Banking groups argue the CFPB violated statutes for rule implementation while the bureau seeks a different court to hear the case.
03/26/2024 1:40 P.M.
2 minute read
The U.S. Chamber of Commerce and multiple plaintiffs in a lawsuit challenging the Consumer Financial Protection Bureau’s credit card late fee rule have filed an emergency motion (PDF) in the U.S. Court of Appeals for the 5th Circuit for an administrative stay of the rule.
The lawsuit was filed in the U.S. District Court for the Northern District of Texas and was pending a decision from the judge on an injunction to delay the effective date of the rule. The CFPB since announced the rule takes effect May 14.
This prompted the plaintiffs to file the emergency motion in the appeals court, stating that “the CFPB violated a statutory requirement that it allow at least six months to implement a rule like the one at issue here, 15 U.S.C. § 1604(d), and instead gave [p]laintiffs’ members only 60 days to comply.”
The plaintiffs “now appeal the effective denial of their motion for a preliminary injunction and respectfully ask this [c]ourt for an administrative stay of the rule and, ultimately, an injunction pending appeal,” according to the emergency motion.
Outside of the CFPB announcing the effective date for the rule while the plaintiffs waited for a ruling on their preliminary injunction, the case has had some additional bumps along the road.
Since the lawsuit was filed, Judge Reed C. O’Connor of the U.S. District Court for the Northern District of Texas recused himself from the case, ACA International previously reported.
O’Connor left the case “amid questions about whether he had financial conflicts because he held shares in credit card issuers that belonged to the U.S. Chamber of Commerce,” Reuters reports.
The CFPB also filed a motion to transfer the lawsuit to a different court because the plaintiffs do not have standing in the Texas district court.
In addition to the U.S. Chamber of Commerce, the Fort Worth Chamber of Commerce, Longview Chamber of Commerce, American Bankers Association, Consumer Bankers Association and Texas Association of Business are plaintiffs in the case.
In response to the Chamber’s lawsuit, the CFPB filed a brief stating “that the Chamber of Commerce and American Bankers Association engaged in blatant forum shopping by filing its case in the federal court in Fort Worth, Texas even though no credit card issuer subject to the rule is located within the Northern District of Texas,” according to a Bloomberg Law report.
The CFPB’s response to the emergency motion to stay the rule’s effective date is due by 5 p.m. on March 29.
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