Bankwest, Inc. v. BakerBankwest, Inc. v. Baker
Thurbert E. Baker, Isaac Byrd, Sidney Ray Barrett, Jr., Atlanta, GA, for Defendants-Consolidated-Defendants-Appellees.
James T. McIntyre, Jr., Chrys D. Lemon, McIntyre Law Firm, PLLC, Washington, DC, for Community Financial Services Ass‘n of America, Amicus Curiae.
Erin Glenn Busby, Bracewell & Patterson, L.L.P., Houston, TX, for Robert L. Clarke, Amicus Curiae.
Deborah M. Zuckerman, AARP Foundation Litigation, Washington, DC, for AARP, Atlanta Legal Aid Society, Inc., Consumer Federation of America, Georgia Legal Services Program, National Ass‘n of Consumer Advocates, National Consumer Law Center, Amici Curiae.
Appeals from the United States District Court for the Northern District of Georgia.
Before CARNES, HULL and HILL, Circuit Judges.
HULL, Circuit Judge:
1 This case concerns payday loans, which are small loans with interest rates averaging 400-500% APR due on the next payday. This appeal presents the question of whether the State of Georgia may regulate a narrow segment of agency agreements between in-state рayday stores and out-of-state banks or whether the Georgia Act in issue is preempted by
2 The Georgia Act in issue,
3 To avoid this direct prohibition, however, payday stores have entered into agency agreements whereby the stores procure such payday loans for out-of-state banks, but nonetheless, retain the predominate economic interest in the loans. To stop this practice, the Act restricts in-state payday stores from acting as agents for out-of-state banks in one, limited circumstance: where the agency agreement grants the in-state agent “the predominate economic interest” in the bank‘s payday loan, which the parties agree means that the payday stores hold more than 50% of the revenues from the loan. See
4 The district court denied the plaintiffs’ motion for a preliminary injunction enjoining the enforcement of the Georgia Act. After review and oral argument, we conclude that the district court did not abuse its discretion in denying the plaintiffs preliminary-injunctive relief.
I. FACTUAL BACKGROUND
5 Given the complexity of this case, we first outline the principal players, the agreements at issue, and the relevant federal and state law.
A. The Principal Players
6 There are two distinct sets of plaintiffs in this case. The first set of plaintiffs is the out-of-state banks, such as Community State Bank and BankWest.1 The out-of-state banks have nо physical locations in Georgia. Rather, the out-of-state banks offer payday loans in Georgia by contracting with independent, local payday stores that form the second set of plaintiffs.
7 The second set of plaintiffs are corporations, such as Advance America, First American Cash Advance of Georgia, Cash America Financial Services, and others that operate payday stores in Georgia. These payday stores are not banks or subsidiaries of banks. Rather, these payday stores are wholly independent businesses with physical locations in Georgia. For example, Advance America operates 89 payday stores in Georgia.
8 The payday stores operate not only in Georgia but in many states. In some states, there is no limit on the interest rate a payday store may charge a borrower. In such states, there is no need for these plaintiff payday stores to associate themselves with out-of-state banks. Rather, they are permitted to loan money directly to borrowers and charge any interest rate they wish.
9 In contrast, Georgia‘s usury laws present a serious problem for the plaintiff payday stores. In Georgia, the maximum legal annual percentage rate (“APR“) for loans of $3,000 or less is 16%. See
10 Accordingly, the local payday stores in this case have entered into arrangements with out-of-state banks to serve as their agents in Georgia. By doing so, the payday storеs are marketing and procuring the high-interest rate loans in Georgia allowed in the charter states of the out-of-state banks.
11 The typical scenario is that a borrower goes to a payday store in Georgia, receives a single loan payment of up to $500, and signs a promissory note or loan agreement identifying the out-of-state bank as the lender. At the time of receiving the loan proceeds, the borrower often gives the payday store a post-dated check for the loan repayment plus finance charge. The loan matures within four to forty-five days, usually on the borrower‘s next payday. On that day, the borrower must repay the principal, plus a finance charge of 17% to 27% of the principal, depending on the term of the loan. When the finance charge is calculated as an APR, it far exceeds the maximum permitted under Georgia law. In fact, the charges on a typical two-week payday loan have an APR between 442% and 520%.
13 The defendant in this case is, essentially, the State of Georgia. As discussed below, the State of Georgia prohibits Georgia-licensed businesses, such as the plaintiff in-state payday storеs from (1) making payday loans directly to borrowers, and (2) acting as agents when paid the predominate economic interest in the payday loan.
B. The Contracts
14 Just as there are two types of plaintiff in this case, there are two types of contract. First, there is the contract between the out-of-state bank and the borrower. The relationships between the out-of-state banks and the borrowers are governed by written loan contracts. In the consumer loan contract provided by plaintiff BankWest, which we have been led to believe is typical, BankWest is identified as “the Lender” and Advance America, the payday store, is identified as “the fiscal agent and loan marketer/servicer.” The loan contract discloses the APR of the loan, the total finance charge, the amount of the loan, and the total amount that will have to be repaid by the borrower. The first page of the loan contract, which contains all of the financial terms of the loan, is signed by only the borrower and BankWest.3 Thus, BankWest, as the lender, sets the terms and features of the loans.
15 Second, there is also the entirely separate contract between the in-state payday store and the out-of-state bank. It is the in-state payday stores’ agency relationships that the State of Georgia has attempted to regulate, but only when the payday store retains the predominate economic interest in the loan revenues.
