Opinion ID: 76850
Heading Depth: 2
Heading Rank: 1

Heading: Applicability of the FAA

Text: The purpose of the FAA “was to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S. Ct. 1647, 1651 (1991). The FAA’s provisions “manifest a ‘liberal federal policy favoring arbitration agreements.’” Id. at 25, 111 S. Ct. at 1651 consistently used the plural form of “Defendants.” She asserted that “Defendants violated” Georgia usury laws, and that she was “entitled to recover from Defendants all interest charges paid by [her].” Because Jenkins charged a national bank with violating Georgia usury laws, removal was proper. 9 (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 941 (1983)). The Supreme Court has “rejected generalized attacks on arbitration that rest on ‘suspicion of arbitration as a method of weakening the protections afforded in the substantive law to would-be complainants.’” Green Tree Fin. Corp. v. Randolph, 531 U.S. 79, 89–90, 121 S. Ct. 513, 521 (2000) (quoting Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 481, 109 S. Ct. 1917, 1920 (1989)). The FAA makes enforceable a written arbitration provision in “a contract evidencing a transaction involving commerce.” 9 U.S.C. § 2 (2000). The FAA defines “commerce” as “commerce among the several States.” Id. § 1. The Supreme Court has “interpreted the term ‘involving commerce’ in the FAA as the functional equivalent of the more familiar term ‘affecting commerce’—words of art that ordinarily signal the broadest permissible exercise of Congress’ Commerce Clause power.” Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56, 123 S. Ct. 2037, 2040 (2003) (citation omitted). The Court has further explained the phrase “evidencing a transaction” means only that the transaction turns out, in fact, to have involved interstate commerce, “even if the parties did not contemplate an interstate commerce connection.” Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 277–81, 115 S. Ct. 834, 841–43 (1995). 10 In this case, the district court found the FAA applied because the underlying payday lending transactions involved interstate commerce. On appeal, Jenkins challenges this part of the district court’s decision, contending there has been no showing that the loan agreements involved interstate commerce. Jenkins’ contention is without merit. The FAA’s broad interstate commerce requirement is satisfied in this case. The lending transactions were between Jenkins, a Georgia resident, and FNB, a national bank located in South Dakota.4 Loan applications were electronically transmitted to South Dakota, where FNB decided whether to approve or refuse the loans. If the loans were approved, FNB sent the borrowers preprinted Consumer Loan Agreements, each including an Arbitration Agreement. The district court explained: “First National Bank’s role in analyzing loan applications, sending the approved loan applications, funding the loans, and accepting the loan proceeds constitutes sufficient interstate commerce to satisfy the definition of ‘involving commerce’ within the meaning of 9 U.S.C. §§ 1, 2.” Jenkins v. First Am. Cash 4 The district court correctly rejected Jenkins’ assertion that First American, a Georgia entity, was the “true” lender. FNB was expressly listed as the lender in the loan documents, while First American was listed merely as the “loan marketer/servicer.” FNB approved the loans, funded the loans, and set the credit scoring criteria for the loans. Also, repayment checks were made out to FNB and deposited in a bank account in FNB’s name. 11 Advance of Georgia, 313 F. Supp. 2d 1370, 1373 (S.D. Ga. 2003) (citation omitted). We agree with the district court. Here, the parties not only contemplated an interstate commerce connection when they entered into the lending agreements,5 but the payday lending transactions did, in fact, turn out to involve interstate commerce. The district court did not err in applying the FAA to the loan agreements signed by Jenkins.6