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Davis v. Oasis Legal Finance Operating Company, LLC

United States Court of Appeals, Eleventh Circuit

August 28, 2019

LIZZIE DAVIS, individually 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,
v.
OASIS LEGAL FINANCE OPERATING COMPANY, LLC, OASIS LEGAL FINANCE, LLC, OASIS LEGAL FINANCE HOLDING COMPANY, LLC, Defendants-Appellants.

          Appeals from the United States District Court for the Southern District of Georgia D.C. Docket No. 3:17-cv-00022-DHB-BKE

          Before TJOFLAT and JORDAN, Circuit Judges, and SCHLESINGER, District Judge. [*]

          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 lenders 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 enforcing forum selection clauses in payday loan agreements and in favor of preserving class actions as a remedy for those aggrieved by predatory lenders. If Georgia's public policy regarding payday lenders is a horse, as Justice Burrough suggested, it carries these borrowers safely to a Georgia courthouse.

         I

         The plaintiffs entered into identical loan agreements with Oasis Legal Finance, LLC; Oasis Legal Finance Operating Company, LLC; and Oasis Legal Finance 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 Georgia's Payday Lending Act, O.C.G.A. § 16-17-1 et seq., Industrial Loan Act, O.C.G.A. § 7-3-1 et seq., and usury laws, O.C.G.A. § 7-4-18. The Oasis lenders removed the suit to federal court and moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) and to strike the plaintiffs' class allegations under Federal Rule of Civil Procedure 12(f). The Oasis lenders argued, among other things, that the loan agreements' forum selection clause required the plaintiffs to bring suit in Illinois, and that the class action waiver barred their ability to file a class action. The plaintiffs responded that these provisions violated Georgia public policy and, therefore, were unenforceable.[2]

         Applying Georgia law, the district 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 § 16-17-1(d)). The district court similarly ruled that the class action waiver contravened public policy because, when the Georgia Legislature enacted the PLA and the GILA, it expressly included class actions as a remedy for those aggrieved by payday lenders. The district court reasoned that the Georgia Legislature would not create such a remedy and then allow lenders to "effectively wipe away this consumer protection with a waiver in a single paragraph of a six-page, single-spaced agreement." Id. at *5.

         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 selection clause and class action waiver are unenforceable. We agreed to consider both issues, and now affirm.[3]

         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 the 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 ...


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