16 The agreement between plaintiffs Advance America (an in-state payday store) and BankWest (an out-of-state bank) is in the record, and again we have been led to believe that it is typical. Under the agreement, Advance America pays for all costs related to its storefront locations and employees.4 Advance America procures the borrower and submits a loan application to BankWest. BankWest then approves (or denies) the application and advances all funds. BankWest uses a separate third-party “loan processing agent” (referred to as “Tele-Track” in the record) to electronically approve applications.5
17 In addition, if a borrower does not pay back the loan, the agreement transfers part of the loan loss to Advance America.6 Every three months, the total amount of BankWest loans that Advance America cannot collect (known as loan loss) is calculated. If the loan loss is 8.5% or less of the total amount of the finance charges (which are 17% of the loan) over that period, then BankWest absorbs the loss.7 That means BankWest absorbs the first 1.45% (8.5% of 17%) of the total loan amounts. However, if the loan loss exceeds 8.5% of the finance charges, BankWest reduces the amount owed to Advance America for its services by that excess up to 13.8% of the total loans made. In other words, BankWest absorbs the loan losses up to the point where they equal 1.45% of the total loans, and Advance America absorbs the losses to the extent they exceed 1.45% up to 13.8% of the total loans. If the loan losses exceed 13.8% of the total loans, BankWest bears the remaining risk of loss.8
C. The Relevant Federal and State Law
1. Federal Law
19 As noted earlier, in Georgia, there is a 16% cap on the interest rate that in-state payday stores, and even in-state banks, may charge for loans under $3,000. Georgia, however, cannot prevent an out-of-state bank from charging its higher home-state interest rates because
In order to prevent discrimination against State-chartered insured depository institutions, ... such State bank ... may, notwithstanding any State constitution or statute which is hereby preempted for the purposes of this section, ... charge on any loan ... interest ... at the rate allowed by the laws of the State ... where the bank is located....
21
22 Georgia recognizes that the plaintiff out-of-state banks in this case are authorized to charge the high-interest rates of 400-500% under the laws of their charter states.11 Given
2. State Law
23 What Georgia says it has the power to regulate in the Act are in-state payday stores in these two ways: (1) to prohibit in-state payday stores from making payday loans directly to borrowers; and (2) to restrict in-state payday stores from acting as agents for exempt entities in the one circumstance where the in-state payday store holds the predominate economic interest in the payday loans.
24 Specifically, in April 2004, the Georgia legislature enacted Senate Bill 157, 2004 Ga. Laws 440, now codified in
25 The Act declares payday loans unlawful in Georgia. Specifically, the Act declares it “unlawful for any person to engage in any business ... which consists in whole or in part of making, offering, arranging, or acting as an agent in the making of loans of $3,000 or less” if that loan violates, among other things, Georgia‘s usury laws. Id.
27 In addition to prohibiting in-state payday stores from making payday loans directly, Georgia has declared agency arrangements between payday stores and exempt entities, where the payday store has “the predominant economic interest” in the loan revenue, to be an unlawful scheme or contrivance designed to allow the in-state payday stores to circumvent Georgia‘s usury laws. Specifically, Georgia
declares that the use of agency or partnership agreements between in-state entities [payday stores] and out-of-state banks, whereby the in-state agent holds a predominate economic interest in the revenues generated by the payday loans made to Georgia residents, is a scheme or contrivance by which the agent seeks to circumvent ... the usury statutes of this state.
29
30 Section 16-17-2(b)(4) of the Act explicitly makes “[a]ny arrangement by which a de facto lender [payday store] purports to act as the agent for an exempt entity [out-of-state bank]” unlawful if the “entire circumstances of the transaction show that the purported agent holds, acquires, or maintains a predominant economic interest in the revenues generated by the loan.” Id.
31 Because the prohibited agency conduct in
32 Thus, the Act has no application when out-of-state banks act for themselves or act through an in-state agent (even a payday-store agent) who is paid less then 50% of the revenue from a payday loan. If, however, an out-of-state bank enters into an agreement with an in-state payday store that allows the independent payday store to have the predominate economic interest (by earning more than 50% of the revenue from a payday loan), the payday store, and not the out-of-state bank, is liable for damages under the Act. Although the Act does not empower Georgia to prosecute an out-of-state bank directly as a principal party to the agency agreement, the Act does prohibit the in-state agent, acting pursuant to an unlawful contract, from collecting the payday loans and declares that the payday loans procured by the in-state payday store are void ab initio. See
33 In addition,
34 Immediately after the Georgia Act was enacted on April 9, 2004, the payday stores and out-of-state banks filed a total of four lawsuits against the Georgia Attorney General, the Georgia Secretary of State, or both of them, seeking temporary restraining orders and preliminary and permanent injunctions against enforcement of the Act, as well as declaratory judgments that the provisions of the Act that apply to them are preempted by federal law and are unconstitutional. The district court consolidated the four cases and heard argument on the motions for preliminary injunction. Because the Act was scheduled to go into effect on May 1, 2004, the district court entered a temporary restraining order prohibiting enforcement against the plaintiffs until May 15, 2004.
35 Two days before the scheduled expiration of the TRO, the district court denied the plaintiffs’ motions for a preliminary injunction and refused to enter an injunction pending appeal.19 The district court found that the plaintiffs did not demonstrate a likelihood of success on the merits as to any of their claims. The district court also decided that the balance of harms favored Georgia and weighed against issuing an injunction, and that enjoining enforcement of the Act would harm the public interest. The district court did find that the plaintiffs would be irreparably harmed if the Act were enforced against them, and the parties do not dispute that finding.20
36 The plaintiffs filed notices of appeal as well as motions asking this Court to issue an injunction pending appeal. We denied the motions for an injunction pending the appeal but did expedite the appeal. As things stand now, the Act has been in effect since May 25, 2004, when the district court‘s extended TRO expired.
III. STANDARD OF REVIEW
37 We generally review the district court‘s denial of an injunction only for an abuse of discretion. See Delta Air Lines, Inc. v. Air Line Pilots Ass‘n, Int‘l, 238 F.3d 1300, 1308 (11th Cir. 2001). However, determinations of law made in the course of denying a preliminary injunction are reviewed de novo. Bailey v. Gulf Coast Transp., Inc., 280 F.3d 1333, 1335 (11th Cir. 2002). “A district court by definition abuses its discretion when it makes an error of law.” United States v. Pruitt, 174 F.3d 1215, 1219 (11th Cir. 1999) (quoting Koon v. United States, 518 U.S. 81, 100, 116 S.Ct. 2035, 2047, 135 L.Ed.2d 392 (1996)). As to findings of fact made in the course of denying a preliminary injunction, “the trial court is in a far better position than this Court to evaluate [the] evidence, and we will not disturb its factual findings unless they are clearly erroneous.” Cumulus Media, Inc. v. Clear Channel Communications, Inc., 304 F.3d 1167, 1171 (11th Cir. 2002) (internal citations omitted).
