*1 however, an we will ‘not strike down constitutional statute on the ba- otherwise BAKER, Attorney Thurbert E. General ” legislative illicit motive.’ alleged of an sis Georgia, Cathy Cox, of the State of Entertainment, F.3d at 1309
Artistic Secretary State, for the State O’Brien, at 391 U.S. 88 S.Ct. (quoting Georgia, capacities, in their official rejecting attempt an to cast Defendants-Consolidated-Defen- nudity ordinance was doubt whether dants-Appellees. effects). by secondary really motivated no basis for Because Zibtluda established No. 04-12420. concluding that the 2001 Ordinance was of Appeals, United States Court than to by any purpose motivated other Eleventh Circuit. secondary effects of adult ameliorate businesses, properly the district court re- June under interme- viewed the 2001 Ordinance scrutiny. diate
IV. CONCLUSION the 2001 affords an
Because Ordinance operate for a license to
aggrieved applicant
an adult entertainment business assur- prompt judicial of a decision and the
ance
County adopted the 2001 Ordinance to secondary
combat the effects of adult busi-
nesses, challenge to the 2001 this facial fails. The district court is
Ordinance
AFFIRMED.
BANKWEST, INC., America, Advance Georgia,
Cash Advance Centers of
Inc., Plaintiffs-Appellants,
Community Bank, First American State Georgia, LLC,
Cash Advance of Cash Services, Inc.,
America Financial America, Inc., First Cash Delaware, Creditcorp
Bank
Georgia, LLC, County Bank of Reho Beach, Delaware, Express
both Check LLC, Georgia,
Advance Consolidat
ed-Plaintiffs-Appellants, *3 Bernstein, LLP, Columbia, SC,
Adams & Plaintiffs-Appellants and Consolidat- ed-Plaintiffs-Appellants. Baker, Byrd, Sidney E. Isaac
Thurbert Barrett, Jr., Atlanta, GA, for Ray Defen- dants-Consolidated-Defendants-Appel- lees. Jr., McIntyre, Chrys T. D. Lem-
James on, Firm, PLLC, McIntyre Washing- Law *4 ton, DC, Community for Financial Services America, Ass’n of Amicus Curiae. Busby, Erin Bracewell & Patter- Glenn son, L.L.P., Houston, TX, L. for Robert Clarke, Amicus Curiae. Zuckerman, AARP
Deborah M. Founda- DC, Litigation, Washington, tion AARP, Inc., Legal Society, Atlanta Aid America, Georgia Consumer Federation of Legal Program, National Services Ass’n Advocates, Consumer National Consumer Center, Law Amici Curiae. CARNES, HILL,
Before HULL Judges. Circuit HULL, Judge: Circuit loans, payday This case concerns which averag- are small loans with interest rates ing APR pay- 400-500% due on the next day. appeal presents question This Verbonitz, Zucker, Susan Marc J. Weir Georgia may regulate whether the State of Partners, LLP, & Alan Kaplinsky, S. Jere- segment a narrow agency agreements Rosenblum, Levin, Ballard, my T. Mark J. payday between in-state stores and out-of- LLP, Spahr, Ingersoll, Andrews & Phila- Georgia state banks or whether the Act in PA, Eiselstein, delphia, P. William Miller preempted by § issue is of the Fed- Martin, PLLC, Willis, Christopher & J. (“FDIA”), Deposit eral Insurance Sinkfield, Richard H. Daniel D. Zegura, 1831d(a). U.S.C. Hardin, LLP, Larkins, Rogers & John K. issue, inAct Ga.Code Ann. Jr., Chilivis, Cochran, Bever, Larkins & (2004), §§ 16-17-1 LLP, Russ, targets to 16-17-10 King Spalding, Michael C. & precludes Bartlett, E. A. businesses in-state Campbell, Charles Robert Norman, Long, Atlanta, GA, payday directly making stores from Aldridge pay- & Larry Jr., Parker, Poe, Dwight Floyd, day Georgia. challenges loans in No one Rather, the out-of-state banks Georgia. in-state stores preclude Georgia’s pay- making from in contract- payday banks loans even offer rates. high these day loans at independent, payday local stores ing with plaintiffs. that form the second set prohibition, howev- this direct To avoid agency into er, have .entered payday stores plaintiffs corpora- The second set whereby procure the stores agreements America, tions, First such as Advance loans for payday such Georgia, American Cash Advance of Cash nonetheless, predominate retain but Services, Financial and others America stop in loans. To economic Georgia. stores in operate payday pay- the Act restricts in-state practice, this or sub- payday These stores are agents for out- acting day stores Rather, these of banks. sidiaries one, circumstance: limited of-state banks wholly independent businesses stores are grants the agreement where Georgia. For physical with locations predominate “the economic instate operates 89 example, Advance America loan, bank’s which interest” Georgia. stores means that the parties agree 50% of the revenues hold more than stores operate *5 § 16- Ann. the loan. See Ga.Code from In many in states. some Georgia but 2(b)(4). type one Georgia outlaws this 17— states, there is no limit on the interest rate in-state prevent agency agreement may charge a borrower. payday a store circumventing from Geor- payday stores states, In there is no need for these such usury reaping and enormous gia’s laws them- plaintiff payday stores to associate payday loans. revenues Rather, with out-of-state banks. selves plaintiffs’ court denied the The district money directly they permitted to loan enjoin- injunction preliminary for a motion rate charge any and to borrowers Act. ing the enforcement they wish. con- argument, we After review and oral contrast, Georgia’s usury pres- In laws court did not abuse that the district clude plaintiff pay- problem a for the ent serious denying plaintiffs pre- in its discretion Georgia, In the maximum le- day stores. liminary-injunctive relief. (“APR”) rate percentage gal annual $8,000 is 16%. See Ga. or less loans I. FACTUAL BACKGROUND 7-4-2(a)(2).2 means This Ann. Code case, of this complexity Given limited to the 16% store is' payday that a players, principal first outline the law if it at- under provided APR issue, fed- and the relevant agreements to its cus- money directly to loan tempts eral and state law. However, under tomers. Principal Players The FDIA, A. is 'author- a state-chartered of interest allowed charge the rate ized plaintiffs sets of There are two distinct in charter state the laws of its under plaintiffs is this case. The first set in Thus, business. state where does other Community such as the out-of-state is not limited Geor- an out-of-state bank out-of- and BankWest.1 The State Bank gia’s cap. in physical locations 16% banks have no $3,000 involving more than 2. For loans term “out-of-state 1. When we use the bank/’ per referring legal "State-chartered insured of interest we are to a maximum rate 5% 7-4-18(a). the FDIA that depository institution” under See Ga.Code Ann. month. Georgia. a state other than chartered in is, in in Accordingly, payday essentially, the local The defendant this case below, arrangements Georgia. into As this case have entered State discussed to serve as their Georgia prohibits Georgia- with out-of-state banks State of so, businesses, By doing pay- agents Georgia. plaintiff licensed such as the (1) marketing procuring day payday making stores are stores from (2) borrowers, al- high-interest directly rate loans loans acting paid predomi- lowed in the charter states of the out-of- when state banks. nate economic interest loan. scenario is that a borrower typical B. The Contracts a goes Georgia, store receives types plaintiff Just as there are two $500, single payment up loan case, types this there are two of contract. signs promissory agreement note or loan First, there is the contract between the identifying the out-of-state bank as the out-of-state bank and the borrower. The receiving lender. At the time of the loan relationships between the out-of-state proceeds, gives often borrower governed by banks and the borrowers are post-dated store a check for the written loan contracts. the consumer repayment charge. loan plus finance loan contract provided by plaintiff Ban- forty-five days, loan matures within four to kWest, which we have been led to believe usually payday. on the borrower’s next typical, BankWest is identified as “the day, repay On the borrower must America, Lender” and Advance principal, plus charge a finance 17% store, is identified as “the fiscal principal, depending 27% of the on the The loan con- *6 marketer/servicer.” term of the loan. When the finance loan, tract discloses the APR the the APR, charge is calculated as it far charge, total finance the amount of the permitted exceeds the maximum under loan, and the total amount that will have to fact, In charges law. the on a repaid by be the page borrower. The first typical payday two-week loan have an APR contract, of the loan which contains all of between 442% and 520%. loan, the financial signed by terms of the payday The many physi- stores maintain only Thus, the borrower and BankWest.3 pay cal locations in and all costs BankWest, lender, as the sets the terms maintaining associated with those loca- and features of the loans. tions, rent, costs, including equipment Second, entirely sepa- there is also the costs, taxes, staffing advertising. and Al- rate contract between the in-state though the out-of-state bank advances the store and the out-of-state bank. It is the funds, initial loan the stores mar- in-state payday stores’ relation- loans, ket the process applications, collect ships that the State of has at- maturity, loans after reports submit about tempted regulate, but when the bank, the loans to the out-of-state and predominate store retains eco- payments remit the loan to a local bank nomic the loan revenues. account in the out-of-state bank’s name. later, As detailed stores effec- agreement plaintiffs between Ad- (an store) tively