LIZZIE DAVIS, individuаlly and on behalf of all others similarly situated, DENNIS GREEN, individually and on behalf of all others similarly situated, JOHNNY MOODY, individually and on behalf of all others similarly situated, JOHN SUBER, individually and on behalf of all others similarly situated, SHIRLEY WILLIAMS, individually and on behalf of all others similarly situated, PAMELA DAVIS, individually and on behalf of all others similarly situated, Plaintiffs-Appellees, versus OASIS LEGAL FINANCE OPERATING COMPANY, LLC, OASIS LEGAL FINANCE, LLC, OASIS LEGAL FINANCE HOLDING COMPANY, LLC, Defendants-Appellants.
No. 18-10526
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
August 28, 2019
JORDAN, Circuit Judge
D.C. Docket No. 3:17-cv-00022-DHB-BKE; [PUBLISH]
Appeals from the United States District Court for the Southern District of Georgia
(August 28, 2019)
Before TJOFLAT and JORDAN, Circuit Judges, and SCHLESINGER, District
JORDAN, Circuit Judge:
American courts have long refused to enforce contractual provisions that contravene public policy. See, e.g., Marshall v. Baltimore and Ohio R.R., 57 U.S. 314, 334 (1853) (“It is an undoubted principle of the common law that it will not lend its aid to enforce a contract to do an act that is illegal, or which is inconsistent with sound morals or public policy. . . .“). In Georgia, “[n]o principle of jurisprudence is better settled than this.” Glass v. Childs, 71 S.E. 920, 921 (Ga. Ct. App. 1911).1
Courts have said that “[i]t is the duty of all courts of justice to keep their eye steadily up on the interests of the public, . . . and when they find an action is founded up on a claim injurious to the public . . . to give no countenance or assistance in foro civili.” Elisha Greenhood, The Doctrine of Public Policy: Reduced to Rules 2 (1886) (quoting C.J. Wilmot‘s Opinion in Low v. Peers, (1770) 97 Eng. Rep. 138 (Ex. Ch.)). Others, however, have characterized the public policy defense as “a very unruly horse, and when once you get astride it you never know where it will carry you.” Richardson v. Mellish, (1824) 130 Eng. Rep. 294, 303 (H.L.) (Burrough, J.).
In this case, a class of borrowers filed suit in Georgia against their lenders, alleging that their loan agreements violated state usury laws. The lendеrs moved to dismiss the action based on the forum selection clause and class action waiver in the agreements. The district court concluded that both provisions were unenforceable as against Georgia public policy, and the lenders appealed.
Following oral argument and a review of the relevant authorities, we agree with the district court. Georgia‘s Payday Lending Act and Industrial Loan Act articulate a clear public policy against enfоrcing forum
I
The plaintiffs entered into identical loan agreements with Oasis Legal Finance, LLC; Oasis Legal Finance Operating Company, LLC; and Oasis Legal Finanсe Holding Company, LLC (the “Oasis lenders“). The loans generally amounted to less than $3,000 and were to be repaid from any recoveries that the plaintiffs received in their separate personal injury lawsuits. The plaintiffs’ obligations to repay the loans were therefore contingent on success in the underlying lawsuits.
In February of 2017, the plaintiffs filed a class action complaint against the Oasis lenders in Georgia state court, alleging that the loan agreements violated Geоrgia‘s Payday Lending Act,
Applying Georgia law, the distriсt court rejected both of the arguments made by the Oasis lenders and held that the forum section clause and class action waiver were unenforceable. See Davis v. Oasis Legal Fin. Operating Co., No. CV 317-022, 2017 WL 5490919, at *4-5 (S.D. Ga. Nov. 15, 2017). The district court concluded that “the enforcement of forum selections clauses in payday lending contracts would contravene [Georgia‘s] public policy” as established by the Payday Lending Act. Id. at *4. It explained that “[c]ertain payday lenders have attempted to use forum selection clauses contained in payday loan documents in order to avoid the courts of the State of Georgia, and the General Assembly has determined that such practices are unconscionable and should be prohibited.” Id. at *3 (quoting
The district court certified its decision for interlocutory review, and the Oasis lenders petitioned us to consider whether the district court erred in concluding that the loan agreements’ forum selеction clause and class action waiver are unenforceable.
II
The enforceability of a forum selection clause is a question of law that we review de novo. See Rucker v. Oasis Legal Fin., L.L.C., 632 F.3d 1231, 1235 (11th Cir. 2011). The same plenary standard governs the enforceability of a class action waiver. See Cruz v. Cingular Wireless, LLC, 648 F.3d 1205, 1210 (11th Cir. 2011).
A
A forum selection clause, when properly bargained for, “protects [the parties‘] legitimate expectations and furthers the vital interest of the justice system.” Atl. Marine Constr. Co. v. U.S. Dist. Ct. for thе W. Dist. of Tex., 571 U.S. 49, 63 (2013) (quotation marks omitted). Such clauses “should be given controlling weight in all but the most exceptional cases.” Id. See also M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972) (stating that a forum selection clause “should control absent a strong showing that it should be set aside“).
