Loan providers had been banned 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 entered 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 allegations that are’ class arguing that the mortgage agreements’ forum selection clauses needed the borrowers to sue them in Illinois and that the course action waivers banned a course action. Siding because of the borrowers, the region court denied the lenders’ motions, keeping that both clauses violated Georgia’s policy that is public were unenforceable.

The Eleventh Circuit affirmed on interlocutory appeal and in an opinion by Judge Adalberto Jordan. The court reasoned that relating to Georgia Supreme Court precedent, the Payday Lending Act establishes a clear public policy that prohibits loan providers from making use of out-of-state forum selection clauses: the Act expressly bars loan providers from designating a court when it comes to quality of disputes “other than a court of competent jurisdiction in and also for the county when the debtor resides or perhaps the loan workplace is found. when it comes to forum selection clause” 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 methods 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 since the Act failed to particularly need disputes to be earned a Georgia county

it just so long as disputes should be solved in a “county when the borrower resides or perhaps the mortgage workplace is found.” (emphasis included). The court disposed for this argument, reasoning that Georgia place conditions usually make use of the term that is general” whenever discussing Georgia counties. As well as the lenders’ argument made little sense based from the Act’s clear prohibition on out-of-state forum selection clauses.

For a number of reasons, the court also rejected the lenders’ argument that the Payday Lending Act will not connect with loans by out-of-state loan providers. First, the Georgia Supreme Court has refused this argument. Second, the statute broadly applies to “any business” that “consists in entire or title loans TN in element of making . . . loans of $3,000.00 or less.” 3rd, if this argument held water, it could make the Act’s prohibition on out-of-state forum selection clauses meaningless.

Then, the court addressed the course action waiver. It consented with all the region court’s summary that the Georgia Legislature meant to protect course actions as an answer against payday lenders—both statutes expressly allow course actions. Enforcing the course action waiver would undermine the point and character of Georgia’s statutory scheme. This, alone, ended up being adequate 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 are not void as against general general public policy. The court had not been convinced, emphasizing that Jenkins and Bowen class that is involved waivers in arbitration agreements. Therefore, the Federal Arbitration Act used and created a powerful federal policy in benefit of arbitration. Furthermore, Supreme Court precedent establishes that area 2 of the Federal Arbitration Act overrides a continuing state statute or common-law doctrine that efforts to undercut the enforceability of a arbitration contract. Because an arbitration contract had not been at issue right here, the court explained, Jenkins and Bowen are distinguishable plus the Federal Arbitration Act will not use.