Yesterday, the lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB or Bureau) credit card late fee rule (Final Rule) was ordered to be transferred from the U.S. District Court for the Northern District of Texas to the District Court for the District of Columbia (D.D.C.) for the second time in as many months. The court’s decision was largely based on the same analysis as the first transfer order.

As discussed here, the Final Rule sets a safe harbor amount for late fees at $8 and eliminates the annual inflation adjustments to that safe harbor amount, for larger card issuers, among other changes. In March, a collective of trade groups filed a complaint in the Northern District of Texas challenging the Final Rule and arguing that it should be invalidated because the CFPB’s funding mechanism violates the appropriations clause of the U.S. Constitution and the Administrative Procedure Act.

Shortly after the lawsuit was filed, the district court issued an order raising concerns about the proper venue for the action and setting a briefing schedule on the issue. After briefing was concluded, the court found the totality of the circumstances weighed in favor of transfer. “This case does not belong in the Northern District of Texas and certainly not in the Fort Worth Division. The only apparent connection is that one Plaintiff is headquartered in the Northern District and the effects of the Rule will be felt generally here. But the effects of the CFPB’s Rule will be felt in every district in the United States … Here, the Court will refrain from taking part in ‘creative judging’ and is compelled to follow the law laid out by Congress in 28 U.S.C. § 1404(a).”

On April 5, the U.S. Court of Appeals for the Fifth Circuit issued an order, discussed here, finding that the Texas district court lacked jurisdiction to issue its first transfer order because the plaintiffs’ appeal of the effective denial of their motion for preliminary injunction was already pending before the appellate court. The plaintiffs moved for an injunction pending the U.S. Supreme Court’s decision in Community Financial Services Association of America, Limited (CFSA) v. CFPB, which would decide whether the CFPB’s special funding structure violated the appropriations clause. The Fifth Circuit remanded the case to the district court to enter an order addressing the preliminary injunction motion, which the district court granted on May 10, discussed here.

As discussed here, on May 16 the Supreme Court issued its decision in CFSA v. CFPB, finding the CFPB’s funding structure constitutional. Meanwhile, the Fifth Circuit dismissed the trade associations’ appeal as moot (because the district court entered the preliminary injunction they sought); the CFPB filed a motion to expedite issuance of the mandate by the Fifth Circuit; and the Fifth Circuit granted that motion and issued the mandate on Friday, May 24. Yesterday, the CFPB filed a second motion to transfer, which the district court granted the very same day. “The court has already analyzed the above mentioned private- and public-interest factors listed above in its March 28 Order … While the Fifth Circuit reversed that decision and ruled that the transfer was improper, the majority’s reasoning was based on the Court’s lack of jurisdiction to transfer the case pending an appeal, not because the transfer analysis was improper or that the Court abused its discretion in transferring the case to a more appropriate venue. Accordingly, given that the Court now has full jurisdiction over the case with no appeals pending, the Court again determines that transfer is appropriate …”

Within hours of the order’s issuance, the plaintiffs filed with the Fifth Circuit an emergency petition for writ of mandamus and administrative stay of transfer arguing that the transfer “would delay the resolution of this challenge and deprive [the plaintiffs] of their choice of a proper and appropriate venue.” The petition further noted that in the Fifth Circuit’s original order reversing the district court’s transfer order, Judge Oldham in a concurring opinion emphasized that even if the district court would have had jurisdiction to issue its order “the transfer was inappropriate because [the CFPB] had not shown good cause to merit transfer.” Today, the Fifth Circuit issued an order administratively staying the district court’s transfer order until June 18.

Troutman Pepper will continue to monitor and report on any significant developments in this case.