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Judge in CFPB Credit Card Lawsuit Avoids Recusal

A judge in the banking industry/CFPB legal battle can remain on the case.

That’s according to a ruling — made public Thursday (April 18) by Reuters — by a judicial ethics panel, which convened to determine whether U.S. Circuit Judge Don Willett needed to recuse himself because his son owns stock in Citigroup.

Willett is hearing a suit brought by the U.S. Chamber of Commerce, the American Bankers Association and the Consumer Bankers Association challenging a rule by the Consumer Financial Protection Bureau (CFPB) that would lower the late fees charged by issuers to about $8, from the current average of $31.

Critics contend that the CFPB is acting outside its authority, while the CFPB argued that this change would save consumers around $10 billion.

Per the Reuters report, the CFPB had suggested Willett might need to recuse himself because of his son’s stock ownership. However, the panel wrote in its ruling that this ownership does not fit the definition of financial interest under the code of conduct for federal judges.

“In some respects, the situation you describe is analogous to a judge who owns bank stock and is assigned to preside over the trial of a defendant charged with robbing that very bank,” the ethics committee wrote. 

“In that situation, the bank has an interest in restitution as a crime victim, but the commentary to the code makes it clear that a judge in such a case does not have an interest in the “subject matter” of the trial.

Willett earlier this month authored a decision that mandates the suit will be heard in Fort Worth, Texas, reversing an earlier decision by federal Judge Mark Pittman that moved the case to Washington, D.C. 

Pittman had ruled in late March the plaintiffs had no cause to have their case heard in Texas, as the CFPB, three of the plaintiffs and eight of the attorneys involved all have ties to D.C., while just one plaintiff lives in Fort Worth.

“Under plaintiffs’ theory, there isn’t a city in the country where the venue would not lie, as every city has customers who may potentially be impacted by the rule,” Pittman wrote. “Venue is not a continental breakfast; you cannot pick and choose on a plaintiffs’ whim where and how a lawsuit is filed.”