October 22, 2021

Volume XI, Number 295

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Court Denies English’s Preliminary Injunction Motion; Mulvaney Continues to Exercise Acting CFPB Director Authority

Yesterday, U.S. District Court Judge Timothy J. Kelly denied Leandra English’s motion for a preliminary injunction in a 46-page opinionEnglish had sought to block President Trump’s appointment of Mick Mulvaney to serve as the CFPB’s Acting Director. The Court denied that request and held that English failed to satisfy  any of the four elements of her preliminary injunction claim.

The Court found that English was unlikely to ultimately succeed on the merits of her claim. It held that the Vacancies Reform Act (“VRA”) gave President Trump the right to appoint a CFPB Acting Director and that the Dodd-Frank Act did not displace the President’s VRA authority. In reaching that conclusion, the Court relied on language in Dodd-Frank providing that all federal laws relating to federal employees or officers – such as the VRA – apply to the CFPB “except as otherwise provided expressly by law.” It found that Dodd-Frank’s reference to the Deputy Director’s service as the Acting Director in the Director’s “absence or unavailability” did not constitute an “express” provision of law overriding the VRA.

English had argued, under the canon of statutory construction that specific statutes trump general ones, that the Dodd-Frank provision was more specific than the VRA, and thus controlled. The Court soundly rejected this argument, finding that the VRA’s reference to “vacancies” was more specific to this situation than Dodd-Frank’s reference to the Director’s “absence or unavailability.”

The Court also rejected English’s argument that a different result was required because Dodd-Frank used the word “shall” in reference to the Deputy Director’s service as Acting Director. It relied on the commonsense notion that, while the word “shall” is generally mandatory, it is not necessarily unqualified. The court recognized that this very notion is embedded in Dodd-Frank itself. Dodd-Frank says that the Director “shall serve as the head of the [CFPB].” If “shall” were unqualified in that context, then the provision stating that the President “may” remove the Director for cause would be meaningless (and the statute nonsensical).

Further, relying on the doctrine of constitutional avoidance, the Court rejected English’s position because it would create serious constitutional problems. “Under English’s reading, the CFPB Director has unchecked authority to decide who will inherit the potent regulatory and enforcement powers of that office, as well as the privilege of insulation from direct presidential control, in the event he resigns. Such authority appears to lack any precedent, even among other independent agencies.”

If the CFPB Director had that much control over his successor, it would severely diminish the President’s control over Executive officers and thus his constitutional duty to “take care that the laws be faithfully executed,” the Court held. It also acknowledged that a panel of the D.C. Circuit has already found that the CFPB’s structure is unconstitutional. It held that English’s reading of the statutes would only exacerbate those problems.

English had equal difficulty convincing the Court that she would suffer irreparable harm if an injunction were not issued. The only harm she proffered was the intangible harm she would suffer from being unable to perform the duties of the Acting Director. The Court declined to adopt the reasoning of the only authority supporting the proposition that such harm was irreparable harm — an unpublished district court decision from 1983 involving the termination of officers of an agency that would automatically cease to exist under its implementing statute thus precluding their later reinstatement. The Court found that English “utterly failed to describe any [irreparable] harm.”

On the third and final elements of English’s claim – balance of the equities and public interest – the Court found her claim equally wanting. English said that the need for clarity meant that an injunction should issue. The Court held that, “There is little question that there is a public interest in clarity here, but it is hard to see how granting English an injunction would bring any more of it. . . . The President has designated Mulvaney the CFPB’s acting Director, the CFPB has recognized him as the acting Director, and it is operating with him as the acting Director. Granting English an injunction . . . would only serve to muddy the waters.”

Finding that English failed to meet her burden on even one element of her preliminary injunction claim, the Court denied her motion. The Court’s decision does not ultimately resolve the merits of the case and English will doubtless file an appeal with the D.C. Circuit. Because of the cloud that the ongoing litigation casts on the legality of any of Mulvaney’s actions, President Trump should appoint a permanent Director without delay.

Copyright © by Ballard Spahr LLPNational Law Review, Volume VIII, Number 11
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About this Author

Flo, Washington DC, Ballard Spahr
Associate

A client-focused litigator and enforcement attorney, with extensive experience in the financial-services, technology, and real estate industries. Theodore R. ("Teddy") Flo represents lenders, technology companies, start-ups, corporate executives, and real estate service providers in local and national litigation, arbitration, and government investigations. While focused on investigations before the CFPB, he also represents clients before the SEC, DOJ, HUD, CFTC, and state regulators.

Teddy delivers practical cost-effective results for his clients through creative thinking and...

202-661-2259
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