Federal Court in Florida Says Putative Class Action Challenging Litigation Funding Practices Should Be In Illinois State Court

Federal Court in Florida Says Putative Class Action Challenging Litigation Funding Practices Should Be In Illinois State Court

A putative class action filed against a litigation funding company – claiming that the company violated usury, lending practices, and other laws – has been dismissed as filed in the wrong forum, although the plaintiff may seek to proceed in another jurisdiction.

In Smith v. Oasis Legal Fin., LLC, Case No. 8:17-cv-2163-T-33JSS, 2017 U.S. Dist. LEXIS 180081 (M.D. Fla. Oct. 31, 2017), the court dismissed the case under the doctrine of forum non conveniens, adding that because the court decided “that the case should be litigated in a different forum, the Court declines to determine whether the class action allegations in the Amended Complaint should be stricken” and further stating that defendant “Oasis Legal may raise that issue in the Circuit Court of Cook County, Illinois if Smith refiles her action” in that jurisdiction.

The court said that the plaintiff, Smith, “entered a litigation funding agreement, which she characterizes as a loan, with Oasis Legal in May of 2016”, that the “agreement specified Oasis Legal would give Smith $1,140 to fund a lawsuit in which Smith was represented” and that in exchange, “Smith agreed to pay a portion of the proceeds from that pending litigation — a provision Smith interprets as imposing an unlawfully high interest rate between 33.44% and 71.42%.”  The agreement also included a choice of law provision choosing Florida law, and a choice of forum provision, choosing Circuit Court of Cook County, Illinois, in the event of a litigated dispute under the litigation funding agreement.

Smith sued Oasis Legal, “asserting claims for unjust enrichment and violation of Florida’s Interest, Usury, and Lending Practices Act and Florida’s Deceptive and Unfair Trade Practices Act, as well as for declaratory relief under Florida’s Consumer Finance Act” and sought “relief on behalf of herself and all others who entered similar agreements with Oasis Legal in Florida beginning on August 21, 2013.”

Oasis moved to dismiss on a number of grounds, and the court granted the motion on the basis of forum non conveniens.  The court rejected Smith’s arguments that the forum selection clause was unenforceable, that Oasis had waived the right to enforce the forum selection clause, and that public interest factors weighed in favor of a Florida forum.

The full opinion is available here.

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