Davis v. Oasis Legal Fin. Operating Co.

• Decision Date: 28 August 2019
• Docket Number: No. 18-10526,18-10526
• Citation: 936 F.3d 1174
• Parties: 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.
• Court: U.S. Court of Appeals — Eleventh Circuit

936 F.3d 1174

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.

No. 18-10526

United States Court of Appeals, Eleventh Circuit.

August 28, 2019

James Darren Summerville, Angela R. Fox, Kurt G. Kastorf, Maxwell Kent Thelen, The Summerville Firm, LLC, Atlanta, GA, Jeremy S. McKenzie, Karsman McKenzie & Hart, Robert Bartley Turner, Savage & Turner, PC, Savannah, GA, for Plaintiffs-Appellees.

William M. McErlean, Christine Skoczylas, Barnes & Thornburg, LLP, Chicago, IL, for Defendants-Appellants.

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, 16 How. 314, 14 L.Ed. 953 (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 , 9 Ga.App. 520, 71 S.E. 920, 921 (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, 134 S.Ct. 568, 187 L.Ed.2d 487 (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, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) (stating that a forum selection clause "should control absent a strong showing that it should be set aside").

In Bremen , 407 U.S. at 15–18, 92 S.Ct. 1907, the Supreme Court identified four grounds on which a court can refuse to enforce an otherwise-valid forum selection clause. These include if "(1) [its] formation was induced by fraud or overreaching; (2) the plaintiff effectively would be deprived of its day in court because of the inconvenience or unfairness of the chosen forum; (3) the fundamental unfairness of the chosen law would deprive the plaintiff of a remedy; or (4) 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 Bremen , 407 U.S. at 15–18, 92 S.Ct. 1907 ). Here, we consider the fourth ground—when enforcing 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, 92 S.Ct. 1907.

"Public policy is an amorphous concept .... Accordingly, it has been held that, the delicate and undefined power of courts to declare a contract void as contravening public policy should be exercised with great caution, and only in cases free from substantial doubt." Dep’t of Transp. v. Brooks , 254 Ga. 303, 328 S.E.2d 705, 713 (1985) (alterations adopted and quotations omitted). In Georgia, a contractual provision generally does not violate public policy unless the Legislature has declared it so or enforcement of the provision would flout the very purpose of the law. See id. ; Robinson v. Reynolds , 194 Ga. 324, 21 S.E.2d 214, 215 (1942) ("Contracts that obviously and directly tend in a marked degree to bring about results that the law seeks to prevent cannot be made the ground of a successful suit ... [and are] void as against public policy.").

Although amorphous in concept, Georgia’s public policy bar is built on a solid foundation—the Georgia Constitution and state statutes. "[T]hese are the sources that are first to be considered and that often may be conclusive." Strickland v. Gulf Life Ins. Co., 240 Ga. 723, 242 S.E.2d 148, 151 (1978) (quotation omitted). "Statutes, of course, are perhaps the clearest expressions of the public policy of [Georgia]." Dove v. Dove , 285 Ga. 647, 680 S.E.2d 839, 842 (2009). See also Sonja Laesen, 7 Georgia Jurisprudence § 3:3 (updated 2019) ("The only authentic and admissible evidence of public policy of a state is its constitution, laws, and judicial decisions."). For example, O.C.G.A. § 13-8-2 provides that "[a] contract which is against the policy of the law cannot be enforced," and lists particular agreements that are unenforceable as against public policy. Although § 13-8-2 does not address the specific provisions at issue in this case, the statute makes clear that its list is "nonexclusive" and Georgia courts have held that...