Court Panel Rules CFPB Leadership Structure is Constitutional

Case originating from opposition to a civil investigative demand from the bureau leads to challenge of single-director leadership structure in Ninth Circuit.

5/10/2019 8:00 AM

Court Panel Rules CFPB Leadership Structure is Constitutional

A Ninth Circuit panel unanimously ruled the “CFPB’s single-director-removable-only-for-cause structure is constitutional” in CFPB v. Seila Law LLC, according to a report from Alan Kaplinsky, partner with Ballard Spahr LLP.

The Ninth Circuit heard oral arguments in Seila in January.

Kaplinsky reports:

“Appellant Seila Law had asked the Ninth Circuit to overturn the district court’s refusal to set aside a Bureau civil investigative demand, arguing that the CID was invalid because the CFPB’s structure is unconstitutional. In rejecting the constitutional challenge, the Ninth Circuit relied on U.S. Supreme Court precedent, which in the Ninth Circuit’s view, “indicate that the for-cause removal restriction protecting the CFPB’s Director does not ‘impede the President’s ability to perform his constitutional duty’ to ensure that the laws are faithfully executed.”  The Ninth Circuit commented that “the Supreme Court is of course free to revisit those precedents, but we are not.”

The panel also relied on precedent that the bureau’s structure is constitutional from the D.C. Circuit’s en banc decision in PHH Corporation v. Consumer Financial Protection Bureau.

“Neither PHH Corporation nor the CFPB filed a petition for certiorari asking the U.S. Supreme Court to review the D.C. Circuit’s en banc decision. Since the Ninth and D.C. Circuits are the only circuits to have ruled on the CFPB’s constitutionality and both have held that the Bureau’s structure is constitutional, there is currently no split in the circuits that might encourage the Supreme Court to grant a petition for certiorari should one be filed by Seila Law,” according to Kaplinsky.

Two additional pending cases involve a challenge the constitutionality of the CFPB’s leadership structure, including CFPB v. All American Cash Checking Inc., and CFPB v. RD Legal Funding LLC.

Kaplinsky reports either of the cases could create a split in the circuit courts. The Fifth Circuit completed oral arguments in the All American Check Cashing case on March 12 and the RD Legal Funding case is pending in the Second Circuit.

Read more analysis of the latest action in the cases from Kaplinsky.

Related Content from ACA International:

U.S. Department of Justice Opposes Petition for Supreme Court to Hear BCFP Case

U.S. Supreme Court Denies Hearing for CFPB Constitutionality Case

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