FYI: 7th Cir Holds UCC Financing Statement May Incorporate List of Collateral By Reference

The U.S. Court of Appeals for the Seventh Circuit recently reversed a bankruptcy court's ruling that a lender failed to perfect its security interest because its UCC financing statement failed to provide sufficient indication of the secured collateral under Article 9 of the Uniform Commercial Code.

 

In so doing, the Seventh Circuit concluded that under the Illinois version of the UCC, a financing statement's reference to an unattached security agreement sufficiently "indicates" the secured collateral as required by Article 9, and need not "contain" a specific description of the collateral within its four corners.

 

A copy of the opinion is available at:  Link to Opinion

 

An Illinois business that purchased and refurbished trucks for resale ("Debtor") obtained a commercial loan (the "Loan") from a retail banking lender ("Lender").  As collateral for the Loan, Lender was granted a security interest in substantially all of Debtor's assets, including accounts, cash, equipment, inventory and proceeds. 

 

Lender sought to perfect its interest by timely filing a financing statement with the Illinois Secretary of State, which purported to cover "[a]ll Collateral described in First Amended and Restated Security Agreement dated March 9, 2015 between Debtor and Secured Party."

 

Two years later, the Debtor defaulted on the Loan and filed a bankruptcy petition under Chapter 7.  The Lender sought recovery of $7.6 million on the loan.  The Trustee argued that Lender's security interest was not properly perfected because its financing statement did not independently describe the underlying collateral, instead referencing the security agreement.  As such, the Trustee sought to avoid the Lender's interests in the Debtor's property under the agreement.

 

In ruling upon the parties' motions for judgment on the pleadings, the bankruptcy court entered judgment in the Trustee's favor, holding that the Loan's financing statement failed to contain any description of collateral with the particularized kind of notice required by Article 9 of Illinois' UCC, 810 ILCS 5/9-101, et seq.  The parties jointly certified an immediate appeal of the bankruptcy court's decision, which was granted by the Seventh Circuit, leading to the instant appeal.

 

As the parties did not dispute the validity of the loan nor the legitimacy of the Lender's security interest, the sole issue on appeal was whether Illinois's version of Article 9 of the Uniform Commercial Code requires a financing statement to contain a specific description of the secured collateral, or if incorporating a description by reference to an unattached security agreement sufficiently "indicates" the collateral. 

 

To review this issue, the appellate court looked to relevant state precedent, analogous decisions and dicta to apply the UCC as interpreted by Illinois courts and governed by Illinois law.  Pisciotta v. Old Nat'l Bancorp, 499 F.3d 629, 635 (7th Cir. 2007); In re Blanchard, 819 F.3d 981, 984 (7th Cir. 2016).  In applying the Illinois courts' application and interpretation of the UCC, statutory construction starts with a review of the statutory language itself, to be given its plain and ordinary meaning if clear and unambiguous, and must be viewed in light of the statute as a whole.

 

As you may recall, Article 9 of Illinois' UCC provides in relevant part that a financing statement must: (1) provide the name of the debtor; (2) provide the name of the secured party or its representative; and (3) indicate the collateral covered by the financing statement.  810 Ill. Comp. Stat. 5/9-502(a).  Section 9-504 further provides that a financing statement sufficiently indicates the collateral that it covers if the financing statement states: (1) a description of the collateral pursuant to Section 9-108; or (2) an indication that the financing statement covers all assets or all personal property."  810 ILCS 5/9-504.

 

Here, the Seventh Circuit was tasked with deciding whether Article 9's language required that the four corners of the financing statement include a specific description of the secured collateral, or if a description by reference, such as the agreement at issue here, adequately "indicates" the collateral.

 

The Seventh Circuit's analysis initially focused on the text of section 9-108, which provides six examples to "reasonably identify" secured property in a financing statement, including "any other method, if the identity of the collateral is objectively determinable."  810 ILCS 5/9-108(b)(6).  Notably, this language was expanded as part of Illinois' revisions to its versions of the UCC in 2001 to adopt the system of "notice filing," and no longer require financing statements to "contain" a description of the secured collateral, but must only "indicate" the secured collateral.  810 ILCS 5/9-502, cmt. 2; 5/9-504 cmt. 2.

