Last week, the lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB or Bureau) credit card late fee rule (Final Rule) was transferred from the U.S. District Court for the Northern District of Texas to the District Court for the District of Columbia (D.D.C.).
As discussed here, the Final Rule sets a safe harbor amount for late fees at $8 and eliminates the annual inflation adjustments to that safe harbor amount, for larger card issuers, among other changes. As discussed here, a collective of trade groups, including the U.S. Chamber of Commerce, Fort Worth Chamber of Commerce, Longview Chamber of Commerce, the American Bankers Association, the Consumer Bankers Association, and Texas Association of Business (collectively, the trade groups) filed a complaint in the Northern District of Texas challenging the Final Rule and arguing that it should be invalidated because the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution and the Administrative Procedure Act.
On March 19, the district court issued an order, discussed here, raising concerns about the proper venue for the action and setting a briefing schedule on the issue. “The Court is weary that there appears to be an attenuated nexus to the Fort Worth Division, given only one plaintiff of the six in this matter has even a remote tie to the Fort Worth Division.”
After briefing was concluded, the court began its analysis noting that it was indisputable that the action could have been brought in D.D.C. “A civil action against a government agency or officer in their official capacity may be brought in a ‘judicial district in which any defendant resides.'” According to the court, in this case, both defendants and three of the six trade groups are located in Washington D.C., where the Final Rule was promulgated as opposed to Fort Worth where only one trade group is located.
Since the action could have been filed in D.D.C., the court turned to whether private- and public-interest factors weighed in favor of transfer. While the court conceded that three of the four private-interest factors were neutral, it found that the fourth factor “all other practical factors that might make a trial more expeditious and inexpensive” weighed heavily in favor of transfer. Of the ten attorneys of record, eight listed their offices in D.C. That would mean that any court proceeding would require all of the defendants’ counsel and two-thirds of the trade groups’ counsel to travel to Fort Worth. “This would mean that taxpayers, including residents of Fort Worth, would foot an expensive bill for this litigation.” Since the trade groups did not identify any substantial or practical issues with the case being held in D.C, the court concluded that the private interest factors as a whole weigh in favor of transfer.
As for the public-interest factors, the court found the Northern District of Texas has a significantly busier docket than that of D.D.C. and there is a strong interest in having this dispute resolved in D.C. While the third and fourth factors were neutral, the court found the totality of the circumstances weighed in favor of transfer.
“This case does not belong in the Northern District of Texas and certainly not in the Fort Worth Division. The only apparent connection is that one Plaintiff is headquartered in the Northern District and the effects of the Rule will be felt generally here. But the effects of the CFPB’s Rule will be felt in every district in the United States … Here, the Court will refrain from taking part in ‘creative judging’ and is compelled to follow the law laid out by Congress in 28 U.S.C. § 1404(a).”
Of note, there is still an appeal pending in the Fifth Circuit related to this action — the trade groups filed a notice of appeal from the district court’s “effective denial” of their motion for preliminary injunction (because it was not decided on an expedited basis). It is not clear what the Fifth Circuit will do with the appeal now that the district court has transferred the case to D.C.
