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Rilley v. MoneyMutual, LLC

United States District Court, D. Minnesota

January 11, 2019

Scott Rilley, Michelle Kunza, Venus Colquitt-Montgomery, Jonathan Aldrich, and Kendra Buettner, on behalf of themselves and those similarly situated, Plaintiffs,
MoneyMutual, LLC, Selling Source, LLC, and PartnerWeekly, LLC, Defendants.

          E. Michelle Drake, Esq., Jeffrey L. Osterwise, Esq., and John G. Albanese, Esq., Berger & Montague, PC; and Mark L. Heaney, Esq., Heaney Law Firm, LLC, counsel for Plaintiffs.

          Christina Rieck Loukas, Esq., and Joseph M. Windler, Esq., Winthrop & Weinstine, PA; and Donald J. Putterman, Esq., and Michelle L. Landry, Esq., Putterman Landry & Yu LLP, counsel for Defendants.




         This matter is before the Court on the Plaintiffs' motion for class certification. (Doc. No. 113.) Defendants' oppose the motion. For the reasons discussed below, the Court grants Plaintiffs' motion.


         This is a class action brought by Plaintiffs on behalf of all Minnesota residents who used or any MoneyMutual-branded website to obtain a payday loan from August 1, 2009 through the date the Court certifies the Class (the “Class Period”), against Defendants, for violations of Minnesota statutes and common law. (Doc. Nos. 1-2 (“Am. Compl.”), 113.) The background facts of this case have been set forth in prior orders and the Court need not fully discuss the facts here. Instead, the Court summarizes and supplements the relevant facts below.

         I. Defendants' Business

         Defendants collectively operate a lead-generating business for various payday lenders. Consumers would go to Defendants' website to fill out an application, and then Defendants would sell the application to lenders. The lenders would independently decide whether to lend consumers money.

         Defendants operate the website (“MM Website”). MoneyMutual, LLC holds the MM Website, but has no employees. (Doc. No. 29 (“Madsen Decl.”) ¶ 5.) Selling Source is the sole owner of MoneyMutual and PartnerWeekly. PartnerWeekly and Selling Source have shared numerous employees. (Doc. No. 28 ¶¶ 2-4.) Defendants use television and Internet-based advertising, as well as direct marketing to market the MM Website. (Madsen Decl. ¶¶ 5-6; Doc. No. 117 (“Albanese Decl.”) ¶ 22, Ex. 2 (“McKay Dep.”) at 17, 19-21, 47, 91, 94-95.) Defendants' advertising features celebrity spokesperson Montel Williams. (Id.) The MM Website has been active since 2009, and Montel Williams has been the spokesperson for MoneyMutual since its inception. (Albanese Decl. ¶ 22, Ex. 3 at 65-66., Ex. 4, Ex. 5.) Until around October 2016, the MM Website advertised to consumers that they could secure loans “as soon as tomorrow, ” in amounts up to $1, 000; as of October 2016, the amount changed to $2, 500. (Id., Exs. 7-8.) The MM Website did not disclose to potential borrowers that MoneyMutual is not licensed in Minnesota or that the loans offered may be illegal in Minnesota. (See id., Exs. 6-9.)

         The MM Website invited consumers to apply for a loan, which involved the consumer providing his or her name, social security number, address, bank account information, military status, income, employment status, e-mail address, phone number, and next payday. (Id., Ex. 10 (“Maple Dep.”) at 21-25.) These categories of information remained substantially the same during the Class Period. (Id.)

         Once MoneyMutual receives an applicant's information via the MM Website, Defendants then connect those leads to Defendants' network of lenders via PartnerWeekly's “automated, ” “ping tree” system for selling leads. (Madsen Decl. ¶ 8; McKay Dep. at 30-31.) This system is based upon lead purchase agreements between PartnerWeekly and the lenders, which include “lead purchase insertion orders” that specify the type of consumer sought by the lender. (Madsen Decl. ¶ 6; McKay Dep. at 33.) Once an applicant is matched with a lender, the consumer's web browser is automatically redirected to the lender's website, and the consumer receives an e-mail with the lender's contact information. (Maple Dep. at 33-35.) Defendants represent that 30%-60% of leads sold in the industry result in a loan transaction. (McKay Dep. at 124-126; Albanese Decl. ¶ 22, Ex. 15 (“Madsen Dep.”) at 46-47.)