 

Interpreting the word "indicate" in this context and by its ordinary meaning, the Seventh Circuit reasoned that the Article 9 "allows a party to 'indicate' collateral in a financing statement by pointing or directing attention to a description of that collateral in the parties' security agreement." 

 

The Court further noted that this interpretation is consistent with prior rulings and other courts' construction of Article 9's purpose to ensure "adequate public notice" of liens and security interests to avoid "creat[ing] a windfall for a bankruptcy estate or a minefield for lenders." In re Blanchard, 819 F.3d 981, 988–89 (7th Cir. 2016) (internal and additional citations omitted).

 

Next, the Seventh Circuit considered the distinction between: (i) a security agreement, which defines and limits the collateral, and; (ii) a financing statement, which puts third parties on notice that a creditor may have an existing security interest in the property and further inquiry may be necessary and requires less detail.  In re Grabowski, 277 B.R. 388, 391 (Bankr. S.D. Ill. 2002); Helms v. Certified Packaging Corp., 551 F.3d 675, 680 (7th Cir. 2008). 

 

Citing approaches from all three Illinois bankruptcy courts, the Seventh Circuit concluded that a financing statement's incorporation by reference is permissible in Illinois as "any other method" under § 9-108, so long as the identity of the collateral is objectively determinable.  See In re Grabowski, 277 B.R. 388 (Bankr. S.D. Ill. 2002); In re Duesterhaus Fertilizer, 347 B.R. 646 (Bankr. C.D. Ill. 2006); In re Macronet Group, Ltd., 2004 WL 2958447 (Bankr. N.D. Ill. 2004).

 

As the financing statement at issue adequately described the security interest by referencing "[a]ll [c]ollateral" as described in the underlying security agreement between the parties in compliance with Article 9, the Seventh Circuit held that the Trustee was not entitled to avoid the Lender's lien under the Bankruptcy Code, and reversed and remanded for further proceedings in the bankruptcy court.

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
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FYI: 8th Cir Allows External Evidence to Oppose Remand Under CAFA's "Local Controversy" Exception

The U.S. Court of Appeals for the Eighth Circuit recently affirmed a trial court's order denying a motion to remand their putative class action to Arkansas state court based on the federal Class Action Fairness Act's (CAFA) "local controversy" exception to jurisdiction because the consumer plaintiffs failed to meet their burden to demonstrate that they sought significant relief from a defendant that was a citizen of the state.

 

In so ruling, the Eighth Circuit held that the trial court did not err when it considered extrinsic evidence in the form of affidavits from the defendant company because a court "may inquire by affidavits or otherwise, into the facts as they exist," when deciding whether the court has jurisdiction.

 

A copy of the opinion is available at: https://law.justia.com/cases/federal/appellate-courts/ca8/16-1152/16-1152-2019-08-30.html

 

An Illinois corporation ("company") offered a free rewards program to its customers. An Arkansas consumer allegedly paid more for products from the company than another customer "because he did not present a rewards card at checkout," like the other customer did.

 

Based on these two transactions, the consumer filed a class action complaint in state court in Arkansas against the company and two of its district managers who are Arkansas citizens claiming the defendants violated Arkansas's statutory prohibition on price discrimination in the sale of manufactured products.

 

Specifically, the consumer alleged that the company violated Arkansas Code § 4-75-501 because its customer rewards program willfully refused or failed to give all consumers the rebates and discounts that it provided to its rewards cards members. The consumer also alleged that the Arkansas citizen district managers supposedly "implemented the unlawful program" and that they were "independently" liable.

 

Asserting jurisdiction under CAFA, the defendants removed the case to federal court. The consumer moved to remand to state court based on the CAFA's "local controversy" exception arguing that the Arkansas district managers were "significant" defendants, as required to defeat jurisdiction.

 

In response to the motion to remand, the defendants submitted affidavits establishing that the "district managers do not decide which products to offer in the program, nor do they decide the extent of the discount."  Instead, the company makes those decisions at the corporate level and the district manages have "no discretion to vary the products or the prices."

