TAYLOR

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

BRENDA TAYLOR, )

)

Plaintiff, )

)

v. ) No. 1:25-cv-00918-TWP-MJD

)

NISWI, LC d/b/a LENDUMO, )

SOAREN MANAGEMENT, LLC, )

LDF HOLDINGS, LLC, )

BRITTANY ALLEN, )

JOHN DOES 1-20, )

)

Defendants. )

REPORT AND RECOMMENDATION

Defendants Niswi LC, LDF Holdings LLC, and Brittany Allen have filed a Motion to

Compel Arbitration, or in the Alternative, to Dismiss for Lack of Jurisdiction and for Failure to

State a Claim. [Dkt. 68.] Plaintiff Brenda Taylor opposes this motion. [Dkt. 73.] Judge Tanya

Walton Pratt has designated the undersigned Magistrate Judge to issue a report and

recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). [Dkt. 72.] As explained below, the

Undersigned recommends that Defendants' Motion to Compel Arbitration be granted on the

issue of arbitrability. Given this finding the Undersigned need not, and thus does not, consider

whether the Parties' dispute is in fact arbitrable or whether Plaintiff's claims should be dismissed

for tribal sovereign immunity or failure to state a claim.

I. Background

Plaintiff was a citizen of Indiana during the time relevant to this lawsuit. Id. at ¶ 8.

Defendants are two entities and an individual involved in the consumer lending activities of the

Lac du Flambeau Band of Lake Superior Chippewa Indians ("the Tribe"). Id. at ¶¶ 9-15.

Plaintiff claims that while the Tribe is nominally in the business of consumer lending, in reality

the Tribe is the cat's paw of non-Tribal predatory lenders seeking to cloak usury in tribal

sovereign immunity. Id. at ¶¶ 24-60.

Plaintiff entered into five high interest consumer loans with Defendants between

November 2021 and March 2022. [Dkt. 53 at ¶¶ 56-61.] The loans ranged from $1,200 to

$1,800, with annual interest rates ranging from 693.904% to 794.86%. Id. Plaintiff claims these

loans carry more than double the Indiana Uniform Consumer Credit Code's ("IUCCC") statutory

maximum interest rate and are therefore "unlawful debts" for purposes of 18 U.S.C. § 1961(6).

Id. at ¶ 101. Based on these allegations, she asserts claims under the IUCCC and the Racketeer

Influenced and Corrupt Organizations Act ("RICO"). Id. at ¶¶ 92-102.

Each loan agreement includes an identical choice of law provision, which provides as

follows:

GOVERNING LAW: The laws of the Tribe and applicable federal law will

govern this agreement, without regard to the laws of any state or other jurisdiction,

including the Conflict of Laws clause(s) of any state. You agree to be bound by

Tribal law, and in the event of a bona fide dispute between you and us, Tribal law

and applicable federal law shall exclusively apply to such dispute.

See, e.g., [Dkt. 53-1.]

Each loan agreement also includes an identical arbitration agreement, which states that

Defendants have tribal sovereign immunity from lawsuits but will agree to a "limited waiver

[which] is strictly limited to individual arbitration claims set forth below and judicial actions to

enforce such individual arbitration awards as strictly limited herein." Id. at 14. "The arbitrator

shall apply substantive law consistent with the Governing Law set forth above, and the Federal

Arbitration Act, 9 U.S.C. §§ 1-16 ('FAA') and applicable statutes of limitation, and shall honor

claims of privilege recognized at law." Id. at 15.

The Tribe has a body of law called the Tribal Code.1 The Tribal Code fully incorporated

"the Wisconsin Consumer Act, Wis. Stat. Chapters 421 to 427, and any rules or orders of any

Wisconsin administrative agency promulgated thereunder . . . as tribal law" in March 1988. See

Tribal Code § 46.101. The Wisconsin Consumer Act governs consumer credit transactions.

Wis. State §§ 422.101 to 422.506. The Wisconsin Consumer Act also provides, in relevant part:

Unless superseded by the particular provisions of chs. 421 to 427, chs. 401 to 411

and the principles of law and equity, including the law relative to capacity to

contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion,

bankruptcy, or other validating or invalidating cause supplement chs. 421 to 427.

Wis. Stat. § 421.103(1). Chapters 401 to 411 of the Wisconsin Code, which are incorporated

into the Wisconsin Consumer Act, as shown in the quoted language above, is the Wisconsin

Uniform Commercial Code, which also governs principles of contract formation.

