Court Reverses Course, Strikes State Attorney General’s Lawsuit Against Litigation Funder Over NFL, 9/11 Responder Transactions

Court Reverses Course, Strikes State Attorney General’s Lawsuit Against Litigation Funder Over NFL, 9/11 Responder Transactions

A federal court that previously ruled  that the structure of the Consumer Financial Protection Bureau is unconstitutional, while allowing the New York Attorney General to proceed with claims in the same lawsuit, now has reversed course, and dismissed the New York AG’s claims against a litigation funding company accused of scamming 9/11 responders and ex-professional football players.

In a September 12 ruling, Judge Loretta Preska dismissed the New York Attorney General’s federal and state law claims against RD Legal Funding over alleged violations of federal and state law in connection with litigation funding transactions with former National Football League players and with 9/11 responders.

Judge Preska had previously dismissed the CFPB from the case, based on her determination that the single-director-removable-only-for-cause structure of the CFPB is unconstitutional.

In her September 12 ruling in the case captioned Consumer Financial Protection Bureau and The People of the State of New York v. RD Legal Funding, et al., 17-cv-890 (LAP), U.S. District Court, Southern District of New York, Judge Preska said that there is no longer a statutory basis for the New York AG to bring its Consumer Financial Protection Act claims and therefore dismissed such claims for lack of federal jurisdiction.

She also ruled that there was no federal question at issue in the New York AG’s state law claims, declined to exercise supplemental jurisdiction over the state law claims, and dismissed the AG’s state law claims.

With all claims dismissed, the New York AG could bring its state law claims in state court, while the CFPB could appeal the holding on the unconstitutionality of its structure.

A previous Secondary Insurance Market Blog post, Court That Ruled CFPB Unconstitutional Also Concludes That Judge In NFL Concussion Litigation Was Correct To Invalidate Lawsuit Funding, available here.  Additional articles about the latest ruling include the following:

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