IV. DISCUSSION
38 The plaintiffs raised five claims in the district court but press only three of them here. Those three claims are that the Georgia Act: (1) is preempted by
A. Chevron
39 The parties dispute what position the FDIC has taken on the preemption issue here. The out-of-state banks and payday stores point to certain statements made by various FDIC officials suggesting one view and Georgia points to various other documents that it suggests indicate that the FDIC has a different view on the preemption issue. However, the threshold issue for us is whether the FDIC‘s view is entitled to deference under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).21
41 The reason is that we do not defer to agency positions, whether formal or informal, on preemption issues. See Smiley v. Citibank (South Dakota), N. A., 517 U.S. 735, 744, 116 S.Ct. 1730, 1735, 135 L.Ed.2d 25 (1996) (distinguishing between the “substantive (as opposed to pre-emptive) meaning of a statute,” on which deference must be granted, and “the question of whether a statute is pre-emptive“); see also Nat‘l Mining Ass‘n v. Sec‘y of Labor, 153 F.3d 1264, 1267 (11th Cir. 1998) (citing Colo. Pub. Utils. Comm‘n v. Harmon, 951 F.2d 1571, 1579 (10th Cir. 1991)). Because “a preemption determination involves matters ... more within the expertise of the courts than within the expertise of” an administrative agency, we need not defer to an agency‘s opinion regarding preemption. Colo. Pub. Utils. Comm‘n, 951 F.2d at 1579. That side issue settled, we turn now to our own determination of the preemption issue.
B. Preemption
42 There are three types of preemption: express preemption, field preemption, and conflict preemption. Express preemption occurs when “Congress has manifested its intent to preempt state law explicitly in the language of the statute.” Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113, 1122 (11th Cir. 2004). Field preemption occurs when “federal regulation in a legislative field is so pervasive that we can reasonably infer that Congress left no room for the states to supplement it....” Id. Conflict preemption arises either when “it is impossible to comply with both federal and state law” or “when state law stands as an obstacle to achieving the objectives of the federal law.” Id. Because the field preemption and conflict preemption issues are easily resolved, we address them first.
C. Field Preemption
43 With regard to field preemption, it is clear that the FDIA was not intended to “occupy the field” of state bank regulation. In the case of state-chartered banks, the FDIA itself makes it clear that while state banks are subject to some federal regulation, the states remain the “primary regulatory authority” over state banks participating in the FDIC‘s deposit insurance program. See, e.g.,
44 Although
D. Conflict Preemption
45 With regard to conflict preemption, this is not a case where compliance with both the state and federal laws is impossible. As in Barnett Bank of Marion County v. Nelson, “[t]he two statutes do not impose directly conflicting duties on [state] banks — as they would, for example, if the federal law said, ‘you must [export your home-state interest rate],’ while the state law said, ‘you may not.‘” 517 U.S. 25, 31, 116 S.Ct. 1103, 1108, 134 L.Ed.2d 237 (1996). Therefore, the conflict preemption question turns on whether the Act “stands as an obstacle to achieving the objectives of the federal law,” Hughes v. Att‘y Gen. of Florida, 377 F.3d 1258, 1265 (11th Cir. 2004) (citing Crosby v. Nat‘l Foreign Trade Council, 530 U.S. 363, 372-73, 120 S.Ct. 2288, 2294, 147 L.Ed.2d 352 (2000) and Cliff, 363 F.3d at 1122), or whether the Act substantially impairs the right created by the federal law. Barnett Bank, 517 U.S. at 33, 116 S.Ct. at 1109. For the following reasons, the Act does not stand as an obstacle to achieving this objective or substantially impair the right created by the federal law, and, therefore, there is no conflict preemption.
47 Second, the Act does not prohibit out-of-state banks from using independent agents, including payday stores, or other partnerships to make payday loans at their home-state interest rates in Georgia. Rather, the Act restricts out-of-state banks from only one limited type of agency: using a separate, in-state business entity in Georgia that holds “a predominant economic interest” in the loan revenues.
48 In addition, the Act leaves open other alternatives for out-of-state banks to export their home-state interest rates to Georgia borrowers. Given modern technology and communications in today‘s economic world, out-of-state banks have a plethora of distribution channels to use in exporting their home state interest rates to Georgia borrowers.
49 In sum, nothing in the language of
E. Express Preemption
1. Section 27(a) Preempts State Law
50 As stated above, express preemption occurs when “Congress has manifested its intent to preempt state law explicitly in the language of the statute.” Cliff, 363 F.3d at 1122.
51 Because this is an express preemption case,
2. Statutory Interpretation Principles
52 When Congress expressly codifies its preemptive intent in statutory form, our analysis “begins with the language of the statute.” Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 542, 121 S.Ct. 2404, 2415, 150 L.Ed.2d 532 (2001). Our task of statutory interpretation must also be guided by Medtronic, Inc. v. Lohr, 518 U.S. 470, 484, 116 S.Ct. 2240, 2250, 135 L.Ed.2d 700 (1996), where the United States Supreme Court addressed a federal statute that “expressly pre-empts state law.” The Supreme Court noted that in such express-preemption situations “our interpretation of [the preemptive] language does not occur in a contextual vacuum. Rather, that interpretation is informed by two presumptions about the nature of pre-emption.” Id. at 485, 116 S.Ct. at 2250.
53 “First, because the States are independent sovereigns in our federal system, we have long presumed that Congress does not cavalierly pre-empt state-law ..., particularly in those [areas] in which Congress has legislated in a field which the States have traditionally occupied.” Id. (internal quotation marks, punctuation, and citations omitted). In such situations, it is important to give the statute a narrow construction in order to be consistent with both federalism concerns and the historic primacy of state regulation. See id.; Cipollone v. Liggett Group, Inc., 505 U.S. 504, 518, 112 S.Ct. 2608, 2618, 120 L.Ed.2d 407 (1992). As noted earlier, states and state regulators have traditionally regulated state banks, and remain the primary regulatory authority.
54 Second, the Supreme Court has instructed that in interpreting a federal statute, including one that expressly preempts state law, federal courts must considеr Congressional intent and purpose, as these are the “touchstone in every pre-emption case.” Medtronic, 518 U.S. at 485, 116 S.Ct. at 2250 (internal quotation marks and citations omitted).
