                                                                     [PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT               FILED
                         ________________________
                                                      U.S. COURT OF APPEALS
                                                        ELEVENTH CIRCUIT
                               No. 03-16329                 February 18, 2005
                         ________________________        THOMAS K. KAHN
                                                                CLERK
                        D. C. Docket No. 03-00094 CV-1

CHARLENE JENKINS, And All Other
Persons Similarly Situated,


                                               Plaintiff-Appellee,

                                    versus

FIRST AMERICAN CASH ADVANCE
OF GEORGIA, LLC, FIRST NATIONAL
BANK IN BROOKINGS,


                                               Defendants-Appellants.

                         ________________________

                Appeal from the United States District Court
                   for the Southern District of Georgia
                     _________________________

                             (February 18, 2005)

Before ANDERSON, DUBINA and BLACK, Circuit Judges.

BLACK, Circuit Judge:
      Plaintiff-Appellee Charlene Jenkins entered into several lending

transactions with Defendants-Appellants First American Cash Advance of

Georgia, LLC (First American) and First National Bank in Brookings (FNB).

Each time Jenkins obtained a loan, she signed an Arbitration Agreement, in which

she agreed to either arbitrate or assert in a small claims tribunal, any claim she had

against Defendants. The Arbitration Agreements also required Jenkins to waive

her right to participate in a class action against Defendants. Nonetheless, Jenkins

filed a class action lawsuit against First American and FNB in state court,

asserting the loan agreements violated Georgia usury laws. After removing the

case to federal court, Defendants moved to stay the court proceedings and compel

arbitration. The district court denied Defendants’ motion, finding the Arbitration

Agreements were unconscionable. Pursuant to 9 U.S.C. § 16(a) (2000),

Defendants appealed the denial of their motion to this Court. We reverse and

remand.

                                I. BACKGROUND

      FNB is a national bank chartered under the National Bank Act, 12 U.S.C.

§ 21–216(d) (2000), with its principal offices in South Dakota. From September

2001 through January 2003, First American, which is located in Georgia, managed

and serviced loans for FNB; however, FNB set the credit scoring criteria for the

                                          2
loans and funded the loans. Customers, like Jenkins, seeking to obtain a loan from

FNB would fill out a loan application at First American’s offices. First American

would electronically transmit the application to FNB for review. FNB would

analyze the loan application and make the final decision on whether or not to

extend credit. If FNB approved the application, it would send a Consumer Loan

Agreement, which included a Promissory Note and an Arbitration Agreement, to

First American. To obtain the loan, the customer would have to sign and date both

the Promissory Note and the Arbitration Agreement.

      The type of lending transactions at issue in this case are commonly referred

to as “payday loans.” In general, payday loans are small-dollar, short-term loans

with high interest rates. In such transactions, a borrower receives a modest cash

advance that becomes due for repayment within a short period of time, usually

about 14 days. As security for the loan, the borrower gives a check to the payday

lender in the amount of the cash advance, plus the interest charged by the lender.

The interest rates in payday lending transactions typically range from 20% to 30%

for a two-week advance, which computes to an annual percentage rate of about

520% to 780%. If the borrower has not repaid the lender by the due date, the




                                         3
lender can negotiate the check.1 Alternatively, the borrower may be able to extend

the loan’s due date by paying a fee. This type of extension is referred to as a

renewal or a rollover.

       Between June 2002 and September 2002, Jenkins entered into at least eight

payday lending transactions with First American and FNB. Each of these loans

was for less than $500 and had a maturity date between 7 and 14 days. The annual

percentage rates charged by Defendants for these loans ranged from a low of

438% to a high of 938.57%. Most of the loans in question charged an interest rate

of about 469% annually.

       Like other FNB customers, Jenkins signed and dated a Promissory Note and

an Arbitration Agreement each time she took out a loan. FNB was explicitly listed

as the lender in the loan documents, and First American was listed as the “loan

marketer/servicer.” Each Promissory Note included a choice-of-law provision,

stating the note was “governed by and construed in accordance with the laws of

South Dakota.” The Arbitration Agreements stipulated that they were governed

by the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1–16 (2000), because the

underlying lending transactions involved interstate commerce. Each Arbitration



       1
         Borrowers’ repayment checks were made payable to FNB and were deposited in a bank
account in FNB’s name.

                                             4
Agreement further stated if a court found the FAA did not apply to a particular

transaction, then the Arbitration Agreement would be governed by the arbitration

law of South Dakota.

      The Arbitration Agreements signed by Jenkins provided that “all disputes”

between the parties would be resolved by binding arbitration. They further stated

Jenkins waived her right to participate in a class action against Defendants. Under

the Agreements, Jenkins had the right to choose the arbitrator from a list of

national arbitration organizations, or Jenkins and Defendants could agree on a

local arbitrator. The Agreements required Defendants to advance Jenkins’

arbitration costs if she submitted a written request for them to do so. The

Arbitration Agreements also permitted the arbitrator to award reasonable

attorneys’ fees and expenses to the prevailing party “[i]f allowed by statute or

applicable law.”