do all the work and retain 81% of vance America (an bank) the loan revenues. and BankWest is in borrower, page 3. The signed by second and final of the loan con- which must be Ban- kWest, tract agreement, contains an arbitration and Advance America. lated. If the loan loss 8.5% less led to record, have been again charges finance total amount of the agree- Under the typical. it is believe : loan) (which 17% of the over for all costs pays America ment, Advance loss.7 absorbs period, then BankWest and em- its storefront locations related BankWest absorbs the first That means procures Advance America ployees.4 17%) (8.5% of the total loan 1.45% application a loan and submits borrower However, if the loan ex- amounts. loss (or approves then BankWest BankWest. charges, finance Ban- 8.5% of the ceeds denies) all and advances application to Ad- the amount owed kWest reduces third- separate uses funds. BankWest services vance America its (referred to agent” processing party “loan made. of the total loans up excess to 13.8% record) to electroni- “Tele-Track” words, absorbs the In other BankWest applications.5 cally approve they up point to the where loan losses addition, pay does not a borrower loans, Ad- equal 1.45% the total loan, transfers agreement back the absorbs the losses to vance America America.6 loan loss to Advance part of the they up exceed 1.45% 13.8% extent months, the total amount Every three exceed the total If the losses loans. loans, Advance America total BankWest bears loans that 13.8% the BankWest loss) (known loss.8 remaining risk of is calcu- as loan cannot collect eight percent be and one half occupancy Loans shall all rental and include 4. The costs (8.5%) costs, the amount of the finance improvements, or less of up-front and leasehold Loans, costs, costs, charge charge as the finance printing processing equipment taxes, costs, Lending costs, costs, in the federal Truth in staffing is disclosed maintenance (the costs, *7 servicing the Loans as the laws collect- federal and state when with all by amount the dollar will be reduced undisputed that BankWest ing It is loans.- Rate losses exceed Loss wholly separate that the loan en- America are and Advance adjusted will be The Fees Standard. tities. quarterly on a with this Section accordance year is an automated-consumér-infor- to date 5. Tele-Track the calendar basis based on Advance, also that experience. mation database America loss Advance America in other states where uses the 14-month record reflects that 8.The for in its own name. makes loans filing for period just before motion initially, but the loans “owns” all Standard on the injunction, 6. BankWest "the Loss Rate any right third to sell a loan to Ban- aggregate portfolio retains the of loans made America, payday store approxi- party; Georgia Advance borrowers was to kWest Thus, any responsi- refusal on loan has a of first BankWest was mately 12.5%. to chooses sell. of all losses approximately BankWest ble 68% for turn, Ad- during period.” incurred and Ad- agreement between BankWest 7. The responsible approxi- for vance was America vance states: Thus, America it is not mately all loan losses. 32% agency agreement disputed between a standard to has established The Bank Ad- America makes and Advance ef- BankWest of collection the effectiveness monitor part the loan responsible for vance America re- America. Bank forts of Advance The payday loans. losses on the quires to the Bank on that loan losses Further, hereby stitution or agreement allocates the statute which is for largely preempted purposes to Advance America. of this sec- loan revenues tion, ... charge any on loan ... states that the maximum agreement $1,000 ... at the rate allowed the laws of any loan is and that amount the State where the bank locat- charged every for borrowers $17 $100 ed.... charge. That the finance borrowed.9 compensation is a
Advance America’s total 1831d(a). 12 U.S.C. servicing for “marketing and fee” $13.80 Georgia recognizes plaintiff that the out- every to a borrower.10 As a advanced $100 banks in of-state this case are authorized result, America, store, payday Advance charge high-interest of 400- rates ($13.80 $17) receives 81% out of of the loan 500% under the laws of their charter generated by charge. revenues the finance 27(a), states.11 Given cannot that, dispute fact parties do not regulate or restrict out-of-state banks act- agreements under their with the ing charging for themselves from these banks, plaintiff payday out-of-state high-interest rates out-of-state bank predominate stores have the economic in- in Georgia. Georgia loans does not dis- generated by terest in the revenues pute “any” “any means loan” of the payday loans issue. later, out-of-state explained bank. As this why Georgia exempted has The Relevant C. Federal and State Law throughout payday loan Act in 1. Federal Law issue. earlier, in Georgia, As noted there is a 2. State Law cap
16% on the interest rate that in-state Georgia says power What it has the stores, payday and even instate regulate in the Act are in-state $3,000. may charge for loans under Geor- (1) stores in these ways: prohibit two however, gia, prevent cannot an out-of- making pay- stores from charging higher state bank from its home- (2) borrowers; day directly loans state interest rates because restrict in-state acting stores from FDIA authorizes a state-chartered bank to exempt entities the one charge the rates allowed under circumstance where the in-state the laws of its charter state in other predominate store holds the in- economic Specifically, where does business. terest in the loans. FDIA “any covers loan” of the out- solely of-state bank but addresses the in- 2004, Specifically, April loan, terest-rate element of the as follows: legislature enacted Bill Senate prevent In order discrimination Ga. Laws now codified in *8 against deposi- State-chartered insured §§ Ann. Code 16-17-1 to 16-17-10. The institutions, tory ... such State bank Act findings contains that even though the ... may, notwithstanding any con- Georgia Attorney State General had deemed agreement actually 9. The states that the Community maxi- 11.Plaintiffs BankWest and State ($500) mum loan amount is "One thousand Bank are chartered in South Dakota. Plain- typo agreement [sic] dollars.” The in the is County tiffs First Bank of Delaware and Bank any not relevant to of the issues are dis- of Rehoboth Beach are chartered in Dela- cussing. permit ware. Both of these states their state charge high-interest banks to these rates of agreement A Exhibit to the states that Ad- 10. 400-500%. vance America’s fee for collected loans is per "$13.80 $100.00 loaned.” violates, $3,000 if or less” rates loans of loans with excessive payday usury things, Georgia’s laws. among existing state other previously illegal under to be (a)(1)(G).13 16-17-2(a), (a)(1)(E), §§ Id. Georgia Industri law, though the and even 16-17-2(a) § of the Act declares Although cease- had issued- Loan Commissioner al unlawful, § 16-17- stores, loans payday these payday to and-desist orders 2(a)(3) out- explicit exception an to grants their usuri continued have payday of the under this section of-state banks Ann. 16-17- Ga.Code practices. ous 16-17-2(a)(3).14 Ann. Act, Act. Ga.Code according See 1(b).12 of the purpose The Thus, out-of- prohibit Act does not contained within findings legislative to making payday state banks loans deterrents” it, “sufficient provide is to in high-interest Georgia. rates Id. activity cease.” illegal this “cause Further, purpose the main Geor- loans unlawful payday The Act declares lend- regulate Act gia is the Act declares Specifically, Georgia. in Act and not out-of-state banks. engage in ers any person to for it “unlawful from the defi- exempts out-of-state banks whole ... which consists in any business lend- lenders and nition of offering, arranging, making, part or 17—1(a);15 exempts making ing, explicitly agent an acting as or 16— (a) (2) (G) Paragraph of subsection of Code "payday declares that 12. simple upon having effect 7-4-2 in which lending an adverse Section elderly, greater percent per the economi- personnel, the military rate is not than annum; cally disadvantaged, and other citizens §Ann. 16—17— Georgia." Ga.Code (2) State of the terms are under loans lawful Such 1(c). of: 10, (A) Chapter "The of Title 1 of Article are declares that loans 13. The Act Solicitation Installment Home Retail any of Geor- they violate number unlawful Act”; Sales Specifically, gia's protection laws. consumer 10, (B) Chapter 1 of Title Article 16-17-2(a) states: Act”; or Sales "Motor Vehicle Finance any person en- be It shall unlawful (C) ,5 Chapter 3 of 12 of Title of Article Part business, form in whatever gage in 44, relating pawnbrokers.... to, transacted, including, but limited 16-17-2(a)(l)-(a)(2). §Ann. Ga.Code Internet, electronic, mail, telephonic or means, part in whole which consists or illegal unless Payday are loans acting offering, arranging, making, chartered under they a "bank are issued making of loans of by the insured another state and the laws of $3,000.00 (1) person Such less unless: Corporation ... Deposit Insurance Federal permit- engaging financial transactions operating of the fed- in violation [that] is pursuant ted to: charter to its applicable eral state laws (A) regulating institu- financial The laws 16-17-2(a)(3). §Ann. ....” Ga.Code. 7, Chapter Title under 1 of tions defined of Geor- Code Institutions the "Financial 16-17-l(a) lending 15. Section defines gia”; purposes of payday lenders for the (B) federally