Community State Bank v. Strong
2011 U.S. App. LEXIS 17767
| 11th Cir. | 2011Background
- Strong obtained a $200 payday loan in Georgia (2004) with an arbitration clause; loan labeled as made by Community State Bank but funded via Cash America entities; Strong sued in state court asserting state-law usury and related claims against Cash America defendants; Cash America and Bank filed a Federal §4 petition to compel arbitration in district court; district court remanded and dismissed petition for lack of jurisdiction; Eleventh Circuit previously held look-through jurisdiction in Strong I, later reconsidered after Vaden; current panel splits jurisdiction: Bank has freestanding petition; Cash America petition is barred by collateral estoppel from state court sanction; Court remands as to Bank and affirms dismissal as to Cash America.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Bank's §4 petition is within federal jurisdiction | Bank could file only if underlying controversy supports federal question | Vaden look-through allows freestanding §4 petitions to be jurisdictional | Bank petition jurisdiction affirmed; district court to decide arbitration |
| Whether Cash America's §4 petition is barred by collateral estoppel | State-court arbitration issue could be re-litigated in federal court | Georgia sanctions final judgment; issues were litigated and decided | Collateral estoppel bars Cash America's petition; dismissal affirmed |
| Role of Vaden and freestanding petitions in this case | Freestanding petitions may be jurisdictionally viable under look-through | Vaden limits look-through when actual litigation exists; freestanding case differs | Court adopts look-through for Bank as freestanding petition; discusses limits under Vaden |
Key Cases Cited
- Vaden v. Discover Bank, 556 U.S. 49 (2009) (adopted look-through jurisdiction for §4 petitions)
- Community State Bank v. Strong, 485 F.3d 597 (11th Cir. 2007) (look-through to underlying controversy; §4 jurisdiction)
- Strong v. Ga. Cash Am., Inc., 485 F.3d 597 (11th Cir. 2007) (initial panel decision on jurisdiction via look-through)
- Vaden, 565 F.3d 1305 (11th Cir. 2009) (en banc decision; treatment of freestanding petitions)
- BankWest, Inc. v. Baker, 411 F.3d 1289 (11th Cir. 2005) (Section 27(a) FDIA preemption discussion; preemption scope)