The Tribal Code also includes a chapter governing consumer financial services. Tribal

Code §§ 94.101 to 94.1004. The subchapter governing short-term consumer loans provides that

state law limiting the terms on consumer loans, including maximum interest rates, "shall not

apply to extensions of credit under a Loan operated in accordance with this subchapter." Tribal

Code § 94.804(6)(a).

The loan agreements include a forum selection clause. The Parties agree that any dispute

will be heard either by the American Arbitration Association ("AAA") or by a mutually agreed

upon arbitrator "who is an attorney, retired judge, or arbitrator registered in good standing with

an arbitration association[.]" [Dkt. 53-1 at 15.] If the dispute is heard by the AAA, then the

AAA's procedural rules will govern the arbitration. Id. If the dispute is heard by an alternative,

1 See https://www.ldftribe.com/departments/97/Other_Pages/Court_Ordinances.html. (May 11, 2026).

mutually agreed upon arbitrator, then that arbitrator's procedural rules will govern the arbitration.

Id.

Finally, each arbitration agreement includes an identical delegation provision, which

provides, "The words 'dispute' and 'disputes' are given the broadest possible meaning and

include, without limitation (a) all claims, disputes, or controversies arising from or relating

directly or indirectly to this . . . Arbitration Provision ('this Provision'), the validity and scope of

this Provision and any claim or attempt to set aside this Provision[.]" Id.

II. Legal Standard

The Federal Arbitration Act (“FAA”) embodies "both a liberal federal policy favoring

arbitration . . . and the fundamental principle that arbitration is a matter of contract." Gupta v.

Morgan Stanley Smith Barney, LLC, 934 F.3d 705, 710 (7th Cir. 2019) (quoting AT&T Mobility

LLC v. Concepcion, 563 U.S. 333, 339 (2011)). Indeed, the FAA regards written arbitration

agreements as "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in

equity for the revocation of any contract." 9 U.S.C. § 2. Thus, when presented with a valid

arbitration agreement, "the court shall make an order directing the parties to proceed to

arbitration in accordance with the terms of the agreement." Id. § 4. Courts must grant a motion

to compel arbitration where there is (1) a written agreement to arbitrate, (2) a dispute within the

scope of the agreement to arbitrate, and (3) a refusal to arbitrate. Zurich Am. Ins. Co. v. Watts

Industries, Inc., 417 F.3d 682, 687 (7th Cir. 2005) (citing 9 U.S.C. § 4). "A court may

invalidate an arbitration agreement based on generally applicable contract defenses like fraud or

unconscionability, but not on legal rules that apply only to arbitration or that derive their

meaning from the fact that an agreement to arbitrate is at issue." Kindred Nursing Ctrs. Ltd.

P'ship v. Clark, 581 U.S. 246, 252 (2017).

The party seeking to compel arbitration bears the burden of demonstrating a valid

agreement to arbitrate. A.D. v. Credit One Bank, N.A., 885 F.3d 1054, 1063 (7th Cir. 2018).

In evaluating an arbitration agreement, courts may properly consider relevant exhibits and

affidavits. Reineke v. Circuit City Stores, Inc., 2004 WL 442639, at *1 (N.D. Ill. 2004). Once

the moving party satisfies its initial burden, the nonmoving party must identify a triable issue of

fact, much like the nonmoving party's burden on a motion for summary judgment. Tinder v.

Pinkerton Sec., 305 F.3d 728, 735 (7th Cir. 2002). The nonmoving party "cannot avoid

compelled arbitration by generally denying the facts upon which the right to arbitration rests; the

party must identify specific evidence in the record demonstrating a material factual dispute for

trial." Id. Courts view the evidence in the light most favorable to the nonmoving party and draw

reasonable inferences in its favor. Id. If the non-moving party identifies a triable issue of fact,

"the court shall proceed summarily to the trial thereof." 9 U.S.C. § 4.

