Consumer Law


New York’s attorney general will have to use state courts if the office wants to pursue RD Legal Funding, a company that provides advances to people expecting settlement money, a federal judge in New York has ruled.

U.S. District Judge Loretta Preska ruled on Wednesday that there is no basis for federal jurisdiction after she struck down the Title X law creating the Bureau of Financial Protection and dismissed the agency from the suit.

The New York Times covered the decision.

The New York attorney general and the CFPB had together sued RD Legal Funding in February 2017. The suit had claimed the funding company had misrepresented the terms of its deals with Sept. 11 responders and professional football players with Alzheimer’s disease who were awaiting settlement money.

Preska ruled in June that that the CFPB structure is unconstitutional because it has a single leader who could be removed by the president only for cause. Her opinion had sided with Judge Brett Kavanaugh, now a U.S. Supreme Court nominee, who had dissented from an en banc decision upholding the structure by the U.S. Court of Appeals for the District of Columbia Circuit.

Kavanaugh and Preska had differed on the remedy, however. Preska overturned the entire section of the Dodd-Frank law that created the CFPB. Kavanaugh would have allowed the law to stand while severing the provision on for-cause removal.

In light of her decision invalidating the consumer law, “it follows that there is no statute for the NYAG to proceed under and no grant of authority to proceed,” Preska said.