## Facts

- Saliha Madden, a New York resident, opened a Bank of America credit card account in 2005 and agreed to a written cardholder agreement.
- Monthly statements sent to Madden in New York reflected an APR of 32.24% on the account.
- The credit card program was later housed in FIA Card Services, N.A., a national bank.
- After Madden defaulted, the charged-off debt was sold in 2010 to Midland Funding, LLC, a debt buyer, which attempted to collect the balance plus interest.
- Midland sought to collect interest exceeding New York’s 16% civil usury cap and 25% criminal usury cap.
- Madden brought a putative class action alleging violations of the FDCPA, New York usury law, and N.Y. Gen. Bus. Law § 349.
- After the Second Circuit rejected National Bank Act preemption and remanded, the district court addressed renewed motions for summary judgment and class certification.

## Issues

1. Whether a contractual choice-of-law provision required applying non-New York law to permit interest collection that would exceed New York’s criminal usury limit.
2. Whether attempting to collect interest unlawful under applicable state usury law can support FDCPA claims under 15 U.S.C. §§ 1692e and 1692f.
3. Whether the proposed class satisfied Rule 23(a) and Rule 23(b)(3), and, if so, what class definition and claims could be certified.

## Decision

- The court granted defendants’ renewed summary-judgment motion in part and denied it in part.
- The court held that defendants were not entitled to summary judgment on the theory that non-New York law necessarily controlled to defeat usury-based claims as a matter of law.
- Applying New York conflict-of-laws rules, the court declined to apply a choice-of-law clause to the extent it would permit collection of interest that would be criminally usurious under New York law.
- The court allowed core FDCPA theories premised on attempting to collect unlawful interest to proceed, while granting summary judgment on certain narrower theories or predicates.
- The court granted plaintiff’s renewed motion for class certification as modified, certifying a narrower class limited to New York residents and claims amenable to common proof.

## Legal Principles

- Under New York conflict-of-laws rules, a contractual choice-of-law clause may be disregarded where applying the chosen law would violate a fundamental New York public policy and New York has a materially greater interest in the dispute.
- New York’s prohibition on charging more than 25% interest, backed by criminal sanctions, can constitute a fundamental public policy sufficient to limit enforcement of a contrary choice-of-law clause for New York borrowers.
- A debt collector’s attempt to collect amounts not legally owed, including interest barred by applicable usury law, can support FDCPA claims under § 1692e (misleading representations) and § 1692f (unfair or unconscionable means).
- Class certification under Rule 23(b)(3) may be appropriate where liability turns on standardized practices (e.g., uniform interest assessment and collection on purchased accounts) and common issues predominate; the class may be narrowed to ensure common proof and manageability.

## Conclusion

The court held that New York’s strong public policy against criminally usurious interest could override a choice-of-law clause for collection efforts targeting New York residents, denied summary judgment on the central usury-based FDCPA theory, and certified a modified New York-resident class focused on Midland’s standardized interest-collection practices.


Madden v. Midland Funding, LLC, 237 F. Supp. 3d 130 (S.D.N.Y. 2017)