CFPB petitions 5th Circuit to keep credit card late fee case in D.C.

Courts CFPB Appellate Junk Fees

On April 18, the CFPB asked a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit to reconsider its earlier decision to grant a petition for a writ of mandamus requiring the U.S. District Court for the Northern District of Texas to claw back its earlier transfer of industry’s challenge to the CFPB’s credit card late fee rule to Washington D.C. (covered by InfoBytes here). The CFPB urges the 5^th Circuit to grant a panel rehearing, suggesting that the panel’s earlier decision rested on “flawed factual premises” and would be “unworkable for courts.”  

According to the CFPB, the panel relied on the incorrect assumption that “credit card issuers needed to have printed and distributed disclosure materials about the late fees to customers by March 29” to comply with the final rule. The Bureau asserted this was a “manufactured” deadline. The CFPB also stressed that TILA does not require the Bureau to provide advance notice for a reduction in the maximum late fee. Further, the Bureau’s petition expanded into four misconstrued facts, such as that it was not true that the panel needed to grant the plaintiffs’ alleged claim for “urgent relief,” that the plaintiffs’ preliminary injunction motion needed to be decided quickly, that the plaintiffs were “entitled” to a quick resolution, and that the panel erred again in deciding that the final late fee rule did not require compliance until May 14 (thus leaving six more weeks for a decision).

Second, the CFPB argued that the panel’s new standard for assessing whether a preliminary injunction was denied would be “unworkable” for courts in practice and would improperly interfere with the district courts’ authority to manage their dockets when plaintiffs seek preliminary injunctive relief.  The Fifth Circuit has asked the plaintiffs to respond to the petition for rehearing by April 29, 2024. 

Separately, the Fifth Circuit has set a schedule for “expedited briefing” on the appeal of the district court’s “effective denial” of plaintiffs’ motion for a preliminary injunction.  The briefing, however, will not conclude until May 17, 2024, days after the CFPB’s credit card late fees rule goes into effect.  The Fifth Circuit has not yet ruled on plaintiffs’ pending motion for a stay pending appeal, raising the prospect that the credit card late fees will go into effect only to be enjoined soon thereafter.