District Court approves final Madden class action settlement

Courts Usury FDCPA National Bank Act Madden Settlement Valid When Made

On September 10, the U.S. District Court for the Southern District of New York issued a final order and judgment to approve a class action settlement agreement, which ends litigation dating back to 2011 concerning alleged violations of state usury limitations. As previously covered by InfoBytes, the plaintiffs brought claims against a debt collection firm and its affiliate alleging violations of the FDCPA and New York state usury law when the defendants attempted to collect charged-off credit card debt with interest rates above the state’s 25 percent cap that was purchased from a national bank. In 2017, upon remand following the 2nd Circuit’s decision that a nonbank entity taking assignment of debts originated by a national bank is not entitled to protection under the National Bank Act from state-law usury claims (covered by a Buckley Special Alert here), the district court certified the class and allowed the FDCPA and related state unfair or deceptive acts or practices claims to proceed.

Following a fairness hearing, the court granted the parties’ joint motion for final approval, which divides the approximately 58,000 class members into two subclasses: claims alleging state-law violations, and claims alleging FDCPA violations. Under the terms of the settlement, the defendants are required to, among other things, (i) provide class members with $555,000 in monetary relief; (ii) provide $9.2 million in credit balance reductions; (iii) pay $550,000 in attorneys’ fees and costs; (iv) pay class representatives $5,000 each; and (v) agree to comply with all applicable laws, regulations, and case law regarding the collection of interest, including the collection of usurious interest.