Loan providers were banned from enforcing out-of-state forum selection clauses and class action waivers in loan agreements because such conditions violate GeorgiaвЂ™s public policy, the Eleventh Circuit held in Davis v. Oasis Legal Finance working Co., 2019 WL 4051592 (11th Cir. Aug. 28, 2019). A course of borrowers whom joined into identical loan agreements sued their loan providers, alleging that the agreements violated GeorgiaвЂ™s Payday Lending Act, O.C.G.A. В§ 16-17-1 et seq., Industrial Loan Act, O.C.G.A. В§ 7-3-1 et seq., and usury regulations, O.C.G.A. В§ 7-4-18. The lenders relocated to dismiss the issue and hit the borrowersвЂ™ class allegations, arguing that the mortgage agreementsвЂ™ forum selection clauses needed the borrowers to sue them in Illinois and therefore the course action waivers banned a course action. Siding utilizing the borrowers, the region court denied the lendersвЂ™ motions, keeping that both clauses violated GeorgiaвЂ™s policy that is public had been unenforceable.
Lenders argued that the Payday Lending Act could possibly be interpreted to allow non-Georgia forum selection clauses since the Act failed to require disputes to specifically be brought in a Georgia county, it just so long as disputes needs to be settled in a вЂњcounty when the borrower resides or perhaps the loan office is situated.вЂќ (emphasis included). The court disposed with this argument, reasoning that Georgia place conditions usually make use of the term that is generalвЂќ whenever discussing Georgia counties. Plus the lendersвЂ™ argument made sense that is little regarding the ActвЂ™s clear prohibition on out-of-state forum selection clauses.
For a couple of reasons, the court additionally rejected the lendersвЂ™ argument that the Payday Lending Act does not connect with loans by out-of-state loan providers. First, the Georgia Supreme Court has refused this argument. Second, the statute broadly is applicable to вЂњany businessвЂќ that вЂњconsists in entire or perhaps in part of making . . . loans of $3,000.00 or less.вЂќ 3rd, if this argument held water, it might make the ActвЂ™s prohibition on out-of-state forum selection clauses meaningless.
So as to persuade the court otherwise, lenders pointed to prior Eleventh Circuit casesвЂ”Jenkins v. First American Cash Advance of Georgia, LLC, 400 F.3d 868 (11th Cir. 2005), and Bowen v. First Family Financial Services, Inc., 233 F.3d 1331 (11th Cir. 2000)вЂ”which held that class action waivers in arbitration clauses are not void as against general public policy. The court had not been convinced, emphasizing that Jenkins and Bowen class that is involved waivers in arbitration agreements. Consequently, the Federal Arbitration Act used and created a very good policy that is federal benefit of arbitration. Furthermore, Supreme Court precedent establishes that area 2 of this Federal Arbitration Act overrides a continuing state statute or common-law doctrine that efforts to undercut the enforceability of a arbitration contract. Because an arbitration agreement had not been at problem right here, the court explained, Jenkins and Bowen are distinguishable together with Federal Arbitration Act will not use.