U.S. Court of Appeals, Ninth Circuit (applying New York law) · US (9th Cir. / NY law) · 2020-21 · Certified questions withdrawn after settlement; the New York usury question remains open
Citation/Docket: 962 F.3d 455 (9th Cir. 2020) (certification order); certified questions withdrawn July 2021
Posture: Funder vs. plaintiffs' attorney, for breach of contract and fiduciary duty
Funder(s) involved: Fast Trak Investment Company, LLC
Fast Trak funded lawsuits in which Richard Sax was attorney of record, secured not only by the clients' case proceeds but also by Sax's attorney fees in unrelated matters. When Sax collected and did not pay, Fast Trak sued. Sax defended on the ground that the agreements were usurious loans rather than investments.
The Ninth Circuit found no controlling New York authority on whether a funding agreement is a loan, or a cover for usury, where repayment can come from an attorney's fees in unrelated cases, and certified the question to the New York Court of Appeals. Both sides briefed it, then settled, and the questions were withdrawn without an answer.
The moment a funding deal reaches beyond the funded case, for example into the lawyer's fees in other matters, the non-recourse characterisation weakens and the usury defence becomes real. That question is still open in New York, where most of these contracts choose their law.
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Compiled from public sources (court filings, published opinions, and secondary reporting) as part of the Institute's Phase 1 Dispute Library research. This is educational material, not legal advice; case citations should be independently verified before relied upon.