Fountain v. Oasis Legal Finance, LLC
2015 U.S. Dist. LEXIS 13841
| D. Minnesota | 2015Background
- Oasis Legal Finance sells non-recourse "purchase agreements" to Minnesota personal-injury plaintiffs: Oasis pays an upfront purchase price and, if the plaintiff later recovers, takes a substantial premium and fees; if no recovery, plaintiff owes nothing.
- Fountain and Loyd entered such agreements (Loyd settled and paid Oasis; Fountain has not yet resolved her suit).
- The agreements contain an exclusive forum-selection clause requiring suit in Cook County, Illinois, and a Minnesota choice-of-law clause.
- Plaintiffs Fountain and Loyd sued in Minnesota state court (removed to federal court), alleging champerty (void as against public policy in Minnesota), unjust enrichment, usury, deceptive practices, and seeking restitution and an injunction.
- Attorney Todd Gardner (not a signatory) brought a putative class action addition alleging the agreements and related attorney acknowledgments interfere with the attorney-client relationship and seeking declaratory relief and DTPA claims.
- Oasis moved to dismiss: (1) Gardner’s claims for lack of subject-matter jurisdiction (standing and amount-in-controversy), and (2) Fountain and Loyd’s claims under the forum-selection clause (moved under Rule 12(b)(6) or forum non conveniens).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of Gardner to seek declaratory relief about ethical duties | Gardner: Minnesota Rule 1.15 and his attorney acknowledgment create an imminent ethical duty and injury, so he may seek a declaratory ruling | Oasis: Gardner signed a nonbinding acknowledgment (no consideration) and has no concrete injury; professional rules do not confer Article III standing | Dismissed for lack of standing; Gardner’s claims are hypothetical/advisory and not a ripe Article III controversy |
| Subject-matter jurisdiction over Gardner’s claims (amount-in-controversy) | Gardner asserted DTPA-based harms but offered no concrete monetary stake | Oasis argued no actual controversy and no amount-in-controversy to satisfy diversity jurisdiction | Court dismissed Gardner’s claims on standing grounds (did not reach amount-in-controversy) |
| Enforceability of the forum-selection clause in Oasis agreements | Fountain & Loyd: clause unenforceable because the whole contract is void for champerty, procured by fraud, adhesion, violates Minnesota public policy, and would deprive plaintiffs of their day in court | Oasis: clause is severable, prima facie valid under federal law, not shown to be procured by clause-specific fraud or to create extraordinary hardship | Clause is valid and enforceable; plaintiffs failed to plead clause-specific fraud or extraordinary hardship |
| Whether to enforce the forum-selection clause (forum non conveniens) | Fountain & Loyd: Minnesota has local interest; consolidation with Gardner’s claims needed; economic hardship to litigate in Illinois | Oasis: clause requires Illinois; choice-of-law selects Minnesota so Illinois court likely will apply Minnesota law; no extraordinary public-interest factors against enforcement | Forum non conveniens dismissal granted; public-interest factors do not outweigh clause; Fiji (case) must be litigated in Cook County, Illinois |
Key Cases Cited
- M/S Bremen v. Zapata OffShore Co., 407 U.S. 1 (recognizes prima facie validity of forum-selection clauses)
- Atlantic Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Tex., 134 S. Ct. 568 (forum-selection clauses ordinarily enforced; burden on plaintiff; applies analysis to forum non conveniens)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing — injury, causation, redressability requirements)
- DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (Article III case-or-controversy and standing principles)
- Piper Aircraft Co. v. Reyno, 454 U.S. 235 (public-interest factors in forum non conveniens analysis)
- Rucker v. Oasis Legal Fin., LLC, 632 F.3d 1231 (Eleventh Circuit treated Oasis forum clause as severable and enforced it)
- Muzumdar v. Wellness Int’l Network, Ltd., 438 F.3d 759 (court should decide whether it is proper forum before resolving contract validity)
- M.B. Rests., Inc. v. CKE Rests., Inc., 183 F.3d 750 (forum-selection clauses enforced absent undue hardship or invalidating reasons)
- Servewell Plumbing, LLC v. Fed. Ins. Co., 439 F.3d 786 (federal law applied to forum-clause enforceability where state law tracks federal standard)