CFPB Moves to Dissolve Preliminary Injunction and Supplements Motion to Transfer in Credit Card Late Fee Rule Case; Court Immediately Requests Further Briefing

Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) filed a brief in the U.S. District Court for the Northern District of Texas in support of its motion to dissolve the preliminary injunction that has stayed the implementation of its credit card late fee rule. Concurrently, the Bureau also filed a notice of supplemental authority in support of their motion to dismiss or transfer on the grounds that the Fort Worth Chamber of Commerce does not have associational standing to bring the suit. Within hours, the court issued an order requiring further briefing on the issue of associational standing.

In its preliminary injunction brief, the CFPB argues that the Supreme Court’s decision in CFPB v. Community Financial Services Association of America, Ltd. (CFSA), discussed here, constitutes a substantial change in the law that justifies dissolving the preliminary injunction. The Supreme Court’s ruling effectively nullifies the constitutional basis for the preliminary injunction, as it found the CFPB’s funding mechanism to be in compliance with the Appropriations Clause.

The CFPB further contends that the plaintiffs have not established a likelihood of success on their remaining statutory challenges to the rule. The Bureau emphasizes that the public interest does not support continuing to stay a rule that aims to ensure credit card companies comply with congressional limits on late fees, potentially saving consumers more than $10 billion annually.

The CFPB has requested that the court dissolve the preliminary injunction and lift the stay on the late fee rule.

The Bureau’s notice of supplemental authority argues that venue is improper in the Northern District of Texas because the Fort Worth Chamber of Commerce, the primary plaintiff for venue purposes, does not have associational standing to bring the suit. The notice relies on a recent concurring opinion by Justice Thomas in FDA v. Alliance for Hippocratic Medicine, questioning whether associational standing aligns with Article III’s limitations on judicial power, and positing that that associational standing “‘distorts’ the ‘traditional understanding’ that for standing to exist, the court ‘must be able to provide a remedy that can redress the plaintiff’s injury.’” The Bureau argues that the Fort Worth Chamber’s interests in the litigation are not germane to its organizational purpose, which is focused on fostering a thriving business climate in the Fort Worth region. Instead, according to the CFPB, the interests at stake in the litigation are those of large card issuers, none of which are based in or near Fort Worth.

The Bureau contends that allowing the Fort Worth Chamber to bring this suit and secure venue in the court would improperly expand associational standing and stretch the bounds of Article III.

Only hours later, the court issued an order requesting further briefing on the issue of associational standing. The court expressed deep concerns about how associational standing can be used to challenge regulatory actions, particularly noting that the Fort Worth Chamber of Commerce is the only party located in the Fort Worth Division and has only one member affected by the CFPB’s proposed rule. The court highlighted that this member “seemingly joined the Fort Worth Chamber of Commerce to establish venue in this…division.”

The court’s order requires the CFPB to file a formal motion addressing the plaintiffs’ standing by July 29. The plaintiffs are to respond by August 12, and the CFPB’s reply is due by August 19. The court has scheduled a hearing on the matter for August 27.