• February 6, 2015

Poker ChipsUpdate (February 6, 2015): Chalk up another correct prediction for Minnesota Litigator as to the dismissal of the Fountain v. Oasis Legal Finance case though I will have to concede that Sr. U.S. Judge Paul A. Magnuson’s analysis was far more thorough than mine, below.

Original post (January 8, 2015) (under headline, Fountain v. Oasis Litigation Finance: Private Agreements, Public Enforcement, and “Public Policy”): There was a time, some years ago, when U.S. citizens bought and sold human beings. This was fine and dandy in some states but such agreements were deemed contrary to public policy in other states. In the context of lawsuits brought in connection with fugitive slaves, some abolitionist state and federal judges found the contracts void as against public policy even though the contracts were enforceable in other U.S. states. In these stark circumstances, it should be fairly obvious that a court in one state would refuse to dismiss a lawsuit to be tried in another state where public policy conflicted on the most profound moral issue of human bondage.

But where does that moral imperative to disregard or over-ride the terms of a contract end? Where does a Minnesota judge refrain from imposing Minnesota “public policy” over a contract that designates, say, Illinois as the state in which any litigation must be brought and Illinois law as the appropriate rule of decision?

This is the issue to be decided in Fountain et al. v. Oasis Litigation Finance (“OLF”), described in earlier posts by Sr. U.S. District Court Judge Paul A. Magnuson (D. Minn.).

A 1956 law review article by a Columbia law professor and a University of Minnesota professor suggested that it must appear ‘pernicious and detestable’ or, it must ‘violate some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal” before a one state court should intervene in a choice-of-law clause to avoid application of another state’s law. They were right. That is why I predict that the case of Brianca Fountain and others against OLF, brought in Minnesota in spite of an Illinois forum selection clause and choice-of-law clause will be dismissed.

OLF’s memo of law in support of its motion to dismiss does not seem to dig into the weeds analyzing just how “pernicious” and “detestable” plaintiffs’ allegations  against it are or are not. They don’t defend their transactions but rely on the fact that the legitimacy and legality of the transactions must be decided elsewhere. I won’t second guess the strategy except to suggest that OLF’s alleged conduct does not seem very pernicious or detestable to me at all.

In response, plaintiffs try hard to portray OLF’s conduct as “champertous,” “illegal,” and “unethical.” They also spend a lot of time talking about the percentages that OLF recovers in its “purchase agreements.” But even plaintiffs cannot bring themselves to use words like “shocking,” “horrible,” “exploitative” or the like. Their brief is barely able to muster the high dudgeon to utter the toss-off and over-used legal curse,”unconscionable” (it pops up on p. 34).

If the OLF deal were really  pernicious, detestable, or if it violated some fundamental principle of justice, some prevalent conception of good morals, “some deep-rooted tradition of the common weal,” then would the millions of credit card agreements that violate Minnesota usury statutes limits on interest rates (but are subject to other states’ laws, which have no such caps) also be void as contrary to public policy? I am confident that no court will go along with that argument.


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