A federal judge revived the CFPB’s lawsuit against a legal settlement company the bureau says defrauded the families of Sept. 11 victims and former NFL players.
Judge Loretta A. Preska of the U.S. District Court for the Southern District of New York on Wednesday reversed a prior ruling and allowed the Consumer Financial Protection Bureau to bring claims against RD Legal Funding LLC. The judge in 2018 held that the CFPB’s enforcement action was invalid because the bureau was unconstitutionally structured at the time.
The CFPB declined to comment Thursday. Representatives for RD Legal didn’t respond to a request for comment.
Cresskill, N.J.-based RD Legal provides cash advances to consumers entitled to payouts from victim compensation funds and legal settlements.
The CFPB and then-New York Attorney General Eric Schneiderman sued RD Legal in 2017, alleging that the company defrauded former NFL players who were parties to the league’s concussion settlement and the families of victims of the Sept. 11 attacks.
The CFPB alleged the firm misinterpreted the terms, costs, and conditions of the transactions that paid consumers up-front sums.
The U.S. Court of Appeals for the Second Circuit in October 2020 overturned Preska’s 2018 decision to dismiss the CFPB lawsuit. The U.S. Supreme Court’s June 2020 ruling in Seila Law v. CFPB—which fixed constitutional defects in the CPFB’s single-director leadership structure—superseded Preska’s 2018 ruling, the Second Circuit said.
The Supreme Court subsequently ruled in Collins v. Yellen that any actions taken by an agency head who was validly appointed could survive, even if the process for removing that agency head was unconstitutional at the time.
Both rulings compelled Preska to reverse her 2018 decision, she said in Wednesday’s opinion allowing the CFPB to resume its litigation.
The case is Consumer Fin. Prot. Bureau v. RD Legal Funding, LLC, 2022 BL 89083, S.D.N.Y., No. 17-cv-890, 3/16/22.
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