Removing Barriers Blog

D.C. District Court Hears Argument in Request for Preliminary Injunction
Posted December 27, 2017 by Chandler Schuette

Judge Timothy Kelly heard arguments on Friday, Dec. 22 for a preliminary injunction request from Leandra English challenging President Trump's appointment of Mick Mulvaney to serve as interim director of the Consumer Financial Protection Bureau (CFPB). CUNA is participating as an amici in this litigation.

During the hearing, the Department of Justice (DoJ) argued that the Federal Vacancies Reform Act (FVRA) is the governing statute for appointments since it is explicit to vacancies and resignations. And, it is the traditional statutory authority for addressing Executive Branch vacancies, and contains limited exceptions expressly articulated in the statute itself (none of which apply to the CFPB). It also argued that Section 5491 of the Dodd-Frank Act does not clearly apply to a vacancy and does not include a clear statement displacing the FVRA’s preexisting procedures.

During the hearing in addition to counsel for DoJ, the CFPB’s General Counsel sat on the Defendants side. Previously, the CFPB General Counsel issued a memo siding with the DoJ.

Alternatively, Plaintiff’s counsel, Deepak Gupta argued that the Dodd-Frank Act provides a mandatory succession plan for CFPB leadership that should displace the FVRA. In terms of standing, Gupta argued that English is harmed because she cannot engage in her statutory right to function as the CFPB director.

Throughout the arguments several points from CUNA’s amicus brief were raised in the hearing. The constitutional question CUNA raised that if plaintiff were to prevail the President would be deprived of any right of control over the CFPB, including even the right to appoint an Acting Director in the event of a resignation entirely beyond the President’s control was discussed.

It was also noted as highlighted in CUNA’s brief that the D.C. Circuit currently has before it, en banc, a petition by PHH Corp. to declare that Dodd-Frank unconstitutionally deprives the President of the right to discharge the CFPB Director without cause. However, the plaintiffs claim goes even a step further to the other extreme by arguing the court should not only allow a director to only be removed “for cause” but also have the ability to appoint their own non-Senate confirmed successor, who would also be removable only for cause.

This prompted a discussion of whether English’s argument conflicts with the Take Care Clause, which says the President must “take care that the laws be faithfully executed.” Judge Kelly appeared to agree that this was a concerning Constitutional question and added an additional concern that English could arguably serve indefinitely having never been selected by a President or confirmed by the Senate if he ruled in her favor, which is essentially unprecedented.

Judge Kelly also questioned Gupta about how granting the injunction would create more certainty for consumers and the marketplace. Gupta argued that finding for English would be in the public interest and that she might very well perform her duties differently than Director Mulvaney and all actions taken by Mulvaney will have to be undone if the court rules in her favor. The DoJ pointed out that naming a third director in one month would likely not provide the public with certainty, and the judge also questioned how financial markets would be better served if English were to takeover and create uncertainty about the CFPB’s ongoing work.

In closing Gupta asked for a written opinion for the injunction, which would be significant if there is an appeal. It is expected that either side will likely appeal a loss.

CUNA will be closely following this, particularly since recent actions taken by the CFPB such as changes to the HMDA rule and an extension of the prepaid card rule will be impacted by the ruling if Director Mulvaney is reversed in his ability to promulgate rules.