regulating state and The laws lending de- Payday Act. remainder unions; chartered credit funds "all transactions in which fined as 7, (C) Chapter relat- 1 of Title Article 13 of later date repaid at a to be advanced mortgages; ing residential 16-17-l(a). Payday lenders Ga.Code. Ann. (D) "Georgia In- Chapter Title 3 of engages in such who as "one are defined Act”; (E) Chapter 4 Title dustrial Loan *9 Id. The section first transactions.” usury; relating to and from the exempts Act then (F) Card Chapter Title "The Credit 5 of payday lending and payday of both Act,” definitions including fi- Bank Credit and Card 'payday “This definition states: lenders and who assignees and their nancial institutions exceptions incorporates the lending' expressly chap- operating violation of in said (a) subsections examples contained in ter; and prohibited-con- predominate out-of-state banks from the economic in 16-17-2(a) (b); sections, §§ duct it generated by revenues payday loans exempts provi- out-of-state banks from the residents, made to is a scheme regulating sion choice of law and choice of agent or contrivance which the seeks contracts, § forum in loan 16-17- clauses usury to circumvent ... statutes of 2(c)(1);16 exempts it out-of-state banks this state. monetary penalties §§ from the civil 16- 16-17-l(c). § Ga.Code. Ann. It is this sin- provisions 17-3 and 16-17-4 because those gle type agency or partnership relation- only §§ are limited violations 16-17- ship Georgia regulates by the Act. (b), exempt which out-of-state Georgia prevent has done so to in-state banks; it revokes the business license payday stores that keep predominate only they if engage businesses economic interest payday local loans in “payday lending,” the definition of which from circumventing Georgia’s cap by 16% 16-17-7, §§ excludes out-of-state partnering with out-of-state banks. 16-17-l(a); designates the site or loca- 16-17-2(b)(4) explicit Section of the Act “payday lending” tion where place takes ly “[a]ny arrangement by makes which a Georgia public nuisance and out-of-state [payday de facto lender purports to store] exempt banks are from the definition of agent entity act as the for an exempt [out- 16-17-l(a). 16-17-8, §§ payday lending, of-state unlawful bank]” the “entire cir short, In attempts regulate the Act in- cumstances of the transaction show payday lenders and not out-of-state holds, purported agent acquires, or banks. predominant maintains a economic inter prohibiting addition to pay- in-state est in generated by the revenues the loan." day making payday stores from loans di- 16-17-2(b)(4) added). § Id. (emphasis rectly, Georgia has agency declared ar- predominate economic interest re
rangements payday between stores and quirement is fulfilled one criteria: entities, exempt payday where the store payday in-state store receives over 50% of predominant has “the economic interest” Id}17 the revenue from the loan. revenue, in the loan to be an unlawful designed scheme or contrivance prohibited agency to allow Because the conduct payday 16-17-2(b)(4) the in-state § stores to circumvent subject excep- to the Georgia’s usury laws. Specifically, 16-17-2(a), Geor- § tions in the Act specifi- also gia cally exempts out-of-state banks from the 16-17-2(b)(4).
declares that reach of part- §§ the use of See id. 16- (b). 17-2(a)(3), nership agreements between in-state en- Again, targets the Act [payday tities stores, stores] and out-of-state conduct of payday in-state not out- banks, whereby the in-state holds of-state banks. (b) of Code plaintiff Section 16-17-2.” payday pre- Ga.Code. which the store has "the (a); 16-17-2(a)(3). Ann. 16-17-1 see dominate economic interest” in the revenues payday parties from the loan. The also do 17—2(c)(1) example, § 16. For dispute secondary agree- limited to that under the 16— above, "payday issue, explained lender.” As plaintiff the Act ments exempts out-of-state banks from the definition receive more than of the revenues 50% lender, thus, and, 16-17-2(c)(l) loan, and, thus, predomi- have the application has no to out-of-state banks. nate economic interest in the loan. thus, question, is whether can parties dispute
17. The preclude do not entering 16—17— stores from 2(b)(4) affects agency agreements. those transactions into these *10 HISTORY II. PROCEDURAL when application no Thus, Act has the or themselves act for banks out-of-state Act was Georgia the Immediately after (even pay- a an in-state through act 2004, 9, payday the stores April on enacted then 50% paid less who is agent) day-store a total of four filed and out-of-state If, loan. payday a from revenue of the Attorney Georgia against the lawsuits into enters however, out-of-state bank an State, Secretary of or General, the payday in-state an with agreement an them, seeking temporary restrain- both of payday independent the allows store permanent and preliminary and ing orders economic predominate the Act, store have enforcement injunctions against than 50% earning more (by interest that the declaratory judgments as well loan), payday the a payday revenue from apply to them the Act that provisions bank, is store, not the are law and by federal preempted are out-of-state Al- Act. under the damages for court con- liable district unconstitutional. empower not does argu- the Act though heard the four cases solidated directly an out-of-state in- preliminary for prosecute the motions ment on agree- party to the Act was scheduled principal as a Because the junction. the in-state ment, prohibit the dis- May does on the Act effect go into restraining an unlawful con- temporary pursuant a agent, acting trict entered court loans tract, collecting against the payday enforcement prohibiting from order procured 15, loans 2004. payday May until plaintiffs declares ab initio. store void are payday expira- scheduled days Two before § 16-17-3. Ann. See Ga.Code TRO, denied district court tion of the 17—2(d) im- a preliminary the Act for addition, § motions plaintiffs’ In 16— (1) injunc- an that: to enter injunction and refused on penalties poses court The district appeal.19 in their directly pending own tion loans make not demon- plaintiffs did (2) prohibited to make found that name; undertake or on merits of success likelihood themselves strate between a secondary agreements The district their claims. banks, any of whereby pay- as to and out-of-state the balance decided court also eco- predominate stores maintain day weighed favored in harms loans made nomic interest and that en- 17—2(d). injunction, issuing an against See id. name.18 the bank’s 16— injunction, the preliminary qualify for a To any bor- provides that individual 18. The (1) likeli to show: substantial had lenders whose class of borrowers rower or merits; (2) they on of success hood illegal con- pursuant to procured was injury irreparable without suffer would and an out-of- store between tract (3) injury out threatened that the injunction; for payday store "three sue the bank can injunction damage the weighed whatever any or other the amount times (4) Georgia; and cause the State would that, borrower,” court and the must charges to the issued, not be injunction would attorneys' fees as plaintiffs successful award Sea See Four public interest. to the adverse § 16-17-3. Ga.Code Ann. well as costs. Barr, 320 v. Consorcio & Resorts sons Hotels addition, bring may an action State Cir.2003). (11th "prelimi A F.3d vio- payday stores who against penalties civil extraordinary and dras injunction nary is an (b) (a) "equal to or three subsections late the mov- granted unless remedy to be tic charges to times amount persuasion” burden clearly carries the ant transactions.” in the unlawful the borrowers United States elements. four these Jef 16-17-4(a). Id. (11th Cir. County, 720 F.2d ferson however, penal- subject these civil 1983) (internal citation quotation marks and 16-17-4(a). ties in 16-17-3 omitted). *11 1300
joining enforcement of the Act would harm IV. DISCUSSION public interest. The district court did The plaintiffs' raised five claims in the find that plaintiffs irrepara- would be district court only but three of press them bly harmed if were enforced here. Those claims are that three them, against parties and the do not dis- (1) Act: preempted by pute finding.20 FDIA; (2) violates the dormant (3) Clause; Commerce violates the plaintiffs The appeal filed notices of Federal Act. Arbitration Before discuss- asking well as motions this Court to issue issues, ing these we address what defer- injunction pending appeal. We denied ence is due to Deposit Federal Insurance injunction for an pending motions (“FDIC”) Corporation positions regarding appeal but did expedite appeal. As preemption. now, things stand the Act has been in 25, 2004,
effect May since when the district A. Chevron expired. court’s extended TRO parties dispute position what
the FDIC has taken on the preemption
issue here. The out-of-state banks and
III. STANDARD OF REVIEW
point
to certain statements
generally
We
review the district
made
various FDIC officials suggesting
injunction
court’s denial
of an
for an
one
view and
points to various
Lines,
abuse of discretion. See Delta Air
other documents
it suggests
indicate
Ass’n, Int’l,
Inc. v. Air Line Pilots
238 that the FDIC has a different view on the
(11th
1300,
Cir.2001). However,
F.3d
1308
preemption
However,
issue.
the threshold
determinations of law
made
the course
issue for us is whether the FDIC’s view is
denying
a preliminary injunction are
Chevron,
entitled to deference under
U.S.A.,
reviewed de novo. Bailey v.
