5th Circuit Reverses District Court Transfer of CFPB Credit Card Suit

Earlier this month, the U.S. Court of Appeals for the Fifth Circuit issued an Order, which vacated an order by the U.S. District Court for the Northern District of Texas, transferring a suit brought by several trade groups challenging the CFPB’s authority under the CARD Act (the Act) to alter the structuring and amounts of credit card late fees.

The trade groups filed a motion for preliminary injunction of the Act.  However, rather than ruling on the motion for preliminary injunction, the district court instead invited and granted the CFPB’s motion to transfer the case to the District Court for the District of Columbia. 

On appeal to a three-judge panel, the Fifth Circuit found the district court acted without jurisdiction.  The district court lacked jurisdiction because it granted the motion to transfer after the plaintiffs appealed the district court’s denial of their preliminary injunction of the Act.  The Fifth Circuit found that the district court’s failure to rule on the pending motion for a preliminary injunction was effectively a denial of that motion, given the context of the case.  The panel concluded that after the appeal of the denial of the preliminary injunction was lodged, the district court no longer had jurisdiction to make rulings altering the status of the case.  The panel clarified that it did not decide the propriety of the transfer itself, but rather that the transfer was procedurally incorrect.

The panel’s ruling vacates the transfer to the U.S. District Court for the District of Columbia, keeping the case in the Northern District of Texas.