III. Discussion

The issue currently before the Undersigned is whether the arbitrability inquiry, i.e.,

whether the dispute falls within the arbitration agreement's scope, shall be decided by the court

or by an arbitrator. "Unless the parties clearly and unmistakably provide otherwise," this issue of

arbitrability is decided by the court. AT&T Technologies Inc. v. Communications Workers of

America, 475 U.S. 643, 649 (1986). But where the arbitration agreement contains a valid

delegation provision providing that issues of arbitrability will be decided by the arbitrator, then

the court will enforce the delegation provision and compel arbitration on the issue of

arbitrability. Rent-A-Center West, Inc. v. Jackson, 561 U.S. 63, 71 (2010). The underlying

agreement, the arbitration agreement, and the delegation provision are all severable. Id. This

means that a party seeking to avoid arbitration must make a specific challenge to the arbitration

agreement and a specific challenge to the delegation provision in order to avoid arbitration and

keep their lawsuit in court. Id. When the non-moving party raises a specific challenge to the

delegation provision, then the court must evaluate that challenge before ordering compliance

with the delegation provision and sending the dispute to arbitration. Id.

A. Collateral Estoppel

Plaintiff's threshold challenge to the delegation provision is one of collateral estoppel, but

her argument is perfunctory and undeveloped. Plaintiff opted out of a class action in the Western

District of Virginia that raised similar consumer protection claims against defendants associated

with the Tribe's consumer lending activities. See Fitzgerald v. Wildcat, 687 F. Supp. 3d 756

(W.D. Vir. 2023). In that case, the court held that the delegation provision impermissibly waived

the plaintiffs' state substantive rights without recourse to state substantive law and was therefore

unenforceable as a matter of public policy. Id. at 777. Plaintiff argues that the Defendants in

this case should be collaterally estopped from enforcing the delegation provision because the

defendants in Fitzgerald were unsuccessful on that issue. [Dkt. 73 at 17.]

Plaintiff's collateral estoppel argument consists of three sentences. [Dkt. 73 at 17.]

She does not identify which jurisdiction's collateral estoppel law applies in this case. See, e.g.,

DeGuelle v. Camilli, 724 F.3d 933 (7th Cir. 2013) (noting differences between the federal

common law of collateral estoppel and Wisconsin's law of collateral estoppel). Nor does she

identify the elements of collateral estoppel. She fails to mention that the Defendants in this case

are not the same defendants that were sued in Fitzgerald, see 3:20-cv-44, dkt. 135 (W.D. Vir.

Jan. 10, 2023), and she does not explain why the Defendants in this case should be bound by a

decision issued in a case to which they were not parties.

Plaintiff's perfunctory argument is fatal to her collateral estoppel defense. "Perfunctory

and undeveloped arguments are waived, as are arguments unsupported by legal authority."

United States v. Davis, 29 F.4th 380, 385 n. 2 (7th Cir. 2022); see also Nelson v. Napolitano, 657

F.3d 586, 590 (7th Cir. 2011) ("Neither the district court nor this court are obliged to research

and construct legal arguments for parties, especially when they are represented by counsel.")

Plaintiff has the burden of establishing collateral estoppel, and the argument she presents in her

response brief fails to meet that burden. See Freeman United Coal Min. Co. v. Office of Workers'

Compensation Program, 20 F.3d 289, 394 (7th Cir. 1994) (the party invoking collateral estoppel

has the burden of establishing its elements).

B. Mutual Assent and Definiteness of Terms

Plaintiff next challenges the delegation provision under the Seventh Circuit Court of

Appeals' recent decision in Harris v. W6LS, Inc., 171 F.4th 957 (7th Cir. 2026), amended by, ---

F.4th ---, 2026 WL 1641195 (June 5, 2026), reh'g denied, --- F.4th --- (June 5, 2026), but Harris

is distinguishable. As in this case, the complaint in Harris raised consumer protection challenges

under state and federal law to a tribal lender's high interest consumer loans (specifically,

defendants associated with the lending activities of the Otoe-Missouria Tribe). Id. at 959. The

plaintiffs in Harris challenged the arbitration agreement and its delegation provision and sought

to litigate their claims in federal court. Both the arbitration agreement and the delegation

provision were governed by "Tribal Law and applicable federal law" and excluded state law. Id.

at 960. The court noted that in interpreting arbitration agreements, courts apply "ordinary state-

law principles that govern the formation of contracts" to determine "whether the parties agreed to

arbitrate a certain matter (including arbitrability)." Id. at 962 (quoting First Options of Chicago,

Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). At the time the parties entered into the arbitration

agreement, however, the Otoe-Missouria tribal code did not include a legal framework governing

contract formation. Harris, 171 F.4th at 962. The court reasoned that the delegation provision

was therefore unenforceable because it involved indefinite material terms that precluded the

parties' mutual assent. Id. at 963. The court explained:

Here, the lack of definiteness in the contract's Governing Law provision contradicts

any mutual assent to the delegation or arbitration provisions. The contract purports

to have the arbitrator use applicable federal law or Otoe-Missouria tribal law to

determine the interpretation, applicability, validity, arbitrability, enforceability,

formation or scope of this Arbitration Agreement. But as discussed above, federal

law does not provide underlying principles of contract formation and there was no

tribal law for an arbitrator to apply when plaintiffs signed their contracts. We

cannot, then, ascertain what the parties have agreed to do in committing their future

disputes to arbitration. Since it was not reasonably certain what law the parties

agreed would be used in arbitration, they cannot have mutually assented to the

delegation or arbitration terms.

Id. (cleaned up).

Unlike Harris, the delegation provision in this case is governed by a well-developed body

of law governing contract formation and defenses—that is to say, the law of Wisconsin. At the

time Plaintiff entered into the arbitration agreement and delegation provision, she agreed that the

enforceability of these agreements would be governed by Wisconsin contract law. That is

because she agreed to be bound by the Tribal Code which fully incorporates the Wisconsin

Consumer Act. Tribal Code 46.101. The Wisconsin Consumer Act in turn governs consumer

credit transactions, Wis. State §§ 422.101 to 422.506, and incorporates Wisconsin's Uniform

Commercial Code as well as "the principles of law and equity, including the law relative to

capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion,

bankruptcy, or other validating or invalidating cause supplement to [the Wisconsin Consumer

Act]." Wis. Stat. § 421.103(1). Had the delegation provision in this case expressly stated,

"issues of arbitrability will be governed by the law of Wisconsin," then the holding in Harris

would clearly have no impact on the resolution of this issue, yet that is effectively what the

delegation provision states by including "laws of the Tribe and applicable federal law" in the

"governing law" section of the Parties' agreement.2

The Undersigned agrees with Defendants that the incorporation of the Wisconsin

Consumer Act into the Tribal Code distinguishes this case from Harris and that here, unlike in

Harris, the terms of the delegation provision were sufficiently definite to allow the Parties to

mutually assent to the delegation provision.

C. Tribal Jurisdiction

Plaintiff next argues that the Tribal Code cannot govern the delegation provision because

the Tribe's legal jurisdiction does not extend to the underlying consumer credit transactions,

which Plaintiff signed over the internet off reservation land. Plaintiff relies on Jackson v.

Payday Financial, LLC, 764 F.3d 765 (7th Cir. 2014), which held that a forum selection clause

requiring litigation in a tribal court is invalid when the tribal court lacks subject matter

jurisdiction over the dispute. Id. at 781-86. That is because tribal courts, like federal courts, are

courts of limited jurisdiction, and they may only hear disputes that "implicate the sovereignty of

the tribe over its land and its concomitant authority to regulate the activity of nonmembers on

that land." Id. at 782. A tribal court's lack of subject matter jurisdiction cannot be waived, and

"a nonmember's consent to tribal authority [by way of a forum selection clause in an arbitration

agreement] is not sufficient to establish the jurisdiction of a tribal court." Id. at 783 (citing

Plains Commerce Bank v. Long Family Land and Cattle Company, Inc. 554 U.S. 316, 337

(2008)).

2 Although Defendants rely on the incorporation of Wisconsin law into the Tribal Code in their opening

brief—indeed, that is their principal argument—Plaintiff does not address the incorporation of Wisconsin

law into the Tribal Code at any point in her response brief. See generally [dkt. 73.]

The jurisdictional issues in Jackson, which arose from a forum selection clause selecting

a tribal court, are not applicable to the present dispute, which involves a choice of law provision

selecting the Tribal Code and applicable federal law. As a general matter, parties to an

arbitration agreement are free to bind themselves to any body of law they choose, irrespective of

whether that body of law derives from a government with legal jurisdiction over the transaction

or whether that body of law is presently valid outside the context of the parties' agreement. See

DIRECTTV, Inc. v. Imburgia, 577 U.S. 47, 53-54 (2015) ("[T]he Federal Arbitration Act allows

parties to an arbitration contract considerable latitude to choose what law governs some or all of

its provisions [.] . . . In principle, they might choose to have portions of their contract governed

by the law of Tibet, the law of pre-revolutionary Russia," or state court decisions that have been

overruled by the Supreme Court.). Although the Parties in this case agreed that the delegation

provision, the arbitration agreement, and the loan agreement would be governed by the Tribal