         According to a spreadsheet detailing all of the leads sold by Defendants regarding Minnesota consumers, Defendants sold 41, 154 leads regarding Minnesota consumers to lenders during the period of September 29, 2009 to October 19, 2017 (“Lead Acquisition Spreadsheet”). (Albanese Decl. ¶ 3.)[1] Because of duplicate contact information, however, Plaintiffs estimate that there are approximately 27, 887 unique Minnesota consumers on the Lead Acquisition Spreadsheet. (Id.) Defendants also collected and preserved the banking information, including bank name, routing number, and account number, for all applicants. (See Id. ¶ 5; ¶ 22, Ex. 16.) Defendants are not licensed to arrange loans in Minnesota. (McKay Decl. ¶ 7; Madsen Decl. ¶ 19.) Neither are the lenders to which they sell leads. According to the MM Website, the loans offered by the lenders have annual interest rates with a “typical representative APR range . . . somewhere between 261% and 1304% for a 14-day loan.” (Albanese Decl. ¶ 22, Ex. 9 at PLF-0001227.)

         On May 19, 2010, the Attorney General's Office for the State of Minnesota notified MoneyMutual that because it “arrange[s] for payday loans to Minnesota consumers” that it was “subject to the restrictions on payday loans set forth in Minnesota law, ” and that MoneyMutual was “aiding and abetting lenders that violate Minnesota law.” (Id., Ex. 23.) The Attorney General sent the same letter to MoneyMutual in 2012. (Id., Ex. 24.) Defendants did not respond to the Attorney General's letter, and Defendants' counsel represented at the hearing on this motion that Defendants disagree with the Attorney General's interpretation of the law and facts on this matter.

         II. Plaintiffs

         Plaintiffs are consumer-borrowers and have filed a purported class action against Defendants related to the payday loans. Plaintiffs Rilley and Kunza have been involved in the litigation since its inception in March 2014; Plaintiffs Aldrich, Buettner, and Colquitt-Montgomery have been involved since March 2018. Each Named Plaintiff visited the MM Website from a computer in Minnesota, submitted their Minnesota address and banking information, and were matched with a lender that provided a loan with a principal under $1, 000. (Doc. Nos. 138 (“Aldrich Decl.”) ¶¶ 6-8, 139 (“Buettner Decl.”) ¶¶ 6-9; 140 (“Kunza Decl.”) ¶¶ 8-16; 141 (“Colquitt-Montgomery Decl.”) ¶¶ 9-12; 142 (“Rilley Decl.”) ¶¶ 7-10.)

         III. Procedural History

         Plaintiffs first filed their complaint in Minnesota state court, naming only MoneyMutual as a defendant. Plaintiffs eventually amended the complaint to add Defendants PartnerWeekly and Selling Source. (Doc No. 1-2 (“Am. Compl.”).) Defendants then removed the case to this Court and moved to dismiss for lack of personal jurisdiction. In the August 30, 2017 Order, the Court found the exercise of personal jurisdiction appropriate, but dismissed the RICO claim under Fed.R.Civ.P. 12(b)(6).

         On March 21, 2018, Plaintiffs filed their Second Amended Complaint, which added Plaintiffs Jonathon Aldrich, Venus Colquitt-Montgomery, and Kendra Buettner, omitted the previously dismissed claims, and did not add any new claims or theories of recovery. (Doc. No. 85 (“2d Am. Compl.”).) Defendants moved to dismiss the Second Amended Complaint again for lack of personal jurisdiction. (Doc. No. 95.) On October 3, 2018, the Court denied Defendants' motion.

         Plaintiffs now move the Court for an order certifying this case as a class action under Federal Rules of Civil Procedure 23(a) and 23(b)(3) on behalf of the following proposed class of borrowers (the “Class”):

All individuals residing in Minnesota who (1) received a loan from a lender of $1, 000 or less, (2) that required a minimum payment within 60 days of loan origination of more than 25 percent of the principal balance, (3) by using or any MoneyMutual-branded website, (4) from August 1, 2009 through the date of this Order.

(Doc. No. 113 at 1.) Plaintiffs also move the Court for an order appointing Named Plaintiffs as representatives of the Class and appointing E. Michelle Drake and John G. Albanese of Berger & Montague, P.C., and Mark Heaney of Heaney Law Firm, LLC as Class Counsel (“Proposed Class Counsel”).


         I. Legal Standard for Rule 23 Class Certification

          “A class action serves to conserve the resources of the court and the parties by permitting an issue that may affect every class member to be litigated in an economical fashion.” Ebert v. Gen. Mills, Inc., 823 F.3d 472, 477 (8th Cir. 2016). To obtain class certification, ...

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