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Texas judge moves late fee case from Fort Worth to D.C., accuses banks of forum shopping

Imagine for a moment you’re an inventor, and you’ve noticed there’s a judge in East Texas who tends to rule in favor of plaintiffs. If your idea for an invention had been stolen, wouldn’t it be nice to have your case decided by that judge?

Until recently, one out of every four patent cases was heard in one court in the Eastern District of Texas for this very reason.

It was an extreme case of what’s called “forum shopping,” a legal strategy the U.S. Supreme Court tried to rein in back in 2016. But forum shopping – picking favorable judges, regions, state or federal courts – continues in matters big and small. And the outcomes can affect the rights of people nationwide.

Another example centers around bankers and banking groups suing the Consumer Financial Protection Bureau over its attempt to cap credit card fees – only this time, forum shopping is getting some pushback.

Ken Sweet writes about banking issues for the Associated Press and joined Texas Standard to discuss. Listen to the interview above or read the transcript below.

This transcript has been edited lightly for clarity:

Texas Standard: This is a real case, but right now, the spotlight isn’t so much the substance of the fees, but where the case should be heard in the first place, right? 

Ken Sweet: That’s correct.

So, we think of most banks as being filed in New York or San Francisco. But what happened here is the American Bankers Association and the Consumer Bankers Association – and most notably, the U.S. Chamber of Commerce – sued the Consumer Financial Protection Bureau (CFPB). They sued in the Northern District of Texas to stop the CFPB from implementing a credit card late fee proposal, which would have reduced credit card late fees from about $32 to about $8.

And they were hoping they would get a particular Trump appointed judge, as I understand it. 


So, in this courthouse, which is a Fort Worth courthouse, there are two judges there which are historically conservative. They wanted Reed O’Connor. But Reed O’Connor owns shares in banks so he had to recuse himself.

So they got Mark Pittman, who is also a historically conservative judge. But Judge Pittman seemed very skeptical of these banks coming to his courthouse in the middle of Texas when most of these banks do most of their business on the East Coast.

And so what did he say? What did he ultimately do? 

Late last week, the judge issued an order saying this court case had to be transferred to the Washington, D.C., district. And he gave this great quote where he basically said, “venue is not a continental breakfast. You cannot pick and choose on a plaintiff’s whim where or how a lawsuit should be filed.”

He’s like, “listen, no offense to the great state of Texas, but you don’t have big banks based in Dallas and Fort Worth. The banks are on the East Coast. The lawyers for the banks are on the East Coast. You should be doing this lawsuit on the East Coast.”

I want to get to one of the first things any competent attorney has to do in a civil case, and that’s where to bring this case. You have to make that decision. What’s wrong with picking the one that favors you most?

Well, that’s been an issue that’s been growing consistently for about a decade.

What the bankers wanted here was to get a nationwide preliminary injunction against the rule. That would have required the government to stop this rule dead in its tracks. Reed O’Connor and Mark Pittman have issued these injunctions in the past, so they seemed like they were a good choice for that.

But let’s look at the other side of this. If you’re a defendant and you’re challenging the forum brought by the plaintiffs, aren’t you engaging in a kind of forum shopping yourself? I mean, you have to make a case that there’s a better venue and you’re going to look for a forum that’s favorable to your side. That sounds an awful lot like forum shopping. 

Well, the CFPB made their own argument. They basically said, “listen, the District of Washington, D.C., court specializes in this type of high level regulation, what is known as the Administrative Procedure Act.” And the judge brought this up in his order.

I think 80 percent of the lawyers for this case have addresses in Washington. So the CFPB argued that we’re going to spend hundreds of thousands or millions of dollars of taxpayer money to fly lawyers from D.C. to Fort Worth. That’s great for the airport, but it’s not great for the taxpayer. So, that was the argument and the judge bought that.

What could the outcome of this case mean for everyday folks?

Well, late fees are a big deal for Americans. Banks charged about $14 billion worth of late fees against Americans last year, and this rule would have brought that substantially down.

Again, the average late fee is about $32. This would have capped the late fee at $8. So this was always expected to be fought. The banks are angry about this and it was going to get appealed.

I think that what the banks wanted was to get this injunction and stop it in its tracks immediately. And then instead of that, this is going to have to go through the appeals process and probably end up at the Supreme Court as most of these big cases do.

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Texas Standard