55 As a result, any understanding of the scope of a pre-emption statute must rest primarily on a fair understanding of congressional purpose. Congress’ intent, of course, primarily is discerned from the language of the pre-emption statute and the “statutory framework” surrounding it. Also relevant, however, is the structure and purpose of the statute as a whole, as revealed not only in the text, but through the reviewing court‘s reasoned understanding of the way in which Congress intended the statute and its surrounding regulatory scheme to affect business, consumers, and the law.
56 Id. at 485-86, 116 S.Ct. at 2250-51 (internal quotation marks and citations omitted).
57 The Supreme Court has set out the governing framework courts should follow.
In these cases, our task is to identify the domain expressly pre-empted, because an express definition of the preemptive reach of a statute supports a reasonable inference that Congress did not intend to pre-empt other matters.... Because federal law is said to bar state action in a field of traditional state regulation ... we work on the assumption that the historic police powers of the States are not to be superseded by the Federal Act unless that is the clear and manifest purpose of Congress.
59 Lorillard Tobacco, 533 U.S. at 541-42, 121 S.Ct. at 2414 (internal quotation marks, citations, and punctuation omitted). We now turn to the language of
3. Scope of § 27(a)
60 According to the plain language of
- a State bank;
- from charging interest at the rate allowed by the home State;
- on any loan.
64 The language of
65 Even as to “any” loan of state banks, the language of
66 So while an out-of-state bank in Georgia clearly can make a payday loan at a 500% APR, the State of Georgia, nonetheless, may regulate an out-of-state bank‘s procurement and collection practices in Georgia. See
67 In the same vein, the language of
4. The Georgia Act
68 The next question is whether the Georgia Act falls within the above preemptive scope of
69 Obviously,
70 On the other hand, as discussed above, Georgia can regulate a variety of collateral activities associated with loans. If Georgia had enacted legislation that precluded felons convicted of fraud from being licensed fiscal agents in loan transactions in Georgia or precluded banks (including out-of-state banks) from employing such felons in Georgia as third-party vendors or service providers to handle loan funds, we would have no difficulty determining that such state legislation was not preempted by
71 Therefore, the first question is whether the Act, and in particular
72 For the following reasons, we conclude that
73 First, and most importantly, nothing in
74 Second, as discussed above, there are many means by which an out-of-state bank may issue payday loans to its customers in Georgia. In fact, out-of-state banks may continue to use agents and agency agreements, including independent, local payday stores in Georgia. All that is required for out-of-state banks and in-state payday stores to continue with the exact same business model is for the two entities to alter the agency contract between them so as to provide that the payday store receives only 50% of the revenue from the payday loan. At most, the Act removes only one type of agency agreement that in-state payday stores can have with out-of-state banks. Therefore, the Act is nothing more than a narrow agency limitation on contracts between in-state payday stores and out-of-state banks.
75 Third,
76 The plaintiffs in this case are essentially asking us to rewrite
In order to prevent discrimination against State-chartered insured depository institutions, ... such State bank ... may, notwithstanding any State constitution or statute which is hereby preempted for the purposes of this section, ... charge on any loan ... interest ... at the rate allowed by the laws of the State ... where the bank is located and such State bank may procure these loans using any separate, local, and non-bank business as an agent and under any agency terms it selects.
78 We decline to do so. Rather, we decide the express-preemption issue on the basis of the plain language of the statute as it is written.
79 For all the above reasons, we conclude that
6. Section 16-17-2(d) of the Georgia Act
80 While the Act exempts out-of-state banks from direct liability in
Any person who violates subsection (a) or (b) of this Code section shall be guilty of a misdemeanor of a high and aggravated nature and upon conviction thereof shall be punished by imprisonment for not more than one year or by a fine not to exceed $5,000.00 or both. Each loan transaction shall be deemed a separate violation of this Code section. Any person who aids or abets such a violation, including any arbiter or arbitration company, shall likewise be guilty of a misdemeanor of a high and aggravated nature and shall be punished as set forth in this subsection. If a person has been convicted of violations of subsection (a) or (b) of this Code section on three prior occasions, then all subsequent convictions shall be considered felonies punishable by a fine of $10,000.00 or five years imprisonment or both.
82
83 The parties do not dispute that penalties for any direct violation of the Act do not apply to out-of-state banks. Subsection (d) of
84 However, in addition to the penalties for a violation of subsections (a) or (b), the third sentence in subsection (d) goes on to state that “[a]ny person who aids or abets such [a direct] violation” is also guilty of a misdemeanor. Id.
85 Although the Act grants an exception for liability to out-of-state banks in subsections (a) and (b), and in the first and last sentences of subsection (d), it does not grant a similar exception in the aid-and-abet sentence in subsection (d). One argument is that because the Act throughout either exempts, or otherwise has no application to, out-of-state banks, this Court should conclude that the Georgia legislature also intended to exempt out-of-state banks from liability as an aider-and-abettor of the payday stores’ violations of the Act.26 However, whеn a legislative body “‘includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that [the legislative body] acts intentionally and purposely in the disparate inclusion or exclusion.‘” KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 125 S.Ct. 542, 548, 160 L.Ed.2d 440 (2004) (quoting Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 300, 78 L.Ed.2d 17 (1983)).
86 We do note that the State of Georgia avows here that it has no intention of prosecuting out-of-state banks as aiders and abettors. We ultimately need not decide this question of Georgia law because even if the aid-and-abet provision in subsection (d), as written, permits the State of Georgia to prosecute out-of-state banks as aiders and abettors, we conclude that subsection (d) is not preempted.
87 Because Georgia has the power to keep in-state payday stores from acting as agents for out-of-state banks in the limited circumstances where the stores retain the predominate economic interest in the payday loan, we conclude that the State of Georgia is not prohibited from reasonably punishing not only such violators but also those who aid and abet such violations.
7. Section 16-17-3 of the Georgia Act
88 Having concluded that
Any person who violates subsection (a) or (b) of Code Section 16-17-2 shall be barred from the collection of any indebtedness created by said loan transaction and said transaction shall be void ab initio, and any person violating the provisions of subsection (a) or (b) of Code Section 16-17-2 shall in addition be liable to the borrower in each unlawful transaction for three times the amount of any interest or other charges to the borrower.
