The federal district court judge to whom the lawsuit challenging the CFPB’s final credit card late fee rule (Rule) was reassigned entered an order yesterday questioning whether the Fort Worth Division of the Northern District of Texas is the correct venue to hear the lawsuit.

In the order, Judge Mark Pittman states that “[t]he Court is [wary] that there appears to be an attenuated nexus to the Fort Worth Division, given only one plaintiff of the six in this matter has even a remote tie to the Fort Worth Division.”  His order sets an expedited briefing schedule on the venue question, giving the plaintiffs until 5:00 p.m. on March 21 to “explain the case’s connection to the division” and giving the CFPB until 5:00 p.m. on March 25 to respond.  Alternatively, the order states that the court “welcomes [the CFPB] to file a motion to transfer under [28 U.S.C.] §1404” and that if the CFPB choses to do so, it must notify the court of its intent to file the motion by 5: 00 p.m. today and will then have until 5:00 p.m. on March 21 to file its motion and brief.  The plaintiffs will then have until 5:00 p.m. on March 25 to respond.

The plaintiffs in the lawsuit are the Chamber of Commerce of the United States of America, Fort Worth Chamber of Commerce, Longview Chamber of Commerce, American Bankers Association, Consumer Bankers Association, and Texas Association of Business.  In addition to the complaint, the plaintiffs filed a motion for a preliminary injunction in which they ask the court to preliminarily enjoin the Rule during the pendency of the lawsuit.  In its opposition to the preliminary injunction motion, the CFPB argues that plaintiffs are unlikely to succeed on the merits of their case because the court should dismiss or transfer the complaint for improper venue under 28 U.S.C. § 1406.  According to the CFPB, only one plaintiff, the Fort Worth Chamber of Commerce, resides in the Northern District of Texas “but the Fort Worth Chamber—suing on behalf of its members, only one of whom is named, Synchrony Bank of Draper, Utah (apparently a recent addition to its roster)—lacks standing and, therefore, cannot provide the foundation for venue in this Court.” (emphasis included).  The CFPB further states:

The other Plaintiffs are associations headquartered in Washington, D.C. or other parts of Texas.  And those other Texas groups identify zero members with standing.  Put simply, this case—about a consumer protection rule issued in Washington and applicable to a small number of large card issuers, not one of which appears to be based in this District—does not have an adequate connection to this District for venue to be proper.

In its brief opposing the plaintiff’s preliminary injunction motion, the CFPB cites to 28 U.S.C. § 1391(e)(1) which provides that in suits against the federal government, venue is proper where “(A) a defendant in the action resides, (B) a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (C) the plaintiff resides if no real property is involved in the action.”  The CFPB argues that venue is not proper under either subsections (B) or (C) because:

  • The events or omissions giving rise to the plaintiffs’ claim did not occur in the Northern District of Texas but occurred where the CFPB issued the Rule, in Washington, D.C.  Also, only one plaintiff, the Fort Worth Chamber, claims any presence in the forum and it will not be subjected to any burden in the Western District because it is not a large card issuer.  And the Fort Worth Chamber does not point to any member who will suffer a burden in the Northern District.
  • Although the Fort Worth Chamber resides in the Northern District, it cannot satisfy the test for associational standing and thus cannot be the basis for venue in the Northern District.  That test requires an association to show that “the interests it seeks to protect are germane to the organization’s purpose.”  The only member of the Fort Worth Chamber identified by the plaintiffs as allegedly harmed by the Rule is a Utah card issuer.  The interest of a Utah card issuer is not germane  to the Chamber’s interest in promoting a thriving business climate in Fort Worth.

In his order, Judge Pittman directs the plaintiffs to explain “the case’s connection to the division” and “how the court should weigh the In re Volkswagen private- and public-interest factors.”  In re Volkswagen is a 2008 en banc Fifth Circuit decision which the CFPB did not cite in its opposition.  In that case, the district court had denied the defendant’s motion to transfer venue and the issue before the Fifth Circuit was whether it should issue a writ of mandamus directing the district court to transfer the case.  The Fifth Circuit set forth the following lists of private and public interest factors to be used in determining whether a venue transfer is for the convenience of the parties and witnesses and in the interest of justice: 

  • The private interest factors are: (1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make trial of a case easy, expeditious and inexpensive.
  • The public interest factors are: (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws [or in] the application of foreign law.