Code; they did not agree that the dispute would be heard by a tribal court, as the litigants did in

Jackson. Instead, the Parties agreed that any dispute would be heard either by the AAA or by an

alternative, mutually agreed upon arbitrator "who is an attorney, retired judge, or arbitrator

registered in good standing with an arbitration association[.]" [Dkt. 53-1 at 15.] For this reason,

the jurisdictional issues in Jackson do not apply, and Plaintiff's reliance on Jackson is

misplaced.3

3 Plaintiff also argues that the Tribal Code is not "law" because certain relevant provisions of the Tribal

Code, i.e., the provisions governing high-interest loans to non-tribal members off reservation land, do not

apply to members of the Tribe themselves and only apply to outsiders. [Dkt. 73 at 22-23.] Plaintiff likens

this aspect of the Tribal Code to a "Letter of Marque and Reprisal," which is essentially a war power

reserved to Congress. Id. at n. 1 (citing U.S. Const. Art. 1, § 8). Whatever merit this argument might

have, it does not challenge the delegation provision with particularity. Instead, it challenges the

arbitration agreement as a whole and the underlying loan agreement. But merely challenging the

underlying agreement and issues of arbitrability, without specifically challenging the validity of the

delegation provision itself, is insufficient to overcome the operation of the delegation provision. See

Rent-A-Center, 561 U.S. at 71.

D. Prospective Waiver, Unconscionability, and Public Policy

Plaintiff objects to both the delegation provision and the arbitration agreement as a whole

under the doctrines of "prospective waiver," unconscionability, and public policy, but a close

reading of these arguments reveals that they are, in substance, merely directed at the issue of

arbitrability itself and do not succeed in specifically disproving the validity of the delegation

provision, as is required for a successful challenge under well-established Supreme Court

precedent.

A party may challenge an arbitration agreement under the "prospective waiver"

doctrine, whereby an agreement that prospectively waives "a party's right to pursue statutory

remedies" may be unenforceable as a violation of public policy. Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, 473 U.S. 614, 637 (1985). Although parties possess broad latitude to

specify the rules under which their arbitration will be conducted, they must preserve the ability to

assert federal statutory causes of action so that "the statute[s] will continue to serve both [their]

remedial and deterrent function[s]." Gilmer v. Interstate / Johnson Lane Corp., 500 U.S. 20, 28

(1991). If a "prospective litigant effectively may vindicate its statutory cause of action in the

arbitral forum," then courts should enforce the parties' agreement to arbitrate. Mitsubishi

Motors, 473 U.S. at 637. But where an arbitration agreement prevents a litigant from vindicating

federal substantive statutory rights, courts will not enforce the agreement. Id.

District courts within the Seventh Circuit are divided as to whether the prospective

waiver doctrine applies only to impermissible waivers of federal statutory rights, or if the

doctrine extends to impermissible waivers of state statutory rights as well. Compare Walton v.

Uprova Credit LLC, 722 F. Supp. 3d 824, 836 (S.D. Ind. 2024) ("Because the FAA stands on

equal footing with other federal statutes, the prospective waiver rule becomes relevant only

where compelling arbitration, as the FAA instructs, simultaneously jeopardizes federally

protected interests . . . . We, therefore, find it unsurprising that the Supreme Court has never

invoked the prospective waiver doctrine in cases involving state statutory claims.") (collecting

cases) with Harris v. FSST Management Services, LLC, 686 F.Supp.3d 734, 739 (N.D. Ill. 2023)

(describing the prospective waiver doctrine with respect to a delegation provision as follows: "Is

there a specific challenge to [the] delegation provision? If so, does the choice of law clause

prospectively waive federal or state rights? If so, the entire loan agreement, and implicitly the

delegation and arbitration provisions, are also unenforceable."). The Seventh Circuit Court of

Appeals has not resolved this issue. See Harris, 171 F.4th at 962 ("Because we find that

defendants' motion to compel arbitration fails on ordinary formation principles," described supra,

"we need not reach the untrodden ground of prospective waiver of state-law rights . . . and leave

that question for another day"). As explained below, the Undersigned need not take sides on this

aspect of the prospective waiver doctrine because Plaintiff's argument fails under either theory.

Plaintiff argues that the arbitration agreement and delegation provision must be set aside

because they prospectively waive her statutory rights to bring a claim against defendants under

the IUCCC, which is an Indiana statute prohibiting usury, and RICO, a federal statute that

incorporates concepts from state law for the definition of an "unlawful debt." [Dkt. 73 at 23.]