Coast
Inc. v. Natural Resources
Gulf
Defense
Inc.,
Council, Inc.,
Transp.,
1333,
(11th
837,
280 F.3d
467
2778,
1335
104
U.S.
S.Ct.
“
Cir.2002).
(1984).21
F.2d Preemption Field C. involves mat determination preemption “a it preemption, of the field expertise regard to With ... more within the ters not intended to of’ FDIA was expertise that the within is clear than courts regulation. of state bank “occupy need defer the field” agency, we administrative banks, the regarding preemp case of state-chartered In the opinion agency’s to an state Comm’n, that while 951 F.2d makes it clear FDIA itself Pub. Utils. Colo. tion. regula settled, turn federal subject some are to side issue banks 1579. That regu pre tion, “primary states remain determination our own now to partici state banks authority” latory over issue. emption deposit insurance FDIC’s pating Preemption B. 1813(r) See, §§ e.g., 12 U.S.C. program. as state supervisor” bank (defining “State types preemp
There are three
pri
entity
or other
with
officer, agency,
preemp
field
preemption,
express
tion:
authority
state
over
regulatory
mary
Express
tion,
preemption.
and conflict
1820(h)(1)(A)
(granting State
banks);
has
“Congress
when
occurs
preemption
authority
state
over
regulatory
supervisor
law
state
to preempt
its intent
manifested
govern
laws
respect
to state
with
banks
of the statute.”
language
explicitly in
and
lending
fair
things,
Inc.,
among other
Credits,
ing,
Am.
Gen.
Payco
Cliff
1831a(i) (providing
Cir.2004).
protection);
(11th
consumer
Field
1113, 1122
F.3d
of in
activities
governing
section
that the
regula
“federal
when
occurs
preemption
not be construed
banks “shall
state
sured
pervasive
field is so
legislative
in a
tion
State
authority of
limiting
as
Congress
reasonably infer
can
that we
more
impose
authority
supervisory
supplement
for the states
no room
left
”
restrictions”).22
stringent
arises ei-
preemption
....
Id. Conflict
provid-
protection
broad
to the
In contrast
heavy federal
emphasizes the
22. The dissent
NBA,
FDIA created
ed under
inappropri-
banking, but
presence
national
customers
protecting
purpose of
for the
FDIC
view,
role of
marginalizes the
ately, in our
deposit
making
insurance
by
banks
of failed
centerpiece of
banking
matters.
states in
lending
and federal
qualified state
available
banking
is the National
laws
the federal
above,
Nonetheless,
explained
as
institutions.
("NBA”), which estab-
Banking
of 1864
laws,
and the
FDIC
and state
states
FDIA,
state
are
national banks
lishes that
free
regulators of state
primary
remain
subject
federal bank-
and
interference
banks.
regulations.
banks
endowed
ing
National
heavy
that the
emphasizes
also
dissent
pow-
incidental
"all
law with
such
federal
banking and the
presence in national
federal
necessary
carry
be
ers
shall
inter-
of national
regulation
federal
excessive
§ 24 Sev-
banking.”
U.S.C.
business with the
as 1864
back
extend
far
est rates
However,
govern or
does not
the NBA
enth.
27(a)
NBA,
enactment
Furthermore,
is no
there
protect
banks.
state
However,
the NBA.
85 of
"mirrors”
FDIA
pow-
grant
"all incidental
corresponding
of nation-
rates
regulates
the NBA
is to
as there
FDIA
banks
ers” to state
(affecting
the FDIA
al
in the NBA.
national
banks)
until
enacted
was not
state
Council,
Although §
eign
363, 372-73,
authorizes state banks
Trade
530 U.S.
export
their
interest rate
home
to an-
120 S.Ct.
field does not preemption of the power State’s out-of- regulate state state banks using banks. independent agents, including stores, or other D. Preemption Conflict partnerships to make loans at their regard With to conflict preemp home-state in Georgia. rates tion, this is not a compliance case where Rather, the Act restricts with both the state and federal laws is banks from type one limited agen- impossible. inAs Barnett Bank Mar cy: using separate, business en- Nelson, Comity ion v. “[t]he two statutes tity Georgia predominant holds “a impose do not directly conflicting duties on economic interest” in the loan revenues. would, they [state] banks —as for example, 16-17-2(b)(4). Ga.Code Ann. said, ‘you federal law must [export addition, In the Act open leaves other your rate],’ home-state interest while the ” alternatives for out-of-state banks to ex- said, state ‘you may law not.’ 517 U.S. port their home-state 25, 31, rates to 1103, 1108, 116 S.Ct. 134 L.Ed.2d (1996). Georgia borrowers. Given Therefore, modern tech- pre conflict nology and emption question today’s communications turns on eco- whether the Act world, nomic “stands as an obstacle to out-of-state banks achieving ple- have a objectives law,” thora of Hughes federal distribution v. channels to use in Att’y Florida, Gen. 377 F.3d exporting their home state interest rates (11th Cir.2004) (citing Crosby v. Nat’l For- to Georgia borrowers. FDIA, NBA, expressly preserves unlike the banks. powers state's traditional over state Principles Statutory Interpretation language sum, nothing in the sole gives out-of-state codifies its Congress expressly When in- independent, to use exclusive form, our statutory intent preemptive or to define language analysis “begins with relationship with those their nature of Reilly, Tobacco Co. Lorillard statute.” conclude Consequently, 2404, 2415, 150 stores. 525, 542, 121 S.Ct. 533 U.S. preemption. conflict is no (2001). that there statutory Our task L.Ed.2d 532 guided also be
interpretation must 470, 484, Lohr, Medtronic, Inc. v. 518 U.S. Preemption Express E. 135 L.Ed.2d 116 S.Ct. 27(a) Preempts Law State (1996), Supreme 1. Section States where United that “ex statute addressed a federal Court *14 oc- above, preemption express stated As The Su law.” pre-empts state pressly its has manifested “Congress curs when express- that in such preme Court noted in explicitly law state preempt intent interpretation “our situations preemption Cliff, 363 the statute.” language of not oc language does preemptive] [the of 27(a) of the FDIA 1122. Section at F.3d Rather, that vacuum. cur in a contextual any State “notmthstanding states pre by two is informed interpretation hereby statute which constitution pre-emp the nature sumptions about of this sec- purposes for the preempted 485, 116 at 2250. at S.Ct. tion.” Id. may charge on tion,” out-of-state bank an indepen “First, States because the by the allowed the rate of any loan system, we in sovereigns our federal dent 12 U.S.C. its charter state. laws does Congress long presumed have 1831d(a). Therefore, obviously a this is § ..., par cavalierly pre-empt state-law preempts statute in the federal which case Con in those which ticularly [areas] state forms of law. some which a field legislated has gress Id. traditionally occupied.” have States express pre this is Because marks, (internal punctuation, quotation 27(a) case, preempts § “some emption omitted). situations, In such and citations laws on state and thing” precludes a narrow give the statute important it is question Accordingly, “something.” with to be consistent order construction 27(a) § preempts language of whether and historic concerns both federalism Congress Act, not whether id.; Ci See regulation. primacy of state legislation when state preempt intended to Inc., U.S. 505 Group, Liggett pollone 27(a). turn, pres this case § enacting L.Ed.2d 504, 518, 112 S.Ct. statutory inter sub-questions two ents earlier, (1992). states As noted be answered. that must pretation regulat traditionally regulators have state scope what is question is first banks, primary remain the ed state accomplished preemption express authority. regulatory 27(a)’s provides language which plain instruct- Second, has Supreme Court may charge ... ... bank that a “State statute, a federal interpreting al ed that ... at the rate any loan ... preempts expressly one that including the State where the laws lowed consider law, courts must federal state 12 U.S.C. located.” bank as these purpose, intent Congressional 1831d(a). is wheth question The second every pre-emption “touchstone are the scope Act falls within er the 485, 116 Medtronic, 518 U.S. at case.” 27(a). (internal quotation at 2250 any S.Ct. marks 3.on loan. omitted).
