936 F.3d 1174
11th Cir.2019Background
- Borrowers entered identical small-dollar (typically < $3,000) contingent litigation-advance loan agreements with Oasis entities; repayment depended on recovery in underlying personal-injury suits.
- Agreements contained a forum-selection clause designating Cook County, Illinois, and a class-action waiver.
- Borrowers filed a putative class action in Georgia alleging violations of the Georgia Payday Lending Act (PLA), the Georgia Industrial Loan Act (GILA), and state usury laws.
- Oasis removed to federal court and moved to dismiss under the forum-selection clause and to strike class allegations under the waiver.
- The district court held both the forum-selection clause and class-action waiver unenforceable under Georgia public policy and certified for interlocutory appeal.
- The Eleventh Circuit affirmed, concluding Georgia statutes (PLA and GILA) express a strong public policy forbidding out-of-state forum-selection clauses in payday loans and preserving class actions as a statutory remedy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of forum-selection clause | Forum clause violates Georgia public policy (PLA forbids designating out-of-state courts) | Clause is valid and requires litigation in Cook County, Illinois ("county" includes lender's county) | Unenforceable: PLA and Georgia decisions evince clear policy prohibiting out-of-state forum-selection clauses in payday loans |
| Applicability of PLA to out-of-state lenders | PLA applies to loans to Georgia borrowers even if lender is out-of-state | PLA excludes loans involving interstate commerce or out-of-state lenders | PLA applies: statutory text and Georgia Supreme Court precedent show PLA covers such loans and forbids forum-selection avoidance |
| Enforceability of class-action waiver | Waiver contravenes PLA and GILA because both contemplate class remedies for payday lending violations | Waiver is permissible; procedural/substantive unconscionability or fee-shifting make waiver enforceable | Unenforceable: enforcing waiver would eliminate a statutory remedy contemplated by PLA/GILA and frustrate their purpose |
| Relevance of FAA/arbitration precedent | State public policy governs contractual waivers not in arbitration | Defendant relies on cases upholding waivers in arbitration (FAA preemption) | FAA inapplicable: waiver is not in an arbitration clause, so federal arbitration policy does not override Georgia public policy |
Key Cases Cited
- Marshall v. Baltimore & Ohio R.R., 57 U.S. 314 (1853) (common-law principle refusing enforcement of contracts contrary to public policy)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (grounds for refusing enforcement of forum-selection clauses)
- Atl. Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 571 U.S. 49 (2013) (forum-selection clauses normally given controlling weight)
- Rucker v. Oasis Legal Fin., L.L.C., 632 F.3d 1231 (11th Cir. 2011) (Eleventh Circuit precedent on forum-selection clause enforceability)
- Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868 (11th Cir. 2005) (analysis of class-waiver enforceability and unconscionability in consumer-loan context)
- W. Sky Fin., LLC v. Georgia, 793 S.E.2d 357 (Ga. 2016) (Georgia Supreme Court construing PLA to prohibit out-of-state forum-selection clauses)