The corporation operated a pizza establishment that allowed customers to make payments using debit cards. Linney's Pizza, LLC v. Bd. of Governors of the Fed. Rs. Sys., No. 3:22-cv-00071-GFVT, 2023 WL 6050569, 2023 U.S. Dist. LEXIS 164203, at *1, *2 (E.D. Ky. Sept. 15, 2023). The corporation was required to pay a percentage of each transaction to the debit card issuers. Id. Under the Durbin Amendment to the Dodd-Frank Act, the fees were “limited… to an amount ‘reasonable and proportional’ to the issuer’s ‘incremental costs’ from processing debit payments.” Id. at *2-3 (citing 15 U.S.C. §§1693o-2(a)(2)). The Board of Governors of the Federal Reserve System (the Board) issued a final rule that allowed debit card issuers to “receive interchange fees that do not exceed the sum of the permissible base component and the permissible ad valorem component… [t]he standard’s base amount per transaction is 21 cents… [t]he ad valorem amount is five basis points of the transaction’s value…” Id. at *3-4 (quoting 76 Fed. Reg. 43.396). The corporation challenged the final rule arguing that it “exceeds the Board’s authority, is contrary to law, and is arbitrary and capricious.” Id. at *4. However, before reaching the merits of the claim, the district court granted the Board’s motion to dismiss because the proceeding allegedly had not commenced before the statute of limitations barred the claim. Id. at *1-2. All parties agreed that under 28 U.S.C. § 2401(a), the challenge to the final rule was “restricted by a six-year statute of limitations.” Id. at *5. However, the parties disagreed as to whether the statute of limitations begins to run at the date of injury or the date the rule was promulgated. Id. Ultimately, the district court concluded that the corporation’s “claim is untimely because it is bringing a facial challenge more than six years after the publication of the regulation at issue.” Id. at *10. Additionally, the court rejected the corporation’s equitable tolling argument because it “did not diligently pursue its rights.” Id. at *12. Therefore, the court dismissed the corporation’s claims with prejudice. Id. at *13. The corporation appealed the dismissal after a recent Supreme Court case had clarified when the statute of limitations begins to run for final rule challenges.
In Linney’s Pizza, LLC v. Bd. Of Governors of the Fed. Rsrv. Sys., No. 23-5993, 2024 WL 4129195, 2024 U.S. App. LEXIS 22727 (6th Cir. Sept. 5, 2024) (opinion not yet released for publication), the Sixth Circuit vacated the district court’s holding and remanded the case. The court noted that the Supreme Court had recently held that the statute of limitations for challenging regulations “begins to run on the date of injury, not when the challenged regulation issues.” Corner Post, Inc. v. Bd. Of Governors of the Fed. Rsrv. Sys., 144 S.Ct. 2440, 2460 (2024). Therefore, the district court’s dismissal had to be vacated and the case remanded to determine whether the corporation’s claim was barred under the “date of injury” standard.
By Hayden Mariott: [email protected]