90
91 The remaining part of
92 It is important to understand that the Georgia Act does not void the payday loan because of the interest rate on the loan. If the payday store procures a high-interest-rate loan for the out-of-state bank and does not retain over 50% of the revenue,
93
94 In the end, we see no reason to preclude Georgia from punishing violations of its agency rule in the manner it has selected because the violation depends upon the existence of a prohibited agency agreement and does not occur if the payday store does not have the predominate economic interest in the payday loan. Consequently, we conclude that the portion of
F. The Commerce Clause
95 The out-of-state banks and payday stores also assert that the Georgia Act violates the dormant aspect of the Commerce Clause. Although the plaintiffs raise this issue, they devote very little attention to the issue in their briefs.
96 The Commerce Clause states that “Congress shall have Power ... [t]o regulate Commerce ... among the several States....”
97 To determine whether a statutory scheme violates the dormant or negative aspect of the Commerce Clause, courts employ two tiers of analysis. Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 578-79, 106 S.Ct. 2080, 2084, 90 L.Ed.2d 552 (1986). If the state scheme “directly regulates or discriminates against interstate commerce, or when its effect is to favor in-state economic interests over out-of-state interests, we have generally struck down the statute without further inquiry.” Id. at 579, 106 S.Ct. at 2084. But, if the discriminatory state regulation in question “advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives,” the state regulation will be upheld. Limbach, 486 U.S. at 278, 108 S.Ct. at 1810; see also Hunt v. Wash. State Apple Adver. Comm‘n, 432 U.S. 333, 353, 97 S.Ct. 2434, 2446, 53 L.Ed.2d 383 (1977). In all other instances, courts have determined that the discriminatory state regulation violated the dormant or negative aspect of the Commerce Clause.
98 However, if a state regulation only indirectly affects interstate commerce and regulates both in-state and out-of-state interests equally, courts “have examined whether the State\‘s interest is legitimate and whether the burden on interstate commerce clearly exceeds the local benefits.” Brown-Forman, 476 U.S. at 579, 106 S.Ct. at 2084. Though the two tiers of analysis are not clearly distinguishable, “[i]n either situation the critical consideration is the overall effect of the statute on both local and interstate activity.” Id.
99 The plaintiffs\’ argument that the Georgia Act violates the dormant or negative aspect of the Commerce Clause is without merit. It is undisputed that the Act makes no attempt to regulate the interest rate out-of-state banks can charge borrowers in Georgia. In-state banks, however, are limited to Georgia\‘s 16% cap. Furthermore, out-of-state banks are still permitted to use in-state payday stores as agents as long as they do not give the payday store the predominate economic interest in the payday loan. In-state banks may not use payday stores to charge more than Georgia\‘s 16% cap no matter what the in-statе banks pay the payday stores. Therefore, the Act actually places fewer restrictions on out-of-state banks than it does on Georgia-based banks. Consequently, there is no violation of the dormant or negative aspect of the Commerce Clause.
G. The Arbitration Provision
100 Section 16-17-2(c)(2) of the Georgia Act declares arbitration clauses in payday loan contracts void if the payday loan contract is “unconscionable.” See
101 For a plaintiff to have standing to sue in federal court, he must allege in his complaint, or otherwise through the course of the proceedings, “that he has suffered an injury in fact“; in other words, “some harm to a legal interest that is actual or imminent, not conjectural or hypothetical.” Bowen v. First Family Fin. Servs., Inc., 233 F.3d 1331, 1339 (11th Cir.2000) (internal quotation marks and citation omitted). In the context of a plaintiff\‘s challenge to the enforceability of an arbitration clause in a loan agreement, we have held that the plaintiff must allege that an arbitration between the lender and the borrower is imminent or “certainly impending.” Id. at 1340 (citing Whitmore v. Arkansas, 495 U.S. 149, 158, 110 S.Ct. 1717, 1724-25, 109 L.Ed.2d 135 (1990)). There simply being “a `perhaps\’ or `maybe\’ chance that the arbitration agreement will be enforced . . . is not enough to give [the plaintiffs] standing to challenge its enforceability.” Id. It follows that in order to challenge the validity of a statute that tends to undermine the enforceability of an arbitration agreement, a party must show harm to its interest in enforcing the agreement that is actual or imminent. The party seeking an injunction against enforcement of the statute must show that arbitration, which is a prerequisite to application of the statute, is imminent or certainly impending. It is not enough that there may be arbitration and that the statute may be applied if there is.
102 The plaintiffs have not met their burden in this regard. They have not even alleged in their complaint or in their motion for a preliminary injunction that any breaches of the loan agreements have occurred or are imminent. They have not alleged that if there are breaches there will be arbitration. The agreement gives either party the right to elect arbitration but does not require disputes to be arbitrated if neither party elects it.29
103 Maybe there will be breaches, and maybe in connection with those breaches someone will elect arbitration, and maybe if that happens the Georgia statutory provision in question will be asserted and applied. But maybe is not enough. See id. Having failed to demonstrate imminent or certainly impending injury from
104 The Act contains another provision that refers to arbitration. Specifically, the aiding or abetting provision of
105 It is not clear from the Georgia Act what action by an arbitrator would amount to aiding or abetting a violation of the Act, nor is it apparent why the Georgia General Assembly saw fit to specially include arbitrators in the aiding or abetting provision. Although we question the validity of a regulation that would subject an arbitrator to liability merely for deciding a pаyday loan dispute in accordance with the arbitration clause in a payday loan contract, we need not decide that issue, because neither the out-of-state banks nor the payday stores are arbitrators.
106 The plaintiffs in this case will never be prosecuted or sued as arbitrators for acting in contravention of the Act. Therefore, the out-of-state banks and payday stores have asserted no injury-in-fact particular to them, see Steel Co. v. Citizens for a Better Env\‘t, 523 U.S. 83, 103, 118 S.Ct. 1003, 1016, 140 L.Ed.2d 210 (1998), nor have they alleged facts sufficient to stand in the place of the arbitrators. See Powers v. Ohio, 499 U.S. 400, 410-11, 111 S.Ct. 1364, 1370-71, 113 L.Ed.2d 411 (1991) (holding that in order for a litigant to bring an action on behalf of a third party, the litigant must demonstrate that (1) he has “suffered an `injury in fact,\’ thus giving him or her a `sufficiently concrete interest\’ in the outcome of the issue in dispute“; (2) he has “a close relation to the third party“; and (3) there is “some hindrance to the third party\‘s ability to protect his or her own interests” (internal citations omitted)). In short, the out-of-state banks and payday stores lack standing to challenge the arbitration provisions.