She states that numerous cases have held that "arbitration agreements and delegation provisions

are unenforceable where they operate in tandem with a 'choice of law' clause to effect a

prospective waiver of federal and statute statutory rights." Id.

Plaintiff makes two distinct arguments under the prospective waiver doctrine. First, she

argues that by "disclaiming state law [in the arbitration agreement], Defendants . . . prevent the

arbitrator from applying the body of law necessary to determine arbitrability, making both the

arbitration clause and the delegation clause unenforceable." [Dkt. 73 at 20.] (citing Hengle v.

Treppa, 19 F.4th 324, 342 (4th Cir. 2021) (holding that a delegation provision was invalid

because by selecting tribal law in the choice of law provision, the arbitration agreement deprived

plaintiff of any contract formation defenses); Smith v. Western Sky Fin., LLC, 168 F. Supp. 3d

778, 786 (E.D. Pa. 2016) ("In practical terms, enforcing the delegation provision would place an

arbitrator in the impossible position of deciding the enforceability of the agreement without

authority to apply any applicable federal or state law."). But as explained supra, this case is

distinguishable from Hengle and other tribal lending cases cited by Plaintiff because the tribal

law at issue here expressly incorporates Wisconsin contract law. [Dkt. 53-1 at 10]; Tribal Code

46.101; Wis. Stat. § 421.103(1). Thus, by enforcing the delegation provision and compelling

arbitration on the issue of arbitrability, the Court would reserve the prospective waiver questions

that Plaintiff raises in her brief, as well as any other arguments she might wish to present on the

issue of arbitrability, to the AAA or an alternative, mutually agreed upon arbitrator. The

arbitrator would then apply the "laws of the Tribe," which include Wisconsin's body of law on

contract formation and defenses, to determine the arbitrability of the Parties' dispute. Unlike

Hengle, where compelling arbitration on the issue of arbitrability would have deprived the

plaintiff from asserting legal defenses to the delegation provision, in this case Plaintiff would

have the benefit of Wisconsin's state law defenses to contract formation. Plaintiff does not point

to an analogous case where a court determined that the prospective waiver doctrine prohibits

such a choice of law provision, and she does not explain how her rights would be impacted by

availing herself of Wisconsin contract defenses rather than Indiana contract defenses.

Plaintiff's second prospective waiver argument seeks to collapse her challenges to the

delegation provision and the arbitration agreement as a whole into a single inquiry, arguing that

"if the 'animating purpose' of the arbitration agreement is to prospectively waive statutory rights,

neither it nor the delegation provision are valid." [Dkt. 73 at 26] (emphasis added). This

approach contradicts Supreme Court precedent, which holds that a litigant must challenge the

delegation provision with specificity. The Court has explained that, while a litigant may

challenge both the arbitration agreement as a whole and the delegation provision in particular

under the same legal theory, defeating the delegation provision still requires a particularized

challenge. See, e.g., Rent-A-Center, 561 U.S. at 74 (explaining that a successful challenge to a

delegation provision as unconscionable due to the arbitration agreement's limits on discovery

would require the challenger to show that those limits "cause[] the arbitration of his claim that

the Agreement is unenforceable to be unconscionable" which "would be, of course, a much more

difficult argument to sustain than the argument that the same limitation renders arbitration of his

factbound employment-discrimination claim unconscionable"). Thus, Plaintiff may raise a

prospective waiver challenge to both the delegation provision and the arbitration agreement as a

whole, but her challenge to the delegation provision must be particular to that specific aspect of

the agreement. In this case, it is not.

Plaintiff cites non-binding precedent from the Fourth Circuit Court of Appeals which

does appear to collapse these inquiries to a certain degree, but the Seventh Circuit Court of

Appeals has not adopted that approach. See Hayes v. Delbert Services Corp., 811 F.3d 666, 675

(4th Cir. 2016) (holding that the arbitration agreement and the delegation provision were non-

severable because the "essence" of the contract was intended to ensure that the defendants "could

engage in lending and collection practices free from the strictures of any federal law"). This case

is factually distinguishable from Hayes, as the "brazen nature" of the arbitration agreement in

Hayes clearly and unequivocally sought to evade federal lending laws by stating, "no United

