Torrence v. Nationwide Budget Finance

Torrence v. Nationwide Budget Finance

One of a number of Public Justice’s class actions representing North Carolina consumers who were charged illegally high interests rates by payday lenders. These lenders used mandatory arbitration clauses and class action bans to immunize themselves from lawsuits. In January 2012, a North Carolina trial court rejected Nationwide Budget Finance’s class action ban in light of AT&T Mobility v. Concepcion, ruling that the ban was unenforceable where “payday borrowers would not be able to effectively vindicate the type of claims raised by plaintiffs here, even if the claims are legally justified and correct, if they are required to proceed on an individual rather than class basis.” The court based this conclusion on an evidentiary hearing and extensive factual record proving that: (1) payday borrowers are unable to secure legal representation to bring individual cases; (2) because of the legal and factual complexity of the claims, borrowers could not represent themselves pro se and would likely “be unaware that they possessed any sound basis for a legal claim”; and (4) “no individual arbitration cases have ever been brought challenging payday lending in North Carolina, either against the defendants in this case or against any other payday lenders.” The court reasoned that Concepcion did not address cases where the plaintiffs prove they could not effectively vindicate their statutory rights individually, and stated that Concepcion “is limited to overturning the ‘Discover Bank rule,’ which was a rule of automatic invalidation, in a case in which the plaintiff would be able to effectively vindicate his rights in arbitration.” The court explained that North Carolina law, by contrast, “involves consideration of all facts and circumstances,” and that the plaintiffs in Torrence, unlike the Concepcion plaintiffs, “would not be able to effectively vindicate their rights in NAF arbitration.” North Carolina Attorney General Roy Cooper has been active in pursuing payday lenders and forcing them to cease operations in the state. In addition to Public Justice’s Paul Bland, the plaintiffs in Torrence were represented by lead counsel Jerry Hartzell of Raleigh, N.C.; Mona Lisa Wallace and John Hughes of Salisbury, N.C.; Mal Maynard of the Financial Protection Law Center in Wilmington, N.C.; Carlene McNulty of the North Carolina Justice Center in Raleigh; and Richard Fisher of Cleveland, Tenn.

  • Leslie Bailey

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