The New York Attorney General sued the bank following a series of allegedly fraudulent wire transfers initiated by third-party scammers from consumer accounts. The Attorney General asserted multiple causes of action, including a claim under the Electronic Fund Transfer Act (EFTA), 15 U.S.C. §§ 1693a et seq., and its implementing regulation; Regulation E, 12 C.F.R. §§ 1005.1 et seq. The complaint also alleged that the bank’s overdraft and nonsufficient fund (NSF) fee practices were deceptive and abusive in violation of state law and sought to enforce those laws under § 1042 of the Consumer Financial Protection Act (CFPA), part of the Dodd-Frank Act. Additionally, the Attorney General claimed that the bank’s practices violated the federal prohibition on unfair, deceptive, or abusive acts or practices (UDAAP). The bank moved to dismiss the complaint in its entirety, arguing in part that 15 U.S.C. § 1693a(7)(B) barred EFTA liability for debits made pursuant to a wire transfer payment order. While the court granted the motion in part, it denied it as to the EFTA claim. The court held that § 1693a(7)(B) did not preclude liability for a fraudulent payment order that resulted in a debit from a consumer’s account in connection with a wire transfer. The Attorney General subsequently moved the Second Circuit to certify the court’s Opinion and Order for interlocutory appeal and to stay proceedings in the interim.
In New York v. Citibank, N.A., No. 24-CV-659 (JPO), 2025 WL 1194377, 2025 U.S. Dist. LEXIS 75855 (S.D.N.Y. Apr. 22, 2025) (opinion not yet released for publication), the court granted the bank’s motion to certify the court’s order and to stay the action pending appeal. First, the court noted that the certified issue carried precedential weight in many cases and would define the scope of the Attorney General’s claims and the parties’ burdens at trial. The court acknowledged that the bank had identified a pure and controlling question of law under § 1292(b), because reversal of the prior order could significantly affect the course of the litigation and benefit appellate guidance. Next, the court considered whether a substantial ground for a difference of opinion existed and concluded that it did. The court explained that determining the scope of § 1693a(7)(B) was complex, requiring the application of multiple interpretive canons to intricate statutory text and could potentially implicate decades of legislative and regulatory history. The court also noted that the Second Circuit had not yet addressed the issue. Third, it reasoned that immediate appellate review could clarify legal uncertainty, influence settlement, and materially advance the resolution of a case with broad implications for financial institutions and consumers nationwide. The court then addressed the Attorney General’s request to certify the entire order for interlocutory appeal and explained that such a request was unnecessary, because § 1292(b) allows certification of an order itself rather than each individual claim or issue it addressed. Finally, the court granted the motion to stay, reasoning that although the bank was unlikely to prevail on appeal, its arguments warranted serious consideration. The court found that resolving whether the EFTA or Article 4A governed the disputed payment orders could have broad and immediate consequences for the financial industry. A stay would conserve resources, especially because the scope of discovery under either framework remained contested. The court further found that the bank’s commitment to adopt interim measures to mitigate consumer harm reduced any potential prejudice caused by the delay. Therefore, a stay would serve the public interest by promoting clarity on a significant legal issue.
By Callighan Ard [email protected]
Edited By Hayden Mariott [email protected]