In Greater Chautauqua Federal Credit Union v. Quattrone, several New York credit unions challenged the retroactive application of the Fair Consumer Judgment Interest Act, which reduced the statutory post-judgment interest rate on consumer debts from nine percent to two percent. The plaintiffs argued that applying the law to judgments entered before its effective date constituted an unconstitutional regulatory taking under the Fifth Amendment. They sought declaratory and injunctive relief, as well as attorneys’ fees.
After extensive pretrial motions, discovery, and a three-day bench trial, Judge Mary Kay Vyskocil of the Southern District of New York issued findings of fact and conclusions of law. The Court considered whether the Act’s retroactive impact amounted to a regulatory taking under the three-factor Penn Central test: (1) the economic impact of the regulation, (2) interference with reasonable investment-backed expectations, and (3) the character of the government action.
A key point in the Court’s reasoning came from expert testimony provided by Vega's expert Professor Jim Wilcox of UC Berkeley. In his declaration, Professor Wilcox explained that neither industry literature, internal documents, nor testimony from the credit unions indicated that the nine percent statutory post-judgment interest rate meaningfully influenced lending criteria, risk assessments, or loan decisions. The Court cited this analysis in finding that the credit unions did not, in fact, rely on the statutory rate in their operations, which undercut a central pillar of their regulatory takings claim.
Ultimately, the Court concluded that plaintiffs failed to carry their heavy burden of proving a regulatory taking. Judgment was entered in favor of the defendants, the plaintiffs’ requests for declaratory and injunctive relief were denied, and the preliminary injunction previously in place was vacated. The case was dismissed, closing the litigation in the defendants’ favor.
Amended Findings of Fact and Conclusions of Law Granting Judgement for Defendants After Bench Trial