and citations The language of only refers result, any As understanding banks, state and does not address non- scope pre-emption of a statute must rest businesses, stores, such as primarily understanding on fair of con- all. gressional intent, purpose. Congress’ Even “any” as to loan of state course, primarily is discerned from the language of any does not mention language of the pre-emption statute and other element or term of the other “statutory surrounding framework” than interest rates. it Importantly, does relevant, however, it. Also is the struc- any activity mention collateral associ- ture purpose of the statute aas loan, ated with the such marketing,
whole, text, as revealed not advertising, solicitation, aspect of but through reviewing court’s rea- the loan procurement process. It does not understanding way soned in which mention collection practices associated Congress intended the statute and its Indeed, with the loan. disputed is not surrounding regulatory scheme affect consumer protection and fraud business, consumers, and the law. laws may regulate an out-of-state-bank’s 485-86, (inter- Id. at activities S.Ct. at 2250-51 associated with its Fur- loan. *15 ther, 27(a) omitted). § nal in quotation nothing regulates marks and separate citations contracts between out-of-state banks and Supreme The Court has out gov- set in-state vendors to which the borrower is erning framework courts follow. should (such not even party a as cases, In these our identify task is to here). agreements apparent The clarity of expressly pre-empted, domain because 27(a)’s § is, language least, at important an express definition of preemptive evidence legislative of intent. a supports reach of statute a reasonable So while an Georgia out-of-state bank in Congress inference that not intend did clearly can a payday make loan to at a pre-empt other 500% matters.... Because APR, State Georgia, nonetheless, of federal law is said to bar action in state may regulate an pro- out-of-state a bank’s field of traditional state regulation curement and collection practices in Geor- we on assumption work gia. 1820(h)(1)(A). § See 12 U.S.C. historic police powers of States superseded by to be the Federal Act vein, In the same the language of unless the clear and manifest 27(a) § in-state, does not mention non- purpose Congress. agents all, agents at or expressly permit Tobacco, out-of-state banks to 541-42, any Lorillard in- U.S. at use (internal state person business or S.Ct. marks, happens to quotation select as citations, omitted). agent. For example, punctuation Georgia and We has the 27(a). require payday now § turn to the stores language of be licensed and out-of-state banks could 27(a) Scope § 3. not use an in-state who is not li- According to plain language censed to do in Georgia. business There is 27(a), § the domain of expressly law 27(a) § no language addressing which 27(a) preempted by are state laws which local, may non-bank vendors properly act prohibit: agents as in loan transactions or under bank; 1. a State local, what circumstances non-bank ven- 2. from charging interest at the rate may dors so act. Nothing §in seeks State;
allowed the home regulate entirely separate agency (including out-of- banks precluded gia or out-of-state into between entered contracts banks) such felons employing Instead, state stores. banks or service third-party vendors Georgia re- as narrow quite scope funds, we would handle loan by out- providers element to one stricted such determining that difficulty have no rate.23 the interest banks: of-state preempted legislation was state Georgia Act 27(a). Geor- parties dispute k. None arrange- regulate agency ability gia’s the Geor- question'is whether next out-of- felons and ments between preemptive the above within falls Act gia Likewise, disputes no one 27(a). a sev- banks. contains state The Act §of scope busi- ability regulate in-state Georgia’s proceed we and thus erability provision, nesses, the local Act.24 such as through section-by-section this case. 27(a) expressly preempts Obviously, example, Therefore, question is whether For the first legislation. state
certain 17—2(b)(4), Act, that said particular legislation enacted Georgia had 16— on charge interest limitation cannot prohibited interest-rate “out-of-state Georgia’s than greater its borrow- any loan rates on BankWest loans between difficulty de- no would have cap,” agency regulation 16% a permitted ers legislation was such termining operating payday stores non-bank when 27(a). by § preempted expressly serve Georgia may properly banks.25 above, hand, discussed the other On variety of collateral regulate can 16-17-2(b) (4) Section If loans. with associated activities fel- precluded legislation had enacted *16 reasons, conclude following For the being licensed of fraud ons convicted 17—2(b)(4) permit- the Act is a § of that Geor- in loan transactions 16— agents fiscal §Ann. 16-17-10. Ga.Code "[p]reemption states The dissent meaningless doctrine states be a would language of plain expanding the 25.In by statutes effectively federal rewrite could 27(a), theories: uses these two § dissent the this In adding or conditions limitations.” way “of restricting an is in-state case, a condi- Georgia not add Act does the Georgia principal” and that the getting at In- statute. to federal tion or limitation authority that indirectly the restrict herein, may not stead, Georgia Act the explained as directly by 27(a) banks gives § scope out-of-state the outside regulates conduct agents. In restricting of in-state the actions 27(a). making preemption § than Rather recognize view, implicitly suggests, we these theories our all-powerful force dissent directly en- regula- not does preemption the state's federal limit 27(a). by § authority granted is intended— upon to what croach of state tion 27(a)'. § that the scope of only support our conclusion preemptive They within the also 27(a) reach the does not language §of plain provides: severability provision 24. Act. In- by regulated conduct 27(a) nothing deed, says § language chapter any provision of this "If procurement collection the loan about by a found provision is application of such agents, nothing by agents and about practices Unit- competent jurisdiction in the court of in-state, agents out-of- less non-bank much to be or is found to be invalid ed States Instead, 27(a) directly restricts law, state banks. by then remain- superseded federal be so and cannot only interest-rate limitations be chapter shall not of this ing provisions preemption expanded to cause indirect affected, chapter shall continue this and entities, in-state agreement between agency person or circum- any other apply to stores, banks. and out-of-state payday as such stance.” ted agency limitation that applies any or to form agency have relationship agency agreement payday between in-state with non-bank vendors. There is also banks, and, thus, and out-of-state nothing in preempts a state’s 27(a). expressly by § not preempted local, power regulate non-bank entities operating within independent the state as First, nothing and most importantly, agents contractors or for an IT—2(b)(4) purports place any di- 16— Thus, bank. in the absence of some “clear rect limitation on interest rates out-of- and expression manifest” may Congressional state bank charge individual borrow- purpose Rather, may ers that States Georgia. regulate non- out- permitted of-state banks are charge stores’ relationships same home-state interest in Georgia effectively rates which enable the non-bank they were before the Act. As detailed stores to do what Congress permits out-of- above, Act repeatedly exempts do, state banks to the Georgia statute is out-of-state banks from not the defini- preempted. tion lenders and payday lending, plaintiffs in this case essentially but from other provisions various asking us rewrite to read as fact, 16-17-2(b)(4) Act. In even follows. Act itself place any does not limitation on In to prevent order discrimination entirely separate loan contract be- against State-chartered insured deposi- tween the out-of-state bank and the bor- institutions, tory ... such State bank rower. ... may, notwithstanding any State con- Second, above, as discussed there are stitution or statute which hereby many means which an out-of-state bank preempted for purposes of this sec- may issue loans to its customers tion, ... charge on any loan ... fact, Georgia. may out-of-state banks ... at the rate allowed the laws of continue to use and agency agree- State where the bank is located ments, including independent, local State bank may procure such these stores in Georgia. All that required using any local, loans separate, out-of-state banks and non-bank business an agent un- stores to continue with the exact same any agency der terms it selects. model business is for the two entities to *17 Rather, We decline do so. we decide alter agency contract between them so the express-preemption issue on the basis as to provide that store re- plain language of the statute as only ceives 50% of the revenue from the written. most,
payday loan. At the Act removes only one For all type agency agreement reasons, of that in- above we conclude 27(a) § state payday stores can that have with out-of- does not expressly preempt Therefore, 17—2(b)(4) state banks. nothing Act is Act, of which 16— more than a agency narrow limitation on precludes in-state stores from act- contracts between in-state payday stores ing agents for out-of-state banks when and out-of-state banks. the payday store predominate retains the economic loan.