      The Arbitration Agreements provided only one exception to resolving

disputes in arbitration: “All parties . . . shall retain the right to seek adjudication in

a small claims tribunal for disputes within the scope of such tribunal’s

jurisdiction.” The Agreements did, however, require appeals from the small

claims tribunal to be resolved by arbitration. Therefore, by signing the Arbitration




                                            5
Agreements, Jenkins agreed to resolve any claim she had against Defendants by

either submitting the claim to arbitration or raising it in a small claims tribunal.

      The main provisions of the Arbitration Agreements were conspicuously

disclosed in bold-faced capital letters:

      You acknowledge and agree that by entering into this Arbitration
      Provision:
      (a) YOU ARE WAIVING YOUR RIGHT TO HAVE A TRIAL
            BY JURY TO RESOLVE ANY DISPUTE ALLEGED
            AGAINST US OR RELATED THIRD PARTIES;
      (b) YOU ARE WAIVING YOUR RIGHT TO HAVE A
            COURT, OTHER THAN A SMALL CLAIMS TRIBUNAL,
            RESOLVE ANY DISPUTE ALLEGED AGAINST US OR
            RELATED THIRD PARTIES; and
      (c) YOU ARE WAIVING YOUR RIGHT TO SERVE AS A
            REPRESENTATIVE, AS A PRIVATE ATTORNEY
            GENERAL, OR IN ANY OTHER REPRESENTATIVE
            CAPACITY, AND/OR TO PARTICIPATE AS A
            MEMBER OF A CLASS OF CLAIMANTS, IN ANY
            LAWSUIT FILED AGAINST US AND/OR RELATED
            THIRD PARTIES.2

In addition, each Promissory Note signed by Jenkins included a clause stating:

      Arbitration: You acknowledge that you have read, understand and
      agree to the terms contained in the Arbitration Agreement you are
      signing in connection with this Note. By entering into the Arbitration
      Agreement, you waive certain rights, including the right to go to

      2
         The class action waiver was also conspicuously disclosed at another point in the
Arbitration Agreements, where it was further explained: “THE ARBITRATOR SHALL NOT
CONDUCT CLASS ARBITRATION; THAT IS, THE ARBITRATOR SHALL NOT
ALLOW YOU TO SERVE AS A REPRESENTATIVE, AS A PRIVATE ATTORNEY
GENERAL, OR IN ANY OTHER REPRESENTATIVE CAPACITY FOR OTHERS IN
THE ARBITRATION.”

                                            6
      court, to have the dispute heard by a jury (except as specifically
      provided in the Arbitration Agreement), and to participate as part of a
      class of claimants relating to any dispute with Lender, First American
      or their affiliates.

      Jenkins nevertheless filed a class action lawsuit against First American and

FNB in the Superior Court of Richmond County, Georgia. In her complaint,

Jenkins alleged the payday loan agreements violate Georgia’s usury statutes, Ga.

Code Ann. §§ 7-4-2, 7-4-18 (2004), and the Georgia Racketeer Influenced and

Corrupt Organizations (RICO) Act, Ga. Code Ann. § 16-14-4 (2003).

      First American and FNB removed the case to federal district court. In

federal court, First American and FNB sought to enforce the Arbitration

Agreements signed by Jenkins. Defendants moved pursuant to the FAA to stay

the court proceedings and to compel arbitration. Under the FAA, a written

arbitration provision in “a contract evidencing a transaction involving [interstate]

commerce . . . shall be valid, irrevocable, and enforceable, save upon such grounds

as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2

(2000). The FAA explains when a party to such an agreement fails or refuses to

arbitrate, the other party may petition a federal district court for an order to compel

arbitration. Id. § 4.




                                           7
       The district court found the payday lending transactions involved interstate

commerce, and, therefore, the FAA applied. The district court, however, denied

Defendants’ motion to compel arbitration, finding the Arbitration Agreements

were unenforceable because they were unconscionable. Defendants filed a motion

to reconsider and to stay the proceedings pending this appeal. The district court

denied the motion for reconsideration and granted the motion to stay the

proceedings. This appeal followed.

                II. JURISDICTION AND STANDARD OF REVIEW

       Pursuant to 9 U.S.C. § 16(a) (2000), we have jurisdiction over this appeal.

9 U.S.C. § 16(a) (2000) (authorizing an immediate appeal of any “final decision

with respect to an arbitration”).3 We review de novo the district court’s denial of a


       3
         In her brief, Jenkins questions whether removal was appropriate in this case and
suggests federal jurisdiction does not exist. This argument, however, is without merit. In
Beneficial National Bank v. Anderson, 539 U.S. 1, 123 S. Ct. 2058 (2003), the United States
Supreme Court held actions for usury against a national bank can be removed to federal court
because the National Bank Act, 12 U.S.C. §§ 85–86 (2000), preempts state usury laws in such
situations. Id. at 11, 123 S. Ct. at 2064. The Court explained:
        In actions against national banks for usury, [§§ 85 and 86] supercede both the
        substantive and the remedial provisions of state usury laws and create a federal
        remedy for overcharges that is exclusive, even when a state complainant, as here,
        relies entirely on state law. Because §§ 85 and 86 provide the exclusive cause of
        action for such claims, there is, in short, no such thing as a state-law claim of
        usury against a national bank.
Id., 123 S. Ct. at 2064. Jenkins attempts to evade the Supreme Court’s holding in Anderson by
contending her usury claims were brought primarily against First American, not FNB. She
argues FNB was only included in her complaint because she was seeking a declaratory judgment
finding FNB to be a “sham” lender. Her complaint, however, expressly named both First
American and FNB as Defendants and charged them both with usury. The complaint

                                              8
motion to compel arbitration. Musnick v. King Motor Co. of Fort Lauderdale, 325

F.3d 1255, 1257 (11th Cir. 2003).