 

The trial court denied the motion to remand based on the affidavits "finding that the district managers were not significant defendants under CAFA," and concluding that the consumer had fraudulently joined them to avoid federal jurisdiction. The trial court also granted defendants' motion to dismiss because the company offered the same discount to the consumer, "but he refused to sign up for the free program, essentially declining the discounted price."

 

This appeal followed.

 

Initially, the Eighth Circuit observed that the CAFA exempts "local controversies from federal jurisdiction."

 

As you may recall, a federal trial court "must decline to exercise jurisdiction over a class action when a defendant "from whom significant relief is sought by members of the plaintiff class" and "whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class" is a citizen of the state in which the plaintiff originally filed the class action."  28 U.S.C.§ 1332(d)(4)(A).

 

The party seeking remand has the burden to prove this narrow exception applies to defeat federal jurisdiction.

 

The Eighth Circuit framed the issue before it as whether the district managers were "significant"  defendants under section 1332(d)(4)(A).  However, the Eighth Circuit noted that it could not resolve this by looking at the complaint.  The complaint did not allege "any substantive distinctions" between the company's conduct and the district managers' conduct.  The complaint also did not allege that the district managers had the discretion to determine how to implement the rewards program.  Instead, the complaint merely alleged that the district managers "acted on behalf of" the company.  These vague allegations failed to demonstrate that the district managers' conduct was "an important ground for the asserted claims in view of the alleged conduct of all the defendants."

 

In contrast, the affidavits established that the district managers' conduct was not a "significant basis" for the claims asserted.  Instead, the company was the "target" defendant. 

 

In response, the consumer argued that the trial court erred by considering this extrinsic evidence.  The Eighth Circuit rejected the consumer's argument because "when a question of the district court's jurisdiction is raised, . . . the court may inquire by affidavits or otherwise, into the facts as they exist."

 

Thus, because the district managers' conduct did not form a significant basis for the consumer's claim, the Eighth Circuit held that the trial court did not err when it determined that the consumer failed to meet their burden to demonstrate that the local controversy exception to CAFA jurisdiction applied.

 

Finally, the Eighth Circuit also rejected the consumer's argument that the trial court wrongly dismissed the complaint because the Arkansas Supreme Court's ruling in Rhodes v. Kroger Co., held that a rewards program did not violate section 4-75-501 when a plaintiff, like here, declines to join the free rewards program.

 

Therefore, the Eighth Circuit affirmed the trial court's judgment in favor of the defendant company.

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
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Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

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FYI: DC Cir Upholds Denial of Class Cert Due to Individualized Inquiries for Injury and Causation

The U.S. Court of Appeals for the D.C. Circuit recently held that a trial court did not abuse its discretion in denying class certification on the ground that common issues did not predominate where individual determinations of injury and causation would be required for at least 2,2017 of the 16,065 putative class members.

Accordingly, the D.C. Circuit affirmed the trial court's denial of class certification.

A copy of the opinion is available at:  Link to Opinion

The plaintiffs ("Plaintiffs") were customers of the four largest freight railroads in the United States (collectively, "Defendants").  Plaintiffs sued the Defendants alleging that they violated section 1 of the Sherman Act, 15 U.S.C. § 1, by conspiring to fix rate-based fuel surcharges.  They also sought treble damages under section 4 of the Clayton Act, 15 U.S.C. § 15.

Plaintiffs moved to certify a class under Fed. R. Civ. P. 23(b)(3).  The proposed class consisted of all shippers who paid rate-based fuel surcharges for unregulated services purchased from the Defendants between July 1, 2003 and December 31, 2008. 

To show that causation, injury, and damages could be proved on a class-wide basis, the Plaintiffs invoked two regression models constructed by their economist expert ("Economist Expert").

After the trial court initially certified the class, the D.C. Circuit vacated the certification order on interlocutory review and remanded the matter for reconsideration in light of the United States Supreme Court decision in Comcast Corp. v. Behrend, 569 U.S. 27 (2013).

In so ruling, the D.C. Circuit explained that common questions "cannot predominate where there exists no reliable means of proving classwide injury in fact."  The Court further expressed concern with the trial court's failure to address "the damages model's propensity towards false positives," which left the D.C. Circuit with no way of knowing whether "the overcharges the damages model calculates for class members [are] any more accurate than the obviously false estimates it produces for legacy shippers."

