Chamber of Commerce of the United States of America et al v. Consumer Financial Protection Bureau et al

Filing 82

OPINION & ORDER: Before the Court is Plaintiffs' Motion for Preliminary Injunction. ECF No. 3 . For the reasons below, the Court GRANTS the preliminary injunction and STAYS the Consumer Financial Protection Bureau's ("CFPB") amendment to Regulation Z, 12 C.F.R. § 1206 ("Final Rule"). (Ordered by Judge Mark Pittman on 5/10/2024) (saw)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
CHAMBER OF COMMERCE OF THE
UNITED STATES OF AMERICA, ET AL.,
Plaintiffs,
v.

No. 4:24-cv-00213-P

CONSUMER FINANCIAL PROTECTION
BUREAU, ET AL.,
Defendants.
OPINION & ORDER
Before the Court is Plaintiffs’ Motion for Preliminary Injunction.
ECF No. 3. For the reasons below, the Court GRANTS the preliminary
injunction and STAYS the Consumer Financial Protection Bureau’s
(“CFPB”) amendment to Regulation Z, 12 C.F.R. § 1206 (“Final Rule”).

BACKGROUND
In January 2022, President Biden’s appointed CFPB Director Rohit
Chopra issued a bulletin characterizing credit card late fees as “junk
fees.” A few weeks later, the CFPB issued a request for information from
consumers to give their viewpoints and assist in determining whether
such fees should bear that taxonomy. Before receiving responses, on
June 22, 2022, the CFPB issued advance notice of proposed rulemaking
requesting information on card issuers’ costs and the deterrent effects
of late fees. The CFPB gave card issuers thirty days to respond, with a
ten-day extension added thereafter. They declined card issuers’ requests
for additional extensions.
On February 1, 2024, the Biden administration announced new
regulations and legislative proposals designed to combat the labeled
junk fees. One of these, the Final Rule at issue in this case, would reduce
the late-fee safe harbor from $30 to $8, would no longer adjust this
amount for inflation, and would reduce the cap on late fees to twenty-

five percent of the missed minimum payment. The Final Rule was
presented on March 5, 2024—just two days before President Biden’s
State of the Union Address—and is slated to go into effect on May 14.1
On March 7, 2024, the Chamber of Commerce of the United States of
America, along with the Longview and Fort Worth Chambers of
Commerce, the American Bankers Association, the Consumer Bankers
Association, and the Texas Association of Business sued the CFPB and
Director Rohit Chopra in this Court. Their complaint alleges violations
of the Appropriations Clause and separation of powers, as well as
violations of the APA, CARD and Dodd-Frank Acts. Accordingly, they
seek a declaratory judgment that the Final Rule violates the APA. That
same day, they filed a Motion for Preliminary Injunction to stay the
Final Rule from going into effect, accompanied with an emergency
motion for an expedited briefing schedule. Plaintiffs did not request the
issuance of a Temporary Restraining Order. However, Plaintiffs asked
the Court for a ten-day turnaround on their request for injunctive relief.
After filing, Plaintiffs’ case played musical chairs: it was originally filed
before Senior Judge Terry Means, it was then reassigned to Judge Reed
O’Connor, Judge O’Connor recused from the case, and it was reassigned
the undersigned. This case’s procedural history gets even more abstruse
after that.
After an initial review of the record, on Monday, March 18, a mere
two business days after receiving the case, the undersigned ordered the
parties to file supplemental briefing to determine whether the Fort
Worth Division of this Court is the appropriate venue for this case.2 In
response, Plaintiffs filed a motion on March 19 asking the Court to
consider their request for injunctive relief before assessing venue. That
motion informed the Court that it need not worry about venue and
1

Importantly, the Court offers no opinion and has no opinion as to whether the CFPB’s
Final Rule reducing the credit card late fee cap is good or bad policy, as that is irrelevant
to the Court’s analysis.
2
It has been the Court’s standard practice as both a state and federal trial judge to ask
for briefing on venue as early as possible in a case when it appears from a cursory review
of the pleadings, as here, that the ties to the Fort Worth Division are attenuated., See, e.g.,
Progressive Cnty. Mut. Ins. Co. v. Keechi Transp., LLC, No. 4:22-CV-00533-P,
2022 WL 17095927 (N.D. Tex. Nov. 21, 2022) (Pittman, J.).

