Credit Card Late Fee Suit’s Transfer to Washington Put on Hold

A federal appeals court for the second time thwarted a Texas judge’s attempt to move the banking industry’s suit challenging the Consumer Financial Protection Bureau’s credit card late fee cap to Washington, D.C.

Judge Mark Pittman of the US District Court for the Northern District of Texas transferred the case to the federal district court in Washington late Tuesday, noting that no banks subject to the rule capping fees at $8 are based in his judicial district. Pittman’s order marked the second time he had sent the case to Washington since taking it over in March.

The industry plaintiffs—the US Chamber of Commerce, the American Bankers Association, the Consumer Bankers Association, and three Texas industry groups—immediately filed a petition asking the US Court of Appeals for the Fifth Circuit to block the transfer.

The Fifth Circuit stayed the transfer until June 18 in a Wednesday order, though it didn’t block the move outright. The appeals court also ordered the CFPB to respond to the trade associations’ petition for a writ of mandamus by June 6.

“We appreciate the Fifth Circuit’s consideration of our arguments that the case should remain in the Northern District of Texas, and we will continue to take all necessary legal action to challenge this misguided and harmful rule,” Maria Monaghan, senior counsel at the US Chamber of Commerce Litigation Center, said in a statement.

The CFPB declined to comment.

Venue Fight

The battle over where the credit card late fee suit should be heard is part of a broader fight over forum shopping. Critics say business interests are flocking to federal courts in Texas to challenge federal regulations because of the conservative bent of the state’s federal judges.

The Fifth Circuit’s Wednesday order is a replay of earlier fights over where the credit card late fee lawsuit should be heard.

Pittman, the third judge to preside over the case, first sent the lawsuit to the Washington federal court on March 28. The CFPB, three of the plaintiffs, and 80% of the attorneys involved in the case were based in and around Washington, while no banks subject to the rule are based in the Northern District of Texas’ Forth Worth Division, he said.

The Fifth Circuit blocked the first transfer on April 5 on the grounds that Pittman didn’t rule directly on the industry plaintiffs’ request for a preliminary injunction on the CFPB’s rule, which was set to take effect May 14.

Pittman applied a preliminary injunction on May 10 putting the rule on hold while the parties awaited a US Supreme Court ruling on the constitutionality of the CFPB’s funding through the Federal Reserve.

The Supreme Court determined the funding was constitutional in its May 16 decision in CFPB v. Community Financial Services Association of America decision, overturning an October 2022 Fifth Circuit ruling.

Once the case was sent back to Pittman, the judge determined the facts on the ground hadn’t changed and transferred the case to Washington a second time.

“This case did not belong in the Northern District of Texas and certainly not in the Fort Worth Division on March 7, it did not when this Court transferred it on March 28, and it does not today—two months later,” he said Tuesday.

The CFPB’s credit card late fee rule, issued March 5 as part of the Biden administration’s assault against so-called junk fees, has the potential to cost banks $10 billion of their $14 billion in annual credit card late fee revenue, according to Bloomberg Intelligence.

Paul Hastings LLP represents the US Chamber and its co-plaintiffs.

The case is In re: Chamber of Commerce, 5th Cir., No. 24-10463, Unpublished Order 5/29/24.