V. CONCLUSION
107 For all the above reasons, we conclude the district court did not abuse its discretion in denying a preliminary injunction.
108 AFFIRMED.
CARNES, Circuit Judge, dissenting:
109 Congress enacted a statute providing that any state-chartered bank may “charge on any loan . . . interest . . . at the rate allowed by the laws of the State . . . where the bank is located.”
110 The majority opinion attempts to paint this case as one in which a bunch of cunning cash advance stores have purchased the authority of out-of-state banks as part of their scheme to get around Georgia\‘s usury laws. In this picture, BankWest and other out-of-state banks are not real players but instead only passive pawns that lease their charters to the cash advance stores; those stores are actually the lenders, perform all the critical functions, carry most of the risk, and to use the majority\‘s phrase “effectively do all the work.” Ante, at 1294. That\‘s not a pretty picture, but neither is it one the record in this case supports.
111 The record shows that it is the banks, and not the cash advance stores, that perform the critical loan functions. The parties agree that BankWest and Advance America are exemplars of the out-of-state banks and their in-state agents, and the record contains the contractual agreement between them. Under that agreement, it is BankWest that provides all of the funds that are loaned. Advance America provides none. It is BankWest that determines which borrowers will receive a loan because, as an undisputed affidavit establishes, BankWest “in its sole discretion, determines all underwriting criteria that must be satisfied by a prospective borrower.” Advance America has no control ovеr the underwriting criteria that BankWest applies to these loans.1
112 The affidavits show that “BankWest also establishes, in its sole discretion, the terms and features of the loans, including the loan amounts, fees and charges, interest rate, repayment terms, credit limits and credit standards.” By contrast, “Advance America has no control or authority over the loan approval process, underwriting criteria, credit terms, credit standards or the terms and conditions of the loans between BankWest and its Georgia borrowers.” Not only that, but Advance America is not even a party to the loan agreement. Instead, “[t]he Loan Agreement is a promissory note between the borrower and BankWest, which, among other things, clearly states that BankWest is the lender on the loan, and obligates the borrower to repay the loan with interest to BankWest on or before the stated maturity date.” Nor does Advance America have a legal right to the loan receivables. Instead, “[t]he loan receivables are BankWest\‘s assets, and BankWest records them as such on the bank\‘s financial statements.”2
113 Advance America bears no risk of loss of principal, because it advances none of the principal. BankWest advances all of the principal and bears all of the risk that principal will be lost. The only risk of loss that Advance America has is for part of the loan revenues (the finance charges).
114 The way the contractual loss assignments have played out in the real world of cash advance loans in Georgia is that BankWest has borne twice as much of the loan loss as Advance America. The record contains this sworn statement about the actual loss data for the fourteen-month period just before the filing of the motion for injunction: “For the period of Januаry 2003 through February 2004, the Loss Rate Standard on the aggregate portfolio of loans made by Bankwest to Georgia borrowers was approximately 12.5%. Thus, BankWest was responsible for approximately 68% of all loan losses incurred during that period.”3
115 So, Advance America suffered less than one-third of the losses, BankWest more than two-thirds.
116 The facts, then, are that BankWest is the true lender. It is not only identified as such in the loan documents, but it also performs all of the critical loan decision-making functions, supplies all of the funds for the loan, is the only one exposed to any loss of principal, and has borne most of the loan losses that have actually occurred.
117 The factual spinning and loaded language of the majority opinion aside, the real defect in that opinion is its express preemption analysis. The Supreme Court has instructed us that: “In deciding whether a federal law pre-empts a state statute, our task is to ascertain Congress\’ intent in enacting the federal statute at issue. Pre-emption . . . is compelled [when] Congress\’ command is explicitly stated in the statute\‘s language. . . .” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 95, 103 S.Ct. 2890, 2899, 77 L.Ed.2d 490 (1983) (internal quotations omitted).4 Here, Congress\’ preemptive command is explicitly stated in the statutory language. Yet the majority decision does not obey that clear, compelling command.
118 The relevant portion of FDIA § 27(a) plainly says that “State-chartered insured depository institutions . . . may, notwithstanding any State constitution or statute which is hereby preempted for the purposes of this section, . . . charge on any loan . . . interest . . . at the rate allowed by the laws of the State . . . where the bank is located.”5
The question is not whether Congress intended to preempt state laws inconsistent with the right it created on behalf of out-of-state banks. The preemptive command could not be clearer. To the extent that “any State constitution or statute” attempts to define, condition, impinge upon, regulate, restrict, or otherwise affect the right of an out-of-state bank to charge an interest rate permitted under the laws of its charter state, that state law is preempted.
119 Because the scope of the preemption is coextensive with the federal right created, the question is the scope of the federal right. The key statutory word defining the scope of the federal right, the word upon which this issue turns, is “any.” Section 27(a) says that state-chartered insured depository institutions may charge “on any loan” interest at the rate allowed by the laws of their charter state.
120 Both the Supreme Court and this Court have made clear that “any” does not mean “some” or “all but a few,” it means “all.” For example, in United States v. Gonzales, 520 U.S. 1, 117 S.Ct. 1032, 137 L.Ed.2d 132 (1997), the question was whether the statutory phrase “`any other term of imprisonment\’ means what it says or whether it should be limited to some subset of prison sentences.” Id. at 5, 117 S.Ct. at 1035 (internal quotation omitted). Because of the natural, expansive meaning of the word “any,” and the absence of any limiting language in the statute, the Court concluded that “any term of imprisonment” meant all terms of imprisonment, without exception. Id.