                                     III. DISCUSSION

       The parties raise, inter alia, the following three issues on appeal: (1)

whether the district court erred in applying the FAA to the loan agreements in this

case; (2) whether the district court erred in finding the Arbitration Agreements are

unconscionable; and (3) whether the Arbitration Agreements are unenforceable

because the underlying payday loans are illegal and void ab initio under Georgia

law. We address each of these issues in turn.

A.     Applicability of the FAA

       The purpose of the FAA “was to reverse the longstanding judicial hostility

to arbitration agreements that had existed at English common law and had been

adopted by American courts, and to place arbitration agreements upon the same

footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20,

24, 111 S. Ct. 1647, 1651 (1991). The FAA’s provisions “manifest a ‘liberal

federal policy favoring arbitration agreements.’” Id. at 25, 111 S. Ct. at 1651




consistently used the plural form of “Defendants.” She asserted that “Defendants violated”
Georgia usury laws, and that she was “entitled to recover from Defendants all interest charges
paid by [her].” Because Jenkins charged a national bank with violating Georgia usury laws,
removal was proper.

                                                9
(quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24,

103 S. Ct. 927, 941 (1983)). The Supreme Court has “rejected generalized attacks

on arbitration that rest on ‘suspicion of arbitration as a method of weakening the

protections afforded in the substantive law to would-be complainants.’” Green

Tree Fin. Corp. v. Randolph, 531 U.S. 79, 89–90, 121 S. Ct. 513, 521 (2000)

(quoting Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 481,

109 S. Ct. 1917, 1920 (1989)).

      The FAA makes enforceable a written arbitration provision in “a contract

evidencing a transaction involving commerce.” 9 U.S.C. § 2 (2000). The FAA

defines “commerce” as “commerce among the several States.” Id. § 1. The

Supreme Court has “interpreted the term ‘involving commerce’ in the FAA as the

functional equivalent of the more familiar term ‘affecting commerce’—words of

art that ordinarily signal the broadest permissible exercise of Congress’ Commerce

Clause power.” Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56, 123 S. Ct. 2037,

2040 (2003) (citation omitted). The Court has further explained the phrase

“evidencing a transaction” means only that the transaction turns out, in fact, to

have involved interstate commerce, “even if the parties did not contemplate an

interstate commerce connection.” Allied-Bruce Terminix Cos., Inc. v. Dobson,

513 U.S. 265, 277–81, 115 S. Ct. 834, 841–43 (1995).

                                         10
       In this case, the district court found the FAA applied because the underlying

payday lending transactions involved interstate commerce. On appeal, Jenkins

challenges this part of the district court’s decision, contending there has been no

showing that the loan agreements involved interstate commerce. Jenkins’

contention is without merit.

       The FAA’s broad interstate commerce requirement is satisfied in this case.

The lending transactions were between Jenkins, a Georgia resident, and FNB, a

national bank located in South Dakota.4 Loan applications were electronically

transmitted to South Dakota, where FNB decided whether to approve or refuse the

loans. If the loans were approved, FNB sent the borrowers preprinted Consumer

Loan Agreements, each including an Arbitration Agreement. The district court

explained: “First National Bank’s role in analyzing loan applications, sending the

approved loan applications, funding the loans, and accepting the loan proceeds

constitutes sufficient interstate commerce to satisfy the definition of ‘involving

commerce’ within the meaning of 9 U.S.C. §§ 1, 2.” Jenkins v. First Am. Cash




       4
         The district court correctly rejected Jenkins’ assertion that First American, a Georgia
entity, was the “true” lender. FNB was expressly listed as the lender in the loan documents,
while First American was listed merely as the “loan marketer/servicer.” FNB approved the
loans, funded the loans, and set the credit scoring criteria for the loans. Also, repayment checks
were made out to FNB and deposited in a bank account in FNB’s name.

                                                11
Advance of Georgia, 313 F. Supp. 2d 1370, 1373 (S.D. Ga. 2003) (citation

omitted).

