - the CEO, chairman, and president of Defendant Think Finance, Inc. (“Think Finance”)[2] - and Defendant NCA violated laws prohibiting usurious and otherwise illegal lending practices.

         Plaintiff alleges that the Defendants orchestrated a scheme to offer and collect on loans to Pennsylvania consumers at illegally high interest rates. Specifically, Plaintiff alleges that Defendants coordinated with Native American tribes, who are generally not subject to state limits on interest rates, to serve as the front of the lending scheme, while Defendants operated the loan mechanism. These loans allegedly violated Pennsylvania's Loan Interest and Protection Law 41 P.S. § 201(a), which limits to six-percent interest rates on unsecured loans under $50, 000 offered by unlicensed lenders. § 201(a). The loans at issue have an average interest rate of 250-390%. See Rees' Response to Plaintiff's Sealed Statement of Undisputed Facts in Support of Plaintiff's Motion for Partial Summary Judgment ¶13.

         In Plaintiff's Second Amended Complaint (“SAC”), Plaintiff alleges that Defendant Rees violated Pennsylvania's Corrupt Organizations Act (“COA”) 18 Pa. C.S.A. §§ 911(b)(1), (3), and (4); the Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) 73 P.S. s§§ 201-1 et seq.; the Fair Credit Extension Uniformity Act (“FCEUA”) 73 P.S. §§ 2270.1 et seq.; various provisions of the federal Dodd-Frank Act; and related laws. Additionally, Plaintiff alleges that Defendant NCA violated the COA § 911(b)(4); the FCEUA §§ 2270.1 et seq.; and related laws.[3]

         As to Defendant Rees and regarding the tribal period only, Plaintiff moves for summary judgment on Count Two (COA § 911(b)(3)); Count Three (COA § 911(b)(4)); and Count Five (UTPCPL § 201-1 et. seq.) of the SAC. Doc. No. 225. As to Defendant NCA, Plaintiff moves for summary judgment on Count Three and Count Four. Doc. No. 225. Defendant Rees moves for summary judgment in his favor on all Counts. Doc. No. 257. Defendant NCA moves for summary judgment in its favor on Counts Three and Four. Doc. No. 256.

         For the reasons described below, we deny all summary judgment motions.

         III. ANALYSIS

         Legal Standard

         To obtain summary judgment, a movant must show “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Disputes about “material” facts are those that “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A “genuine” dispute exists if the non-movant establishes evidence “such that a reasonable jury could return a verdict” in their favor. Id.

         “Where the defendant is the moving party, the burden is on the defendant to show that the plaintiff has failed to establish one or more essential elements of her case.” Brown v. Aria Health, 2019 U.S. Dist. LEXIS 66266, at *9-10 (E.D. Pa. Apr. 17, 2019) (quoting Burton v. Teleflex Inc., 707 F.3d 417, 425 (3d Cir. 2013)) (internal quotations omitted). Once the movant meets its initial burden, the nonmoving party must then “go beyond the pleadings and come forward with specific facts showing that there is a genuine issue for trial.” Santini v. Fuentes, 795 F.3d 410, 416 (3d Cir. 2015) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)) (internal citations omitted) (emphasis omitted).

         “The court must review the record ‘taken as a whole.'” Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 150 (2000) (quoting Matsushita, 475 U.S. at 587)). At summary judgment, we must view the evidence and draw all inferences “in the light most favorable to the party opposing the motion.” Matsushita, 475 U.S. at 587 (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)). See also Horsehead Indus., Inc. v. Paramount Commc'ns, Inc., 258 F.3d 132, 140 (3d Cir. 2001).

         Still, the non-movant must show more than “[t]he mere existence of a scintilla of evidence in support of . . . [the non-movants] position” to defeat a motion for summary judgment. Anderson, 477 U.S. at 252. To survive summary judgment, the specific facts set forth by the non-movant must require resolution “only by a finder of fact because they may reasonably be resolved in favor of either party.” Id. at 250. The non-movant “may not rest upon the mere allegations or denials of the . . . pleading; its response . . . must set forth specific facts showing that there is a genuine issue for trial.” Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001) (internal quotation marks omitted).

         Count One - COA 18 Pa. C.S.A. § 911(b)(1) Against Defendant Rees

         Section 911(b)(1) of the COA provides that it is illegal “for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity in which such person participated as a principal, to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in the acquisition of any interest in, or the establishment or operation of, any enterprise . . . .” § 911(b)(1). As we explained in Think Fin. II, 2018 WL 637656, a defendant must be a “principal” in order to be liable under Section 911(b)(1). Id. at *8.

         Pennsylvania's COA, Section 911, is analogous to the federal Racketeering Influenced and Corrupt Organizations (“RICO”) Act 18 U.S.C. §§ 1961-1968. Courts interpreting the Pennsylvania COA often apply RICO precedent. Think Fin. II, 2018 WL 637656, at *8; Commonwealth v. Donahue, 630 A.2d 1238, 1245 (Pa. Super Ct. 1993). RICO precedent is helpful but not controlling for ...


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