By Nate Raymond
(Reuters) - A federal appeals court ruled on Friday that a Texas judge wrongly transferred to another court in Washington, D.C., an industry-backed lawsuit challenging an agency rule on credit card late fees, highlighting the debate over "judge shopping" in the U.S.
The New Orleans-based 5th U.S. Circuit of Appeals on a 2-1 vote sided with business and banking groups who last month filed the lawsuit in Fort Worth, Texas, a city whose federal courthouse has become a favorite venue for litigants challenging President Joe Biden's administration's policies.
The ruling was a jurisdictional victory for business groups including the U.S. Chamber of Commerce and American Bankers Association amid a broader debate over how and whether to rein in "judge shopping" by litigants who sue over government policies in courts with one or two sympathetic judges.
The U.S. Consumer Financial Protection Bureau (CFPB), whose rule was the subject of the lawsuit, and business groups did not respond to requests for comment.
At issue was the CFPB rule targeting what the government agency has called "excessive" fees credit card issuers charge for late payments, which it estimated costs consumers $12 billion per year.
Under that rule, credit card issuers with more than 1 million open accounts can only charge $8 for late fees, unless they can prove higher fees are necessary to cover their costs. Issuers previously could charge up to $30 or $41 for subsequent late payments.
Rather than rule on the business group's request to block the rule, U.S. District Judge Mark Pittman, an appointee of Republican former President Donald Trump, last week concluded the lawsuit should instead be heard by a judge in Washington.
His decision came after the U.S. Judicial Conference, the judiciary's policymaking body, announced a new policy aimed at curbing "judge shopping" in cases challenging federal or state laws.
Before he transferred the case, the groups filed an appeal of what they said was Pittman's earlier effective denial of their request to block the rule, stripping him of jurisdiction over the case and ability to transfer it.
U.S. Circuit Judge Don Willett, in a Friday opinion joined by fellow Trump appointee U.S. Circuit Judge Andrew Oldham, agreed, saying once a party appeals a trial judge's decision, that judge has "zero jurisdiction to do anything that alters the case's status."
U.S. Circuit Judge Stephen Higginson, an appointee of Democratic former President Barack Obama, dissented, saying its holding was "incompatible with district court discretion over docket management and prudent policing of forum shopping."
The case has already been transferred to a judge in Washington, who the 5th Circuit has no jurisdiction over. Willett directed Pittman to give that judge notice his transfer "should be disregarded."
(This story has been refiled to correct story link to ruling in paragraph 2)