States state or federal law applies to this Agreement." Hayes, 811 F.3d at 670. Subsequent cases

from the Fourth Circuit Court of Appeals, though claiming to follow Hayes' "essence" approach,

instead considered the plaintiffs' delegation provision challenges separately from their challenges

to the arbitration agreements as a whole and invalidated those delegation provisions based on a

particularized showing that they were invalid. See, e.g., Hengle, 19 F.4th at 342 (striking the

delegation provision because it "restrains the arbitrator from considering federal law defenses to

arbitrability, thereby precluding Plaintiffs from effectively vindicating their federal statutory

rights" and separately holding that the dispute was not arbitrable because the choice of law

provision in the arbitration agreement would prospectively waive federal causes of action with

respect to consumer lending). What's more, the case within the Seventh Circuit upon which

Plaintiff leans most heavily also applies a particularized approach that is more consistent with

Supreme Court precedent than the "essence" approach applied in Hayes. See Harris, 686 F.

Supp. 3d at 741 (holding that the delegation provision was invalid based on the particularized

showing that the choice of law provision "requires an arbitrator to determine whether a valid and

enforceable arbitration agreement exists without access to substantive federal law," and

separately holding that the arbitration agreement as a whole prospectively waived statutory

causes of action).

Given these circumstances, the Undersigned declines Plaintiff's request to apply the

"essence" approach set forth in Hayes and instead follows well-established Supreme Court

precedent holding that a challenge to a delegation provision requires a particularized showing

that the delegation provision itself is invalid. Under this approach, Plaintiff's prospective waiver

challenge to the delegation provision fails because she has not shown that compelling

compliance with the delegation provision would prevent her from vindicating her federal or state

rights.

Plaintiff's unconscionability and public policy challenges fail for the same reason. She

argues that an arbitration agreement that purportedly waives IUCCC's non-waivable provisions is

unconscionable and violates public policy under Indiana law. [Dkt. 73 at 28]. But she has not

shown that compelling compliance with the delegation provision and having the issue of

arbitrability decided by an arbitrator applying Wisconsin law is itself unconscionable or a

violation of public policy. Both defenses—unconscionability and public policy—have been

applied successfully to invalidate contracts under Wisconsin law. See, e.g. Wisconsin Auto Title

Loans, Inc. v. Jones, 714 N.W.2d 155, 167-75 (Wis. 2006) (holding that a one-sided arbitration

provision was procedurally and substantively unconscionable under Wisconsin law); Atkins v.

Swimwest Family Fitness Center, 691 N.W.2d 334, 338-39 (Wis. 2005) (holding that an

exculpatory contract violated public policy, which the court defined as "that principal of law

under which freedom of contract or private dealings is restricted by law for the good of the

community"). Plaintiff has not attempted to show a meaningful distinction between the

application of these contract defenses under Indiana or Wisconsin law, and she has not shown

that an agreement that selects Wisconsin law, rather than Indiana law, is so one-sided as to be

unconscionable or a violation of public policy. Accordingly, her unconscionability and public

policy challenges to the delegation provision fail.

In sum, Plaintiff's collateral estoppel defense to the delegation provision is perfunctory

and undeveloped. The Seventh Circuit Court of Appeals' recent decision in Harris is

inapplicable because the arbitration agreement provides that issues surrounding contract

formation and defenses are controlled by Wisconsin law, which was incorporated into the Tribal

Code at the time Plaintiff entered into her loan agreements. The subject matter jurisdiction

issues described in Jackson are inapplicable. Finally, Plaintiff's prospective waiver,

unconscionability, and public policy challenges to the delegation provision fail because those

challenges do not present successful challenges to the delegation provision itself. Accordingly,

the Undersigned recommends that Defendants' Motion to Compel Arbitration be GRANTED on

the issue of arbitrability.

IV. CONCLUSION

For the reasons explained above, the Undersigned RECOMMENDS that the Defendants’

Motion to Compel be GRANTED on the issue of arbitrability.

Any objections to the Magistrate Judge's Report and Recommendation shall be filed with

the Clerk in accordance with 28 U.S.C. § 636(b)(1) and Fed. R. Civ. P. 72(b), and failure to

timely file objections within fourteen days after service shall constitute a waiver of subsequent

review absent a showing of good cause for such failure.

SO ORDERED.

Dated: 9 JUN 2026 Tob aioe

Marl J. Dinsmpgre

United StatesMagistrate Judge

Southern District of Indiana

Distribution:

All ECF-registered counsel of record via email

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