This week, the CFPB filed a notice with the Texas federal district court stating that it intends to move to transfer the lawsuit challenging the CFPB’s final credit card late fee rule (Rule).  The notice was filed pursuant to an order entered by the court on March 18 questioning whether the Fort Worth Division of the Northern District of Texas is the correct venue to hear the lawsuit.  In the order, the court directed the plaintiffs to explain the lawsuit’s connection to the Fort Worth Division and “how the court should weigh the In re Volkswagen private- and public-interest factors.”  However, as an alternative, the court invited the CFPB to file a motion to transfer.  The order provides that, if the CFPB elects to move to transfer, it must file its motion and brief by 5:00 p.m. on March 21 and the plaintiffs must file their response by 5:00 p.m. on March 25.

The plaintiffs in the lawsuit are the Chamber of Commerce of the United States of America, Fort Worth Chamber of Commerce, Longview Chamber of Commerce, American Bankers Association, Consumer Bankers Association, and Texas Association of Business.  In addition to the complaint, the plaintiffs filed a motion for a preliminary injunction in which they ask the court to preliminarily enjoin the Rule during the pendency of the lawsuit.  In its opposition to the preliminary injunction motion, the CFPB argues that the plaintiffs are unlikely to succeed on the merits of their case because the court should dismiss or transfer the complaint for improper venue.  According to the CFPB, although one plaintiff, the Fort Worth Chamber of Commerce, resides in the Northern District of Texas, it does not have associational standing.  

In a second filing yesterday, the plaintiffs ask the court for expedited consideration of their preliminary injunction motion before the court decides the venue issues.  The Rule was published in the Federal Register on March 15 and has an effective date of May 14, 2024.  The plaintiffs assert that expedited relief is necessary because “credit card issuers must, and indeed already have begun, complying with [the Rule’s] dictates.”  According to the plaintiffs:

[T]he printing and distribution of new disclosure materials like those required by the Final Rule typically takes a minimum of four months to accomplish, and the CFPB has given only two months for issuers representing nearly 95% of the credit card market to undertake this task.  Moreover, despite suggesting that issuers could compensate for harm caused by the Rule by raising interest rates or making other changes to their customer agreements, the CFPB did not provide enough time for issuers to do so, as such changes typically require 45 days’ written notice to consumers.  The effective date of May 14 requires written notice to be printed, mailed, and received by millions of consumers by March 29, 2024.  And, with each day that passes, more issuers will be forced to incur significant and unrecoverable costs to attempt these tasks.  Due to the Defendants’ unlawful actions, if Plaintiffs do not receive a ruling on their Motion for Preliminary Injunction by this Friday—one week before they must provide notice to millions of customers—their relief will have been effectively denied and they will be compelled to seek appellate review.  (emphasis included).

While stating that they intend to submit an additional brief on venue in accordance with the court’s order entered yesterday, they argue that venue is proper in the Fort Worth Division because the Fort Worth Chamber of Commerce is a resident of the Northern District of Texas and the CFPB cannot show that transfer is justified under the public-interest and private-interest factors in In re Volkswagen.  As a result, according to the plaintiffs, the court has the power to issue the preliminary injunction even if it later concludes that transfer is appropriate.  They also assert that a ruling on the preliminary injunction motion before a potential transfer would best ensure the availability of appellate review in the Fifth Circuit.  In addition, while acknowledging they have asked for an injunction that addresses their statutory claims, the plaintiffs indicate that the court does not need to reach the statutory claims to resolve the preliminary injunction motion and instead can grant the preliminary injunction “based on the Appropriations Clause claim in the meantime.”  Finally, the plaintiffs ask the court, if it denies their motion for a preliminary injunction, to issue an injunction pending appeal.  

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