Greater Chautauqua Federal Credit Union v. Marks

In December 2021, New York enacted the Fair Consumer Judgment Interest Act, which reduced the interest rate on money judgments for consumer debt from nine percent to two percent per year, both prospectively and retroactively. Several credit unions filed suit to challenge that the retroactive application of the Act as unconstitutional. Among other things, they argued that the Act is an unlawful taking in violation of the Fifth Amendment. The State moved to dismiss the lawsuit for failure to state a claim.

Represented by Public Citizen and the New Economy Project, ten legal services organizations located in New York filed an amicus brief in support of the motion to dismiss. The brief explained that the Fair Consumer Judgment Interest Act was enacted to address economic hardships placed on New Yorkers by debt-collection lawsuits and consumer-debt judgments carrying an interest rate incommensurate with market rates, and that the state legislature’s amendment of the interest rate is precisely the kind of legislative adjustment of economic burdens to promote the common good that is uncharacteristic of a regulatory taking. In a decision issued in March 2023, however, the court denied the motion to dismiss the takings claim, holding that the plaintiffs had plausibly alleged a regulatory taking.