2

requested a ruling on Plaintiffs’ preliminary injunction by Friday,
March 22. The motion also stated that Plaintiffs would seek appellate
review if the Court did not rule on the preliminary injunction by March
22, arguing any later decision would “effectively deny” their request for
injunctive relief because they must provide printed notice to millions of
customers by March 26. It is again worth mentioning that the Final Rule
does not go into effect until May 14 and no TRO was requested by
Plaintiffs.
The following day, on March 20, the Court denied Plaintiffs’
expedited motion, explaining that the Court, per its longtime docketmanagement practice, must first determine whether venue is proper
before ruling on an injunction that may not appropriately be before it.
The next day, Defendants filed their Motion to Transfer the case to the
United States District Court for the District of Columbia. Four days
later, as pledged, Plaintiffs filed an interlocutory appeal of the Court’s
“effective denial” of their expedited preliminary injunction. On March
26, the Court ordered the parties to meet and prepare a proposed
scheduling order, set a hearing on the preliminary injunction for April 2
(the Court’s first available opportunity), and ordered the parties to
attend mediation by April 19. However, on March 28, having found
venue improper here, the Court transferred the case to the District of
Columbia. The Fifth Circuit stayed that order so it could hear oral
arguments on Plaintiffs’ mandamus motion. The Fifth Circuit then
granted mandamus relief, ordering that this case be reopened in Fort
Worth on April 8. Thereafter, at 9:53 p.m. on April 30, the Fifth Circuit
released an opinion in which they held that this Court had indeed
“effectively denied” Plaintiffs’ expedited motion for preliminary
injunction. The Fifth Circuit maintains jurisdiction over the appeal but
ordered a limited remand directing this Court to make particularized
findings on the preliminary injunction’s merits by May 10, bringing us
here.

3

If the timeline seems hard to follow, the Court agrees. Here is a
helpful visual of the timeline spanning from the filing of Plaintiffs’ case
until the date the Final Rule goes into effect:

LEGAL STANDARD
“To be entitled to a preliminary injunction, a movant must establish
(1) a likelihood of success on the merits; (2) a substantial threat of
irreparable injury; (3) that the threatened injury if the injunction is
denied outweighs any harm that will result if the injunction is granted;
and (4) that the grant of an injunction will not disserve the public
interest.” Ladd v. Livingston, 777 F.3d 286, 288 (5th Cir. 2015) (quoting
Trottie v. Livingston, 766 F.3d 450, 452 (5th Cir. 2014)). The burden of
persuasion on all requirements is on the movant party. See Big Tyme
Invs., LLC v. Edwards, 985 F.3d 456, 464 (5th Cir. 2021). As such, if the
movant fails to establish any of the above elements, the Court must deny
a preliminary injunction. See Miss. Power & Light Co. v. United Gas
Pipe Line Co., 760 F.2d 618, 621 (5th Cir. 1985). That’s because
preliminary injunctions are “an extraordinary and drastic remedy.”
Canal Auth. of State of Fla. v. Callaway, 489 F.2d 567, 573 (5th Cir.
1974).

