SANTA ANA, Calif. (Legal Newsline) – A California auto title loan company faces claims its interest rates are unconscionable, and a California appeals court has just ruled that the arbitration clause in its contracts is.
The Fourth Appellate District ruled Jan. 11 for lead plaintiff Joe Maldonado and his lawyers at Cohelan Khoury and Mesriani Law Group who are pursuing a class action against Fast Auto Loans in Orange County Superior Court.
The 2019 lawsuit says Fast Auto Loans’ terms are illegal under the Unfair Competition Law and the Consumers Legal Remedies Act.
In addition to business registration issues, Fast Auto Loans is accused of offering loans that are basically interest-only and exceed the value of the cars put up as collateral.
It sought to invoke an arbitration clause to defend itself from the claims but has failed so far because it required consumers to waive their right to pursue public injunctive relief, a no-no under the 2017 ruling McGill v. Citibank.
Fast Auto Loans said the McGill rule is preempted by the Federal Arbitration Act.
“Lender attempts to limit the reach of the McGill Rule by suggesting it only applies to plaintiffs seeking to enjoin false or misleading advertising on behalf of the general public,” Justice Kathleen O’Leary wrote.
“We are not persuaded. California’s consumer protection laws must be liberally, not narrowly, applied.
“We are also unpersuaded by Lender’s argument this lawsuit challenges only the interest rates charged in the putative class members’ loans, and therefore, they primarily seek private relief with the injunction. To accept this argument, we would have to ignore the complaint’s unequivocal request to enjoin Lender from harming other consumers in future contracts from outrageous interest rates.”