|
Remanding a putative class action payday loan dispute to state court due to a lack of complete diversity, a South Carolina federal district court nonetheless determined in dicta that the parties'arbitration agreement and class action waiver were valid and enforceable.
In Smalls v. Advance America, Civ. A. No. 2:07-3240-TLW-TER, 2008 WL 4177297 (D. S.C. Sept. 5, 2008), Smalls filed a putative class action against payday loan company Advance in state court. After Advance removed the matter to federal court, Smalls moved to have the matter remanded, alleging that the parties to the suit were not completely diverse.
Advance argued that the diversity requirements were fulfilled by non-citizen plaintiff class members. Alternatively, Advance argued that its dual citizenship – incorporation in Delaware and principal place of business in South Carolina – precluded a finding of complete diversity. Advance also argued that Smalls’s claim should be compelled to individual arbitration pursuant to an agreement and class action waiver between the parties.
First, the Court rejected Advance’s argument that the parties were completely diverse, noting that Advance’s formulation of the diversity rule amounted to "alternative" instead of "dual" citizenship for corporations. Such a rule would require a court to completely ignore Advance’s South Carolina citizenship in any diversity analysis. Therefore, the Court found no complete diversity and remanded the matter to state court.
However, for purposes of judicial economy, the Court did opine in dicta that the parties'arbitration agreement and class action waiver were valid and enforceable. It noted that there was no per se rule in South Carolina invalidating all class action waivers as violative of public policy, nor could Smalls cite to any contrary authority that would tie his abstract policy arguments to the facts of the case.
Finally, the Court observed that Smalls failed to present any evidence that the arbitration agreement was unconscionable due to a lack of meaningful choice or oppressiveness in any substantive term.
Accordingly, the Court remanded the matter back to the state court, but expressed its opinion in dicta that the parties'arbitration agreement and class action waiver were valid and enforceable.
Subscribe to a free weekly update on ADR case law and
legislation
|