The Supreme Court of the United States denied the certiorari petition in
Madden v. Midland Funding, LLc. This case was a putative class action
that alleged violations of the Fair Debt Collection Practices Act and
New York’s usury law. The class representative, Saliha Madden, alleged
that the defendants violated the FDCPA by charging and attempting to collect
an interest rate higher than that permitted under the law of her home
state of New York.
The case began in 2010 after Midland sent Madden a letter seeking to collect
payment of a charged off credit card debt of approximately $5,000. The
debt had been purchased by Midland, a debt buyer from FIA Card Services
(Bank of America). The letter also stated that an interest rate of 27%
per year was applied. Madden filed suit in 2011 alleging abusive and unfair
debt collection practices in violation of the FDCPA and that the company
had charged a usurious rate of interest in violation of New York General
Business Law §349. In 2013, the District Court denied the defendants
motion for summary judgement and Madden’s motion for class certification.
The court found that the original agreement between Madden and FIA Card
Services permitted the interest rate applied to the account. Additionally
it held that Midland was allowed to charge the 27% interest rate because
it was the assignee of the account.
On appeal, Madden argued that the District Court erred in holding that
the National Bank Act’s preemption barred her state-law usury claims.
The National Bank Act permits national banks to “charge on any loan…
interest at a rate allowed by the laws of the State, Territory, or District
where the bank is located.” It also provides for the exclusive cause
of action for usury claims against national banks and completely preempts
all comparable state-usury claims.
The Court of Appeals for the Second Circuit disagreed with the District
court and held that Midland could not benefit from the National Bank Act.
It reasoned that the District Court’s holding should be reversed
because “neither defendant [was] a national bank nor a subsidiary
or agent of a national bank…. and because application of the state
law on which Madden’s claims rely would not significantly interfere
with any national bank’s ability to exercise its powers under the
In March 2016, the Supreme Court invited the Solicitor General’s
Office to file a brief expressing the United States’ views on Madden.
It was expected that the Solicitor General would set forth the views of
the federal banking agencies and their positions regarding this case in
his brief. The Supreme Court’s denial of certiorari in June means
that the decision rendered by the Second Circuit will stand.