(Reuters) – The U.S. Consumer Financial Protection Bureau (CFPB) on Tuesday scored a jurisdictional victory when a federal judge in Texas transferred to another court in Washington, D.C., an industry-backed lawsuit challenging the agency’s rule capping credit card late fees at $8.
U.S. District Judge Mark Pittman in Fort Worth moved swiftly to transfer the lawsuit out of his courthouse for a second time after a federal appeals court that had previously prevented him from doing so relinquished jurisdiction on Friday.
That could give the CFPB a home-turf advantage as it defends a key part of President Joe Biden administration’s crackdown on “junk fees” against a lawsuit filed by groups including the U.S. Chamber of Commerce and the American Bankers Association.
The CFPB had fought for months to move the case out of the federal court in Fort Worth, a venue that has become a favorite of litigants challenging the Biden administration’s agenda and whose two active judges are Republican appointees.
The CFPB declined to comment. The Chamber of Commerce did not respond to a request for comment.
At issue is a rule that would block card issuers with more than 1 million open accounts from charging more than $8 for late fees, unless they could prove higher fees are necessary to cover their costs.
According to the CFPB, issuers collected more than $14 billion worth of credit card late fees in 2022, with an average fee of $32.
Pittman, an appointee of Republican former President Donald Trump, on May 10 halted the rule from taking effect.
But he did so only after a panel of the New Orleans-based 5th U.S. Circuit Court of Appeals dominated by Trump appointees reversed an earlier decision he issued transferring the case to the nation’s capital.
Pittman’s sole rationale for blocking the rule was because the 5th Circuit had in a different case in 2022 concluded the CFPB’s funding structure was unconstitutional, which would mean any regulations it adopted were likewise unconstitutional.
That 2022 ruling was overturned by the U.S. Supreme Court on May 16. The CFPB has said it plans to seek to have Pittman’s injunction vacated as a result, though the industry groups have raised other, yet-to-be-addressed arguments to block the rule.
After the 5th Circuit then returned the credit card fee case to Pittman, the CFPB on Tuesday asked Pittman to send it to Washington once again.
He did so within three hours, saying the case chiefly involves out-of-state plaintiffs challenging actions of government officials in Washington. The only connection to Fort Worth was a local plaintiff, the Fort Worth Chamber of Commerce. (This story has been refiled to correct the day to Tuesday, instead of Monday, in paragraph 12)
Source: Economy - investing.com
