Fifth Circuit Stops Transfer of CFPB Late Fees Rule Case, Again

Washington, D.C. or Texas. Which jurisdiction will ultimately hear the merits of an industry lawsuit challenging the Consumer Financial Protection Bureau’s rule to limit credit card late fees?

For the second time since the industry lawsuit against the CFPB was filed in March, the Fifth Circuit Court of Appeals paused a U.S. District Court for the Northern District of Texas’ order moving the dispute from Texas to D.C. The first time the Texas district court transferred the case, the Fifth Circuit intervened, claiming that a pending industry motion needed to be heard, leading the case to be reopened in Texas.

After the case was reopened in Texas, the district court issued a preliminary injunction to pause the regulation partially based on the Fifth Circuit’s 2022 holding that the CFPB’s funding was unconstitutional. Subsequently, on May 16, the U.S. Supreme Court reversed the Fifth Circuit, and held that the CFPB is, in fact, constitutionally funded. Following the decision, the Texas district court granted the CFPB’s renewed motion to transfer the case to D.C. district court. In the motion, the CFPB reiterated that none of the credit card companies affected by the rule are based in the Northern District of Texas. The Texas court once again noted in its order that both defendants (CFPB and its director Rohit Chopra) and three of the six industry groups that sued, reside in Washington, D.C., where the rule was promulgated. 

On May 29, the Fifth Circuit responded with an order to stay the transfer until June 18. 

March 7 – Industry groups, including the U.S. Chamber of Commerce and the Consumer Bankers Association, sue the CFPB in Texas federal court.
March 21 – CFPB files a motion to transfer case to D.C.
March 28 – the Texas district court grants the CFPB’s motion to transfer case.
March 29 – The case is transferred and is opened in the U.S. District Court for the District of Columbia.
April 2 – Industry groups appeal order of transfer.
April 2 – The Fifth Circuit Court of Appeals STAYS the transfer order.
April 8 – Following the Fifth Circuit’s order, the Texas district court reopens the case in Texas
May 10 – The Fifth Circuit grants the industry group’s motion for preliminary injunction and stays the credit card late fees rule.
MAY 16 – U.S. Supreme Court, in CFPB v. Cmty. Fin. Servs. Ass’n of Am., Ltd, holds that the CFPB is constitutionally funded, reversing the Fifth Circuit’s 2022 decision.
May 28 – CFPB renews motion before Texas district court to transfer the case to D.C.
May 28 – Texas district court grants CFPB’s motion to transfer case to D.C.
May 29 – Fifth Circuit STAYS the transfer order until June 18.

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