Case Update: Madden v. Midland Funding - November 10, 2015

As expected, today, November 10, 2015, Midland Funding filed a petition for a writ of certiorari in the United States Supreme Court, asking the Court to review the Second Circuit's ruling in Madden v. Midland Funding, that the federal preemption provision of the National Bank Act, 12 U.S.C. § 85, could not be invoked by a non-national bank assignee. A link to the petition is provided here. The cert petition advances two primary arguments as to why the Supreme Court should grant review. First, Midland claims the need for resolution of a split between the Second Circuit, on the one hand, and the Eighth and Fifth Circuits, on the other, concerning the impact of the National Bank Act on assigned loans. Specifically, Petitioner claims the Madden decision - subjecting non-national bank assignees to state usury laws - conflicts with the Eighth Circuit's decision in Krispin v. May Department Stores Co., 218 F.3d 919 (8th Cir. 2000), which holds that the preemption inquiry turns on the status of the originating entity and subsequent assignments are irrelevant, and the Fifth Circuit's decision in FDIC v. Lattimore Land Corp., 656 F.2d 139 (5th Cir. 1981), which also looked to the originator of the debt (albeit in the inverse scenario, where the originator was the non-national bank).

Second, the Petitioner claims the Madden case presents a question of substantial importance, particularly to the financial community. Midland contends that if left intact, the Second Circuit's decision will allow states to regulate lending terms when a loan created by a national bank is assigned to a non-national bank entity. Going one...