Reply in Support of Plaintiffs' Motion for Preliminary Injunction

INTRODUCTION

The CFPB’s opposition is notable for what it does not contest. It does not contest that Plaintiffs are likely to succeed on the merits of their constitutional claim under Community Financial Services Association of America v. CFPB, 51 F. 4th 616 (5th Cir. 2022). See Opp’n 2 n.1. Nor does it contest that Plaintiffs have established that the Final Rule will cause Plaintiffs’ members irreparable harm. See id. And it does not contest that one of the Plaintiffs—the Fort Worth Chamber of Commerce—is based in Fort Worth and has members affected by the Rule.

Instead, the CFPB’s lead defense is that the Fort Worth Chamber of Commerce is not able to challenge the Final Rule in the Fort Worth Division of the Northern District of Texas. The CFPB urges this surprising result on the ground that the lawsuit is not “germane” to the Fort Worth Chamber’s mission of cultivating a “thriving business climate in the Fort Worth region,” and thus the Fort Worth Chamber supposedly lacks associational standing. But as a factual matter, it is the Fort Worth Chamber—not the CFPB—that is best suited to determine what is germane to its mission, and as a legal matter, “the germaneness requirement is ‘undemanding’ and requires ‘mere pertinence’ between the litigation at issue and the organization’s purpose.” Ass’n of Am. Physicians & Surgeons, Inc. v. Tex. Med. Bd., 627 F.3d 547, 550 n.2 (5th Cir. 2010) (internal citation omitted). Here, not only does the Fort Worth Chamber’s mission include helping Fort Worth’s “growing financial services industry which supports over 20,000 jobs and has increased the presence of corporate credit and consumer finance,” but its members include banks that will be affected by this rule. App’x 21, Decl. of Steve Montgomery ¶¶ 4-5. Accordingly, the basis for venue is straightforward.

The CFPB also attempts to defend its new rulemaking against Plaintiffs’ statutory claims through misdirection. The CARD Act indisputably allows issuers to charge a “penalty fee” that is “reasonable and proportional to [the] omission or violation” of the cardholder agreement and then enumerates relevant statutory criteria concerning deterrence, cost, and cardholder conduct. 15 U.S.C. § 1665d(a), (c). In their opening brief, Plaintiffs established that these statutory criteria confirm the plain meaning of a “penalty fee” for a “violation” as a fee that deters the violation, accounts for the conduct of the violation, and is not solely compensatory. The CFPB speculates without citation that this meaning is not how consumers “feel” about late fees and doubles down on the radical proposition that it need not consider Congress’ text. Opp’n 16. But the CFPB is a creature of statute, not of consumer “feelings” and unbridled discretion.

Finally, the CFPB argues that the balance of equities weighs against a preliminary injunction because the rule effects the CFPB’s “policy choices.” Opp’n 24. But just a few years ago the Fifth Circuit rejected that argument, explaining that “our system does not permit agencies to act unlawfully even in pursuit of desirable ends.” Wages & White Lion Invs., L.L.C. v. United States Food & Drug Admin., 16 F.4th 1130, 1143 (5th Cir. 2021) (citation omitted). At the end of the day, the CFPB’s rhetoric-laden argument gives away the game: this rulemaking reflects State of the Union policy preferences, not the statute that Congress enacted.

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