Busy Litigation Schedule For Consumer Financial Protection Bureau

Mercedes Kelley Tunstall, writing on Cadwalader’s Financial News site, says the Consumer Financial Protection Bureau (CFPB) “is engaged in a firestorm of tricky litigation these days.” Two cases involve the credit card industry.

In one, a putative class is challenging a card issuer’s compliance with the Serviceperson’s Civil Relief Act. The plaintiffs brought the case in federal district court instead of complying with the arbitration agreement.

The CFPB and the DOJ have filed an amicus brief in support of the plaintiffs. It cites language in the Serviceperson’s Civil Relief Act stating that any aggrieved person can “be a representative party on behalf of members of a class or be a member of a class, in accordance with the Federal Rules of Civil Procedure, notwithstanding any previous agreement to the contrary.”

In another case, a credit card industry group is fighting the CFPB’s credit card late fee rule. The plaintiff asked for an expedited preliminary injunction because the rule is scheduled to go into effect on May 14. The Northern District of Texas denied the motion. It said the best venue for the case is the District Court of the District of Columbia, and transferred it there.

The plaintiffs appealed, and the Fifth Circuit found that the case should be returned to the Northern District of Texas for adjudication. The Consumer Financial Protection Bureau challenged that ruling on the grounds that one of the justices who participated in the decision should have recused himself because he owns shares of a large credit card issuer that could be negatively affected by the late fee rule.

The Committee on Codes of Conduct of the Judicial Conference of the United States said recusal was unnecessary. Now the CFPB’s responsive brief isn’t due until after May 14. Plaintiffs will likely request an accelerated briefing schedule or an emergency motion to stay the rule until the lower court can consider the preliminary injunction.