September 22, 2020

Volume X, Number 266

September 22, 2020

Subscribe to Latest Legal News and Analysis

September 21, 2020

Subscribe to Latest Legal News and Analysis

Consumer Advocacy Groups Ask To Participate As Amicus To Oppose Motion For Reconsideration Of Plaintiffs In Industry Lawsuit Challenging CFPB Payday Loan Rule

The four consumer advocacy groups that filed an amicus brief opposing the joint motion filed by the CFPB and two trade groups seeking a stay of the compliance date for the CFPB’s final payday/auto title/high-rate installment loan rule (Payday Rule) have now filed a motion seeking leave to file an amicus brief opposing the trade group’s motion for reconsideration of the Texas federal court’s June 12 order denying the stay.  The CFPB filed a response in support of the trade groups’ motion for reconsideration.

The joint motion sought the stay of the compliance date pursuant to Section 10(d) of the Administrative Procedure Act (APA), 5 U.S.C. Section 705.  In their initial amicus brief, the advocacy groups argued that a stay of the compliance date while also staying the litigation was inconsistent with the purpose of Section 705 to stay agency action in order to maintain the status quo during judicial review.  In its response in support of the motion for reconsideration, the CFPB has argued that the court can properly use its authority under Section 705 to stay the Payday Rule’s compliance date while also staying the litigation because Section 705 contains no “‘active litigation’ requirement.”

While renewing their argument that the trade groups have not satisfied the four factors used to assess requests for Section 705 stays, the advocacy groups devote most of their proposed new amicus brief to their argument that a stay of the compliance date under Section 705 is not appropriate where the litigation is stayed.  Section 705 allows a court reviewing an agency’s action to postpone the effective date of such action “to the extent necessary to prevent irreparable injury… pending conclusion of the review proceedings.”

The advocacy groups, citing a 1974 U.S. Supreme Court decision, argue that Section 705 was primarily intended to reflect a doctrine that recognized a court’s limited authority to stay an agency action from which an appeal was taken, pending the determination of that appeal.  According to the advocacy groups, granting a stay of the compliance date, “would turn [that] doctrine on its head” because by claiming they need both a stay of the litigation while the CFPB reviews the Payday Rule and a section 705 stay of the compliance date, “plaintiffs make clear that they seek a stay pending agency reconsideration, not this Court’s consideration.” (emphasis in original)  The advocacy groups reject the CFPB’s argument that the requirement in Section 705 that the stay must be necessary to prevent harm “pending conclusion of the review proceedings” can be satisfied “by a lawsuit stayed at the parties’ request.”

In response to the CFPB’s invocation of “uncertainties and delays inherent in the notice-and-comment rulemaking procedures,” the advocacy groups argue that Section 705 “provides no authority for an end-run around APA requirements that an agency finds inconvenient.”

Copyright © by Ballard Spahr LLPNational Law Review, Volume VIII, Number 176

TRENDING LEGAL ANALYSIS


About this Author

Kaplinksy, partner, New York, finance
Partner

Alan S. Kaplinsky is Co-Practice Leader of the firm's Consumer Financial Services Group, which has more than 115 lawyers. Mr. Kaplinsky devotes his practice exclusively to counseling financial institutions on bank regulatory and transactional matters, particularly consumer financial services law, and defending financial institutions that have been sued by consumers in individual and class action lawsuits and by government enforcement agencies. Visit Mr. Kaplinsky's profile in Wikipedia.

...
215-864-8544