CFPB Seeks Reconsideration of Order Vacating Transfer of Credit Card Fee Case

In a lawsuit challenging the CFPB’s new rule decreasing the presumptively reasonable and proportional “safe harbor” amount for credit card late fees under the CARD Act, the CFPB is seeking reconsideration of the Fifth Circuit Court of Appeals’ order vacating the transfer of the lawsuit from the U.S. District Court for the Northern District of Texas to the District Court for the District of Columbia.  The CFPB is asking the same panel of Fifth Circuit judges who entered the order to reconsider their decision and allow the case to transfer to the District of Columbia.

The Fifth Circuit reversed the District Court’s transfer, holding that it should have instead granted the plaintiffs’ earlier motion for a preliminary injunction against enforcement of the rule.  The Fifth Circuit reasoned that, without the preliminary injunction, the credit card companies risked violating TILA’s provision requiring companies to distribute disclosures regarding the change in calculating late fees to consumers by a certain date.

The CFPB asserts that the Fifth Circuit’s decision to vacate the transfer is based on key factual errors and argues TILA does not require advanced notice of a reduction in the maximum amount of late fees allowed to be assessed by credit card companies.  On these arguments, the CFPB maintains that a ruling on the motion for a preliminary injunction was not required.

Lastly, the CFPB argues that the Fifth Circuit’s precedent requires a strong showing of apparent need before a district court is required to prioritize a preliminary injunction over other matters on the court’s docket, such as a motion to transfer.  The CFPB contends the Fifth Circuit’s decision in this case will restrict the ability of district courts to control their own dockets as well as encourage future forum shopping.