Under the Military Lending Act, servicemembers have long been entitled to special protection from the deceptive lending practices that too often target members of the military, and in so doing, threaten their ability to serve and compromise national security. That is, until a recent Eleventh Circuit ruling. At issue is Emmanuel G. Louis, Jr., et al. v. Bluegreen Vacations Unlimited, a standing case decided by the Eleventh Circuit with broad implications for servicemembers and access to the courts generally.

The case began when an Army Private and his wife were manipulated into signing a vacation timeshare contract for a loan that would fund future vacations—a loan that contained terms that flagrantly violate the Military Lending Act. Yet when the Army Private and his wife turned to the courts for relief, they were shut out. If the Eleventh Circuit’s decision is left to stand, they won’t be the only military family denied justice. And Congress’ goal in enacting the Military Lending Act of protecting servicemembers’ financial readiness, and by extension, preserving national security, will be compromised.

In this Q&A, Rose Carmen Goldberg, associate director of policy and programs at SLS’s Deborah L. Rhode Center on the Legal Profession, discusses the U.S. Supreme Court amicus brief she filed in support of the plaintiffs, along with Rhode Center Civil Justice Fellow Brianne Holland-Stergar and the UC Berkeley School of Law Center for Consumer Law & Economic Justice.

How did this case start?

Just months after Emmanuel Louis, Jr. joined the Army, a timeshare company contacted him to offer a “good deal” on a vacation. Lured by the offer, Private Louis, his wife, and their infant child went to one of the company’s resorts, where they experienced the high-pressure tactics typical of too many timeshare companies. But the methods were not the only problem: the loan contract itself was unlawful. In direct contravention of the Military Lending Act, the contract contained an arbitration clause, and the company misrepresented the cost of credit while also failing to provide required disclosures. As a result, the contract was “void from inception” under the Military Lending Act. Yet when the Louises tried to cancel the contract, the company refused and continued to try to collect on the loan. So, they turned to the courts for relief.

What was this case’s path to a Supreme Court cert petition?

In district court, the Louises argued that pursuant to the Military Lending Act, the company does not have a right to collect any money from them under the contract. They asked for rescission of the contract, a declaration that it is unlawful, and restitution of payments. They also requested an injunction to prevent the company from harming servicemembers in the future. The district court, however, dismissed the complaint. It found that the Louises lacked standing because they did not allege a sufficiently concrete harm. Under the court’s view, that the company’s collections on a void loan harmed the Louises was not enough. Rather, they had to allege harm tied directly to the particular Military Lending Act provisions the company violated. When the Louises appealed, the Eleventh Circuit affirmed. It employed substantially the same reasoning, framing its denial of standing in terms of traceability. The Louises then filed a request for Supreme Court review.

What main arguments do you make in your amicus brief in support of the Supreme Court granting cert?

Big picture, we argue that as a matter of historical doctrine and practice, a party who is harmed by the collection of money under a void contract has always had a remedy: to seek redress in court. And the Eleventh Circuit was wrong to close the courthouse doors. By requiring that the Louises establish that their injury resulted not just from the timeshare company’s conduct in collecting on the void contract, but from its Military Lending Act violations, the Eleventh Circuit erected a new and unfounded barrier to establishing traceability.

Important for Supreme Court review purposes, the Eleventh Circuit’s holding creates a circuit split—its standard conflicts with at least three other circuits. The Second, Eighth, and Ninth Circuits have all ruled that loss of money pursuant to a void contract—a paradigmatic pocketbook injury—is sufficient for standing purposes. This is precisely the type of injury that the Louises suffered, which the Eleventh Circuit found lacking. Moreover, the Eleventh Circuit broke with the Supreme Court’s traceability precedent. Under the Court’s longstanding jurisprudence, plaintiffs need only show a “fairly traceable” causal connection between the plaintiff’s harm and the defendant’s challenged conduct. The Court has made clear that this burden is modest and requires only a “concrete link” or “actionable causal relationship” between the plaintiff’s injury and the defendant’s actions. Nowhere has the Court suggested—as the Eleventh Circuit holds—that a plaintiff must show that their harm is tied to the defendant’s violation of a specific statutory provision.

We also argue that the Eleventh Circuit’s traceability standard contravenes Congress’ express intent in enacting the Military Lending Act: to protect servicemembers against deceptive lending as a means of maintaining military readiness. During debates over the Act, Members of Congress echoed Department of Defense concerns about servicemembers becoming ensnared in cycles of debt and becoming distracted from their mission-critical duties. Congress then took the significant step of voiding loan contracts that do not contain core disclosures or that inhibit access to judicial remedies. Though the predation experienced by the Louises is precisely the type of conduct Congress sought to curb, under the Eleventh Circuit’s standard the nearly 133,000 servicemembers stationed in the Circuit no longer have full access to justice.

Why, as you write in your amicus brief, is the Eleventh Circuit’s decision so harmful to active-duty servicemembers?

The Eleventh Circuit’s decision presents compounding risks of inequality and lack of access to justice. Servicemembers in Florida, Georgia, and Alabama who seek restitution for payments on void contracts are no longer able to turn to the Military Lending Act for relief as Congress intended. That is fundamentally unfair. While a pilot stationed in Florida is effectively blocked from pursuing her Military Lending Act claim in federal court, her counterpart in South Dakota can do so under the same facts. The transient nature of military service is also important to recognize. If that South Dakota-based pilot is transferred to Florida and her rights under the Military Lending Act are violated there, she will have suddenly and nonsensically lost the ability to vindicate her rights under the Military Lending Act. This is a recipe for confusion and lost opportunities for redress. As Congress made clear, servicemembers are equally entitled to the Military Lending Act’s protections, for which equal access to the courts is a prerequisite.

Does this case have any implications for national security?

In harming servicemembers, the Eleventh Circuit’s opinion also threatens the mission readiness of the U.S. military. Unpaid debt jeopardizes servicemembers’ security clearances, which are often required for their continued service. In instances of severe indebtedness, servicemembers may even be subject to military disciplinary action or discharged altogether. The Department of Defense itself has decried the widespread deceptive lending practices that impact servicemembers’ creditworthiness, security clearances, and preparedness for mission-critical duties. Indeed, the Department has determined that financial readiness is a crucial aspect of military operational readiness. These concerns are precisely what prompted Congress to enact the Military Lending Act. And the Eleventh Circuit’s evisceration of the Act’s protections weakens national security.

If the Eleventh Circuit’s decision is left undisturbed, what impacts do you foresee on access to the courts generally?

The threat to access to justice extends beyond servicemembers. The Eleventh Circuit’s traceability standard could severely restrict federal court jurisdiction over any number of claims challenging a contract that is void ab initio by statute. Numerous federal statutes contain voiding provisions like the Military Lending Act’s. These include statutes governing investing and securities-related contracts, government contracts, and shipping contracts. The threat also extends to cases brought in federal court alleging violations of state laws. For instance, it has long been understood that insurance policies that contain illegal or fraudulent terms are void ab initio, and the insured is entitled to restitution of premiums paid on such void policies. The question before the Court is therefore of great importance to preserving federal jurisdiction over a variety of disputes.

Rose Carmen Goldberg is associate director of policy and programs of the Deborah L. Rhode Center on the Legal Profession. She is an expert in military and veterans law, with past work including advancing servicemembers and veterans’ rights at the California Attorney General’s Office and representing individual veterans as a Skadden Fellow.