Texas Federal Judge Halts Credit Card Late Fee Rule (and Pushes Back on the Fifth Circuit Along the Way)

On Friday, Judge Mark Pittman of the U.S. District Court for the Northern District of Texas (Fort Worth Division) gave a significant, if not temporary, victory to the credit card industry.  In a 12-page Order and Opinion, Judge Pittman entered a Preliminary Injunction against the CFPB just days before the final credit card late fee rule was scheduled to take effect on Tuesday, May 14th. The court held that an injunction was warranted in light of the Fifth Circuit's decision in Cmty. Fin. Servs. Ass'n of Am., Ltd. v. CFPB, 51 F.4th 616 (5th Cir. 2022), in which the circuit court held that the CFPB's funding mechanism was unconstitutional.  That decision is currently on appeal to the Supreme Court and a decision is expected in the coming months.  

Judge Pittman's decision gives some breathing room to credit card issuers that were required by the new rule to effectively lower late fees from an average of $32 to $8.  In somewhat of a surprise, however, Judge Pittman dedicated the bulk of the opinion to defending his decision to transfer the case to D.C. and to otherwise manage his docket, even ending the opinion with General Patton's famous quote: “Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.”