Third, § refers to “State banks” certainly protects and subsidiaries, its var- 16-17-2(d) 6. Section of divisions, ious employees, and the like. Act Section does not or purport address protect an out-of-state ability bank’s exempts While the Act out-of- local, any use non-bank agents vendors as state banks from liability direct 16- 16-17-2(d) (emphasis Ann. Ga.Code. the remain- 17-2(d), discuss also must added). 16-17-2(d) parties because of der to prose- be used it could whether
dispute
penalties
dispute
do not
parties
and
an “aider
an out-of-state
cute
of
Act do not
violation
for
direct
store’s vio-
the instate
abettor”
banks. Subsection
apply to out-of-state
of
court
The district
deter-
the Act.
lation
(d)
language
begins with the
§ 16-17-2
of
out-
apply to
Act does not
that the
mined
subsection
“[a]ny
who violates
person
“aid or abet”
banks that
of-state
(a)
(b)
of a misde-
guilty
shall be
or
prohibited
into
by entering
16-17-2(d).
Because
Id.
meanor....”
Bankwest, Inc.
See
with them.
contracts
exempt
from liabili-
banks
out-of-state
n. 7
Baker,
F.Supp.2d
(a)
(b),
out-of-
and
an
ty under subsections
16-17-2(d) con-
(N.D.Ga.2004). Section
can
“any person” who
is not
state bank
provision
aid-and-abet
tains
(a)
(b). See id.
or
violate subsection
provides:
Act and
(b).
16-17-2(a)(3),
§§
(a)
subsection
violates
Any person who
for
However,
penalties
addition
(b)
guilty
shall be
this
section
Code
or
(a)
(b),
a violation of subsections
aggra-
high
of a
a misdemeanor
(d) goes on to
in subsection
third sentence
conviction thereof
upon
nature
vated
or abets
“[a]ny person who aids
for
by imprisonment
punished
shall be
guilty of a
is also
violation”
direct]
such [a
by a fine not
year or
than one
not more
16-17-2(d).
§Id.
misdemeanor.
$5,000.00
Each
or both.
to exceed
excep
grants
the Act
Although
a separate
be deemed
shall
transaction
banks
liability
out-of-state
tion
per-
Any
section.
of this Code
violation
(a)
(b),
the first and
and in
subsections
violation,
a
abets such
aids or
son who
(d), it does not
last sentences
subsection
or arbitration
any arbiter
including
the aid-and-
exception
a
grant
similar
guilty
be
likeivise
company, shall
(d).
argu
in subsection
One
sentence
abet
aggravated
high
misdemeanor of
throughout
because
ment is that
set
punished as
be
and shall
nature
appli
has no
or otherwise
exempts,
either
If a
has
person
in this subsection.
forth
to,
this Court
out-of-state
cation
of subsection
convicted
violations
been
legisla
conclude
should
(b)
(a)
on three
section
of this Code
to, exempt intended
ture also
con-
occasions,
subsequent
all
then
prior
liability as an aider-and-abet
pun-
felonies
shall be considered
victions
violations
stores’
$10,000.00
tor of
or five
by a fíne
ishable
body
However,
a legislative
when
Act.26
or both.
imprisonment
years
importantly,
exception. More
repeat the
logical to
argument
it is
is that
The fuller
*18
outset,
16-17-l(a),
§
language
"any person”
in subsection
at the
in
Georgia
Act
read
is,
manner;
(d)
that
because
lending
in a consistent
payday
payday
and
lenders
defines
"any person” for
is not
out-of-state bank
an
exempts out-
purposes of the
and
for the
sentence in
or last
purposes of the first
from both definitions.
of-state banks
(d),
should
subsection
16-17-l(a)
banks
exemption
§
for out-of-state
sen-
"any person” in the third
be considered
by
lending
payday
covered
applies
all
(d).
arguably
It
makes
tence of subsection
both
exceptions in
blanket
Act Given
exemption
direct
grant an
for
little sense
(a)
16-17-2(a)(3),
and
§§
and
16-17-1
§in
liability
16-17-
to out-of-state
(d),
ar-
§
16-17-2
statutory framework
16-17-2(b),
2(a)(3),
and
in
again
§
even
may not be
out-of-state banks
gument
16-17-2(d), only
last
first and
sentences
sen-
even the aid-and-abet
under
prosecuted
away
aider or abettor
as an
to take it
16-17-2(d).
§in
did
tence
(d)
that one sentence
because
subsection
“
16-17~2(a)
(b)
particular language
§§
‘includes
one sec who violates
or
shall be
tion of a statute but omits it in another
barred from collecting the indebtedness
Act,
generally
section of the same
it is
(2)
transaction;
created
said loan
said
presumed
legislative body]
acts
[the
(3)
initio;
loan transaction is void ab
and
intentionally
purposely
dispa
and
16-17-2(a)
any person
§§
who violates
or
” .
rate inclusion or exclusion.’ KP Perma
(b)
damages.
shall be liable for civil
Spe-
Make-Up,
Lasting Impression
nent
Inc. v.
states,
cifically, 16-17-3
part:
relevant
I, Inc.,
U.S.-,
542, 548,
125 S.Ct.
(a)
Any person who violates subsection
(2004) (quoting
We do note the State of and said transaction shall be void ab avows here that it has no intention of initio, any person violating pro- prosecuting out-of-state banks as aiders (a) (b) visions of subsection of Code ultimately abettors. We need not de- Section 16-17-2 shall in addition be lia- question Georgia cide this law because ble to the borrower in each unlawful provision even if the aid-and-abet in sub- transaction for three times the amount (d), written, permits section the State of interest or other charges to the prosecute banks as out-of-s.tate borrower. abettors, aiders and we conclude that sub- Ga.Code Ann. 16-17-3. out-of- Because (d) section is not preempted. §§ state banks are exempt under 16-17- power Because has the keep (b) and, thus, cannot violate sub- payday acting from (a) (b), section it is clear that the civil- agents for out-of-state banks in the limited damage penalty and the collection-of-in- circumstances where the stores retain the §in debtedness bar apply 16-17-3 do not predominate economic pay- to out-of-state banks. day loan, we conclude that the State of The remaining part §of 16-17-3 does prohibited is not reasonably impact out-of-state banks. If an in-state punishing such violators but also procured store a payday loan in those who aid and abet such violations. through bank’s name prohibited Section does not preempt legis- agency agreement with the out-of-state (1) lation imposing penalties on: bank, § 16-17-3 does make stores who illegal agency enter into agree- loan void in that limited circumstance. (2) ments; and out-of-state banks who aid Therefore, we must . consider whether and abet such violations. precisely This is 27(a). § 16-17-3 preempted by § 16-17-2(d) does, and, what therefore, it important It is to understand that is not preempted. Georgia Act does not void the 7. Section 16-17-3 the Georgia Act because of the interest rate on the loan. If procures store a high-inter-
Having that § concluded 16—17— 2(b)(4)’s est-rate loan for the out-of-state bank and prohibition of type one 16-17-2(d)’s revenue, does not retain agreement over 50% of the penalty § 16-17-3 has no violating application agency-agreement prohibition the out-of- *19 preempted by. 27(a), high-interest-rate not state bank’s loan. Rath- we next er, must Georgia consider whether has penalty- 16-17-3 of the instituted this —- Georgia Act preempted. voiding Section 16—17— the procured for loans loan— (1) provides 3 things: three any person by payday stores for out-of-state banks
1309
Like-
to the issue
their briefs.
attention
agreement.
agency
prohibited
under
wise,
resolve
issue.
this
payday
quickly
the
the loan due
voids
to.
law, § 16-17-
Georgia’s
violation
store’s
states
The Commerce Clause
agree-
agency
2(b)(4),
certain
prohibiting
Power ...
“Congress
[t]o
shall have
that
payday
loans.
procurement
in the
ments
among
...
the several
regulate Commerce
CONST,
all-
as
does not serve
an
I,
8,§
Section
art.
cl.
U.S.
States....”
an out-of-
protects
shield that
powerful
directly
Although the
Clause
3.
Commerce
procure-
what
loan matter
bank’s
no
well
Congress,
state
power
limits the
the
conduct
bank’s
or collection
ment
has
that the
Clause
established
Commerce
above, even
well;
in. As detailed
agent engages
as
“negative” aspect
a “dormant”
pri-
important
an
is,
FDIA reserves
Clause serves
that
Commerce
regulation
in the
permissible
role for the states
mary
“a
restriction
as
substantive
host state’s fraud
and the
commerce.”
state
of interstate
regulation
state
447,
apply
439,
laws still
111
protection
Higgins,
498
consumer
Dennis
U.S.
(1991)
host
865, 870,
969
operating
L.Ed.2d
S.Ct.
out-of-state
omitted).
