In a decisive ruling, a federal appeals court quashed the transfer of a contentious lawsuit challenging a Consumer Financial Protection Bureau (CFPB) rule on credit card late fees from Texas to Washington, D.C. The move underscores the contentious issue of “judge shopping” in the U.S. legal system.
The 5th U.S. Circuit of Appeals, based in New Orleans, voted 2-1 in favor of business and banking groups who initiated the lawsuit in Fort Worth, Texas. The decision opposed the attempt to relocate the case to a venue perceived as more favorable to the Biden administration’s policies.
At the heart of the dispute was the CFPB’s regulation aimed at curbing what it considers “excessive” late fees charged by credit card issuers. The rule limits late fees to $8 for issuers with over 1 million accounts, significantly lower than the previous maximums of $30 or $41 for subsequent late payments.
Rather than ruling on the merits of the case, U.S. District Judge Mark Pittman, appointed by former President Donald Trump, attempted to transfer the lawsuit to Washington. This decision was made amid growing concerns over “judge shopping” and coincided with a new policy from the U.S. Judicial Conference aimed at addressing the issue.
However, the appeals court intervened, asserting that once an appeal is filed, the trial judge loses jurisdiction to alter the case’s status. This ruling, supported by Judge Don Willett and Judge Andrew Oldham, highlighted the complexity surrounding jurisdiction and venue in federal cases.
Notably, Judge Stephen Higginson, appointed by former President Barack Obama, dissented from the majority opinion, emphasizing the importance of district court discretion in managing dockets and preventing forum shopping.
Despite the transfer of the case to a judge in Washington, the appeals court directed Judge Pittman to inform the new judge that the transfer should be disregarded, further complicating the legal proceedings.
This decision marks a significant victory for business groups challenging government regulations and reignites the debate over judicial venue and forum shopping in the U.S. legal system.
