Last Friday, a divided panel of the U.S. Court of Appeals for the Fifth Circuit vacated the district court’s order transferring the case challenging the CFPB’s final credit card late fee rule (Rule) to the U.S. District Court for the District of Columbia.  The Fifth Circuit also issued a writ of mandamus directing the district court “to reopen the case and give notice to D.D.C. that its transfer was without jurisdiction and should be disregarded.”  In its order, the Fifth Circuit dissolved its administrative stay of the transfer order which it had extended until 5 p.m. CT on Friday.

In an opinion in which Judge Oldham joined in full, Judge Willett agreed with the plaintiffs that, because of “the [credit card] issuers’ unusually short timeline for complying with the Final Rule or obtaining injunctive relief,” the district court had effectively denied their preliminary injunction motion by denying their motion for expedited consideration of the preliminary injunction motion.  He also concluded that the plaintiffs’ notice of appeal from the denial of their motion for expedited consideration had divested the district court of jurisdiction to enter the transfer order and that mandamus was appropriate.

Judge Willett found that the case satisfied the first two requirements for a writ of mandamus: the party seeking the writ has no other adequate means to attain the relief it desires and its right to a writ is clear and indisputable.  According to Judge Willett, the Fifth Circuit had previously established that the first mandamus requirement was satisfied in the motion to transfer context and the second requirement was satisfied because the district court had committed “clear and indisputable error” by transferring the case when it lacked jurisdiction.  Judge Willett also found that the case satisfied the third mandamus requirement that “the writ is appropriate under the circumstances” because the issue had “an importance beyond the immediate case.”  He stated that “[f]acing an uptick in inter-circuit transfer orders, we take this opportunity to clarify that once an appealable order is lodged before our court, district courts lack jurisdiction to transfer a case because it stymies our ability to review.”

In his dissenting opinion, Judge Higginson wrote that the district court’s conclusion that the case did not belong in the Northern District of Texas was “fact-based and sound.”  He stated that “the district court’s prompt transfer of the case, after explaining in detail why the case was improperly before it, dutifully heeds our admonishment to the district courts to prioritize rulings on motions to transfer.”  He disagreed with the majority’s conclusion that there had been an effective denial of the plaintiffs’ preliminary injunction motion because, according to Judge Higginson, it rested “on a factually flawed premise.”  He noted that the CFPB “has explained, issuers are not required to give advance notice if they reduce a late fee—which is the only change that the Late Fee Rule requires.” (emphasis included). 

Judge Higginson also stated the following:

Gutting in this manner a district judge’s discretion to expeditiously transfer a case it has good reason to believe is improperly before it—especially when Petitioners have insisted that time is of the essence—is particularly worrisome not just as our usurpation of district courts’ docket control, but also in its implications for the judiciary’s ability to prevent forum shopping. (emphasis included).

Despite the Fifth Circuit’s stay of the transfer order, the case was docketed in the D.C. federal district court on March 29 and assigned to Judge Amy Jackson Berman.  In other cases involving contested transfer orders, the Fifth Circuit has ordered the district court that issued the transfer order “to request” that the court to which the case was transferred “return the transferred case.”  Here, the Fifth Circuit has ordered the district court “to reopen the case and give notice to D.D.C. that its transfer was without jurisdiction and should be disregarded.”  By wording its order in this way, the Fifth Circuit appears to be suggesting that the D.D.C. should treat the transfer order as a nullity that did not have the effect of transferring the case (and thus the D.D.C. is precluded from declining to return the case).

On March 26, the Fifth Circuit entered a briefing schedule that requires the plaintiffs to file their brief by May 6.  The CFPB’s brief will be due 21 days thereafter. As a result, unless the Fifth Circuit expedites the briefing, the briefing will not be complete before the Rule’s May 14 effective date.  Given Judge Higginson’s strong dissent, it is also possible that the CFPB will seek a rehearing en banc in the Fifth Circuit, which could also extend the timeline for entry of a preliminary injunction by the Fifth Circuit.