In Bremen, 407 U.S. at 15-18, the Supreme Court identified four grounds on which a court can refuse to enforce an otherwise-valid forum selection clause. These include if “(1) [its] formation was induced by fraud or overreaching; (2) the plaintiff effectively would be deprived of its day in court becаuse of the inconvenience or unfairness of the chosen forum; (3) the fundamental unfairness of the chosen law would deprive the plaintiff of a remedy; or (4) enforcement of the [forum selection clause] would contravene a strong public policy.” Lipcon v. Underwriters at Lloyd‘s, London, 148 F.3d 1285, 1292 (11th Cir. 1998) (citing Bremen, 407 U.S. at 15-18). Here, we consider the fourth ground—when enforcing the forum selection clause “would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or judicial decision.” Bremen, 407 U.S. at 15.
“Public policy is an amorphous concept . . . . Accordingly, it has been held that, the delicate and undefined power of courts to declare a contract void as contravening public policy should be exercised with great caution, and only in cases free from substantial doubt.” Dep‘t of Transp. v. Brooks, 328 S.E.2d 705, 713 (Ga. 1985) (alterations adopted and quotations omitted). In Georgia, a contractual provision generally does not violate public policy unless the Legislature has declared it so or enforсement of the provision would flout the very purpose of the law. See id.; Robinson v. Reynolds, 21 S.E.2d 214, 215 (Ga. 1942) (“Contracts that obviously and directly tend in a marked degree to bring about results that the law seeks to prevent cannot be made the ground of a successful suit . . . [and are] void as against public policy.“).
Although amorphous in concept, Georgia‘s public policy bar is built on a solid foundation—the Georgia Constitution and state statutes. “[T]hese are the sources that are first to be considered and
The Georgia Payday Lending Act,
A payday lender shall not . . . nor shall the loan contract designate a court for the resolution of disputes concerning the contract other than a court of competent jurisdiction in and for the county in which the borrower resides or the loan office is located.
Certain payday lenders have attempted to use forum selection clauses contained in payday loan documents in order to avoid the courts of the State of Georgia, and the General Assembly has determined that such practices are unconscionable and should be prohibited.
Based on this language, the Georgia Supreme Court ruled that the PLA established a clear public policy against “payday lenders [that] have attempted to skirt the laws of Georgia by use of forum selection clauses.” W. Sky Fin., LLC v. Georgia, 793 S.E.2d 357, 363 (Ga. 2016). In ruling that the loan agreements’ forum selection clause is unenforceable in this case, the district court found that
First, the Oasis lenders assert that the word “county” in
Georgia venue provisions commonly use the term “county” or “counties” in reference to Georgia counties, without explicitly saying so. See
Given the PLA‘s condemnation of out-of-state lenders using forum selection clauses to avoid Georgia courts in
Next, the Oasis lenders contend that the PLA does not apply to loan agreements between a Georgia borrower and an out-of-state lender because
Second, other provisions of the PLA make clear that the Act governs “any business” that “consists in whole or in part of making . . . loans of $3,000.00 or less” unless those entities are specifically exempted. See W. Sky Fin., 793 S.E.2d at 363 (quoting
In Western Sky, 793 S.E.2d at 363, the defendant argued that the PLA‘s “interstate commerce” language rendered the statute inapplicable to loans involving out-of-state lenders. The Georgia Supreme Court “reject[ed] the notion that this phrase was meant to exclude loans that involve interstate commerce from the scope of the [PLA].” Id. “If that were so, the [PLA] would be virtually meaningless because it would prohibit nothing.” Id. See also id. at 364 (“If, as Defendants argue, the [PLA] is limited only to transactions that do not involve intеrstate commerce, the [PLA] would effectively prohibit nothing at all.“). The Georgia Supreme Court went on to articulate how excluding loans involving an out-of-state lender would undermine the entire purpose of the PLA.
Given the clear and unambiguous scope of the [PLA] as a whole, to interpret that phrase as a definitional limitation upon payday lending and thereby exempt loans that involve interstate commerce from the prohibitions of the [PLA] would create such a contradiction and absurdity as to demonstrate that the legislature did not mean it to create such a limitation.
Id. at 365 (emphasis added).
Based on our review, Georgia statutes establish a clear public policy against out-of-state lenders using forum selection clauses to avoid litigation in Georgia courts. See
B
The plaintiffs argue, and the district court concluded, that the class action waivers contained in the loan agreements also contravene the purpose of the PLA and the Georgia Industrial Loan Act,
The PLA contains a provision stating that “a civil action may be brought on behalf of an individual borrower or on behalf of an ascertainable class of borrowers.”
