United States: 2016年美国Madden案件判决


On March 21, 2016, the U.S. Supreme Court announced that it has called for the views of the Solicitor General in connection with the certiorari petition in Madden v. Midland Funding, LLC, 786 F.3d 246 (2d Cir. 2015), a decision restricting non-bank loan purchasers from benefitting from the National Bank Act's (the "NBA") state usury law preemption. The Court's invitation for a submission by the Solicitor General keeps alive the possibility for further review of the controversial Madden decision.


In 2008, the issuer of Ms. Madden's credit card, a national bank located in Delaware, charged off and sold her defaulted debt to a non-bank purchaser. Madden, 786 F.3d at 248. Madden, a New York resident, later filed a putative class action lawsuit alleging that application by the non-bank and an affiliated servicer of a 27 percent annual interest rate, while permissible under Delaware law, violated New York's usury law. Id. The defendants argued that they, the assignees of a national bank located in Delaware, were permitted by the NBA to charge the maximum interest rate permitted under Delaware law. Id. at 250.

The NBA permits national banks to "charge on any loan . . . interest at the rate allowed by the laws of the State, Territory, or District where the bank is located." 12 U.S.C. § 85.1 The U.S. Supreme Court has held that the NBA preempts state-law usury claims against national banks. See Marquette Nat'l Bank of Minneapolis v. First of Omaha Service Corp., 439 U.S. 299, 314-18 (1978). Accordingly, it is well established that a national bank located in Delaware can lawfully charge interest rates permissible in Delaware, regardless of usury limitations in the borrower's home state. See id.

Second Circuit's Reasoning

The district court granted summary judgment for the defendants on the grounds that the NBA preempted Madden's usury claim. Madden, 786 F.3d at 249. The Second Circuit reversed, holding that, although NBA preemption "may extend to entities beyond a national bank itself," the defendants could not benefit from the NBA's preemptive effect. Id. at 249, 251-52.

In applying the "significant interference" preemption analysis, the Second Circuit determined that precluding a non-bank debt purchaser from charging an interest rate available to the assignor national bank would not "significantly interfere with [the] national bank's ability to exercise its power under the NBA." Id. at 251. The panel emphasized the absence of any ongoing relationship between the national bank and the transferred debt in this instance, and concluded that a reduction in the price at which banks may be able to sell some consumer debt in the secondary market did not constitute "significant interference." Id.  at 250-52. In this regard, the court also expressed concern about creating an "end-run" around state usury laws. Id. at 251-52.2 According to the Second Circuit, in other cases involving transactions where NBA preemption was extended to non-bank entities, the national bank had maintained a relationship to the debt post-transfer and remained the "real party in interest." Id. at 252-53. In some instances, the third party acted on the bank's behalf, or the borrower's challenge was directed to actions taken by the bank before the debt transferred. Id. In Madden, the court concluded, the defendants acted solely on their own behalf and not for the bank, which had no post-transfer relationship to the debt. Id. at 251.

The Second Circuit nonetheless remanded the case for determination of whether a Delaware choice-of-law provision in Ms. Madden's cardholder agreement with the national bank card issuer would permit the defendants to charge interest as permitted under Delaware law. Id. at 253-54.

Implications for Secondary Market

The Madden decision, and the analogous state court decisions from Maryland and West Virginia involving FDIC-insured state-chartered banks, may inhibit banks' ability to transfer consumer debt off their books through securitization or to dispose of nonperforming loans through sale to non-bank entities. Marketplace lenders, for example, that have partnered with banks may need to adjust these arrangements. At least one large online lending platform has already modified its arrangement with its bank partner in an effort to create an ongoing connection between the loan and the bank potentially distinct from the debt transfer at issue in Madden. Now, the bank will maintain a relationship with each borrower through a "Borrower Account," pursuant to which the borrower can apply for additional loans. Additionally, the platform will pay its bank partner a "loan trailing fee" as the underlying loan is repaid. The platform, however, remains the sole owner of the loans.

It remains to be determined what type of arrangement would be sufficient to overcome the rule articulated in Madden, because the Second Circuit did not delineate the requisite interest the bank must maintain with the transferred debt. The court acknowledged that a national bank's subsidiaries "may benefit from NBA preemption"3 and distinguished an Eighth Circuit decision4 allowing a national bank, before selling the loan, to charge a borrower a fee that the bank paid to a non-bank third party acting as its agent. Madden, 786 F.3d at 250, 253. If Madden requires that the non-bank must effectively act for the bank as its agent, the determinative question would focus on whether the arrangement between the bank and the non-bank demonstrate that the latter is acting on behalf of the former, notwithstanding that the non-bank is the sole owner of the debt. A nexus between loan repayment and trailing fees due to the bank may bolster the argument that the platform or other purchaser is acting on behalf of the bank for NBA preemption purposes.

Even if the Supreme Court ultimately declines to grant certiorari, the Second Circuit's decision leaves open the possibility that the Delaware choice-of-law provision in Ms. Madden's cardholder agreement with the bank that issued her credit card may permit the defendants to continue to apply the interest rate permitted under Delaware law. The parties have filed motions in the district court addressing this subject. If a choice of law provision permits a non-bank to charge interest in accordance with the chosen state's law, non-banks may have an alternative mechanism for availing themselves of interest rates permitted in the originating bank's home state.

In addition, the Second Circuit's decision did not reference the longstanding common law "valid-when-made" principle that a loan cannot become usurious by virtue of subsequent transfer. See Nichols v. Fearson, 32 U.S. 103, 109 (1833). In Nichols, the Supreme Court stated it is a "cardinal rule[ ] in the doctrine of usury . . . that a contract, which, in its inception, is unaffected by usury, can never be invalidated by any subsequent transaction." Id. To the extent Madden remains intact, non-banks may increasingly seek to advance the "valid-when-made" principle as an alternate basis for applying the original terms of acquired loans.

There is no filing deadline applicable to the Supreme Court's request for submission of the views of the Solicitor General. It is possible that the Solicitor General could submit a brief in time for the Court to determine whether to grant certiorari before the summer recess begins at the end of June. A later filing may be more likely, in which case the Court will determine whether to hear the appeal when it returns in October.


1.  A similar provision of the Federal Deposit Insurance Act applies to FDIC-insured state-chartered banks. 12 U.S.C. § 1831d. 

2. This concern has been cited by state courts that recently invalidated debt made through similar arrangements between non-bank loan purchasers and FDIC-insured state-chartered banks. See, e.g., CashCall, Inc. v. Morrisey, No. 12-1274, 2014 WL 2404300 (W. Va. 2014), cert. denied, 135 S. Ct. 2050 (2015); Maryland Comm'r of Fin. Regulation v. CashCall, Inc. 124 A.3d 670 (Md. Ct. Spec. App. 2015) cert. granted, 128 A.3d 51 (Md. 2015). 

3. The court applied and cited case law predating the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which potentially limits the availability of NBA preemption to national banks and excludes their subsidiaries and affiliates. 12 U.S.C. § 25b(e) (". . . a State consumer financial law shall apply to a subsidiary or affiliate of a national bank . . . to the same extent that the State consumer financial law applies to any person, corporation, or other entity subject to such State law."). 

4. Phipps v. FDIC, 417 F.3d 1006 (8th Cir. 2005).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Arnold & Porter
Sheppard Mullin Richter & Hampton
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Arnold & Porter
Sheppard Mullin Richter & Hampton
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions