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MEMORANDUM
DATE: May 17, 2024
TO: Interested Parties
FROM: Caroline Ciccone, Accountable.US President
SUBJECT: CFPB’s SCOTUS Victory Shines More Light on 5th Circuit Judge Shopping Problem and Corporations Gaming the System

In a historic win for everyday Americans, the U.S. Supreme Court ruled in an overwhelming 7-2 decision this week that the Consumer Financial Protection Bureau (CFPB)’s funding structure is constitutional. 

The decision allows the Bureau to continue doing its vital work saving consumers billions of dollars and time despite attempts at political interference and defunding threats from members of Congress in the pocket of the big banks and Wall Street. 

The lawsuit brought by the predatory lending industry with a history of harming consumers and an ax to grind against the CFPB was only ever about one thing: taking out the best line of defense consumers have against financial industry scams, predatory practices, price gouging, and abuse. 

Numerous other lawsuits brought by big corporations and right-wing special interests seeking to block Biden administration actions designed to lower costs and protect consumers cited the payday lenders’ lawsuit as the reason why the court system should take their side. Their cases just crumbled as the CFPB’s constitutionality was overwhelmingly affirmed. 

The barrage of legal attacks against the administration are part of a troubling trend of powerful corporations and right-wing groups venue and judge shopping in courtrooms of least resistance – filing their lawsuits in a pipeline that leads straight through the conservative Fifth Circuit Court of Appeals with a reputation of giving industry whatever they ask for.

The CFPB’s victory before the Supreme Court puts in focus the urgent need for judicial reform.  

Biggest Losers in CFPB vs Payday Industry: 

1)   The predatory lending industry that challenged the CFPB’s independence, funding, and authority, even though the Bureau’s funding structure mirrors funding mechanisms used since the republic’s founding.

2)   Financial industry special interests and those who do their bidding in Congress that have tried for years to obstruct the CFPB’s work protecting consumers based on the same bogus arguments about constitutionality that even far-right Justice Thomas would not go along with in the end.

3)   The Fifth Circuit Court of Appeals, which breathed life into this dubious lawsuit that should have never have gotten this far in the first place. 

Fifth Circuit Under More Scrutiny

  • The Fifth Circuit rubber stamped the payday lenders’ case, just as they did with numerous other industry-funded lawsuits against the Biden administration. The Fifth Circuit’s credibility continues to suffer as it frequently plays along with industry and right-wing judge-shopping schemes that corrupt our judicial system.
  •  The court is widely seen as a haven for industry lawsuits against Biden administration rules and enforcement actions. Just last month, the Fifth Circuit granted the U.S. Chamber and big bank trade groups a preliminary injunction on a pro-consumer update to the Community Reinvestment Act that was set to take effect.
  • The Fifth Circuit’s tendency to sympathize with industry gripes against regulation and right-wing activism is why it’s the go-to place to sue for the U.S. Chamber — a group funded by numerous industries, including big banks, airlines, and drug manufacturers.
  • A recent Accountable.US report found that since January 2017, 63% of the U.S. Chamber’s lawsuits challenging federal regulations were filed in Fifth Circuit jurisdiction, where 19 out of the 26 judges were appointed by Republicans, including 6 by Donald Trump. 

Judge Shopping and Industry’s Likely Next Steps 

  • Even though industry will keep at this practice of judge and venue shopping, hoping for a sympathetic ruling from Fifth Circuit justices who subscribe to fringe legal theories, regulators and their supporters in the advocacy and legal spaces can win.
  • Judge shopping is a purely political strategy that far-right extremists and big corporate CEOs have used and abused to manipulate the judicial system for political and financial gain at the expense of everyday Americans. It’s part of a calculated effort by the broader right-wing legal movement and has become a go-to tactic for groups such as the Alliance Defending Freedom, America First Legal, and America First Policy Institute.
  • Judge shopping threatens the credibility of our judiciary and undermines our democracy. This is why the vast majority of Americans support solutions to curb judge shopping — from congressional action to formal action from the Judicial Conference.
  • For instance, the Judicial Conference is considering adopting a formal policy to make guidance enforceable against the judge shopping practice. Unsurprisingly, right-wing judges on the Fifth Circuit – the court as the center of the controversy – complained about the guidance while the chief judge of the “arguably most judge-shopped district in Texas, the Northern District, announced that the district would not implement the Judicial Conference’s recommendations.”
  • The Fifth Circuit’s resistance to accountability is why Senate Majority Leader Schumer, Sen. Mazie Hirono (D-HI), and other Senate Democrats have proposed legislation to curb judge shopping, as has Rep. Mikie Sherrill (D-NJ-11) and other House Democrats.  These efforts would restore credibility to the judiciary and combat anti-democratic judge-shopping tactics.

Venue Shopping Harms Average Americans

  • These efforts are so important because manipulation of our judicial system by right-wing extremist groups goes beyond individual cases – it leaves millions of Americans worse off. Just last week, in another U.S. Chamber-filed lawsuit in Fifth Circuit territory, a Trump-appointed federal judge in the Northern District of Texas ruled in big banks’ favor and agreed to stay a new CFPB rule limiting credit card late fees to $8 that was supposed to take effect this week. Each day the rule is stayed will cost Americans $27 million. 
  • Trump-appointed Fifth Circuit Court of Appeals Judge Don Willett has already decided not to recuse himself in the U.S. Chamber’s lawsuit against the credit card late fee rule even though it came to light that Willett’s most recent financial disclosure report lists up to tens of thousands of dollars’ worth of shares in Citigroup, a bank greatly impacted by the CFPB’s action capping credit card late fees. 

Bottom Line

Judges that refuse to honor guidance from the Judicial Conference are rolling out a welcome mat for even more judge shopping in Northern Texas and the Fifth Circuit.  

As long as cases are rubber stamped by the Fifth Circuit and sent up to the Supreme Court with no consequence, groups will keep relying on this tactic — forcing everyday Americans to be subject to these narrow decisions. 

That is why Accountable.US will continue to expose and call out brazen examples of judge shopping and support solutions to protect our judiciary and democracy. 

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