ARLINGTON, Va. – The Federal District Court judge charged with hearing a coalition's complaints against a California law regulating credit card operations prevented the law from going into effect on July 1 but left undecided the case's final outcome. The Court will next rule on the matter on November 8. NAFCU, several national bank trade associations as well as several nationwide card issuers joined forces to challenge the law which would require card issuers to either force their California customers or members to pay 10% of the credit card balances each month or make the issuers provide detailed, and expensive, disclosures about the cost of failing to do so. Faced with an enactment date of July 1, the coalition asked the court to prevent the law from going into effect and consider their case against it. NAFCU has argued the pending law is in violation of the Federal Credit Union Act and is unconstitutional. NCUA has issued a legal opinion letter that backed NAFCU's opinion of the law vis–vis the FCUA and assured federally chartered credit unions that they need not abide by it. The Office of Comptroller of the Currency (OCC) has also issued a legal brief in the case arguing that the law violates the National Bank Act (NBA). Despite there appearing to be a good deal of weight behind the coalition's position, Federal District Court Judge Frank Damrell made it clear from the bench that neither side should conclude they have won anything from the Court's granting the plaintiff's request, according to Linda Dent, NAFCU's director of regulatory compliance who was in the courtroom for the June 28 hearing. Both from the bench and in an accompanying memo Judge Damrell expressed frustration that the timing of the suit was such that it prevented the Court from collecting the information it needed and giving the topic the attention it deserved before having to decide whether to allow the law to go into effect, according to Dent. But NAFCU General Counsel Bill Donovan pointed to the portion of Damrell's memo accompanying his order in which the Judge wrote: "However, because the court has serious concerns regarding the validity of at least portions of the statute, it cannot find that plaintiff's delay prevents an interim stay" of the law. Significantly, according to Dent, NCUA's legal opinion letter appeared to weigh more heavily on the Court's consideration than did the brief from the OCC. Dent reported that the judge questioned the California State's Attorney at some length about why he should not take into account the regulator's opinion that that the FCUA pre-empts the California law. The attorney replied that the court did not have to give deference to an opinion letter, Dent said, but the court came back to the question of whether the law really had been pre-empted by NCUA regulations. Still, the court made clear more information and consideration would be coming and Damrell promised the parties to the suit that he would have subjects upon which the court would want more information and which would require greater discovery. Damrell laid out a schedule for how he expected the case to proceed. The parties may conduct discovery and investigation on the issues touched on in the case until August 30. The plaintiffs will file a supplemental brief outlining their further arguments on September 20. Defendants will be able to file a brief outlining their additional arguments by October 11, and plaintiffs will be able to file a response by October 25. The court will continue to hear the case on November 8. In several places the Court also suggested that it would not have to rule the whole law unconstitutional or in violation of the FCUA or the NBA and appeared to leave the door open for the law to apply to state charted credit unions along with other state chartered financial institutions that issue credit cards. This would trigger CUNA's involvement with the suit, according to Mark Wolff, the association's senior vice president for communications. So far CUNA refrained from joining the legislation and cited different reasons for doing so, but the prospect of having one set of its membership (state chartered credit unions) suffering under a burdensome law which does effect another portion (federally chartered credit unions) equally would be enough to galvanize it into action, Wolff explained. "The stay alleviates for now a possible imbalance between how the law would apply to state and federally chartered credit unions," said Eric Richard, CUNA's general counsel. "We'll continue to watch developments closely as the case moves forward and stand ready to take action if all credit unions, state and federal, are not receiving fair and equitable representation," he said. Wolff said that CUNA had retained outside counsel to monitor the case and did not know if the association had heard from any of its state chartered members yet about the matter, which had only appeared to possibly involve state chartered credit unions recently. For its part NASCUS, which represents about 500 state chartered credit unions through its credit union council, said it was also "monitoring" the situation, and NASCUS CEO Doug Duerr expressed the hope that if the court did not throw out the law in regards to state chartered credit unions as well, that the California legislature would be open to revisiting the law. [email protected]