       We agree with the district court. Here, the parties not only contemplated an

interstate commerce connection when they entered into the lending agreements,5

but the payday lending transactions did, in fact, turn out to involve interstate

commerce. The district court did not err in applying the FAA to the loan

agreements signed by Jenkins.6

B.     Unconscionability

       Under the FAA, a written arbitration provision is “valid, irrevocable, and

enforceable, save upon such grounds as exist at law or in equity for the revocation

of any contract.” 9 U.S.C. § 2 (2000) (emphasis added). This language has been

interpreted to mean “[t]he FAA allows state law to invalidate an arbitration

agreement, provided the law at issue governs contracts generally and not

arbitration agreements specifically.” Bess v. Check Express, 294 F.3d 1298, 1306


       5
         The Arbitration Agreements expressly stipulated the lending transactions between
Jenkins and Defendants involved interstate commerce and were governed by the FAA.
       6
          We also reject Jenkins’ argument that the FAA does not apply because the Georgia
legislature recently made a general pronouncement that payday lending does not involve
interstate commerce. See Ga. Code Ann. § 16-17-1(d) (2003 & Supp. 2004) (effective May
2004). Courts determine whether or not interstate commerce exists under the FAA on a case-by-
case analysis by examining whether the transaction in question turns out, in fact, to have
involved interstate commerce. See Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265,
277–81, 115 S. Ct. 834, 841–43 (1995).

                                              12
(11th Cir. 2002) (citing Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 686,

116 S. Ct. 1652, 1656 (1996)). The Supreme Court has recognized that “generally

applicable contract defenses, such as fraud, duress, or unconscionability, may be

applied to invalidate arbitration agreements.” Doctors Assocs., 517 U.S. at 687,

116 S. Ct. at 1656. In this case, Appellant argues, and the district court found, the

Arbitration Agreements signed by Jenkins are unconscionable.

       In deciding claims of unconscionability, Georgia courts generally consider a

variety of factors, which have been divided into procedural and substantive

elements.7 NEC Techs., Inc. v. Nelson, 478 S.E.2d 769, 771–72 (Ga. 1996).

“Procedural unconscionability addresses the process of making the contract, while

substantive unconscionability looks to the contractual terms themselves.” Id. at

771. Factors relevant to the procedural unconscionability inquiry include the

bargaining power of the parties, “the conspicuousness and comprehensibility of

the contract language, the oppressiveness of the terms, and the presence or



       7
         In determining whether the Arbitration Agreements were unconscionable, the district
court applied Georgia unconscionability law. The choice-of-law provisions in the Arbitration
Agreements stipulated that the FAA governs those Agreements, and that if a court found the
FAA did not apply to a particular transaction, then South Dakota arbitration law would govern.
Moreover, the choice-of-law provisions within the Promissory Notes provided that those Notes
would be controlled by the laws of South Dakota. As South Dakota’s unconscionability laws
mirror Georgia’s laws, the outcome of the unconscionability issue would be the same regardless
of which state law applied. See Johnson v. John Deere Co., 306 N.W.2d 231, 237–38 (S.D.
1981) (applying the same two-part analysis of procedural and substantive unconscionability).

                                              13
absence of a meaningful choice.” Id. (citations omitted). As for substantive

unconscionability, courts consider “the commercial reasonableness of the contract

terms, the purpose and effect of the terms, the allocation of the risks between the

parties, and similar public policy concerns.” Id. at 772 (citations omitted).

      On the procedural side of this analysis, the district court found that

Defendants had superior bargaining power and that the Arbitration Agreements

constituted adhesion contracts. On the substantive side of the analysis, the court

provided two reasons for finding the terms of the Agreements to be

unconscionable: (1) precluding class action relief was unfair because a class action

is the most effective method for borrowers with small claims to obtain relief; and

(2) the Arbitration Agreements lacked mutuality of obligation because the

provision providing access to a small claims tribunal would only benefit the

lender, FNB.

      The district court explained that considered individually, these factors might

not be enough to support a finding of unconscionability, but that considered

together, they rendered the Arbitration Agreements unconscionable. We disagree.

      1.     Bargaining Power/Adhesion

      The district court found the Arbitration Agreements were “procedurally

oppressive” because the “type of consumer loans that Defendants offer

                                         14
unquestionably places the consumer at a severe bargaining disadvantage.”

Jenkins, 313 F. Supp. 2d at 1374. The court stated “[c]onsumers who are willing

to borrow money at such [high] interest rates would foreseeably sign anything.”

Id. The court further explained consumers were unable to negotiate the terms of

the preprinted contracts. After a customer, like Jenkins, filled out a loan

application at First American’s offices, the application would be electronically

transmitted to FNB. FNB would then send a completed Consumer Loan

Agreement, including an Arbitration Agreement, back to First American for the

borrower to sign. The court found the contracts to be adhesive because the

borrower was unable to discuss or negotiate “the amount and conditions of the

preprinted agreement.” Id.

      Before considering the merits of the adhesion argument, we must first

decide whether this issue is one for an arbitrator or a court to resolve. The FAA

“provides a remedy to a party seeking to compel compliance with an arbitration

agreement.” Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403,

87 S. Ct. 1801, 1806 (1967). Such a party can move the district court for an order

compelling arbitration. 9 U.S.C. § 4 (2000). Section four of the FAA instructs the

federal court to grant the motion and order arbitration once it is satisfied “that the

making of the agreement for arbitration . . . is not in issue.” Id. If, however, the

                                          15
making of the arbitration agreement is in question, then the federal court may first

adjudicate that issue. Id.

