A district court erred when it transferred a lawsuit seeking to overturn the Consumer Financial Protection Bureau’s rule limiting credit card late fees from Texas to Washington, D.C., the U.S. Court of Appeals for the Fifth Circuit ruled Friday. The American Bankers Association, U.S. Chamber of Commerce and four business groups sued the CFPB in March over the rule, which would lower the safe harbor dollar amount for late fees to $8 and eliminate the annual inflation adjustment for the safe harbor. The lawsuit was filed in the U.S. District Court for the Northern District of Texas, but the judge in the case transferred the case to a Washington, D.C, district court after the bureau challenged whether the Texas court had jurisdiction in the matter.
In a 2-1 ruling, the appeals court ruled that the Texas district court erred in transferring the case because the Fifth Circuit had already granted a temporary stay that paused the transfer order. The plaintiffs also appealed the ruling against the injunction. “Once a party properly appeals something a district court has done—here, the effective denial of a preliminary injunction—the district court has zero jurisdiction to do anything that alters the case’s status,” the appeals court ruled. However, the justices emphasized that their decision was “exceedingly narrow and procedural,” being focused on the correctness of the transfer order and not whether the Texas court has proper jurisdiction in the lawsuit.
