Tens of thousands of Florida consumers who were charged illegally high interest rates but were barred from bringing their claims on a class-wide basis will finally get justice, thanks to the work of Public Justice (formerly Trial Lawyers for Public Justice) and a team of consumer attorneys. A Circuit Court in West Palm Beach ruled yesterday afternoon that a contract term banning class-wide arbitrations in nationwide payday lender Check ‘n Go 's loan agreements is unconscionable and unenforceable where customers were charged interest rates well above Florida’s criminal usury limit of 45%. This ruling in Reuter v. Check ‘n Go clears the way for the arbitration to proceed on a class-wide basis, and will likely influence similar cases pending nationwide.

"This opinion brings us one step closer to returning the proceeds of Check ‘n Go's illegal activities to the consumers who were charged usurious interest rates," said Chris Casper, of James, Hoyer, Newcomer & Smiljanich, P.A., in Tampa.

The court found that without the availability of class-wide relief, no claims would be brought against Check 'n Go (and, indeed, none had), a finding which helped support the court's ultimate conclusion that the class-arbitration waiver was unconscionable and, therefore, unenforceable.

Florida state Circuit Court Judge Elizabeth T. Maass, affirming the value of class actions to consumers, noted that, "The chance that Ms. Reuter could have obtained competent counsel absent the possibility of class action status or successfully recognized a potential claim that she could pursue without benefit of counsel is effectively zero." Further, the judge's decision was based on the fact that "making a loan with annual interest in excess of 45% is loan sharking, a third degree felony, and results in the forfeiture of the right to collect not only interest, but principal. However, of the over 66,000 Check 'n Go customers who completed over 1,000,000 deferred presentment transactions with annual interest rates exceeding 45% between April 1, 1996 and September 30, 2001, none has brought an individual claim."

“This opinion is likely to to influence courts around the country, which are considering similar issues in similar cases, because the judge approached the issues in such a thoughtful and carefully considered manner, ” said Public Justice staff attorney F. Paul Bland, Jr.

Lead plaintiff Donna Reuter took out a number of "payday loans" from Check 'n Go while she was on maternity leave and living on a reduced income. When she was unable to repay the loan in full after the two week cycle, she was forced to “rollover” the loan, paying an additional fee and finance charge with each rollover. Each time she took out one of these loans, she had to sign a loan agreement, which not only detailed the terms of the transaction, but also contained a provision that prohibited her from bringing any claims whatsoever against Check 'n Go on a class-wide basis in arbitration. The Agreements showed that the cost of credit to her on an annual basis was 338.93% to 615.94%. 

“We are determined to do what it takes to bring these cases to a successful conclusion and to ensure our clients get the restitution they deserve,” said Ted Leopold of Ricci~Leopold in Palm Beach.

In addition to Casper, Bland, and Leopold, Public Justice’s legal team includes lead counsel Clay Yates of Fort Pierce; Richard Fisher of the Richard Fisher Law Office in Cleveland, Tennessee; and Public Justice’s Goldberg, Waters & Kraus Fellow, Amy Radon, who was the principal author of the brief challenging the class action ban. 

The judge’s opinion is posted on Public Justice’s website at http://www.Public Justice.org/briefs_documents.htm.