Knox v. First Southern Cash Advance
The underlying lawsuit in this case was first filed in North Carolina state court and was one of five class actions brought by Public Justice against payday lenders that operated in North Carolina after the North Carolina legislation authorizing payday lending expired. The defendants in the Knox case — First Southern Cash Advance, along with Community State Bank (not a party in the original suit) — filed a motion in the U.S. District Court for the Middle District of North Carolina to obtain a federal court order directing the plaintiffs to discontinue their case and proceed, if at all, in arbitration. Shortly after the state court action was filed, the defendants in Knox removed that case to the U.S. District Court for the Eastern District of North Carolina. The Knox plaintiffs filed a motion to remand the case to state court, which was granted, and the state court judge subsequently denied the defendants’ motion to compel arbitration. Despite the ruling from the Eastern District of North Carolina remanding the case to state court, and the state court’s denial of the defendants’ motion to dismiss, the defendants attempted yet again to compel the parties to arbitration by filing a petition to compel arbitration in the Middle District of North Carolina. That court rejected the petition, which is the subject of the appeal to the Fourth Circuit. Public Justice’s brief to the Fourth Circuit argues that the Middle District properly refused to grant the petition ordering arbitration, and that the decision of that court should be affirmed.