(internal
loan-procure-
“This
payday
quotation
If the
stores’
marks
state.
host state’s con-
of the Commerce Clause
practices
‘negative’ aspect
violate
ment
laws,
Georgia has
then
protection
sumer
prohibits
protectionism-that
is,
economic
by the
procured
designed
loan
benefit
regulatory
to void the
measures
power
burdening
illegal
manner.
an
interests
store
in-state economic
payday
Energy
New
competitors.”
out-of-state
end,
preclude
no reason
In the
we see
Limbach,
269, 273-
486 U.S.
Ind. v.
Co. of
of its
punishing
from
violations
1807,
74,
1803,
1311
to be arbi-
require disputes
but does not
the course of
through
or otherwise
plaint,
it.29
party
if
elects
has suffered
trated
neither
he
“that
proceedings,
words,
fact”;
“some
in other
injury
breaches,
will
and
Maybe there
be
or
that is actual
legal
to a
harm
with those breaches
maybe in connection
hypothetical.”
imminent,
or
conjectural
not
arbitration,
maybe
elect
someone will
Servs.,
Family Fin.
wen
v. First
Bo
statutory pro-
happens
if that
Cir.2000)
(11th
Inc.,
F.3d
will be asserted and
question
vision
citation
(internal
marks and
quotation
maybe
enough.
is
See
But
applied.
omitted).
a plaintiffs
In the context
immi-
to
Having failed
demonstrate
id.
arbi
enforceability of an
to the
challenge
injury from
certainly impending
or
nent
agreement, we
in a loan
clause
tration
17—2(c)(2),
the out-of-
Ann.
Ga.Code
16—
allege
must
plaintiff
held that
have
lack stand-
state banks
stores
the lender
arbitration between
that an
It neces-
provision.
this
ing
challenge
to
“certainly
imminent or
the borrower
is
that the
court did not
sarily follows
district
(citing
Id. at 1340
Whitmore
impending.”
in denying them a
abuse its discretion
Arkansas,
110 S.Ct.
495 U.S.
injunction against enforcement
preliminary
(1990)).
1724-25,
L.Ed.2d 135
provision.
of the
‘maybe’
or
‘perhaps’
“a
simply being
There
agreement will
that the arbitration
chance
provision
contains another
that
The Act
give
to
enough
[the
is not
be enforced
the aid-
Specifically,
to arbitration.
refers
challenge its en
to
standing
plaintiffs]
17—2(d)
§of
ing
abetting provision
or
16—
in order
that
forceability.” Id.
It follows
“any
or arbitration
mandates that
arbiter
that
validity of a statute
challenge the
a
or
violation
company” that aids
abets
enforceability of an
to undermine the
tends
under
subject
sanctions
Act will be
must show
party
a
agreement,
arbitration
pay-
the Act. The out-of-state
enforcing
agree
to its interest
harm
16-17-2(d)
day
argue
imminent. The
or
is actual
ment
it is “re-
by the FAA because
preempted
injunction against en
seeking an
party
FAA.
to the
pugnant”
must
of the statute
show
forcement
arbitration,
ap
prerequisite
a
which is
Georgia Act
clear from the
It
is not
statute,
imminent or
plication of the
amount
an arbitrator would
what action
enough that
It is not
certainly impending.
Act,
abetting a violation
or
aiding
and that
stat
may
there
be arbitration
why
Georgia General
apparent
nor is it
there is.
may
applied
be
ute
arbi-
specially include
Assembly saw fit to
abetting provision.
aiding
trators in
not met their burden
plaintiffs
have
validity of a
Although
question
we
al-
They have not
regard.
even
in this
subject an arbitrator
regulation that would
in their motion
complaint
leged
their
deciding
liability merely for
injunction that
preliminary
with the arbi-
in accordance
loan dispute
oc-
agreements
of the loan
have
breaches
contract,
loan
in a
tration clause
They
have
are imminent.
curred or
issue, because
not decide that
we need
there
if there are breaches
alleged
pay-
nor
out-of-state banks
neither the
gives
agreement
arbitration.
will be
are arbitrators.
day stores
to elect arbitration
party
either
before,
have been led to
er. As we stated
referring specifically
arbitra-
We are
typical.
agreement
agreement
portion
between
believe that this
tion
America,
BankWest,
and the
Advance
borrow-
*22
provided
right
in this case will never be
that
plaintiffs
The
exists “notwith-
prosecuted or sued as arbitrators for act
standing any
constitution or
State
statute
in
the Act.
ing
contravention of
There
hereby preempted
pur-
which is
for the
fore,
payday-
the out-of-state banks
poses
Congress
of this section.”
Id.
injury-in-fact par
stores have asserted no
probably thought
using
that
lan-
broad
them,
ticular to
see Steel Co. v. Citizens for
in-
guage
right
to create the federal
Env’t,
83, 103,
a Better
523 U.S.
118 S.Ct.
serting
unequivocal
a clear and
preemption
(1998),
L.Ed.2d 210
nor
140
protect
right
clause to
that
from state
they alleged facts sufficient to stand
have
so,
enough.
interference would be
If
it
place
of the arbitrators. See Pow
underestimated the
Georgia’s
State of
de-
Ohio,
410-11,
ers v.
499 U.S.
S.Ct.
termination to evade federal law and the
(1991)
1364, 1370-71,
113 L.Ed.2d
willingness
permit
of this Court to
states
(holding
litigant
that
in
for a
order
to do so.
a
bring
party,
an action on behalf of
third
majority opinion attempts
The
to paint
(1)
litigant
must demonstrate
he
this case as one which a
cun-
bunch of
fact,’
‘injury
giv
has “suffered an
thus
ning cash advance stores
purchased
have
ing
‘sufficiently
him or her a
in
concrete
authority
of out-of-state
part
banks as
terest’ in the outcome of the
issue
dis
(2)
pute”;
get
Georgia’s
“a
their scheme to
around
he has
close relation to the
(3)
party”;
third
there is
hin
usury
picture,
“some
laws.
In this
BankWest
ability
party’s
pro
drance to the third
and other out-of-state banks are not real
(internal
tect his or her own interests”
players
only
but
instead
passive pawns
omitted)).
short,
citations
the out-of-
that lease their charters to the cash ad-
state banks and
stores lack stand
stores;
actually
vance
those stores are
ing
challenge
provisions.
the arbitration
lenders, perform
functions,
all the critical
risk,
carry most of the
and to use the
V. CONCLUSION
majority’s phrase “effectively do all the
reasons,
For all the
above
conclude
Ante,
work.”
at 1294.
a pretty
That’s not
the district court did not abuse its discre-
picture, but neither is it
one the record
injunction.
tion in denying
preliminary
a
supports.
this case
AFFIRMED.
The record shows that it is the
stores,
and not the cash advance
per-
CARNES,
Judge, dissenting:
Circuit
form the critical loan
par-
functions. The
Congress
providing
enacted
statute
agree
ties
that BankWest and Advance
any
may “charge
state-chartered bank
exemplars
America are
of the out-of-state
on
loan ...
...
interest
at the rate
banks and their
agents,
and the
allowed
laws of the State
where
record contains the contractual agreement
located.”
U.S.C.
agreement,
between them. Under that
it
1831d(a).
Everyone agrees Congress
provides
BankWest that
all of the funds
intended to ensure that the maximum in-
pro-
are loaned. Advance America
BankWest,
terest rate a bank like
which is
vides none.
It is BankWest that deter-
Dakota,
charge
chartered
can
South
mines which borrowers will receive a loan
loans made in
higher
another state is the
because, as an undisputed affidavit estab-
permitted
law,
rate
under South Dakota
lishes,
discretion,
“in
BankWest
its sole
not the lower rate that
the other state
determines all underwriting criteria that
prefers.
prevent
To
states from interfer-
ing
with
must be
charge higher
prospective
satisfied
borrow-
created,
rates that
Congress explicitly er.” Advance America has no control over
sets,
and BankWest records them
such
criteria that BankWest
underwriting
financial statements.”2
on the bank’s
to these loans.1
applies
bears no risk of loss of
Advance America
also
that “BankWest
affidavits show
it advances none of the
principal, because
discretion,
terms
establishes,
in its sole
all of the
BankWest advances
principal.
loans,
including the
and features
bears all of the risk that
principal and
amounts,
charges,
fees and
risk of
principal will be lost.
loss
terms,
rate,
credit
limits
repayment
*23
part
for
America has is
Advance
contrast, “Advance
By
standards.”
credit
(the
charges).
loan revenues
finance
authority
over
has no control
America
underwriting
process,
approval
loan
assign-
the contractual
loss
way
The
criteria,
terms,
standards or
credit
credit
out in the real world of
played
ments have
of the loans
and conditions
the terms
Georgia
be-
is that Ban-
cash advance loans
Georgia
its
borrow-
tween BankWest
much of the loan
has borne twice as
kWest
that,
America
only
Not
but
ers.”
