SCOTUS denies payday lender’s request for review

SCOTUS denies payday lender’s request for review

By Amy Radon, Staff Attorney

This week, the U.S. Supreme Court denied a payday lender’s petition for certiorari in the case of Cash Advance Network v. Felts. The lender, Cash Advance Network, Inc., had petitioned the Court to overturn a decision by the New Mexico Supreme Court holding the lender’s arbitration clause unenforceable.

We represented Andrea Felts (pictured), who took out three online loans when she was going through a costly divorce and needed extra money to make ends meet. When she was no longer able to make her payments on the loans, CANI (and its co-defendants) embarked upon a harassment campaign, calling Felts and her teenage daughter at home and at work — sometimes more than 20 times a day. The lenders even went so far as to threaten Felts with jail.

Felts sued CANI for violating New Mexico’s consumer protection laws, but CANI argued that Felts was bound by contract to submit any challenges or complaints to arbitration rather than try the case in court.

When Felts first took out the loans, the lenders’ arbitrator was the National Arbitration Forum, notorious for its close associations with banks and debt collectors. But a 2009 consent decree with the Minnesota Attorney General drove the NAF out of the consumer arbitration business. Still, CANI insisted on arbitrating Felts’ case and argued that the court had only to appoint a new arbitration provider.

In its decision last August, the New Mexico Supreme Court agreed with Public Justice that CANI’s selection of the NAF was “integral” to the parties’ contract and, therefore, if the court appointed a new arbitrator, it would essentially have to rewrite the contract. The court held that New Mexico contract law does not permit courts to re-write arbitration clauses under these circumstances, and thus the arbitration clause was unenforceable. 

The U.S. Supreme Court’s denial of CANI’s petition for certiorari means that the decision of the New Mexico Supreme Court stands, and CANI and its co-defendants will soon have to face the music in court.

[Photo by Kip Malone, kipmalone.com]