CHAMBER OF COMMERCE FILES LAWSUIT TO NULLIFY CFPB’S NEW CREDIT CARD PENALTY FEE RULE THAT WILL SAVES AMERICANS’ BILLIONS OF DOLLARS– U.S. CHAMBER OF COMMERCE V. CFPB, NO. 4:24-CV-00213-Y (N.D. TEX., MAR. 07, 2024)
In the latest attack on the Biden Administration’s efforts to curtail unfair junk fees, the U.S. Chamber of Commerce and several other trade associations filed a lawsuit against the Consumer Financial Protection Bureau (CFPB) in early March, seeking to halt the implementation of its new rule restricting credit card penalty fees. The CFPB’s rule, praised by consumer advocates, will dramatically reduce the amount of money companies can extract from consumers, from the current maximum fee of $41 to a new, drastically reduced maximum of $8. The CFPB estimates that the new rule will save American families more than $10 billion in late fees annually, translating to an average savings of $220 per year for the more than 45 million people who are charged late fees.
The case is drawing special attention because it is a striking example the financial industry bringing rule challenges in the federal courts in Texas in hopes of securing review by judges who are vehemently pro-industry and anti-regulation. In its filings, the CFPB has rightly accused the Chamber of forum-shopping by filing the case in the Northern District of Texas even though the plaintiffs have very little connection to the district. The presiding judge is apparently receptive to the Bureau’s arguments: “The Court is wary 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.” The CFPB has just filed a motion to transfer the case to the U.S. District Court for the District of Columbia.
FIFTH CIRCUIT SEEKS RETURN OF CASE INVOLVING ELECTION GAMBLING CONTRACTS FROM D.C. BACK TO TEXAS – IN RE: KEVIN CLARKE, NO. 24-50079 (5TH CIR.)
In August 2022, staff of the Commodity Futures Trading Commission withdrew a no-action letter it had previously granted to PredictIt, a platform offering event wagering contracts, and it instructed PredictIt to wind down its political betting operations in the United States. PredictIt then sued the CFTC, alleging that the revocation of the no-action letter was arbitrary and capricious in violation of the Administrative Procedure Act and seeking an injunction of the revocation pending the litigation. On July 21, 2023, the Fifth Circuit held—contrary to well-established principles of administrative law—that the withdrawal of the no-action letter was final agency action subject to review, that the withdrawal was not unreviewable as subject to agency discretion, and that a preliminary injunction pending resolution of the merits was warranted.
Like the Chamber’s challenge to the CFPB’s credit card penalty rule, described above, the case is now mired in a contest over the proper court or “venue” that should hear the matter. In January 2024, the district court in Texas transferred the lawsuit to the district court in D.C. The industry challengers are desperately fighting to have it sent back to Texas, going so far as to secure a “writ of mandamus” from the Fifth Circuit, issued on March 1st, which required the Texas judge to seek its return from D.C. We expect a decision from the district court on transfer soon.
EIGHTH CIRCUIT WINS LOTTERY AND WILL HEAR WAVE OF CHALLENGES TO THE SEC’S CLIMATE RISK DISCLOSURE RULE – STATE OF IOWA V. SEC, NO. 24-1522 (8TH Cir.)
Immediately after the SEC issued its final rule on March 6th requiring public companies to disclose the financial risks they face from climate change, industry opponents launched a multi-pronged attack in multiple federal circuit courts. Environmentalist organizations also filed challenges. Under the rules governing multi-district litigation, a lottery was held and the U.S. Court of Appeals for the Eighth Circuit was picked to consolidate and hear all of the claims. Supporters of the SEC’s rule—including Better Markets—rightly fear that the Eighth Circuit will bring a jaundiced eye to the cases, one that favors the industry and is all too ready to nullify the SEC’s rule.
