On December 6, the U.S. District Court for the Northern District of Texas denied the CFPB’s motion to dismiss a sole local plaintiff for lack of standing, as well as a motion to transfer the challenge to the CFPB’s credit card late fees rule to the U.S. District Court for the District of Columbia. The court also denied the CFPB’s motion to dissolve the preliminary injunction preventing that rule from taking effect. The rule would have lowered the safe harbor amount for credit card late fees charged by larger card issuers from $30 (and sometimes $41) to $8 effective last May 14 but it was enjoined and has never gone into effect. Unless the CFPB chooses to appeal the district court’s ruling and prevails in that appeal, the injunction will remain in place pending resolution of the case.

The district court first addressed the CFPB’s motion to transfer. It found that the sole local plaintiff met the test for associational standing because its members would have had standing in their own right, the interests it is seeking to protect are germane to its purposes, and the individual participation of its members is not necessary. The CFPB had disputed only the second prong, but the Court held that the lawsuit was sufficiently germane to the plaintiff’s purpose of cultivating a thriving business climate in the Fort Worth region to satisfy the 5th Circuit’s “undemanding” requirements. Because the plaintiff is a proper plaintiff, venue is proper in the Northern District of Texas.

As previously covered by InfoBytes, after the Supreme Court’s decision rejecting Appropriation Clause challenges to the CFPB’s funding, the CFPB urged the district court to dissolve the preliminary injunction and lift the stay on the CFPB’s late fee rule (the district court stayed the CFPB’s credit card late fee rule in May when 5th Circuit precedent held that the CFPB’s funding violated the Appropriations Clause). In denying this motion, the district court held that the plaintiffs had demonstrated a substantial likelihood of success on the merits of their non-constitutional claims because the CFPB’s rule was inconsistent with the statute’s authorization for issuers to charge “penalty fees” that not only cover the costs associated with late fees but also deter violations of the card agreement. Just as it had last May, it found that the plaintiffs’ members would be irreparably harmed in the absence of the injunction and that the balance of the equities favored preserving the status quo while the litigation proceeds.

The court has asked the parties to propose a path forward for the litigation by December 23, 2024.