These arguments miss the point. The district court‘s ruling flowed from its conclusion that enforcing class action waivers in this context would allow payday lenders to eliminate a remedy that was expressly сontemplated by the Georgia Legislature, and thereby undermine the purpose of the statutory scheme. That conclusion, if correct, renders the class action waiver unenforceable under Georgia law regardless of whether the provision is also procedurally or substantively unconscionable. See Brookfield Country Club, Inc. v. St. James-Brookfield, LLC, 696 S.E.2d 663, 667 (Ga. 2010) (refusing to “enforce a contractual provision which contravenes the statutory law of this state“); Terry v. St. Farm Fire & Cas. Ins. Co., 504 S.E.2d 194, 195 (Ga. 1998) (considering whether “[t]he underlying purpose” of the statute would be “contravened by enforcement of the specific terms of the agreement“). Accord Atl. Flooring Design Ctrs., Inc. v. R.G. Williams Const., Inc., 773 S.E.2d 868, 870 (Ga. Ct. App. 2015) (voiding a contractual provision because it would frustrate the public policy expressed in the Georgia Arbitration Code); Langford v. Royal Indem. Co., 430 S.E.2d 98, 102 (Ga. Ct. App. 1993) (“A contract provision normally should not be enforced where it conflicts with the general policy and spirit of the statute which governs it, although there may be no literal conflict; that is, it makes no difference whеther the statutory prohibition or command is expressed or implied.“).
The Oasis lenders may be correct in arguing that, when Georgia courts address whether a contractual provision is substantively unconscionable, they also “consider ‘the commercial reasonableness of the contract terms, the purpose and effect of the terms, the allocation of the risks between the parties, and similar public policy concerns.‘” Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868, 876 (11th Cir. 2005) (quoting NEC Techs., Inc. v. Nelson, 478 S.E.2d 769, 772 (Ga. 1996)). The public policy bar, howеver, remains an independent basis to hold a contractual provision unenforceable. See Glosser v. Powers, 71 S.E.2d 230, 231 (Ga. 1952) (“Even in the absence of fraud in the procurement of a contract, a contract which is against the policy of the law is void and unenforceable.“) A hornbook example of the public policy defense is that a court will not enforce a contractual provision that is illegal regardless of whether its obligations are mutual, its terms are conspicuоus, and the parties are well represented. See 17A Am. Jur. 2d Contracts § 247 (updated 2019). See also Stoudemire v. HSBC Bank USA, N.A., 776 S.E.2d 483, 484 (Ga. Ct. App. 2015) (highlighting the difference between “[c]ontracts to do illegal or immoral things, contracts against public policy, and gambling contracts,” which are legally void, and “fraudulent contracts and contracts entered under duress,” which are voidable by the injured party) (citations omitted).
The district court did not, and needed not, conclude that the PLA or the GILA expressly prohibited class action wаivers or created a statutory right to
To that point, the Oasis lenders make one additional argument wаrranting further discussion—that the PLA‘s fee-shifting provision eliminates the risk that enforcing the class action waiver would effectively prevent the plaintiffs from litigating their claims. In past cases, we have held that certain class action waivers were not unconscionable, in part because the agreements at issue contained a fee-shifting provision that, in practice, permitted the plaintiffs to pursue their claims individually. See Jenkins, 400 F.3d at 877-80; Randolph v. Green Tree Fin. Corp., 244 F.3d 814, 816-18 (11th Cir. 2001). Those cases, however, concerned whether the class action waivers were unconscionable because enforcement would prevent the plaintiffs from having their day in court. See Jenkins, 400 F.3d at 877-78. As discussed above, the district court here did not conclude that the class action waiver was procedurally or substantively unconscionable—or that the plaintiffs in this case could never litigate their claims individually—but relied on Georgia‘s public policy as expressed in the text and purpose of the PLA and the GILA.
The Oasis lenders point out that in Jenkins, 400 F.3d at 877-80, and Bowen v. First Family Financial Services, Inc., 233 F.3d 1331, 1336 (11th Cir. 2000), we held that class action waivers in arbitration clauses were not void as against public policy. But those cases do not call for a different result here. Neither Jenkins nor Bowen analyzed the PLA, the GILA, or Georgia‘s public policy against class action waivers in payday loan agreements. Instead, those cases concerned class action waivers in arbitration agreements—where the Federal Arbitration Act “create[s] a strong federal policy in favor of arbitratiоn.” Picard v. Credit Solutions, Inc., 564 F.3d 1249, 1253 (11th Cir. 2009). The Supreme Court, in multiple cases, has ruled that § 2 of the FAA overrides a state statute or common-law doctrine that attempts to undercut the enforceability of an arbitration agreement. See Kindred Nursing Ctrs. Ltd. P‘ship v. Clark, 137 S. Ct. 1421, 1425, 1426 (2017); DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463, 468, 471 (2015). The class action waiver here is not contained in an arbitration agreement, so
The PLA and the GILA establish the Georgia Legislature‘s intent to preserve class actions as a remedy for those aggrieved by payday lenders. Enforcing the class action waiver here would undermine the purpose and spirit of Georgia‘s statutory scheme. The class action waiver is therefore unenforceable, and the district court did not err in denying the Oasis lenders’ motion to strike the plaintiffs’ class allegations.
III
We affirm the district court‘s denial of the motion to dismiss and motion to strike.
AFFIRMED.