Texas Federal Judge Suspects Venue Shopping in Lawsuit Against CFPB
In a significant development, a Texas federal judge has accused major banking industry groups and the U.S. Chamber of Commerce of engaging in venue shopping in their lawsuit against the Consumer Financial Protection Bureau (CFPB). The judge’s ruling is considered a major win for the federal regulator.
Judge’s Decision: Lawsuit to Be Transferred to Washington
Rejecting the banking industry’s choice of venue, Judge Mark Pittman ruled in favor of the CFPB, stating that the lawsuit should be transferred to Washington. The judge argued that the banks had filed the lawsuit in Texas purely for their own advantage, attempting to secure a more favorable ruling. Washington, being the hub of banking industry lawyers, was deemed a more suitable jurisdiction for the case.
Judge Pittman remarked, “Venue is not a continental breakfast; you cannot pick and choose on a Plaintiff’s whim where and how a lawsuit is filed.”
Lawsuit Concerning CFPB’s New Regulations on Credit Card Late Fees
The lawsuit in question revolves around the CFPB’s introduction of new regulations pertaining to the maximum late fees for credit cards. The proposed change aims to cap the average late fee at $8, a significant reduction from the current average fee of $32. The major banking groups opted to file their lawsuit in the U.S. District Court in the Northern District of Texas, a location that has typically seen lawsuits by industry and interest groups against the Biden administration due to the conservative nature of its judges.
Banks vehemently oppose the new late fee rule as it would potentially cost them billions in revenue. According to the bureau’s estimate, banks generate approximately $14 billion annually through credit card late fees.
Pittman Finds Little Grounds for Venue Choice
Judge Pittman examined the motives behind the industry groups’ decision to file the lawsuit in Texas and found them lacking. He noted that the Fort Worth Chamber of Commerce, the only connection to the banking industry in the district, had recently gained a major bank as a member. Pittman supported the CFPB’s argument that Texas is an unsuitable location for such lawsuits, emphasizing that Washington, with its proximity to regulators and expertise in industry regulation law, presents a more appropriate jurisdiction.
“In fact, as far as this Court can discern, not one of the banks or credit card companies directly affected by the future CFPB regulation is located in the Fort Worth Division,” said Pittman.
At present, the American Bankers Association and the Consumer Bankers Association, two major industry groups involved in the lawsuit, have not provided an immediate comment on Judge Pittman’s decision.
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