Loan providers had been barred from enforcing out-of-state forum selection clauses and class action waivers in loan agreements because such conditions violate Georgia’s general public policy, the Eleventh Circuit held in Davis v. Oasis Legal Finance working Co., 2019 WL 4051592 (11th Cir. Aug. 28, 2019). A course of borrowers whom joined into identical loan agreements sued their loan providers, alleging that the agreements violated Georgia’s Payday Lending Act, O.C.G.A. 16-17-1 et seq., Industrial Loan Act, O.C.G.A. 7-3-1 et seq., and laws that are usury O.C.G.A. 7-4-18. Lenders relocated to dismiss the issue and hit the borrowers’ class allegations, arguing that the loan agreements’ forum selection clauses needed the borrowers to sue them in Illinois and therefore the course action waivers banned a course action. Siding aided by the borrowers, the district court denied the lenders’ motions, keeping that both clauses violated Georgia’s policy that is public had been unenforceable.
The Eleventh Circuit affirmed on interlocutory appeal and in an opinion by Judge Adalberto Jordan. When it comes to forum selection clause, the court reasoned that based on Georgia Supreme Court precedent, the Payday Lending Act establishes a clear public policy that prohibits loan providers payday loans phone number from utilizing out-of-state forum selection clauses: the Act expressly bars lenders from designating a court for the quality of disputes “other than the usual court of competent jurisdiction in and also for the county where the debtor resides or the loan office is located.” Further, the statute describes that loan providers had utilized forum selection clauses to prevent Georgia courts and that “the General Assembly has determined that such techniques are unconscionable and really should be forbidden.”
Lenders argued that the Payday Lending Act could possibly be interpreted to allow non-Georgia forum selection clauses due to the fact Act would not require disputes to specifically be introduced a Georgia county
it just provided disputes needs to be solved in a “county where the debtor resides or the mortgage workplace is found.” (emphasis included). The court disposed with this argument, reasoning that Georgia venue conditions usually utilize the term that is general” whenever discussing Georgia counties. And also the lenders’ argument made sense that is little in the Act’s clear prohibition on out-of-state forum selection clauses.
The court also rejected the lenders’ argument that the Payday Lending Act does not apply to loans by out-of-state lenders for several reasons. First, the Georgia Supreme Court has recently refused this argument. 2nd, the statute broadly is applicable to “any business” that “consists in entire or perhaps in section of making . . . loans of $3,000.00 or less.” 3rd, if this argument held water, it might make the Act’s prohibition on out-of-state forum selection clauses meaningless.
Upcoming, the court addressed the course action waiver. It agreed using the region court’s summary that the Georgia Legislature designed to protect course actions as a fix against payday lenders—both statutes expressly allow course actions. Enforcing the class action waiver would undermine the point and character of Georgia’s scheme that is statutory. This, alone, had been sufficient to make the course action waiver unenforceable under Georgia legislation.
So that they can persuade the court otherwise, lenders pointed to prior Eleventh Circuit cases—Jenkins v. First American Cash Advance of Georgia, LLC, 400 F.3d 868 (11th Cir. 2005), and Bowen v. First Family Financial Services, Inc., 233 F.3d 1331 (11th Cir. 2000)—which held that class action waivers in arbitration clauses were not void as against general public policy. The court had not been convinced, emphasizing that Jenkins and Bowen involved class action waivers in arbitration agreements. Consequently, the Federal Arbitration Act used and created a solid federal policy in benefit of arbitration. More over, Supreme Court precedent establishes that area 2 of this Federal Arbitration Act overrides a continuing state statute or common-law doctrine that attempts to undercut the enforceability of a arbitration contract. Because an arbitration contract had not been at problem right right here, the court explained, Jenkins and Bowen are distinguishable therefore the Federal Arbitration Act will not use.
