Here’s what’s happening on industry issues in the courts.
05/29/2024 3:50 P.M.
3 minute read
Courts are busy following the U.S. Supreme Court decision on the Consumer Financial Protection Bureau’s funding structure, including updates on challenges to its rules and other federal rules.
U.S. Department of Labor Overtime Rule
With the July 1, 2024, effective date on U.S. Department of Labor changes to salary thresholds under the Fair Labor Standards Act approaching, business groups are suing the department on the grounds it exceeded its authority in developing the rule, Bloomberg Law reports.
The lawsuit, filed in the Eastern District of Texas, says the Department of Labor violated the Administrative Procedure Act.
“The [d]epartment has failed to adequately justify the dramatic change in policy embodied in the Rule, failed to take into account the strong reliance interests of the regulated community, and failed to meaningfully consider reasonable alternatives,” the complaint states, according to the article.
Legal scrutiny of the rule was expected, and similar rules were proposed during the Obama administration and Trump administration that faced challenges in court.
Read more here.
Legal Fight on CFPB’s Credit Card Late Fee Rule Continues
A case challenging the CFPB’s rule to lower credit card late fees was moved back to a Washington, D.C., district court from the Northern District of Texas.
In March, the judge in the case approved a CFPB request for the case to be heard in Washington, D.C., because none of the banks affected by the rule are in the Texas district.
Then the 5th Circuit Court of Appeals moved it back to Texas because the judge didn’t have the authority to move the case until he issued a decision on the banks’ injunction to delay the rule.
As the case’s jurisdictional issues played out, the U.S. Supreme Court issued its landmark decision that the CFPB’s funding structure through the Federal Reserve is constitutional.
The judge in the credit card fee rule case had granted the banks’ request to delay the rule’s effective date until the Supreme Court issues its decision, which is now off the table following the high court’s ruling.
“Given the [5]th Circuit’s admonition that this [c]ourt had previously not acted swiftly enough in handling this case, the [c]ourt determines it is in the best interest of the [p]arties and justice to transfer the case at the earliest possible juncture,” Judge Mark Pittman said in his opinion to move the case to D.C., Bloomberg Law reports.
Supreme Court Rejects Pending Petition to Challenge CFPB Civil Investigative Demand
In the 2nd Circuit Court of Appeals, a three-judge panel in Consumer Financial Protection Bureau v. Law Offices of Crystal Moroney P.C. affirmed a district court ruling on the CFPB’s funding structure and upheld a civil investigative demand against the law firm.
Moroney appealed the CID as unenforceable because in a previous case, Seila Law v. Consumer Financial Protection Bureau, the Supreme Court found that the CFPB’s single director structure is unconstitutional, but the provision allowing the removal of the CFPB director only “for cause” is severable from the rest of the statute, ACA International previously reported.
Following its May 16 ruling in Community Financial Services Association of America Ltd. (CFSA) v. CFPB that the funding of the bureau through the Federal Reserve is constitutional, reversing an October 2022 decision from the 5th Circuit Court of Appeals, the Supreme Court denied to hear Moroney’s case with a similar challenge.
Read Moroney’s petition here (PDF) for more background.
For more updates on industry issues at the state and federal level, advocacy and compliance, attend the weekly ACA Huddle at 11 a.m. CT Wednesdays.
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