consumer - payday loans - arbitration agreement
The court grant the motion to compel arbutration of Defendant ACE Cash Express, Inc. (“ACE”), in an action based on payday loans, a form of consumer lending involving short-term loans secured by excessively high interest rates
Plaintiffs alleged violations of the Pennsylvania Consumer Discount Company Act, 7 P.S. § 6201 et seq., the Pennsylvania Loan Interest and Protection Law, 41 P.S. § 101 et seq., and the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq.
The payday loan agreement contained an arbitration clause, which stated that the agreement covered “all federal or state law claims, disputes or controversies, arising from or relating directly or indirectly to the Loan Agreement,” as well as “all claims based upon a violation of any state or federal constitution, statute or regulation," and that it was to be interpreted under Delaware law.
The court held that, under the Third Circuit’s holding in Kaneff v. Delaware Title Loans, Inc., 587 F.3d 616, 620 (3d Cir. 2009), applying Delaware law to the Arbitration Agreement would be contrary to a fundamental policy of Pennsylvania, and that Pennsylvania has a materially greater interest than Delaware, the state chosen in the Arbitration Agreement, and that it would thusl apply Pennsylvania law when determining whether the Arbitration Agreement is unconscionable.
However, the court found that the agreement was not procedurally unconscionable under Pennsylvnia law and was thus enforceable.