      In interpreting this section of the FAA, the Supreme Court has distinguished

between claims that challenge the contract generally and claims that challenge the

arbitration provision itself. See Prima Paint Corp., 388 U.S. at 403–04, 87 S. Ct.

at 1806. In Prima Paint, the plaintiff sought to rescind a contract on the grounds

that the contract was fraudulently induced. Id. at 398, 87 S. Ct. at 1803. The

defendant, on the other hand, sought to invoke the contract’s arbitration clause and

moved to stay the action pending arbitration. Id. at 398–99, 87 S. Ct. at 1803.

The Supreme Court explained:

      [I]f the claim is fraud in the inducement of the arbitration clause
      itself—an issue which goes to the “making” of the agreement to
      arbitrate—the federal court may proceed to adjudicate it. But the
      statutory language [of the FAA] does not permit the federal court to
      consider claims of fraud in the inducement of the contract generally.

Id. at 403–04, 87 S. Ct. at 1806. The Court concluded that because the fraudulent

inducement claim related to the underlying contract generally, and not to the

arbitration clause specifically, it was a matter to be resolved by the arbitrator, not

the federal court. Id. at 406, 87 S. Ct. at 1807.

      This Court has applied the Prima Paint rule to claims of adhesion and

unconscionability. We have held that “[i]f . . . [the party’s] claims of adhesion,

                                          16
unconscionability, . . . and lack of mutuality of obligation pertain to the contract as

a whole, and not to the arbitration provision alone, then these issues should be

resolved in arbitration.” Benoay v. Prudential-Bache Secs., Inc., 805 F.2d 1437,

1441 (11th Cir. 1986) (citations omitted).

      Here, the adhesion arguments relied on by the district court pertain to the

underlying Consumer Loan Agreements as a whole, and not to the Arbitration

Agreements specifically. As explained above, the adhesion arguments were

(1) that the consumers lacked bargaining power because these “type[s] of

consumer loans . . . would only appeal to extremely desperate consumers,” and

(2) that the consumers were allegedly unable to negotiate the terms and conditions

of the preprinted agreements. Jenkins, 313 F. Supp. 2d at 1374. These claims do

not relate to the Arbitration Agreements themselves; rather, they allege the

Consumer Loan Agreements, in general, were adhesive. Under the Supreme

Court’s decision in Prima Paint and our decision in Benoay, the FAA does not

permit a federal court to consider claims alleging the contract as a whole was

adhesive. We conclude, therefore, Jenkins’ adhesion claims are for an arbitrator,

not a federal court, to decide.




                                          17
      2.     Class Action Waiver

      The district court found the Arbitration Agreements were substantively

unconscionable because they preclude “borrower[s] from either instigating or

participating in a class action suit.” Jenkins, 313 F. Supp. 2d at 1375. The court

explained “[a] class action is the only way that borrowers with claims as small as

the individual loan transactions [at issue in this case] can obtain relief.” Id. The

district court considered the cost of attorney’s fees to be a significant factor in

determining whether the Arbitration Agreements are unconscionable. Id. The

court speculated that a borrower who attempts to pursue her claim individually

based on one loan transaction would “probably” be unable to obtain a lawyer on a

contingent fee basis. Id. The district court found requiring arbitration and

prohibiting class action “would have the practical effect of providing Defendants

immunity.” Id.

      As an initial matter, we note this issue may be decided by a federal court.

The class action waiver was a provision included in each of the Arbitration

Agreements. Unlike the adhesion argument, which applies to the loan contracts

generally, this claim alleges the Arbitration Agreements specifically are

unconscionable because they preclude class action relief. Under section four of

the FAA, a federal court may adjudicate this claim because it applies to the

                                           18
Arbitration Agreements themselves, and thus, it places the making of the

Arbitration Agreements in issue. See 9 U.S.C. § 4 (2000).

      We have held, however, that arbitration agreements precluding class action

relief are valid and enforceable. See Randolph v. Green Tree Fin. Corp.-Alabama,

244 F.3d 814, 819 (11th Cir. 2001) (holding “a contractual provision to arbitrate

TILA claims is enforceable even if it precludes a plaintiff from utilizing class

action procedures in vindicating statutory rights under TILA”). Other federal

circuit courts have similarly enforced arbitration agreements despite the fact that

classwide relief was unavailable. See, e.g., Snowden v. Checkpoint Check

Cashing, 290 F.3d 631, 638 (4th Cir. 2002) (rejecting the borrower’s argument

“that the Arbitration Agreement is unenforceable as unconscionable because

without the class action vehicle, she will be unable to maintain her legal

representation given the small amount of her individual damages”); Johnson v.

West Suburban Bank, 225 F.3d 366, 369 (3d Cir. 2000) (holding arbitration

“clauses are effective even though they may render class actions to pursue

statutory claims under the TILA or the EFTA unavailable”); cf. Livingston v.

Assocs. Fin., Inc., 339 F.3d 553, 559 (7th Cir. 2003) (“The Arbitration Agreement

at issue here explicitly precludes the [borrowers] from bringing class claims or

pursuing ‘class action arbitration,’ so we are therefore ‘obliged to enforce the type

                                         19
of arbitration to which these parties agreed, which does not include arbitration on

a class basis.’”) (citations omitted).

       In addition, the district court’s contention that consumers would likely be

unable to obtain legal representation without the class action vehicle is unfounded.