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ANALYSIS
A. Preliminary Injunction
Plaintiffs contend that they are entitled to a preliminary injunction
for two main reasons: 1) the Final Rule was promulgated with funds
drawn in violation of the Appropriations Clause; and 2) the Final Rule
violates the CARD Act, TILA, and APA. See ECF No. 4 at 14–15. While
Plaintiffs make compelling arguments under the CARD Act, TILA, and
APA, the Court need not address them because the Fifth Circuit has
held that the CFPB’s funding structure is unconstitutional. Based on
that precedent, and as further explained below, a preliminary injunction
is warranted here.
1. Likelihood of Success on the Merits
To obtain a preliminary injunction, Plaintiffs must show a
substantial likelihood of success on the merits. See Ladd, 777 F.3d at
288. They do. In Cmty. Fin. Servs. Ass’n of Am., Ltd. v. CFPB, the Fifth
Circuit held that Congress’s decision to abdicate its appropriations
power to the CFPB violates the Constitution’s structural separation of
powers. See 51 F.4th 616, 623 (5th Cir. 2022). Under the CFPB’s novel
self-funding scheme, the CFPB requests and receives a self-determined
amount of funding directly from the Federal Reserve, which is itself
funded outside the appropriations process through bank assessments.
Thus, the CFPB is double-insulated from Congress’s appropriations
power. See id. at 638–39. Because the CFPB promulgated its Payday
Lending Rule through the use of unconstitutional funds, the Fifth
Circuit vacated the rule. See id. at 643. The CFPB petitioned for a writ
of certiorari, which the Supreme Court granted last February. See CFPB
v. Cmty. Fin. Services Ass’n of Am., Ltd., 143 S. Ct. 978 (2023). The
Supreme Court has yet to issue a ruling on the appeal.
Here, Plaintiffs argue that the CFPB’s junk fee Final Rule should
be stayed under the reasoning endorsed by Cmty. Fin. Servs. Ass’n, as it
was promulgated under the same funding regime. See ECF No. 4 at 14–
15. The Court agrees. The Fifth Circuit has held that the CFPB’s double-

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insulated funding scheme is unconstitutional. See 51 F. 4th at 626.
Consequently, any regulations promulgated under that regime are
likely unconstitutional as well. Thus, Plaintiffs establish a likelihood of
success on the merits.
2. Threat of Irreparable Harm
Because preliminary injunctions are an “extraordinary and drastic
remedy,” see Callaway, 489 F.2d at 573, Plaintiffs don’t get one just
because they are likely to succeed on the merits. In any context,
injunctive relief “is not a remedy which issues as of course.” Id. But case
law has long recognized that constitutional violations are irreparable.
See Nuziard v. Minority Bus. Dev. Agency, 2024 WL 965299 at *44 (N.D.
Tex. Mar. 5, 2024) (Pittman, J). The issue isn’t so much that Plaintiffs’
injury could never be repaired by damages, but that damages for their
injury could not practicably be measured. See Janvey v. Alguire, 647
F.3d 585, 600 (5th Cir. 2011); Deerfield Med. Ctr. v. City of Deerfield
Beach, 661 F.2d 328, 338 (5th Cir. 1981). Because damages could not be
computed that compensate for Plaintiffs’ subjugation to an
unconstitutional rule, Plaintiffs establish this injunctive-relief factor.
3. Balance of Interests
The last two elements in the injunctive-relief analysis “merge when
the Government is the opposing party.” Nken v. Holder, 556 U.S. 418,
435 (2009). The Court must first examine “the relative harm to both
parties if the injunction is granted or denied.” Def. Distrib. v. U.S. Dep’t
of State, 838 F.3d 451, 459 (2016). If the Court denies an injunction here,
Plaintiffs face an enormous undertaking based upon a potentially
unconstitutional rule. See generally ECF No. 4. If the Court grants an
injunction, the CFPB is relatively unaffected because the Final Rule has
not yet gone into effect. But the Court must still assess public interests.
For this consideration, “it’s unclear whether an injunction must further
public interests or preserve the status quo.” Nuziard, 2024 WL 965299,
at *45. The Fifth Circuit usually goes with the “do-no-harm” approach,
so the Court applies it here. See, e.g., Defense Distrib., 838 F.3d at 457.
Again, as the Final Rule has not yet gone into effect, the status quo
would necessarily be preserved by granting injunctive relief. See Wenner

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v. Tex. Lottery Comm’n, 123 F.3d 321, 326 (5th Cir. 1997) (“It is well
settled that the issuance of a prohibitory injunction freezes the status
quo, and is intended ‘to preserve the relative positions of the parties
until a trial on the merits can be held.’ Preliminary injunctions
commonly favor the status quo and seek to maintain things in their
initial condition so far as possible until after a full hearing permits final
relief to be fashioned.” (citation omitted) (quoting Univ. of Tex. v.
Camenisch, 451 U.S. 390, 395 (1981)).
For the above reasons, the Court GRANTS Plaintiffs’ Motion for a
Preliminary Injunction (ECF No. 3) and STAYS the CFPB’s amendment
to Regulation Z, 12 C.F.R. § 1206.3
*