121 Other decisions of the Supreme Court and this Court emphasize and re-emphasize that “any” does not mean some, or most; it means all. See, e.g., United States v. Alvarez-Sanchez, 511 U.S. 350, 358, 114 S.Ct. 1599, 1604, 128 L.Ed.2d 319 (1994) (noting that a statute referring to “any law enforcement officer” includes “federal, state, or local” officers); CBS Inc. v. PrimeTime 24 Joint Venture, 245 F.3d 1217, 1223 (11th Cir.2001) (holding that “`any termination\’ in the Improvement Act\‘s § 1005(a)(2)(B)(iii) grandfather clause means all terminations of any kind“); Coronado v. Bank Atl. Bancorp, Inc., 222 F.3d 1315, 1321-22 (11th Cir.2000) (holding that immunity under
122 In this case, we should interpret the statutory phrase “any loan” to mean all loans without exception, just as the Supreme Court in Gonzales interpreted the statutory phrase “any other term of imprisonment” to mean all other terms of imprisonment without exception, 520 U.S. at 5, 117 S.Ct. at 1035; just as the Supreme Court in Alvarez-Sanchez interpreted “any law enforcement officer” to mean all law enforcement officers without exception, 511 U.S. at 358, 114 S.Ct. at 1604; and just as we in Merritt interpreted “any termination” to mean all terminations of any kind without exception, 120 F.3d at 1185-86.6
123 Because loans that out-of-state banks make through in-state agents are within the broad scope of the term “any loan,” § 27(a) preempts state laws that attempt to regulate or restrict the interest rates that may be charged on those loans. In other words, § 27(a) preempts what the State of Georgia has done. It is as though the Georgia General Assembly rewrote the key language of that federal statutory provision by adding a sentence, so that it reads:
State-chartered insured depository institutions . . . may . . . charge on any loan . . . interest . . . at the rate allowed by the laws of the State . . . where the bank is located. But they may not do so through agents unless the bank receives the majority of the proceeds generated by the loan.
124 Preemption would be a meaningless doctrine if states could effectively rewrite federal statutes by adding conditions or limitations. In this instance, the rewrite would change the established, all-encompassing meaning of “any” as it is used in § 27(a). Language that limits the meaning of congressionally chosen terms must come from Congress, not from the states. Just as a state cannot say for purposes of § 27(a) what a “State-chartered insured depository institution” is, it cannot say when such an institution is the entity “charg[ing]” the interest on a loan, and it cannot say what “any loan” is. Those are federаl statutory terms. The power to define or redefine federal statutory terms is the power to evade or eviscerate these terms; it is the power to preempt the preemptive force of federal statutes, and it is a power the states do not have.
125 With mimicry that would make a mockingbird blush, the majority opinion has lifted the analytical device from the preceding paragraph of this opinion and inserted different words in an attempt to show that Congress did not envision the particular evasion enacted by Georgia. See ante, at 1307. The majority\‘s point, I suppose, is that Congress did not say out-of-state banks could use in-state agents under the specific contractual terms that BankWest uses Advance America. Of course it didn\‘t. It is impossible to anticipate all the ways in which business will be done, just as it is impossible to anticipate all the ways in which states will attempt to thwart the preemptive will expressed in a federal statute. That is why Congress chose to use the all-encompassing term “any” in § 27(a) instead of more limited terms such as “some,” “many,” or “most.”
126 Faced with the broad language of § 27(a), the majority opts to deny the undeniable. Even though the language the federal statute uses is broad, the statute\‘s application is, the majority insists, “quite narrow.” Ante, at 1305. The majority lists all the activities of out-of-state banks that Congress did not specifically mention in § 27(a), which means under the “quite narrow” view that Georgia can regulate those activities into oblivion. The targetable activities that are left unprotected by the preemption clause of § 27(a), the majority insists, include “collateral activity associated with the loan, such as marketing, advertising, solicitation, or any aspect of the loan procurement process” and “collection practices,” and the matter of “separаte contracts between out-of-state banks and in-state vendors.” Ante, at 1304.
127 So anemic are the provisions of the federal act under the majority\‘s “quite narrow” view that states can prohibit out-of-state banks from using in-state agents at all, because § 27(a) says “nothing about agents, much less in-state, non-bank agents of out-of-state banks,” and because it ”directly restricts only interest-rate limitations and cannot be so expanded to cause indirect preemption of the agency agreement between in-state entities, such as payday stores, and out-of-state banks.” Ante, at 1305 n. 25. In other words, the majority\‘s “quite narrow” view is that states may thwart the preemption clause of § 27(a) by regulating agency relationships or prohibiting preferred forms of them, and by going after the “collateral activity associated with” making loans, activities that are essential for an out-of-state bank to function in another state. See ante, at 1304 (emphasis omitted).
128 And that is what Georgia has done. The theory with which Georgia has cloaked its evasive purpose is that where the in-state agent has the predominant economic interest in a loan, which Georgia considers to be the right to more than fifty percent of the loan-generated revenues, the in-state agent is the actual lender, not the out-of-state bank. See
129 If Georgia may do as it pleases to the in-state agents of out-of-state banks, then Georgia may do as it pleases to the out-of-state banks. Recognizing that, the state takes the position that federal rights of corporations may be conditioned, truncated, or abrogated by state laws so long as those laws are brought to bear on the agents through which the corporations act. And the majority has written that untenable position into the law of this circuit. Section 27(a) grants out-of-state banks the authority to make loans in Georgia at the interest rates they may charge in their charter states. The State of Georgia may no more prevent that authority from being exercised through in-state agents than it may prevent that authority from being exercised on even-numbered days.
130 Not content with gutting the preemption clause of the federal act, the majority also tries to soft-peddle the plain language of the Georgia Act to make it seem as though all the Act does is affect one little bitty aspect of the agency relationship between out-of-state banks and in-state agents. That is not the reality. The reality is that Georgia has acted to strip from out-of-state banks the right that § 27(a) gives them, if those banks structure their business in the way that they think best in light of business considerations and market forces. What Georgia has said is that the out-of-state banks Congress has specifically protected from state usury laws will not be protected by § 27(a) unless those banks quit doing business the way they prefer and start doing business the way the state prefers. And it just so happens that Georgia prefers that out-of-state banks covered by § 27(a) not do business in the way those banks have chosen to do it. What a coincidence.