The Arbitration Agreements expressly permit Jenkins and other consumers to

recover attorneys’ fees and expenses “[i]f allowed by statute or applicable law.”

Under the Georgia RICO statute, a prevailing plaintiff may be awarded attorney’s

fees. Ga. Code Ann. § 16-14-6(c). Jenkins, therefore, can presumably recover

attorneys’ fees and costs if she prevails in arbitration on her Georgia RICO claim.8

See Snowden, 290 F.3d at 638 (in rejecting an unconscionability argument, the

court concluded the plaintiff could recover attorney fees in arbitration if she

prevailed on her TILA and civil RICO claims).

       Georgia courts have explained that by authorizing the recovery of attorneys’

fees, the Georgia RICO statute provides plaintiffs “with effective access to the

judicial process.” Dee v. Sweet, 489 S.E.2d 823, 825 (Ga. 1997). Moreover,

federal circuit courts have recognized that arbitration agreements prohibiting class

action relief do not “necessarily choke off the supply of lawyers willing to pursue


       8
       Also, Jenkins’ arbitration costs would not be expensive. Under the Arbitration
Agreements, Defendants have offered to advance Jenkins’ arbitration expenses, such as filing
and administrative fees, if she submits a written request.

                                              20
claims on behalf of debtors.” Johnson, 225 F.3d at 374; see also Snowden, 290

F.3d at 638. These courts explained that when the opportunity to recover

attorneys’ fees is available, lawyers will be willing to represent such debtors in

arbitration. See Snowden, 290 F.3d at 638; Johnson, 225 F.3d at 374.

      Thus, precluding class action relief will not have the practical effect of

immunizing First American and FNB. The Arbitration Agreements permit Jenkins

and other consumers to vindicate all of their substantive rights in arbitration. We

conclude, therefore, the inclusion of a class action waiver in the Arbitration

Agreements did not render those Agreements substantively unconscionable.

      3.      Access to Small Claims Tribunals

      The district court’s finding of substantive unconscionability was also based

on the provision in the Arbitration Agreements permitting either party to seek

adjudication in a small claims tribunal. The court found the Arbitration

Agreements lacked mutuality of obligation because this provision only benefits

Defendants.

      On its face, this provision does not favor one party over the other; rather, it

provides that “[a]ll parties . . . shall retain the right to seek adjudication in a small

claims tribunal for disputes within the scope of such tribunal’s jurisdiction.” The

district court, however, found a borrower’s ability to pursue an action in a small

                                            21
claims tribunal to be illusory. The court speculated that it is “hard to conceive of a

claim by the payday lender that cannot be sought in a small claims tribunal,” but it

is “easy to envision a plethora of claims a consumer might seek which are

inaccessible in [such a tribunal] due to its limited jurisdiction.” Jenkins, 313 F.

Supp. 2d at 1375. Additionally, the district court explained this provision favored

Defendants because the judgments of small claims tribunals were appealable to an

arbitrator.9

       Under Georgia law, if at the time the agreement is to be enforced, “the

contract contains mutual obligations equally binding on both parties to the

contract, then the contract is not unilateral and unenforceable.” Jones v. Quigley,

315 S.E.2d 59, 60 (Ga. Ct. App. 1984). In this case, both Jenkins and Defendants

had equal access to small claims tribunals. The only restriction, which applied

equally to both parties, was that the claims sought in such a tribunal must fall

within the tribunal’s limited jurisdiction.

       In stating it could “envision a plethora of claims” that consumers would not

be able to raise in small claims courts, the district court apparently overlooked the

many claims that consumers could bring in such tribunals. For example, if FNB


       9
         We note this claim alleged the Arbitration Agreements themselves were unconscionable
due to a lack of mutuality of obligation; therefore, the district court had the authority, under the
FAA, to adjudicate the issue. See 9 U.S.C. § 4 (2000).

                                                 22
charged a consumer an interest rate higher than that agreed upon in the contract,

the consumer could, in most instances, pursue an action for the difference in a

small claims court. Additionally, if FNB mistakenly imposed late charges on a

consumer, he could presumably seek recovery in a small claims tribunal. Thus, we

disagree with the district court’s unsupported speculation that the consumers’

ability to pursue an action in a small claims tribunal is illusory.

      We note, moreover, that the provision providing access to small claims

tribunals was intended to benefit, not injure, consumers. The American

Arbitration Association (AAA) has developed a set of principles, known as the

Consumer Due Process Protocol, to protect consumers and ensure they are treated

equitably in arbitration. See generally American Arbitration Association,

Consumer Due Process Protocol, (Apr. 17, 1998), http://www.adr.org/protocols.

Principle 5 of this Protocol expressly states that consumer arbitration agreements,

like those at issue here, should offer all parties the option of seeking adjudication

in a small claims tribunal. Id. The Comment to Principle 5 explains “access to

small claims tribunals is an important right of Consumers” because it provides “a

convenient, less formal, and relatively expeditious judicial forum for handling . . .

disputes” involving small amounts of money. Id. By including a provision that

offers access to such tribunals, the Arbitration Agreements at issue here merely

                                           23
complied with the AAA’s Consumer Due Process Protocol. Such compliance

further undermines the district court’s finding that the small-claims provision in

the Arbitration Agreements only benefitted the payday lender. Cf. Green Tree

Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 94–95, 121 S. Ct. 513, 524 (2000)

(Ginsburg, J., concurring) (explaining the drafter of the contract could have relied

on the AAA’s Consumer Arbitration Rules to ensure the claims are arbitrated

under a “consumer-protective fee arrangement”).

