On February 27, 2017, the U.S. District Court for the Southern District of New York in part denied a renewed motion by Midland Funding, LLC (“Midland”) to dispose of claims brought by Saliha Madden (“Madden”) under the Fair Debt Collection Practices Act (“FDCPA”) and the New York General Business Law (“NYGBL”). The Order also certified two classes of plaintiffs, thereby permitting Madden’s claims to proceed as class actions.

Madden claims that Midland illegally charged Madden and other similarly situated New York debtors a usurious rate of interest on certain defaulted credit card obligations that Midland had purchased from a national bank. On May 22, 2015, the U.S. Court of Appeals for the Second Circuit reversed a June 2, 2014, order of the district court granting summary judgment in favor Midland and remanded the case. The Second Circuit held that Section 85 of the National Bank Act, 12 U.S.C. 85, which preempts state laws governing the interest a national bank may charge on a loan, does not apply after a national bank sells a loan to a non-bank. The U.S. Supreme Court denied Midland’s petition for writ of certiorari on June 27, 2016, leaving the district court to reconsider the litigation in light of the Second Circuit’s holding. In this alert, we briefly summarize the Order and examine certain open questions and potential next steps.