Opinion ID: 1760838
Heading Depth: 1
Heading Rank: 5

Heading: Conflict of Interest Garrett Litigation

Text: Advance America next asserts that McGinnis has a conflict of interest with the class because she was not a member of the Garrett settlement class and cannot enforce the Garrett settlement agreement. On October 12, 1999, Phyllis Garrett filed an action in the Clark County Circuit Court, alleging that the check-cashing transactions between Advance America and its customers were contracts that bore interest in excess of the maximum lawful rate set forth in article 19, section 13 of the Arkansas Constitution. As part of a settlement entered into with Garrett, Advance America agreed that, on or before May 15, 2001, Advance America would cease conducting check-cashing transactions in Arkansas. The complaint in the instant case requests an Order for appropriate relief and to enforce the terms of the Settlement Agreement in [ Garrett v. Advance America ], Clark County Circuit Court Case No. CIV-99-152. Advance America states that McGinnis was neither a member of the Garrett class nor a party to the Garrett settlement and never received any notification about the Garrett litigation. Advance America also states that, prior to her November 6, 2007 deposition, McGinnis had no understanding of the Garrett settlement agreement and that she was not even aware of its existence. Accordingly, Advance America asserts that McGinnis's testimony demonstrates a conflict of interest with those members of the putative class who were members of the Garrett class and might otherwise arguably be able to enforce the settlement agreement in that case, if it has been violated. McGinnis asserts that Advance America's arguments about the Garrett settlement have nothing to do with McGinnis's efforts to seek monetary relief for usury and DTPA violations in the present case. We agree. While the complaint requested an order enforcing the terms of the settlement agreement, the class definition in the instant case does not involve any monetary damages resulting from a violation of the Garrett settlement. The class in this case is defined as follows: All persons, other than the Defendants and their owners and agents, who have engaged in check cashing or deferred presentment transactions, pursuant to the Arkansas Check Cashers Act, with the Defendants in Arkansas since February 27, 2002, up through and including the date of the entry of judgment in this case. Further, even assuming that the class members in this case might be able to enforce the Garrett settlement as a part of this case, McGinnis would not be precluded from representing the class, as the usury claims against the payday lender are the same in the Garrett litigation and in the instant case. Both suits involved allegations that the payday lender had charged a usurious rate of interest in violation of the Arkansas Constitution. In FirstPlus Home Loan Owner 1997-1 v. Bryant, 372 Ark. 466, 277 S.W.3d 576 (2008), we rejected an adequacy challenge based on the fact that some of the class representatives sought to raise claims against lenders who were strangers to the plaintiffs' individual transactions. We noted that the claims usury and fraudwere the same for all members of the class. Id. Likewise, in the instant case, all of the members of the class have usury claims against Advance America. Even though McGinnis was not involved in the Garrett litigation, we cannot say that she is precluded from representing the Garrett claimants, should the terms of the Garrett litigation come into play in the instant case.