      We further note the district court did not provide support for its assertion

that the small-claims provision favors Defendants because the judgments from

small claims courts are appealable to an arbitrator. This aspect of the small-claims

provision is equally binding on Jenkins and Defendants, as both parties are

obligated to appeal such judgments to an arbitrator. Moreover, the arbitral forum

does not unfairly favor Defendants. Jenkins, who has raised claims under Georgia

usury laws and the Georgia RICO statute, is capable of vindicating all of her

substantive rights in arbitration. In Bess v. Check Express, 294 F.3d 1298 (11th

Cir. 2002), we held the terms of the arbitration agreement at issue in that case did

not “grossly favor” the payday lender because, among other reasons, “nothing in

the agreement prevent[ed] the arbitrator from awarding ‘the full panoply of relief’

available under [the applicable] law.” Id. at 1308; see also Green Tree Fin. Corp.,

                                         24
531 U.S. at 90, 121 S. Ct. at 521 (holding “even claims arising under a statute

designed to further important social policies may be arbitrated because so long as

the prospective litigant effectively may vindicate [his or her] statutory cause of

action in the arbitral forum, the statute serves its functions”) (alteration in original)

(citation and internal quotation marks omitted). The same is true in this case, as

the Arbitration Agreements do not limit Jenkins’ right to relief.10

       We conclude the small-claims provision is mutual and bilateral—it applies

equally to both parties. Jenkins has not demonstrated that access to small claims

tribunals unfairly benefits Defendants. The Arbitration Agreements, therefore, do

not lack mutuality of obligation.

       In summary, we disagree with the district court’s reasons for finding the

Arbitration Agreements unconscionable. The district court did not have the

authority to decide the adhesion claim because that issue related to the loan

agreements generally and, therefore, should have been submitted to an arbitrator.

Although the district court did have the authority to adjudicate the arguments

relating to the class action waiver and the small-claims provision, those




       10
           We note the Arbitration Agreements also permit Jenkins to either (1) choose the
arbitrator from a list of national arbitration organizations, or (2) come to an agreement with
Defendants in selecting a local arbitrator.

                                                 25
contractual conditions, for the reasons explained above, did not render the

Arbitration Agreements unconscionable.

C.    Legality of the Underlying Transactions

      Jenkins raises an alternative argument for affirming the denial of

Defendants’ motion to compel arbitration. Jenkins argues Defendants’ motion

should not be granted because the underlying payday loan contracts are illegal and

void ab initio under Georgia law. See Ga. Code Ann. § 16-17-1 (2003 & Supp.

2004) (effective May 2004). Because the loan contracts are allegedly void,

Jenkins contends “there is nothing to arbitrate.”

      We have, however, previously considered and rejected such an argument.

Bess, 294 F.3d at 1304–06. In Bess, a class action lawsuit arose out of “check

advances” or “deferred payment transactions” between the plaintiffs and

defendants. Id. at 1300. A deferred payment transaction is essentially the same as

a payday lending transaction. See id. at 1300–01. One of the named plaintiffs in

Bess, Luna Clifton Colburn, signed an arbitration agreement in connection with

the deferred payment transactions. The defendants sought to enforce this

agreement and compel arbitration. Like Jenkins’ argument in this case, Colburn

argued the arbitration agreements were unenforceable because the underlying

deferred payment transactions were void as illegal under Alabama law. Colburn

                                         26
alleged the loans charged usurious rates of interest, and the collection of the loans

violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §

1961–1968 (2000).

       In rejecting Colburn’s argument, we applied the Prima Paint rule. Bess,

294 F.3d at 1304–05. We explained the “allegations of illegality go to the

deferred payment transactions generally, and not to the arbitration agreements

specifically.” Id. at 1305. Therefore, an arbitrator, and not a federal court, should

determine whether the underlying transactions are illegal and void. Id. at 1306.

       In Bess, we also distinguished our holding from our earlier decision in

Chastain v. Robinson-Humphrey Co., Inc., 957 F.2d 851 (11th Cir. 1992).11 In

Chastain, we considered an “unusual” set of facts, in which the plaintiff never

personally signed the customer agreements at issue. Id. at 852–53. Without such

a signature, the plaintiff argued she never assented to the arbitration clauses found

within the customer agreements. Id. at 853. We explained:

       Under normal circumstances, an arbitration provision within a
       contract admittedly signed by the contractual parties is sufficient to
       require the district court to send any controversies to arbitration.
       Under such circumstances, the parties have at least presumptively



       11
         Jenkins’ argument relies on a Georgia case, Stewart v. Favors, 590 S.E.2d 186 (Ga. Ct.
App. 2003), and a Florida case, Cardegna v. Buckeye Check Cashing, Inc., — So. 2d — (Fla.
2005), both of which cite this Court’s decision in Chastain.

