Lenders were banned from enforcing out-of-state forum selection clauses and class action waivers in loan agreements because such conditions violate GeorgiaвЂ™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 who joined into identical loan agreements sued their loan providers, alleging that the agreements violated GeorgiaвЂ™s Payday Lending Act, O.C.G.A. В§ 16-17-1 et seq., Industrial Loan Act, O.C.G.A. В§ 7-3-1 et seq., and usury guidelines, O.C.G.A. В§ 7-4-18. Lenders relocated to dismiss the problem and hit the borrowersвЂ™ class allegations, arguing that the mortgage agreementsвЂ™ forum selection clauses needed the borrowers to sue them in Illinois and therefore the class action waivers banned a course action. Siding aided by the borrowers, the region court denied the lendersвЂ™ motions, keeping that both clauses violated GeorgiaвЂ™s general public policy and had been unenforceable.
Lenders argued that the Payday Lending Act might be interpreted to allow non-Georgia forum selection clauses considering that the Act failed to require disputes to specifically be earned a Georgia county, it just provided disputes needs to be settled in a вЂњcounty when the debtor resides or the loan workplace is based.вЂќ (emphasis added). The court disposed of this argument, reasoning that Georgia place conditions frequently utilize the general term вЂњcountyвЂќ whenever discussing Georgia counties. As well as the lendersвЂ™ argument made little sense based regarding the ActвЂ™s clear prohibition on out-of-state forum selection clauses.
For all reasons, the court additionally rejected the lendersвЂ™ argument that the Payday Lending Act will not affect loans by out-of-state loan providers. First, the Georgia Supreme Court has refused this argument. 2nd, the statute broadly is applicable to вЂњany businessвЂќ that вЂњconsists in entire or perhaps in element of making . . . loans of $3,000.00 or less.вЂќ 3rd, if this argument held water, it might make the ActвЂ™s prohibition on out-of-state forum selection clauses meaningless.
So as to persuade the court otherwise, lenders pointed to prior Eleventh Circuit casesвЂ”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)вЂ”which held that class action waivers in arbitration clauses are not void as against general general general public policy. The court had not been convinced, emphasizing that Jenkins and Bowen class that is involved waivers in arbitration agreements. Consequently, the Federal Arbitration Act used and created a good policy that is federal benefit of arbitration. More over, Supreme Court precedent establishes that area 2 of this Federal Arbitration Act overrides state statute or common-law doctrine that efforts to undercut the enforceability of an arbitration contract. Because an arbitration contract had not been at problem right here, the court explained, Jenkins and Bowen are distinguishable and also the Federal Arbitration Act doesn’t use.