Texas federal court requests briefing on compliance date for payment provisions in payday loan rule

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The Texas federal district court hearing the lawsuit filed by two trade groups challenging the CFPB’s 2017 final payday/auto title/high-rate installment loan rule (2017 Rule) has entered an order directing the parties to files briefs regarding a compliance date for the 2017 Rule’s payment provisions.  The order states that the court requests the additional briefing “concerning what would be the appropriate compliance date if the court were to deny Plaintiffs’ motion for summary judgment and grant Defendants’ motion for summary judgment.”

Last week, the CFPB filed a motion to lift the stay of the compliance date for the payment provisions.  The CFPB’s motion followed the trade groups’ filing of a Notice of Potentially Relevant Appellate Proceedings (Notice).  In the Notice, the trade groups advised the district court that the Fifth Circuit has ordered supplemental briefing on the impact of the U.S. Supreme Court’s decision in Collins v. Yellin on the Supreme Court’s remand of Collins to the Fifth Circuit and on All American Check Cashing which is pending in the Fifth Circuit.  The trade groups pointed out that both Collins and All American Check Cashing involve the question of the appropriate remedy for actions taken by an agency director while unconstitutionally insulated from removal by the President.

In its motion to lift the stay of the compliance date for the payment provisions, the CFPB argued that the two cases do not warrant delay by the district court in deciding the cross-motions for summary judgment.  It asked the court to lift the stay of the compliance date if it nevertheless wishes to defer its decision until the Fifth Circuit rules in the two cases.

The district court’s order directs the parties to file their briefs by August 6 and allows responses to be filed by August 16.  It also states that “[t]he court will consider the matter fully briefed upon receipt of the parties’ responses and no reply briefs will be necessary.”  In our estimation, there would be no compelling reason for the court to ask for briefs at this time if it planned to rule on the merits, even in part, in favor of the industry.  Thus, we regard this request as an ominous development from the industry’s standpoint.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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