                                              27
      agreed to arbitrate any disputes, including those disputes about the
      validity of the contract in general.

Id. at 854 (citations omitted). “Where the party seeking to avoid arbitration

admittedly did not sign any contract requiring arbitration, however, ‘there is no

presumptively valid general contract which would trigger the district court’s duty

to compel arbitration pursuant to the [FAA].’” Bess, 294 F.3d at 1305 (quoting

Chastain, 957 F.2d at 854) (alteration in original).

      In Chastain, the plaintiff alleged “that a contract never existed at all”

because she never signed and assented to the contracts in question. 957 F.2d at

855. She challenged “the very existence of any agreement, including the existence

of an agreement to arbitrate.” Id. at 854. In that situation, we held the plaintiff

placed the making of the arbitration agreement in question, thereby permitting the

district court to adjudicate the issue. Id. at 855. We concluded that before

determining whether arbitration should be compelled under the FAA, the district

court can decide whether the parties assented to the contracts containing the

arbitration clauses. Id. at 855–56; see also Bess, 294 F.3d at 1305.

      The plaintiff in Bess, Colburn, attempted to compare his void ab initio

allegation to the contentions in Chastain that a contract never existed. 294 F.3d at

1305. We rejected this argument, explaining Colburn’s reliance on Chastain was



                                         28
misplaced because Chastain focused primarily “on the question of assent.” Id.

We explained:

       Colburn urges that the transactions in this case are void, not because
       he failed to assent to the essential terms of the contracts, but because
       those terms allegedly render the contracts illegal under Alabama law.
       At bottom, Colburn challenges the content of the contracts, not their
       existence. Indeed, unlike the contracts in Chastain, both the
       arbitration agreement and the deferred payment contracts were signed
       by Colburn, and there is no question about Colburn’s assent to those
       contracts. Thus, this case falls within the “normal circumstances”
       described in Chastain, where the parties have signed a presumptively
       valid agreement to arbitrate any disputes, including those about the
       validity of the underlying transaction.

Id. at 1305–06. Because assent to the contracts was not in question, we applied

Prima Paint and held that whether or not the deferred payment transactions were

usurious and void was an issue to be decided by an arbitrator, not a federal court.

Id. at 1306; see also John B. Goodman Ltd. P’ship v. THF Constr., 321 F.3d 1094

(11th Cir. 2003) (holding whether or not the underlying construction contracts

were unenforceable under Florida law was a question for the arbitrator to

decide).12

       12
           Other federal circuit courts have similarly held that allegations claiming high interest
loan agreements are void as illegal will not preclude the enforcement of arbitration provisions
included in the allegedly illegal contracts. See, e.g., Snowden v. Checkpoint Check Cashing, 290
F.3d 631, 637 (4th Cir. 2002) (“[Plaintiff’s] allegations of usurious rates of interest . . . do not
relate specifically to the Arbitration Agreement. Neither do they underlie a claim that [Plaintiff]
failed to assent to the terms of the . . . Agreement.”); Burden v. Check Into Cash of Kentucky,
LLC, 267 F.3d 483, 489–91 (6th Cir. 2001) (holding plaintiffs’ allegations that the high interest
loan agreements were void as illegal was an issue to be decided by an arbitrator).

                                                 29
       Jenkins’ void ab initio argument is no different from the argument we

dismissed in Bess. Jenkins assented to the payday loan contracts and the

Arbitration Agreements associated with those contracts. It is undisputed that she

signed and dated both a Promissory Note and an Arbitration Agreement each time

she obtained a loan from FNB. Jenkins argues the payday loan contracts are void,

not because she failed to assent to the terms of the contracts, but because those

terms render the contracts usurious and void under Georgia law. Thus, Jenkins

does not challenge the existence of either the payday loan contracts or the

accompanying Arbitration Agreements; rather she challenges the content of the

contracts—i.e., the rates of interest charged in the loan agreements. As we held in

Bess, we conclude Jenkins and Defendants entered into “presumptively valid

agreement[s] to arbitrate any disputes, including those about the validity of the

underlying transaction.” Bess, 294 F.3d at 1306; see also John B. Goodman Ltd.

P’ship, 321 F.3d at 1096. We conclude, therefore, that Jenkins’ void ab initio

argument, which challenges the legality of the payday lending transactions, is an

issue for the arbitrator, not the court, to decide.13



       13
           We note this issue raised a question of federal law—namely, deciding whether the
district court has the authority under the FAA to adjudicate Jenkins’ claim that the payday
lending transactions were illegal. See Bess, 294 F.3d at 1306 n.3. In deciding this federal
question, we do not pass judgment on any issues of Georgia contract law. See id.

                                               30
                               IV. CONCLUSION

      For the reasons stated above, we conclude the district court erred in finding

the Arbitration Agreements at issue in this case unconscionable and

unenforceable. Moreover, Jenkins’ alternative argument for affirming the district

court—alleging the underlying payday lending transactions are void ab initio

under Georgia law—is an issue for an arbitrator, not the court, to decide.

Accordingly, we reverse the district court’s decision and remand with instructions

to grant Defendants’ motion to compel arbitration.

      REVERSED and REMANDED.




                                         31
