Judge recuses from CFPB credit card fee rule case; conflicts raised
U.S. District Judge Reed O’Connor of Fort Worth, Texas, appears in a 2018 video produced by the federal judiciary. Administrative Office of the U.S. Courts/Handout via REUTERS Purchase Licensing Rights
March 15 (Reuters) - A conservative federal judge in Texas has recused himself from hearing a lawsuit by business and banking groups challenging the U.S. Consumer Financial Protection Bureau's new rule that aims to lower credit card late fees, a case that a progressive watchdog argued he could not hear due to conflicts of interest.
U.S. District Judge Reed O'Connor in Fort Worth in an order on Thursday did not say why he was stepping aside from presiding over the lawsuit by groups including the U.S. Chamber of Commerce, the nation's largest business lobby, after having set a rapid schedule to consider blocking the rule.
His recusal came shortly before a progressive government watchdog group, Accountable.US, issued a press release detailing research into what it called conflicts of interests arising from investments listed in O'Connor's financial disclosure reports.
Those investments, detailed in O'Connor's 2022 disclosure report, included stock holdings for Chamber of Commerce members Capital One, a bank and major issuer of credit cards, and Visa, one of the largest payment card services companies.
"It's hard to imagine how Judge O’Connor ever thought he could be impartial given his own financial disclosures," Accountable.US President Caroline Ciccone said in a statement.
O'Connor did not respond to a request for comment. The CFPB declined to comment. The Chamber did not respond to a request for comment on Friday.
O'Connor, an appointee of Republican former President George W. Bush, has a track record of ruling in favor of conservative litigants challenging laws and regulations governing guns, LGBTQ rights and healthcare.
The case will now be heard by U.S. District Judge Mark Pittman, an appointee of Republican former President Donald Trump and the only other active judge in Fort Worth, who similarly has often ruled for conservative plaintiffs.
At issue is a CFPB rule that takes aim at what the bureau called "excessive" fees that credit card issuers charge for late payments, something the consumer protection agency estimated costs consumers $12 billion a year.
Under that rule, credit card issuers with more than 1 million open accounts can only charge $8 for late fees, unless they can prove higher fees are necessary to cover their costs. The previous rule allowed issuers to charge up to $30 or $41 for subsequent late payments.
The Chamber, along with the American Bankers Association and the Consumer Bankers Association, sued on March 7 to block the rule, and O'Connor had set a brisk schedule, with all briefs due by Thursday on whether he should issue a preliminary injunction.
The CFPB in court filings accused the business groups of engaging in "forum shopping" to get the case before a judge in Fort Worth, where a local order assigns 90% of all civil cases to either O'Connor or Pittman.
The U.S. Judicial Conference on Tuesday announced a new policy aimed at curbing such "judge shopping" by requiring lawsuits challenging federal or state laws to be assigned randomly to judges throughout a district.
The case is Chamber of Commerce of the United States of America, et al, v. Consumer Financial Protection Bureau, U.S. District Court for the Northern District of Texas, No. 4:24-cv-00213.
For the plaintiffs: Michael Murray of Paul Hastings
For the CFPB: Stephanie Garlock of the CFPB
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