Advance.
America.
record con-
loss as Advance
The
agreement.
the loan
party
a
to
is not even
the actual
this sworn statement about
tains
Instead,
prom-
is a
Agreement
Loan
period
“[t]he
data for the fourteen-month
loss
the borrower
note between
motion for
issory
just
filing
before
BankWest, which, among
things,
other
January
injunction:
period
“For
lender
is the
clearly
through February
states that BankWest
Loss
loan,
to
obligates
aggregate portfolio
the borrower
on the
on the
Rate Standard
to BankWest
made
the loan with
of loans
Bankwest
repay
maturity
approximately
date.”
was
12.5%.
the stated
borrowers
on or before
Thus,
responsible
ap-
legal
have a
BankWest was
America
Nor does Advance
Instead,
all loan
incurred
68% of
losses
proximately
receivables.
to the loan
So,
Amer-
period.”3
Advance
during
as-
are BankWest’s
loan receivables
“[t]he
use in
than the out-of-state banks
opinion says
criteria
majority
that BankWest
1.The
"Tele-Track,”
Georgia.
third-party loan-process-
a
uses
loans,
disapprove
ing agent
approve or
implication
questionable
what is
2.
In
more
also uses Tele-Track
that Advance America
majority opin-
misrepresentation,
than
America makes loans
states where Advance
“Accordingly,
local
says that:
ion
Ante,
& n. 5. We
name.
its own
arrange-
case have entered into
stores in this
may
significance
fact.
It
of that
not told
to serve as their
with out-of-state banks
ments
also
and Advance
be that BankWest
America
Ante,
Georgia.”
at 1294. That
agents in
copy
or the
machine
use the same brand
sought
though
sounds as
carrier,
what?
long-distance
but so
same
nothing in the record
There is
out the banks.
majority may
hoping that some
be
The
be
sought out whom.
It would
who
show
Tele-
from the fact that
readers will infer
say
banks entered
just
accurate to
that the
apply
commonly
a lender’s
Track is
hired
to serve
arrangements with those stores
into
and Advance
fact,
criteria that BankWest
Georgia.
agents in
an
as the banks’
criteria. The rec-
use the same loan
America
way:
put
record does
it that
in the
affidavit
support at all for that infer-
provides no'
ord
with Advance America
"BankWest contracted
ence;
underwriting
what
it is silent about
agent
fiscal
authorized
to act as BankWest’s
making
uses when
criteria Advance America
acting
for a
itself instead of
loans
help.
record, however,
explanation will
Maybe
more
a little
does show
The
lender.
up
losses
responsible for loan
was
something
subject
three other
BankWest
about
charges.
percent
the finance
8.5
to the first
that serve as
cash advance stores
percent of the
loss was 12.5
Because the loan
It shows that
agents for out-of-state banks.
responsi-
was
charges, and BankWest
finance
states that
are located in
when those stores
percent
8.5
loss on the first
directly
ble for the loan
type of loan
them to make this
allow
percent
charges,
consumers,
underwriting
it shouldered
the finance
they
different
use
Congress’
explicitly
than one-third of the loss-
command is
[when]
ica suffered less
”
es,
language
than two-thirds.
in the statute’s
....
BankWest more
stated
Lines, Inc.,
Air
Shaw v. Delta
463 U.S.
facts, then, are that BankWest is
95, 103 S.Ct.
None of this is than charge higher interest rates agents of reasonably regulate Only Ban- state law allows. because long so as it does so on Amer- arrangement with Advance kWest’s that it regulates agents the same terms federally granted ica serves to further its example, Georgia For in-state banks. authority does want using agents banks from wants to forbid *28 It to felonies, “regulate” relationship. that wants noth- who have been convicted 27(a) relationships “regulate” principal-agent prevent doing §in would it from ing 27(a) § rights to effectuate the But that would have to be used prohibition so. "Indeed, expanded language limitations and cannot be so majority states: rate 7. The the 27(a) says nothing pro- § about the loan preemption of the cause indirect by agents practices curement or collection entities, agreement such as between in-state in-state, nothing agents, about much less stores, Ante, and out-of-state banks.” agents banks. In- non-bank of out-of-state original). (emphasis in at 1305 n. 25 stead, 27(a) directly § restricts interest-
1319 injunction Temperance prong preliminary deter- way that the American same “regulate” mination, alcohol. League wanted which is a likelihood substantial of success on the merits. As for the sec- that wrong. The fact get Don’t me found, prong, ond the district court 27(a) Georgia Act’s at- preempts § the Georgia dispute, the State of does not an out-of-state bank’s tempt to restrict agents the banks and their have sufficient- ability export rates does transaction where an out-of- mean that ly irreparable demonstrated harm. a non-bank associates with state bank In third analyzing prong, the district Georgia protected, is even injury court found that the threatened If, relationship clearly is a sham. under the out-of-state banks and their in-state law, actually a a transaction is not federal outweigh damage did not an out-of-state bank within the loan from injunction would cause to the citizens of 27(a), then the bank does not meaning of of Georgia, the State and as a result that export its charter state’s have they had not met their burden on this 27(a). is, how- interest rate under That prong. the three sentences devoted to ever, un- an issue that must be answered topic, summarily this the district court law, not under state law. der federal injunction against the loans found enforce- Georgia argued “[a]n has not are shams under fed- permit involved this case ment of Act would lend- law, attempted to' use eral but instead has collecting ers to continue exorbitant statutory federal state law to redefine amounts of interest from thousands of terms, something may it not do. which is can ill it.” Georgia citizens who afford BankWest, Baker, Inc. v. 324 F.Supp.2d recognize policy
I concerns serious (N.D.Ga.2004). finding 1357 That that motivated the General As assumes, only if if I defensible one as the dis- sembly legislation, to enact this concluded, Congress might support I well an trict court had that the were 27(a) 27(a). grounds. amendment of by § expressly preempted those Act is not Congress. But I am not in Neither are preempted, changes But and that my colleagues majority who are two Circuit, things. In the words of the Fifth duty interpret in this case. Our is to “[sjince Congress expressly preempted enacted, Congress has not to laws regulation, the states are not this area of policy through them to our views shape no injured by injunction” and “there is Any com “quite interpretation. narrow” injury weigh.” to the See Trans states effects of plaints policy about Airlines, Mattox, F.2d Inc. v. 897 World from, are, phrase Supreme to borrow (5th Cir.1990), holding recognized case, banking in another “better ad Court grounds by v. as limited on other Johnson Congress to the than to dressed wisdom Cir.2000). (5th Univ., 214 Baylor F.3d 630 judgment Marquette of this Court.” re- analysis The same holds true with Minneapolis Nat’l Bank First of Corp., gard prong prelimi- Serv. to the fourth Omaha U.S. (1978). 540, 550-51, L.Ed.2d 534 analysis. Issuing S.Ct. an in- nary injunction junction the-proper operation of to ensure expressly preempts Because public federal law is not adverse to the regard regulation to its with public interest. See id. by out-of-state charged of interest rates by applying law as best served federal banks, I would hold that the out-of-state *29 language of express directed met agents banks and their in-state have 27(a). first demonstrating their burden of and their out-of-state banks
Because the their have met burden preliminary prongs of of the four
each court the district analysis,
injunction grant failing discretion
abused its According- injunction. preliminary
them
ly, I dissent. Adkins, ADKINS, Plain Jill
Lucius
tiffs-Counter-Defendants-Ap
pellants, JV, LLC, Cagle- d.b.a. FOODS
CAGLE Foods,
Keystone Defendant-Counter-
Claimant-Appellee, Inc., Farms, Inc.,
Cagle’s, Cagle’s
Defendants-Appellees.
No. 04-11447. Appeals, States Court
United
Eleventh Circuit.
June 2005.
As June Corrected Notes Rate advertising. agree- box contained in the "Loss signage Standard”). agrees to Advance America Amer- BankWest and Advance ment between allowing Loss Rate Standard its collec- any provisions meet the not contain ica does train, ef- Advance America's collection Ad- tions. If supervise, or monitor BankWest Standard do not meet this Loss Rate with the forts employees who deal vance America's Bank, (as Further, Fees established the loans. and collect borrowers below) 2(g) be Section term is America defined agreement provides that Advance marketing and paid America for complying Advance duty responsibility of has the Bank’s fiscal