Several Georgians borrowed modest sums and secured those loans using the proceeds they might recover on personal injury claims. Repayment of the loans was contingent on the borrowers’ recovering on their personal injury claims. The borrowers filed a lawsuit against the lenders in Georgia state court alleging that the interest rates on the loans were usurious and violated the Georgia’s Payday Lending Act and Industrial Loan Act. The lenders removed the case to federal court and argued that the loan agreements required such a lawsuit to be filed in Illinois and also forbid class actions. But, could those requirements be enforced?

The United States Court of Appeals for the Eleventh Circuit concluded that those requirements could not be enforced. Davis v. Oasis Legal Finance Operating Co., Inc., Case No. 18-10526 (decided August 27, 2019). The Court concluded that the forum selection clause conflicted with a provision in the Payday Lending Act that prevented a lender from designating a court for the resolution of disputes other than where the borrower resides or the loan office is located. Further, that text of both the Payday Lending Act and the Industrial Loan Act expressly contemplated claims being made as class actions. Therefore, the Court concluded that enforcing the class action waivers would violate Georgia public policy by eliminating a remedy the Georgia Legislature expressly contemplated.

Parties attempting to rely on forum selection clauses and class action waivers in Georgia should note this case. They should not assume that Georgia courts will enforce them. Public policy may trump the parties’ bargain.