Lending Agreements’ Out-of-State Forum Selection Clauses and Class Action Waivers Violate Georgia Public Policy We Blog 11thCircuitBusinessBlog

Loan providers had been banned from enforcing out-of-state forum selection clauses and class action waivers in loan agreements because such conditions violate Georgia’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 who joined into identical loan agreements sued their loan providers, alleging that the 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 guidelines, O.C.G.A. 7-4-18. Lenders relocated to dismiss the issue and hit the borrowers’ class allegations, arguing that the mortgage agreements’ forum selection clauses needed the borrowers to sue them in Illinois and therefore the course action waivers banned a course action. Siding using the borrowers, the region court denied the lenders’ motions, holding that both clauses violated Georgia’s policy that is public had been unenforceable.

The Eleventh Circuit affirmed on interlocutory appeal and in an opinion by Judge Adalberto Jordan. The court reasoned that based on Georgia Supreme Court precedent, the Payday Lending Act establishes a clear public policy that prohibits loan providers from utilizing out-of-state forum selection clauses: the Act expressly bars loan providers from designating a court for the quality of disputes “other than the usual court of competent jurisdiction in and also for the county when the debtor resides or even the loan workplace is found. Continue reading →