*

*

B. The Court’s Case Management
Having made particularized findings on the preliminary injunction,
the Court must address concerns laid out in the Fifth Circuit’s recent
opinions. See ECF Nos. 77, 81. In particular, the majority stated the
undersigned “did not act promptly with regard to the Chamber’s motion
for a preliminary injunction.” ECF No. 81 at 7. The Court must
respectfully disagree with its appellate court colleagues that it did not
act “promptly” or was otherwise dilatory or sluggish in its resolution of
the preliminary injunction. The preliminary injunction had been
pending for seven days when it reached the undersigned’s docket, as the
Motion was filed on March 7 and the case was transferred from Judge
For the record, the Court clarifies an issue that has gone unaddressed,
but that the Court did not make findings on before initially transferring the
case, due to the truncated nature of the record. Much was argued by the CFPB
concerning standing of the Fort Worth Chamber of Commerce to bring this
suit. See ECF No. 23 at 15–19. The Court wants to make clear that the Fort
Worth Chamber of Commerce does qualify for associational standing. In
support of this holding, the Court adopts the detailed standing analysis
conducted by other federal district courts in the Fifth Circuit involving
challenging federal administrative rules by the Chamber of Commerce on
behalf of its members. See Chamber of Commerce of United States of Am. v.
CFPB, No. 6:22-cv-00381, 2023 WL 5835951, at *6–7 (E.D. Tex. Sept. 8, 2023)
(Barker, J.); see also Chamber of Commerce of United States v. IRS, No. 1:16cv-944-LY, 2017 WL 4682050, at *2 (W.D. Tex. Oct. 6, 2017) (Yeakel, J.).
3

7

O’Connor on March 14. Review of the docket shows the case was
officially docketed with the undersigned at 3:29 p.m. (CDT) on March
14. After reviewing the pending preliminary injunction briefing—which
totaled in excess of eighty pages—the Court ordered expedited briefing
to address venue issues the Court identified in its review. See ECF No.
45. That order was docketed at 4:59 p.m. (CDT) on Monday, March 18,
only two business days after the case was received.
At 4:57 p.m. (CDT) on Tuesday, March 19, Plaintiffs filed their
motion for expedited consideration and noted that they would consider
the request “effectively denied” if the Court did not issue a ruling by
Friday, March 22. See ECF No. 47 at 2. Doing the math, this means the
Court would have needed to rule on the preliminary injunction in just
under six business days to meet Plaintiffs’ demands. In the meantime,
the Court had criminal sentencing dockets on both March 19 and March
21, as well as regular docket management of the 218 open cases the
Court had in March. In fact, the undersigned entered in excess of 75 civil
orders between March 14 and March 22.4

It is also worth noting that, since October 2023, the undersigned has
opened and termed 232 and 307 cases respectively. Both of these totals are the
second most of the sixteen active judges in the Northern District of Texas. The
only judge who opened and termed more cases during this time was fellow Fort
Worth judge, Judge Reed O’Connor. On that note, compare the average times
from indictment to trial (criminal) and complaint to trial (civil) in Dallas and
Fort Worth. In Dallas, the average criminal case took 38 months to proceed
from indictment to trial. The average in Fort Worth is 5 months. In Dallas, the
average civil case took 35 months to proceed from complaint to trial. The
average in Fort Worth is 16 months.
Worth reviewing as well is the recent analysis performed by Judge
O’Connor of the overall number of filings in the Fort Worth Division
determining that, on average, the Fort Worth Division handles 2-3 times the
cases the Dallas Division. X Corp. v. Media Matters for Am., No. 4:23-CV01175-O, 2024 WL 1895255, at *7 (N.D. Tex. Apr. 26, 2024) (O’Connor, J.); see
also ECF No. 51. Like Judge O’Connor in X Corp., the Court does not recite
these statistics to complain, but rather to dissuade its honorable colleagues on
the Fifth Circuit that it was laggard its sworn duty to move this (or any case)
along in a prompt manner.
4

.

