December 7, 2021

Volume XI, Number 341


December 07, 2021

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December 06, 2021

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Credit union seeks preliminary injunction in SDNY case challenging Mulvaney’s appointment as CFPB Acting Director; parties submit opposing briefing schedules

As we’ve reported, Lower East Side People’s Federal Credit Union (“People’s”), filed suit in the Southern District of New York to block Mick Mulvaney’s appointment as CFPB Acting Director.  On December 12, People’s filed a motion for a preliminary injunction.

People’s Argument

In general, People’s arguments track those made by Leandra English, Richard Cordray’s choice for Acting Director, in her case before the D.C. federal district court.  People’s, however, raises additional arguments regarding the alleged irreparable harm that would justify entering a preliminary injunction.  First, it cites Second Circuit case law holding that a constitutional violation constitutes per se irreparable harm.  Second, it argues that, as a regulated entity, it is harmed when its regulator acts without statutory authority to do so.  It alleges that it is irreparably harmed by the confusion and uncertainty it faces about who to listen to at the CFPB: Mulvaney or English.  Third, it argues that, because Mulvaney is (allegedly) making poor decisions, he is causing irreparable harm to People’s mission.

Of course, in raising all of these arguments in its brief, Peoples did not cite a single concrete example. Nor did it identify one thing it would have done differently had English been appointed.  It does not cite one rule or act of the CFPB that it wants to comply with but can’t or that it believes would be unlawful to obey.  Nor does it explain one aspect of its mission that cannot be carried out with Mulvaney serving as CFPB Acting Director.

Briefing Schedules

At the same time it filed the preliminary injunction motion, People’s sought a briefing schedule that is even more aggressive than the briefing schedule ordered by the D.C. federal district court in English’s lawsuit.  On December 13, the DOJ opposed People’s motion on several grounds, including that People’s interest is already protected by English’s lawsuit.  Under People’s proposed schedule, its reply brief would be due three days before the December 22, 2017 oral argument in the English case.  If the D.C. court were to (improperly, in our view) grant a preliminary injunction, then English’s interests would be fully protected.  What’s more, unlike Ms. English, People’s waited until three weeks after Mr. Mulvaney was appointed to file suit.  That delay negates People’s assertion that emergency conditions warrant an expedited schedule.

In its opposition, the DOJ faulted People’s counsel for failing to confer on the briefing schedule, a claim which People’s counsel denied in a letter submitted hours later.  The DOJ also indicated in its response that it intended to move to dismiss People’s lawsuit on standing and jurisdictional grounds as well.  Surprisingly, DOJ did not specifically say that it intends to file a motion to transfer venue of the lawsuit to Judge Kelly in the D.C. federal district court.

As things stand, the competing proposed briefing schedules are as follows:

People’s Proposal:

  • People’s Preliminary Injunction Papers: December 12, 2017 (these are already filed)

  • Amici Supporting Peoples Position: December 14, 2017

  • Government’s Opposition Papers: December 18, 2017 at 9 am

  • Amici Supporting Government’s Position: December 18, 2017 at 9 am

  • People’s Reply Papers: December 19, 2017 at 5 pm

DOJ’s Proposal:

  • DOJ’s Opposition to People’s Preliminary Injunction Motion and Motion to Dismiss: January 12, 2018

  • People’s Reply in Support of Preliminary Injunction Motion and Opposition to DOJ’s Motion to Dismiss: January 26, 2018

  • DOJ’s Reply in Support of its Motion to Dismiss: February 9, 2018

The D.C. federal district court rejected a similar extended, consolidated briefing schedule proposed by the DOJ in English’s case.  It’s unclear how the SDNY court will rule in People’s case, however.

Judge Gardephe

Judge Paul Gardephe is presiding over People’s case.  He was nominated to the court by President George W. Bush and took the bench in August 2008.  A graduate of Columbia Law School, he clerked for Judge Engel of the Sixth Circuit, and has spent time in private practice, in-house at Time, Inc., and in government service in the U.S. Attorney’s Office.

Amicus Briefs

On December 15, 2017, several amicus briefs were filed in People’s case.  All of the briefs supported People’s and were apparently submitted to comply with People’s proposed briefing schedule.  The amicus briefs largely track those filed in the D.C. federal district court case, with a few exceptions.

For example, the financial law “scholars” who filed briefs in both cases added an argument to their amicus brief in People’s case.  They now argue that allowing for appointment under the VRA would give the President a “perverse incentive” to delay appointing a permanent CFPB Director.  That, of course, ignores the time limits applicable to presidential appointments under the VRA found at 5 U.S.C. § 3346.  In contrast, the Democratic state attorneys general, who submitted briefs in both cases, have dropped an argument in People’s case.  In English’s case, they argued that the doctrine of constitutional avoidance is inapplicable.  They do not appear to be making that argument in support of People’s motion.

Credit Union National Association

Although People’s is supporting Leandra English’s argument that she is the rightful CFPB Acting Director, the Credit Union National Association, whose membership consists of more than 6,000 credit unions throughout the country, filed an amicus brief authored by Ballard Spahr in the D.C. federal district court supporting Mick Mulvaney’s argument that he is the rightful CFPB Acting Director.

Copyright © by Ballard Spahr LLPNational Law Review, Volume VII, Number 352

About this Author

Kaplinksy, partner, New York, finance

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.

Flo, Washington DC, Ballard Spahr

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...