Magee and Johnson v. Advance America Servicing of Arkansas, Inc., d/b/a Advance America Cash Advance; and Advance America, Cash Advance Centers, Inc., No. 08-06105 (W.D. Ak. 04/01/09).

We, at the CAFA Law Blog, pride ourselves in making the esoteric entertaining.  However, sometimes we are not given enough to work with to achieve our goal.  So, here is a post you will just have to gut out.

In Magee, the plaintiffs filed a class action suit against Advance America Servicing of Arkansas and a few of its subsidiaries alleging violations of the usury provisions in the Arkansas Constitution and of the Arkansas Deceptive Trade Practice Act. 

The business plan of the defendants involved them giving out money to customers in return for a check from the customers to be cashed at a later date. The defendants would then charge interest on the amount and also impose a check cashing fee to cash a voucher/money order given out by Advance America. The plaintiffs’ complaint contends that these fees charged were extra interest on the loans and usurious under Arkansas law.

The defendants sought to remove the case to federal court under CAFA. However, (and as you would expect) this was met by the plaintiffs asserting that the CAFA amount in controversy was not met, and if it was met, different exceptions applied to have the CAFA jurisdiction taken away.

First, the plaintiffs argued that the loan forgiveness amount and attorney’s fees were not to be included in the calculation of amount in controversy. However, the court quickly struck this idea down and stated that the amounts were properly included and the requirement of $5 million was met. 

Next, the plaintiffs attempted to argue the local controversy exception to CAFA federal jurisdiction. The court stated that this exception does not apply when a similar suit has filed within the last 3 years asserting the same allegations against any of the defendants on behalf of the same or other people. The defendants were able to point to a recent case that defeats this exception. 

The plaintiffs next claim that the home state exception should remove federal jurisdiction. This exception applies when the plaintiffs show that the primary defendants are citizens of the state in which the action was filed. However, the plaintiffs only named one of the defendants as being a resident of Arkansas so this exception was also not applicable.

The defendants were successful in their removal based on CAFA. Hmmm, wonder if Advance America will be lending to plaintiffs to pay for attorney’s fees?

By: Lacy Sarver