Texas judge questions venue in CFPB credit card fee rule challenge
U.S. District Judge Mark Pittman appears before the U.S. Senate Judiciary Committee in Washington, D.C., for a hearing on his nomination to serve as a federal judge in Fort Worth, Texas, on March 5, 2019. U.S. Senate/Handout via REUTERS Purchase Licensing Rights
March 19 (Reuters) - A federal judge in Texas has ordered business and banking groups to explain why their lawsuit challenging the U.S. Consumer Financial Protection Bureau's new rule governing credit card late fees belongs in his court instead of a different venue.
U.S. District Judge Mark Pittman in an order on Monday said he was concerned that "there appears to be an attenuated nexus to the Fort Worth division, given only one plaintiff of the six in this matter has even a remote tie to the Fort Worth division."
Pittman took charge of the case from the only other active federal judge in Fort Worth, Reed O'Connor, who recused himself on Thursday 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, a lead plaintiff.
Both Pittman and O'Connor are appointees of Republican presidents, and their Fort Worth courthouse has become a popular destination for conservative litigants and business groups challenging the polices of President Joe Biden's administration.
Pittman raised his concerns after the U.S. Judicial Conference last week announced a new, discretionary policy aimed at curbing such "judge shopping" by requiring lawsuits challenging federal or state laws to be assigned randomly to judges throughout a federal district.
That policy, if adopted by district courts, would end a practice in which litigants challenging government policies sued in Texas courthouses, or divisions, with just or two Republican-appointed judges. Local rules kept those cases before those judges, allowing litigants to essentially pick their judge.
The CFPB argued in a brief opposing the plaintiffs' request for a preliminary injunction blocking the rule that the groups had engaged in "forum shopping" in order to sue in Fort Worth.
Only one of the groups that sued, the Fort Worth Chamber of Commerce, is based in that division, and the member of the chamber it claimed was harmed by the rule is a Utah bank, the CFPB argued in a March 12 brief.
The other plaintiffs include the American Bankers Association and the Consumer Bankers Association; the Texas Association of Business; and the Longview Chamber of Commerce.
Pittman, an appointee of former President Donald Trump, gave the plaintiffs until Thursday to explain the case's connection to Fort Worth and invited the CFPB to file a formal motion to transfer it, with briefing done by March 25.
There's precedent for Pittman transferring a case over a Biden-era policy. The judge in April ruled a lawsuit challenging an Education Department student loan rule was wrongly filed in Fort Worth and sent it to Austin.
The CFPB declined to comment. The Chamber did not respond to a request for comment.
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 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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Reporting by Nate Raymond in Boston
Our Standards: The Thomson Reuters Trust Principles.