Finally, the D.C. Circuit stressed that Rule 23, as construed in Comcast, requires a "hard look at the soundness of statistical models that purport to show predominance."

On remand, after permitting supplemental discovery and expert reports, the district court denied class certification.

Plaintiffs then filed a petition for permission to appeal the class-certification decisions under Rule 23(f), which was granted by a motions panel of the D.C. Circuit.

On appeal, after initially confirming that it had jurisdiction, the D.C. Circuit analyzed Rule 23, which "sets forth various requirements of the certifications of class actions."

As you may recall, "Rule 23(a) provides four 'prerequisites' for any class certification, including that there must be 'questions of law or fact common to the class.'"

"If these prerequisites are met, Rule 23(b)(3) permits certification if, among other things, 'questions of law or fact common to class members predominate over any questions affecting only individual members.'" 

A "common" question is one that is "capable of classwide resolution – which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke."  An "individual" question is on for which "members of a proposed class will need to present evidence that varies from member to member."

"The party seeking class certification 'must affirmatively demonstrate' that the commonality and predominance requirements are satisfied."

The Plaintiffs asserted claims under section 4 of the Clayton Act, which provides treble damages to any person "injured in his business or property by reason of anything forbidden in the antitrust laws."  To establish liability under section 4, each plaintiff must not only prove an antitrust violation, but also an injury to its business or property and a causal relation between the two. 

"Without common proof of injury and causation, [Plaintiffs] cannot establish predominance."

Here, the D.C. Circuit ruled that the Economist Expert's model "does not prove classwide injury."

Specifically, the model indicated that the proposed class consisted of 16,065 shippers, and the Plaintiffs alleged that a conspiracy injured every one of them.  However, the damages model also indicated that 2,037 members of the proposed class – or 12.7% - suffered "only negative overcharges" and therefore no injury from any conspiracy.

Thus, the trial court "held that the need for 'individualized inquiries to determine which of at least 2,037 (and possibly more) class members were actually injured by the alleged conspiracy,' . . . precluded a finding of  predominance."

The D.C. Circuit found no abuse of discretion in this assessment of predominance by the trial court.

Plaintiffs argued that their model only measured negative damages because of normal prediction error, but the D.C. Circuit ruled that the trial court's determination was not clearly erroneous where it found that prediction error could not "account for all – or even a substantial portion of – the 2,047 shippers that the model shows to be uninjured."

Plaintiffs next argued that predominance does not require common evidence extending to all class members.  However, the D.C. Circuit noted that in the initial appeal it held that, to establish predominance, the Plaintiffs must "show that they can prove, through common evidence, that all class members were in fact injured by the alleged conspiracy."

Moreover, even assuming the trial court "correctly recognized a de minimis exception to the general rule that, for claims under section 4 of the Clayton Act, causation and injury must be 'capable of classwide resolution,'" the district court also "reasonably concluded that such a de minimis exception would not encompass this case."

The D.C. Circuit noted that in reaching its ruling, the trial court explained that the "few reported decisions" involving uninjured class members "suggest that 5% to 6% constitutes the outer limits of a de minimis number," which is less than half the 12.7% at issue in this case.

Moreover, the D.C. Circuit noted, the trial court "considered raw numbers as well as percentages: six percent of a 'class totaling only fifty-five' members might be de minimis, but 12.7 percent of this class yields '2,037 uninjured class members' (according to the common proof), all of whom would need individualized adjudications of causation and injury."

Additionally, the trial court stressed that the Plaintiffs proposed no way, short of individual trials, "to reduce this number and segregate the uninjured from the truly injured."

Under these facts, the D.C. Circuit found no abuse of discretion by the trial court.

Finally, the D.C. Circuit observed that "[i]n [In re Asacol Antitrust Litig., 907 F.3d 42 (1st Cir. 2018)], the First Circuit noted the absence of even a single case 'allowing, under Rule 23, a trial in which thousands of class members testify.'"

The First Circuit declined to create the "first such case," as did the D.C. Circuit.

