Judge Wants to Know Why Credit Card Late Fee Case Was Filed in Texas
Trade groups asking for immediate injunction, threaten appeal
Much to the consternation of the U.S. Chamber of Commerce, the American Bankers Association, the Consumer Bankers Association and state business groups, a Texas federal judge appears suspicious about the reason a lawsuit challenging the Consumer Financial Protection Bureau’s final credit card rule was filed in the Lone Star State.
“The Court is weary [sic] that there appears to be an attenuated nexus to the Fort Worth Division, given only one plaintiff of the six in this matter has even a remote tie to the Fort Worth Division,” Judge Mark T. Pittman of the U.S. District Court for the Northern District of Texas wrote in ordering the business groups to explain why they filed suit in Texas.
In an earlier filing, the government attorneys defending the CFPB rule accused the plaintiffs of forum shopping, pointing out that there was not much of a link between the plaintiffs and Texas. Traditionally, Texas federal courts have been more friendly to business groups than courts in other areas of the U.S.
Judge Pittman invited federal government attorneys to file for a transfer to a more relevant court and the government attorneys did just that.
The trade group attorneys fired back, saying that the judge should consider issuing an injunction barring implementation of the rule before deciding whether the case should be transferred. They added that if Pittman has not issued an injunction by Friday, they would seek an immediate appeal of his decision not to issue one.
The court fight comes just weeks after the CFPB issued its final credit card late fee rule. The rule would affect credit card issuers with at least one million open accounts. Most late fees would be capped at $8, although issuers could charge more if they can demonstrate that their costs exceed that amount.
In their filing, the trade groups argued that an immediate injunction was needed; without one, the affected credit card issuers would have to start printing new inserts and disclosures for any credit cards issued after the rule goes into effect.
“For any individual bank, such a project would typically take at least 4 months to complete,” they said. “For nearly the entire industry to do so at once will take a much longer time.”