Smalls v. Advance America, Slip Copy, 2008 WL 4177297 (D.S.C., Sep 05, 2008)(NO. 2:07-3240-TLW-TER)

On behalf of the class, the one named plaintiff filed a class action suit in South Carolina State Court against the everyone’s favorite defendant these days…payday lenders. In this case the defendants were Advance America Cash Advance Centers of South Carolina, Inc., Carolina Payday Loans, Inc., and Check into Cash Into Cash of South Carolina Inc.

The crux of the plaintiff’s claim is that the defendants entered into loan agreements, including deferred presentment provisions, with the plaintiff and others similarly situated without conducting an investigation into the plaintiff’s ability to repay the loan and knew or should have known plaintiff would be unable to repay the loans likely resulting in additional loans to plaintiff.

The case was removed to federal court. The plaintiff filed a motion to remand back to State Court.

The plaintiff argues that the case should be remanded back to State Court because of lack of minimal diversity. The plaintiff is a citizen on South Carolina. Two of the defendants have dual citizenship, which gives them citizenship in states besides South Carolina. The defendants hoped their dual citizenship would give them a CAFAteria pass to eat in Federal Court. However, the defendants’ dual citizenship does not meet the minimal diversity requirement to enter the Federal CAFAteria. The case was remanded back to state court.  

The defendants cannot simply ignore their South Carolina citizenship; this would be inconsistent with the premise of dual citizenship. The defendants cannot chose or omit citizenship on a whim to establish minimal diversity. If this were the case, any corporation with its principal place of business in a different state from that of its incorporation state would be able to prevent class-action plaintiffs access to state courts. This is not the purpose of the CAFAteria laws.

By: Ryan Hamilton