Accordingly, "[g]iven the need in this case for at least 2,037 individual determinations of injury and causation," the D.C. Circuit held that the trial court "did not abuse its discretion in denying class certification on the ground that common issues do not predominate."

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320

Fax: (312) 284-4751

Mobile:  (312) 493-0874

Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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FYI: 11th Cir Holds Lender's Forum Selection and Class Action Waiver Clauses Unenforceable

The U.S. Court of Appeals for the Eleventh Circuit recently affirmed the denial of a lender's motions to dismiss and to strike a complaint filed on behalf of a class of borrowers who entered into loan agreements with the lenders.

 

In so ruling, the Eleventh Circuit held that the loan agreement's forum selection clause and class action waivers were unenforceable under Georgia's Payday Lending Act and Industrial Loan Act, as enforcement would undermine the purpose and spirit of Georgia's statutory scheme including to preserve class actions as a remedy.

 

A copy of the opinion is available at:  Link to Opinion

 

A class of plaintiff borrowers ("Borrowers") entered into identical loan agreements ("Agreements") with a lender and its affiliated entities ("Lenders").  The borrowers' loans were generally $3,000 or less, and were to be repaid from the borrowers' recoveries in separate personal injury lawsuits, and thus, were contingent upon the success of their lawsuits.

 

In February 2017, Borrowers filed a class action complaint against Lenders in Georgia state court alleging violations of Georgia's Payday Lending Act, O.C.G.A. § 16-17-1 et seq., the Industrial Loan Act, O.C.G.A. § 7-3-1 et seq., and usury laws, O.C.G.A. § 7-4-18.  The Lenders removed the class action suit to federal court and moved to dismiss and strike the complaint on the basis that the Agreement contained a forum selection clause requiring Borrowers to file suit in Illinois, and further waived their ability to file a class action. 

 

The trial court denied the Lenders' motions, holding that the forum selection clause and class action waiver were unenforceable and contravened public policy and the intent of Georgia Legislature because the Payday Lending Act and Industrial Loan Act include express provisions providing class action lawsuits as a vehicle for consumers aggrieved by payday lenders.  This appeal followed.

 

On appeal, the Eleventh Circuit was tasked with considering whether the trial court erred in concluding that the Agreements' forum selection clause and class action waiver were unenforceable.

 

Initially considering the validity of the forum selection clause, the Eleventh Circuit cited rulings by the Supreme Court of the United States, holding that such clauses "should be given controlling weight in all but the most exceptional cases," (Atl. Marine Constr. Co. v. U.S. Dist. Ct. for the W. Dist. Of Tex., 571 U.S. 49, 63 (2013)) and identifying four grounds on which a court can refuse to enforce such clauses: "(1) [if its] formation was induced by fraud or overreaching; (2) [if] the plaintiff effectively would be deprived of its day in court because of the inconvenience or unfairness of the chosen forum; (3) [if] the fundamental unfairness of the chosen law would deprive the plaintiff of a remedy; or (4) [if] 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 M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15-18 (1972).

 

Here, the Eleventh Circuit considered the fourth ground—whether 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."  Noting that Georgia's public policy bar is built on its Constitution and state statutes, which provide that "[a] contract which is against the policy of the law cannot be enforced," and a nonexclusive list of such particular agreements (O.C.G.A. § 13-8-2), the Court acknowledged that it could look to other Georgia statutes (i.e., those in the case at bar) to determine whether the state has a strong public policy against enforcing forum selection clauses in favor of out-of-state payday lenders.

 

As you may recall, Georgia's Payday Lending Act provides, in relevant part, that "[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."  O.C.G.A. § 16-17-2(c)(1). The Georgia Legislature further 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."  § 16-17-1(d).  The district court found these provisions conclusive in its determination that the forum selection clause was unenforceable under Georgia public policy. 

 

On appeal, Lenders argued that subsection 16-17-2(c)(1) of the Payday Lending Act's use of the term "county" does not specify that the county must be in Georgia; thus, Lenders may select as forum the county where their "loan office is located"—in this case, Cook County, Illinois.  The Eleventh Circuit rejected Lenders' argument, noting that Georgia venue provisions commonly use the term "county" or "counties" in reference to Georgia counties, without explicitly saying so, while rendering the language in subsection 16-17-1(d) meaningless.  See Ga. Const., Art. VI, § 2, ¶¶ III, IV, VI; O.C.G.A. § 9-10-93.

