Case Update: Madden v. Midland Funding

August.17.2015

Despite the strong petition and amici briefs, the Second Circuit denied the request to rehear the Madden v. Midland Funding case. With the denial of the petition on August 12, it is now clear that Madden is the law of the Circuit and will remain so unless and until the Supreme Court steps in.

There are several important state law issues that the court of appeals in Madden left open that will be addressed by the district court on remand – such as whether the district court will honor the choice of law designation of the parties (designating Delaware law as governing the loans) and, if New York law applies, whether New York law would assess the legality of the rate by looking to whether it was lawful at the inception of the loan. The denial of the en banc petition, however, does not mean that we are likely to get those answers soon.

Under the governing rules of appellate procedure, the court of appeals issues its formal “mandate” seven days after the denial of a petition for rehearing. Thus, if the defendant-lender in Madden did nothing, the mandate would automatically issue on Wednesday or Thursday of this week and the case would be back on remand to the district court for it to resolve those remaining important state law questions, as well as numerous other issues. We fully expect the defendant-lender, however, to seek a stay of the issuance of the mandate under Rule 41 of the Federal Rules of Appellate Procedure, while it seeks Supreme Court review of the court of appeals ruling. The court of appeals typically grants such requests, absent any unusual circumstances, and we would expect the Second Circuit to grant such a motion if sought in Madden.

If the court of appeals agrees to a stay of the mandate, as we expect, the return of the case to the district court will be delayed until the Supreme Court decides whether to grant the petition for writ of certiorari (seeking review of the court of appeals ruling), and if review is granted, obviously, even longer. Midland has 90 days to seek Supreme Court review. Plaintiffs will then have 30 days to respond, but can easily extend that another 30 days. Thus, the case may not be teed up for the Court to even decide whether to grant review for at least another five months. And then there is a significant possibility that the Supreme Court, instead of deciding whether or not to grant the petition, will ask for the views of the United States. If it does, that could slow down the process at least another three to four months.

Given that process laying ahead, those hoping for quick resolution of the remaining key state law issues are likely to have to continue to wait. Even if Midland does not seek a stay of the mandate (which seems unlikely), it is highly probable that the district court, knowing that a request for Supreme Court review is in the offing, would generally elect to put the case on ice, in any event. Bottom line, unless Midland forgoes seeking a stay, and aggressively pushes for a quick resolution of the remaining key state law issues, those issues will remain unresolved for the time being.

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Robert Loeb Partner, Supreme Court & Appellate, Bankruptcy Litigation

Washington, D.C.

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Bankruptcy Litigation
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Energy
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Robert Loeb Partner

Washington, D.C.

The breadth and depth of Bob's appellate experience, and his consistent track record of success in high-stakes matters, are why clients, including top tech and energy companies, trust him with their most important cases.

The National Law Journal’s Litigator of the Week column recently recognized Bob’s appellate major wins in energy and product liability cases for Broadreach Power and Johnson & Johnson. Bob’s recent victories also include Fifth Circuit wins for energy clients Cheniere and Eni. In the Cheniere-Midship case, Bob obtained an emergency stay from the court of appeals of the regulating agency proceedings and, then after oral argument, achieved a full victory. And for Eni, Bob convinced the Fifth Circuit to vacate a $300M judgment against Eni in a dispute with another energy company. These types of big wins in the most challenging cases show why both Chambers and Legal 500 rank Bob among the Country’s top appellate advocates.

Bob has argued before the Supreme Court multiple times (including a 9-0 victory regarding application of the Fourth Amendment to rental cars), and has filed hundreds of briefs in the Supreme Court. He has also handled cases in highest state courts in California, New York, Maine, Kentucky and New Jersey.

Before joining Orrick, Bob served as one of the leaders of an elite appellate group at the Department of Justice. There, in addition to major national security, commercial, and administrative law, Bob supervised bankruptcy appeals. At Orrick, Bob has continued to handle big ticket bankruptcy matters, such as a billion-dollar dispute over whether DHL’s claim was discharged by United’s bankruptcy, appeals from the City of Stockton bankruptcy confirmation, and a Ninth Circuit matter involving the interplay of the Takings Clause and bankruptcy law.

Bob’s recent work includes matters for Johnson & Johnson, Avon, Microsoft, Eni, Cheniere Energy, Freeport LNG, Broadreach Power, LS Power, Exxon, Medidata, Renco, MSC Cruise Line, Golden 1 Credit Union, Credit Suisse, TravelCenters of America, Gannett, and the City of Stockton.