April 5, 2011
We should pause before attempting to read too much into the court’s denial of the injunction based on TCF’s facial constitutional challenges to the Durbin Amendment. Obtaining an injunction based on a facial challenge to the constitutionality of a statute is an uphill battle. In addition to the usual requirements for injunctive relief (including irreparable harm and likely success on the merits), the proponent must overcome the presumption of constitutionality attached to federal laws.
That the injunction was not successful does not mean that a later challenge will also fail. Tellingly, Judge Piersol seems to agree that at least some of TCF’s challenges are legitimate. During the hearing, Judge Piersol reportedly raised concerns about the constitutionality of the Amendment’s exemption of banks with assets of less than $10 billion, which TCF challenged under the Equal Protection Clause of the U.S. Constitution. This leaves open the possibility that TCF’s equal protection challenge may be successful in the future, especially since the judge reportedly views the government’s argument that a two-tiered pricing structure will eventually result in single rate as speculation.
Importantly, TCF’s challenges to the Fed’s regulations—which actually implement the Amendment—remain. To date the Fed has been inundated with over 11,000 comments to the proposal regulations. And according to Mr. Bernanke (in a March 29 letter to Senate Banking Committee Chairman Tim Johnson), these comments raise issues that are “complex and difficult and are significant to the payment system, its providers, and its users.” The real battle, therefore, is likely still ahead.
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Katherine M. Robison is counsel in the San Francisco office of O’Melveny & Myers LLP and a member of the Litigation and Antitrust & Competition practice groups. The views expressed herein are the views of the author alone and are not the views or opinions of O’Melveny & Myers LLP or the publisher.
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