8

To speed the case along, the Court set a preliminary injunction
hearing for April 2, should it find transfer improper. See ECF No. 63.
Presumably, the Court would have heard arguments and rendered a
prompt decision on the injunctive relief sought. That would have all
occurred more than a month before the Final Rule went into effect.
However, as explained, the Court determined the case did not belong in
Fort Worth and granted the transfer motion before the hearing took
place. The Court’s colleagues on the Fifth Circuit suggested the Court
should have stayed the transfer while the appeal was pending. See ECF
No. 71 at 22. The Court considered this action. But insofar as time was
of the essence, the Court found transfer more appropriate. However, the
Court welcomes further guidance from the Court of Appeals as to
whether a district court must first rule on an injunction motion before it
can transfer a case.
C. The Court’s Docket-Management Authority
This naturally segues to the Court’s next concern. In their last order,
the Fifth Circuit ordered this Court to make particularized findings and
render a decision in ten days. See ECF No. 77 at 2. While the Court has
the utmost deference for its colleagues on the appellate court, it
respectfully notes that this seems to be a usurpation of the Court’s
docket-management authority, especially considering precedents in the
Fifth Circuit’s order. For example, In Gen Land Off. v. Biden, the Fifth
Circuit remanded with instructions for the district court to “act
expeditiously” on a preliminary injunction. See 71 F.4th 264, 275 (5th
Cir. 2023). But here the Court of Appeals gives a specific date to enter
findings, ten days to be specific. Certainly, under 28 U.S.C. § 1657(a),
district courts must prioritize civil actions involving requests for
injunctive relief. But under the Speedy Trial Act, incoming criminal
cases have priority over civil cases. See 18 U.S.C.A. § 3166. If a party in
a civil case can manipulate the system in order to have a district court
be forced by an appellate court to act in a specific number of days,
problems will arise.5 District courts are entrusted to manage their own
For instance, what if a trial court is in the middle of six-week criminal
trial when it received an order to act in a civil case in a specific number of days?
Does the trial court have to send the jury home to rule on a motion because the
5

9

dockets. See Link v. Wabash R.R. Co., 370 U.S. 626, 630–31 (1962)
(holding that trial courts possess inherent power to “manage their own
affairs so as to achieve an orderly and expeditious disposition of cases”).
In this regard, the Court would appreciate additional clarity and
instruction from the Fifth Circuit regarding the circumstances in which
a party can instruct a trial court to rule and dictate the Court’s terms
and timeline. Here, Plaintiffs insisted they needed a quick ruling to
implement a voluntary policy of printing updated disclosures for their
customers. See ECF No. 48 at 6. The Court is concerned that this case
opens the door for “mischief” wherein plaintiffs can come up with
creative reasons for demanding prompt preliminary-injunction rulings
under a dictated timeline.6
The Court had this case for only twenty-one days before transferring
it to the District of Columbia—and that includes the time the case was
before Judge O’Connor. That was over ten weeks before the Final Rule
goes into effect. The case was then pending before the appellate court
thirty-seven days from the time of the interlocutory appeal to the date
of remand. During this five-week period, the Court is confident that the
District Court for the District of Columbia could have held a
preliminary-injunction hearing (if they so chose) and ruled on the merits
plaintiff tells them to? Would the trial court violate the criminal defendant’s
rights by ruling on the civil motion first?
6Of note, the preliminary injunction motion at issue here was only with this
Court about two weeks before Plaintiffs appealed and has “sat” for just over
two months at the time of this Order, significantly less time than any of the
cases cited in the majority opinion. See ECF No. 81 at 7 n.12 (citing In re
Clarke, 94 F.4th 502, 509 (5th Cir. 2024) (three months); McCoy v. La. State
Bd. of Educ., 332 F.2d 915, 916–17 (5th Cir. 1964) (four months); United States
v. Lynd, 301 F.2d 818, 820 (5th Cir. 1962) (eight months).
The Court is even more perplexed as why Plaintiffs did not ask the Court
for a TRO if time was truly of the essence. This is the standard practice
provided for under the federal rules. Hassani v. Napolitano, 2009 WL 2044596
at *1 (N.D. Tex. July 15, 2009) (Fitzwater, C.J.). (A TRO is “simply a highly
accelerated and temporary form of preliminary injunctive relief.”). Here,
Plaintiffs attest that they did not file a TRO “out of consideration for this
Court’s resources” and instead it appears that they made the decision to use
the appellate process to command to the Court to order relief they need on the
timeline when they need it. ECF No. 48 at 6.

