Nate Raymond
(Reuters) – A federal appeals court ruled on Friday that a Texas judge had mistakenly transferred to another court in Washington, D.C., an industry-backed lawsuit challenging the agency’s rule on credit card late fees, highlighting the debate over “judge shopping” ” in US
The New Orleans-based 5th U.S. Circuit of Appeals voted 2-1 to side with business and banking groups that filed the lawsuit last month in Fort Worth, Texas, a city whose federal courthouse has become a favored venue for litigators challenging the rulings. President Joe Biden. administration policy.
The decision was a jurisdictional victory for business groups including the U.S. Chamber of Commerce and the American Bankers Association, amid broader debate over how and whether to curb “litigation shopping” by litigants who sue government policies in courts with one or two sympathetic judges.
The U.S. Consumer Financial Protection Bureau (CFPB), whose rule is the subject of the lawsuit, and the business groups did not respond to requests for comment.
At issue was a CFPB rule targeting what the government agency called “excessive” fees credit card issuers charge for late payments, which is estimated to cost consumers $12 billion a year.
Under the rule, credit card issuers with more than 1 million open accounts can only charge $8 late fees unless they can prove that higher fees are necessary to cover their costs. Previously, issuers could charge up to $30 or $41 for subsequent late payments.
Instead of ruling on a business group’s request to block the rule, U.S. District Judge Mark Pittman, an appointee of former Republican President Donald Trump, concluded last week that the lawsuit should be heard by a judge in Washington.
His decision came after the U.S. Judicial Conference, the judiciary’s policy-making body, announced a new policy aimed at limiting “judge buying” in cases challenging federal or state laws.
Before he referred the case, the groups appealed what they said was Pittman’s earlier de facto refusal to their request to block the rule, denying him jurisdiction over the case and the ability to refer it.
U.S. District Judge Don Willett, in an opinion Friday joined by U.S. District Judge Andrew Oldham, a Trump appointee, agreed, saying that once a party appeals a trial judge’s decision, that judge “has no jurisdiction to do anything that changes status of the case.”
U.S. District Judge Stephen Higginson, an appointee of former Democratic President Barack Obama, dissented, saying his decision was “inconsistent with the district court’s authority to administer the registry and to reasonably control forum shopping.”
The case has already been assigned to a judge in Washington, over whom the 5th Circuit has no jurisdiction. Willett ordered Pittman to notify the judge that his transfer “should be disregarded.”
(This story has been republished to correct the solution reference in paragraph 2)