 

Next, the Lenders contended that the Payday Lending Act doesn't apply to the Agreements between Georgia Borrowers and the out-of-state Lenders because § 16-17- 1(d) states that "[p]ayday lending involves relatively small loans and does not encompass loans that involve interstate commerce."  This argument, too, was rejected by the Eleventh Circuit, because: (i) its argument contradicts its theory that the term "county" was meant to include counties outside the State of Georgia; (ii) other provisions of the Payday Lending Act 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 (W. Sky Fin., LLC v. Georgia, 793 S.E. 2d 357, 363 (Ga. 2016) and out-of-state lenders are not exempt (§ 16-17-2(a)(1)–(4)) and; (iii) excluding loans involving out-of-state lenders from coverage would render the Payday Lending Act's prohibition of out-of-state forum selection clauses meaningless (citations omitted). 

 

Because Georgia statutes establish a clear public policy against out-of-state lenders using forum selection clauses to avoid litigation in Georgia courts, the appellate court concluded that the district court correctly denied the Lenders' motions to dismiss and motion to strike on that ground.

 

Having rejected the Lenders' argument that the Agreements' forum selection clause was unenforceable, the appellate court turned to its review of the class action waiver.

 

As you may recall, both the Georgia Payday Lenders Act and Industrial Loan Act contain provisions expressly provided that claims under the respective statutes may be brought as class actions. § 16-7-3 ("a civil action may be brought on behalf of an individually borrower or on behalf of an ascertainable class of borrowers."); § 7-3-29(e) ("a claim for violation of this chapter against an unlicensed lender may be asserted in a class action.").  In denying the Lenders' motions to dismiss and strike the Borrowers' complaint, the district court stated that the Georgia Legislature "expressly contemplated a specific remedy—[a] class action—for persons aggrieved by predatory lending . . . [and] did not expressly create the class action remedy so that predatory lenders could effectively wipe away this consumer protection with a waiver . . . "

 

On appeal, the Lenders argued that the trial court erred by failing to consider whether the provisions were procedurally or substantively unconscionable, and that neither statute prohibits class action waivers or creates a statutory right to pursue a class action.

 

The Eleventh Circuit agreed with the trial court's reasoning that enforcing class action waivers in this context would allow payday lenders to eliminate a remedy expressly contemplated by Georgia Legislature and undermine the purpose of the statutes, thus rendering any such provision unenforceable whether or not it is also procedurally or substantively unconscionable (citations omitted). 

 

Acknowledging that Georgia courts may 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)) which remain an independent basis to hold a contractual provision unenforceable.  Glosser v. Powers, 71 S.E.2d 230, 231 (Ga. 1952).

 

Lastly, the Lenders argued that the Payday Lending Act's fee-shifting provision eliminates risk that enforcing the class action waiver would effectively prevent plaintiffs from litigating their claims.  While acknowledging that it has held that certain class action waivers were not unconscionable, in part because fee-shifting provisions permitted plaintiffs to pursue their claims individually, the Eleventh Circuit distinguished those cases by noting that enforcement of those provisions would prevent the plaintiffs from having their day in court.  See Jenkins, 400 F.3d at 877-78. 

 

Here, the trial court did not conclude that the class action waiver was unconscionable or that the Borrowers were barred from litigating their claims individually.  Moreover, the authority cited by Lender concerned class action waivers in arbitration agreements, where the Federal Arbitration Act "create[s] a strong federal policy in favor of arbitration.  Picard v. Credit Solutions, Inc., 564 F.3d 1249, 1253 (11th Cir. 2019).  For these reasons, this argument, too, was rejected.

 

Because the Georgia's Payday Lending Act and Industrial Labor Act establish the state's legislatures intent to preserve class actions as a remedy, the Eleventh Circuit affirmed the trial court's denial of the Lenders' motion to dismiss and motion to strike.

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

Alabama   |   California   |   Florida   |   Georgia   |   Illinois   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

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