131 Of course, Georgia does not actually care one whit about how the bаnks do business. All the state is concerned with is whether the banks exercise their federal statutory right to charge § 27(a) interest rates. The banks and their in-state agents can structure their relationship any way they want and can divide up revenue according to the phases of the moon insofar as Georgia is concerned, IF only the banks will give up their federal right to charge higher interest rates than state law allows. Georgia has effectively put a price on the exercise of the federal statutory right, the price being that banks cannot structure their business relationships the way they have chosen. By slapping that price tag onto § 27(a), Georgia has conditioned the exercise of a federal right on compliance with the state\‘s dictates, even though the federal statute granting the right explicitly preempts state laws on the subject. And the majority is letting Georgia get away with doing that.
132 The authority the State of Georgia claims in this regard would have no limit. If Georgia can decide that lending at charter-state interest rates is prohibited where the in-state agent has the predominant economic interest in the loan-generated revenue — that “any loan” in the federal statute does not mean all loans — it can decide that lending is prohibited where the in-state agent has an interest in one-fourth of the loan-generated proceeds, or in one-tenth of them, or where the in-state agent has any interest in them at all. Under the majority\‘s “quite narrow” view of the preemptive force of § 27(a), Georgia could simply declare that, under its own definition of the federal statutory terms, any in-state agent of an out-of-state bank is the de facto lender, not the bank. The majority embraces that position.7
133 None of this is to say that Georgia may not reasonably regulatе in-state agents of out-of-state banks, so long as it does so on the same terms that it regulates agents of in-state banks. For example, if Georgia wants to forbid banks from using agents who have been convicted of felonies, nothing in § 27(a) would prevent it from doing so. But that prohibition would have to be interest-rate neutral, which is to say that Georgia\‘s regulation of agents may not be keyed to a bank\‘s exercise of its § 27(a) interest-rate authority. Georgia may not forbid an out-of-state bank charging § 27(a) protected rates from using any arrangement that it permits a bank not charging those rates to use. More specifically, Georgia may not forbid, restrict, or condition the use of agents generally, or particular categories of agents, as a way of preventing an out-of-state bank from using those agents to exercise its federal statutory right to charge higher interest rates.
134 Yet that is precisely what Georgia has done. Georgia does not generally forbid the use of agents by banks when the agents have a “predominant economic interest” in loan-generated revenue. It permits banks to use agents regardless of how the economic interests are divvied up by them, so long as they do not charge the higher interest rates that § 27(a) permits. If BankWest were not attempting to exercise the higher interest rate authority Congress has given it, Georgia\‘s law would not apply regardless of whether Advance America received half, three-fourths, nine-tenths, or all of the loan-generated revenues. Georgia does not care how much of the revenue an agent receives so long as the agent is not used in the exercise of an out-of-state bank\‘s federally protected right to charge higher interest rates than state law allows. Only because BankWest\‘s arrangement with Advance America serves to further its federally granted § 27(a) authority does Georgia want to “regulate” that relationship. It wants to “regulate” principal-agent relationships used to effectuate § 27(a) rights in the same way that the American Temperance League wanted to “regulate” alcohol.
135 The fact that § 27(a) preempts the Georgia Act\‘s attempt to restrict an out-of-state bank\‘s ability to export interest rates does not mean that any transaction where an out-of-state bank associates with a non-bank agent in Georgia is protected, even if the relationship is clearly a sham. If, under federal law, a transaction is not actually a loan from an out-of-state bank within the meaning of § 27(a), then the bank does not have the right to export its charter state\‘s interest rate under § 27(a). That is, however, an issue that must be answered under federal law, not under state law. Georgia has not argued that the loans involved in this case are shams under federal law, but instead has attempted to use state law to redefine federal statutory terms, which is something it may not do.
136 I recognize the serious policy concerns that motivated the Georgia General Assembly to enact this legislation, and if I were in Congress I might well support an amendment of § 27(a) on those grounds. But I am not in Congress. Neither are my two colleagues who are in the majority in this case. Our duty is to interpret the laws that Congress has enacted, not to shape them to our policy views through a “quite narrow” interpretation. Any complaints about the policy effects of § 27(a) are, to borrow a phrase from the Supreme Court in another banking case, “better addressed to the wisdom of Congress than to the judgment of this Court.” Marquette Nat\‘l Bank of Minneapolis v. First of Omaha Serv. Corp., 439 U.S. 299, 319, 99 S.Ct. 540, 550-51, 58 L.Ed.2d 534 (1978).
137 Because § 27(a) expressly preempts the Georgia Act with regard to its regulation of interest rates charged by out-of-state banks, I would hold that the out-of-state banks and their in-state agents have met their burden of demonstrating the first prong of the preliminary injunction determination, which is a substantial likelihood of success on the merits. As for the second prong, the district court found, and the State of Georgia does not dispute, that the banks and their agents have sufficiently demonstrated irreparable harm.
138 In analyzing the third prong, the district court found that the threatened injury to the out-of-state banks and their in-state agents did not outweigh the damage the injunction would cause to the citizens of the State of Georgia, and as a result that they had not met their burden on this prong. In the three sentences devoted to this topic, the district court summarily found that “[a]n injunction against enforcement of the Act would permit payday lenders to continue collecting exorbitant amounts of interest from thousands of Georgia citizens who can ill afford it.” BankWest, Inc. v. Baker, 324 F.Supp.2d 1333, 1357 (N.D.Ga.2004). That finding is defensible only if one assumes, as the district court had concluded, that the Georgia Act is not expressly preempted by § 27(a). But it is preempted, and that changes things. In the words of the Fifth Circuit, “[s]ince Congress expressly preempted this area of regulation, the states are not injured by the injunction” and “there is no injury to the states to weigh.” See Trans World Airlines, Inc. v. Mattox, 897 F.2d 773, 784 (5th Cir.1990), holding recognized as limited on other grounds by Johnson v. Baylor Univ., 214 F.3d 630 (5th Cir.2000).
139 The same analysis holds true with regard to the fourth prong of the preliminary injunction analysis. Issuing an injunction to ensure the proper operation of federal law is not adverse to the public interest. See id. The public interest is best served by applying federal law as directed by the express language of § 27(a).
140 Because the out-of-state banks and their in-state agents have met their burden on each of the four prongs of the preliminary injunction analysis, the distriсt court abused its discretion in failing to grant them a preliminary injunction. Accordingly, I dissent.