Monday, the Texas federal district court entered an order reopening the case challenging the CFPB’s final credit card late fee rule (Rule) which it had transferred to the U.S. District Court for the District of Columbia and providing notice to the D.C. court that “the transfer was without jurisdiction and should be disregarded.”  The district court’s order, which the D.C. court docketed yesterday, follows the decision issued last Friday by a divided panel of the U.S. Court of Appeals for the Fifth Circuit that vacated the district court’s order transferring the case.  The Fifth Circuit also issued a writ of mandamus directing the district court “to reopen the case and give notice to D.D.C. that its transfer was without jurisdiction and should be disregarded.”

Also Monday, apparently following a report by Politico that Fifth Circuit Judge Willett or a family member owns shares in a large credit card issuer that would be covered by the Rule, the Clerk of the Fifth Circuit issued a memorandum directing the parties “to file letter briefs by 5 p.m. [CT] on Thursday, April 11, 2024, explaining whether or not an ownership interest in a nonparty large credit card issuer would be substantially affected by the outcome of this litigation.”  Judge Willett authored the Fifth Circuit decision vacating the district court’s transfer order. 

The memorandum was issued following the filing of a letter with the court Monday by the CFPB to supplement the Certificates of Interested Persons that the plaintiffs filed with the Fifth Circuit.  (The Certificates are required pursuant to the Federal Rules of Appellate Procedure and Fifth Circuit Rules.)  In the letter, the CFPB stated:

The Bureau writes to inform the Court that, in addition to the party associations listed in the Chamber, et al.’s Certificates, large credit card issuers—those that, together with their affiliates, have one million or more open credit card accounts—have a financial interest in the outcome of the litigation.  The Bureau makes this representation in order that the judges of this court may evaluate possible disqualification or recusal.

As set forth in the Clerk’s memorandum, the Code of Conduct for U.S. Judges provides that a judge shall disqualify himself in certain circumstances, including when the judge or certain family members has a financial interest “in the subject matter in controversy or a party to the proceeding…that could be affected substantially by the outcome of the proceeding.”  The memorandum states:

No large credit card issuers are listed as parties to this litigation.  Nor did the originally filed Certificates of Interested Persons mention credit card issuers; rather, the Certificates listed only the named parties.  Recusal might be nonetheless proper where a judge’s interest in a nonparty large credit card issuer could be ‘affected substantially by the outcome of the proceeding.’

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