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of Plaintiffs’ request.7 The Court possessed and still possesses full faith
in the District Court for the District Court of Columbia to make a just
and fair ruling on Plaintiffs’ motion. If parties cannot have faith that the
legal system operates with integrity and full credence in the law, then
the system is already broken. We must trust the system.
*

*

*

In conclusion, the Court rejects the notion that it did not act
“promptly” with respect to the Plaintiffs’ preliminary-injunction motion.
On the contrary—and as the record plainly shows—the undersigned
received the case on March 14 (ECF No. 39), Plaintiffs moved for
expedited consideration on March 19 (ECF No. 47), Plaintiffs filed an
interlocutory appeal on March 25 (ECF No. 57), and the Court
transferred the case to the D.D.C on March 28 (ECF No. 67). That all
happened in two weeks. See generally ECF No. 81 at 25 (noting a
requirement that trial courts rule on a motion “in less than two weeks
from assignment of [a] case” would be “an impossible law for [the
Circuit] to impose”). In any event, as explained, a district court has
broad discretion and inherent authority to manage its docket. See Link,
370 U.S. at 630–31. That’s what it did here, much to the apparent
dismay of the Fifth Circuit.
In his concurrence, Judge Oldham suggested that this Court “appeared to
analyze the motion to transfer with an eye towards discouraging forum and /
or judge-shopping” and that the Court should not consider forum shopping
because the Fifth Circuit and Supreme Court has not enumerated that as a
transfer consideration. ECF No. 81 at 22–23. This Court whole-heartedly
agrees with the Judge’s learned observation. Forum-shopping was immaterial
for the Court’s substantive transfer analysis in this case. In fact, the
undersigned has transferred over a dozen cases since 2019, with no mention
that the transfer analysis was motivated by venue-shopping concerns. See, e.g.,
Inst. for Free Speech v. Johnson, No. 4:23-cv-0808-P, 2023 WL 7420281 (N.D.
Tex. Nov. 8, 2023) (Pittman, J.); First Call Int’l, Inc. v. S&B Glob., Inc., No.
4:23-cv-00199-P, 2023 WL 7389007 (N.D. Tex. Nov. 8, 2023) (Pittman, J.);
BNSF Ry. Co. v. Float Alaska IP, LLC, No. 4:22-cv-0950-P, 2023 WL 3591683
(N.D. Tex. May 22, 2023) (Pittman, J.); Career Colls. & Sch. of Tex. v. United
States Dep’t of Educ., No. 4:23-CV-0206-P, 2023 WL 2975164 (N.D. Tex. Apr.
17, 2023) (Pittman, J.). This time was no different. And if adequate jurisdiction
was found in this Court, it would still transfer this case for the reasons
articulated in its original transfer order. See ECF No. 67.
7

11

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
REGINALEA KEMP,
Plaintiff,

CONCLUSION

General George S. Patton, Jr. famously said “Never tell people how
to do things. Tell them what to do and they will surprise you with their
v.
No. 4:23-cv-00841-P
ingenuity.” General George S. Patton Jr., War as I Knew It 275 (1947).
The
Court Baccepts
REGIONS
ANK ETthe
AL.,rulings of Fifth Circuit in this case without
passion or prejudice and will apply its guidance to the utmost of its
Defendants.
ability.
However, this Court would be remiss it did not point out the

potential landmines the court’sORDER
ruling could pose for a trial judge’s dayBefore
the Court is Plaintiff’s
Unopposed
Motion
Leave
to File
to-day
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especially
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Second Amended
No. 18. Having
thetoMotion
Parties
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to manipulate
the considered
court system
order
and applicable
docket
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trial
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andthe
“when”
toGRANTS
rule.
SO ORDERED
on this the
18thCourt
day of
September
2023. preliminary
For
the above reasons,
GRANTS
Plaintiffs’
injunction motion (ECF No. 3) and STAYS the CFPB’s amendment to
Regulation Z, 12 C.F.R. § 1206 (“Final Rule”).
SO ORDERED on this 10th day of May 2024.

______________________________________________
Mark T. Pittman
UNITED STATED DISTRICT JUDGE

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