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Justia Daily Opinion Summaries

US Court of Appeals for the Third Circuit
July 15, 2020

Table of Contents

Williams v. Medley Opportunity Fund II, LP

Arbitration & Mediation, Consumer Law, Contracts, Native American Law

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US Court of Appeals for the Third Circuit Opinions

Williams v. Medley Opportunity Fund II, LP

Docket: 19-2058

Opinion Date: July 14, 2020

Judge: Patty Shwartz

Areas of Law: Arbitration & Mediation, Consumer Law, Contracts, Native American Law

The plaintiffs obtained payday loans from AWL, an online entity owned by the Otoe-Missouria Tribe of Indians. The loan agreement stated that the loan was governed by tribal law and that the borrowers consented to the application of tribal law. The plaintiffs filed a purported class action, asserting that AWL charged unlawfully high interest rates, in violation of federal and Pennsylvania law, including the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961-1968. The defendants moved to compel arbitration. The district court denied their motion, holding that the loan agreements, which provided that only tribal law would apply in arbitration, stripped the plaintiffs of their right to assert statutory claims and were therefore unenforceable. The Third Circuit affirmed. Because AWL permits borrowers to raise disputes in arbitration only under tribal law, and such a limitation constitutes a prospective waiver of statutory rights, its arbitration agreement violates public policy and is therefore unenforceable.

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