Texas Judge Accuses Banking Groups Of Venue Shopping

• Texas judge accuses banking groups of venue shopping.

• CFPB's new regulations aim to cap credit card late fees at $8.

• Judge ruled lawsuit should be transferred to Washington.

President Joe Biden sits after speaking during a meeting with his Competition Council in the State Dining Room of the White House in Washington, Tuesday, March 5, 2024. (AP Photo/Andrew Harnik)

AP

A Texas federal judge recently made a significant ruling in a lawsuit involving major banking industry groups and the Consumer Financial Protection Bureau (CFPB). The judge accused the banking groups and the U.S. Chamber of Commerce of engaging in venue shopping, a practice where plaintiffs choose a specific location to increase their chances of a favorable outcome.

The lawsuit in question pertains to the CFPB's new regulations on credit card late fees, which aim to cap the average late fee for customers at $8, down from the previous average of $32. The major banking groups had initially filed their lawsuit in the U.S. District Court in the Northern District of Texas, known for its historically conservative judges.

However, Judge Mark Pittman ruled that the lawsuit should be transferred to Washington, emphasizing that venue selection should not be at the plaintiff's discretion. He noted that Washington, with its proximity to regulators and expertise in industry regulation law, was a more appropriate location for the case.

The CFPB estimated that banks generate approximately $14 billion annually from credit card late fees, making the outcome of the lawsuit crucial for the industry. The ruling highlighted that none of the banks or credit card companies directly impacted by the future CFPB regulations were located in the Fort Worth Division where the lawsuit was initially filed.

This decision marks a significant win for the federal regulator and underscores the importance of fair venue selection in legal proceedings. The American Bankers Association and the Consumer Bankers Association have yet to comment on the ruling.