Legal Finance Payday Loan Class Action Survives Challenge

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The Eleventh Circuit rejected a Georgia payday lender’s offer to enforce contract terms that would have forced a group of Georgia residents to file a lawsuit in Illinois and barred them from pursuing a class action lawsuit .

The six plaintiffs entered into separate loan agreements with Oasis Legal Finance LLC and its affiliates. The loans were generally less than $ 3,000 and were to be repaid from any recoveries the plaintiffs had received in their individual personal injury lawsuits.

The plaintiffs filed a class action lawsuit against Oasis in Georgia state court, claiming that the agreements violated Georgia’s payday loan law, industrial loan law and usury laws. Oasis managed to send the case back to the Federal District Court.

The loan agreements contained clauses requiring lenders to sue only in Illinois and barring their ability to file a class action. The district court was correct in dismissing Oasis’ request to dismiss this case on the basis of these provisions, the United States Court of Appeals for the Eleventh Circuit said.

“Georgia’s Payday Loan Law and Industrial Loan Law set out a clear public policy against the application of forum selection clauses in payday loan agreements and in favor of the preservation of class actions as recourse for people harmed by predatory lenders, ”the court said in its August 28 decision. .

Georgia’s Supreme Court ruled that the PLA has established a clear public policy against payday lenders who attempt to circumvent Georgian law through forum selection clauses, the court said. He rejected Oasis’ argument that the PLA does not apply to loan agreements between a Georgian borrower and an out-of-state lender.

The PLA and the ILA also contain provisions stating that class actions can be brought on behalf of a class of borrowers. “Applying the class action waiver here would undermine the purpose and spirit of Georgia’s legal regime,” the appeals court said.

The forum selection and class action waiver clauses in these contracts are therefore inapplicable, the court concluded.

The opinion was drafted by Judge Adalberto Jordan and joined by Judge Gerald Bard Tjoflat and Judge Harvey Schlesinger of the U.S. District Court for the Central District of Florida, sitting by designation.

The complainants are represented by The Summerville Firm LLC, Karsman McKenzie & Hart and Savage & Turner PC. The defendants are represented by Barnes & Thornburg LLP.

The case is Davis v. Oasis Legal Fin. Operating Co., 11th Cir., No. 18-10526, 08/28/19.

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