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Seila Law Asks U.S. Supreme Court to Review Ninth Circuit Ruling that CFPB’s structure is Constitutional

Seila Law has filed a petition for a writ of certiorari with the U.S. Supreme Court seeking review of the Ninth Circuit’s ruling that the CFPB’s single-director-removable-only-for-cause structure is constitutional.  The petition follows the entry of an order by the Ninth Circuit granting Seila Law’s motion for a stay of the Ninth Circuit’s mandate in the case pending resolution of the petition by the Supreme Court.

There is currently no circuit split regarding the CFPB’s constitutionality, with both the Ninth Circuit and the en banc D.C. Circuit in PHH having ruled that the CFPB’s structure is constitutional.  Nevertheless, Seila Law argues that “further percolation” would not benefit the Supreme Court in resolving the question of the CFPB’s constitutionality.  In support, Seila Law references the Ninth Circuit’s comment in its decision that “the majority, concurring, and dissenting opinions from the en banc D.C. Circuit in PHH ‘thoroughly canvassed’ the arguments involved in the constitutionality debate.”  Seila Law contends that, in light of these “extensive” opinions, “[a]dditional opinions from other courts of appeals will add little to this Court’s consideration of the issue.”

In addition to asserting that “the importance of the [separation-of-powers] question presented [by this case] cannot be overstated,” Seila Law observes that “even outside the circumstances of this case, the Court routinely grants review in cases presenting significant separation-of-powers issues in the absence of a conflict between the courts of appeals.”

The Solicitor General must respond to Seila Law’s petition by July 29, 2019.  While the DOJ opposed the certiorari petition filed by State National Bank of Big Spring (SNB) that also asked the Supreme Court to decide whether the CFPB’s structure is constitutional, it did so because it viewed that case as “a poor vehicle to consider the [constitutionality] question.”  However, the DOJ called the question an “important one that warrants [the Supreme] Court’s review in an appropriate case.”  The DOJ pointed to Seila Law, which was then still pending in the Ninth Circuit, as an example of another case that raised a similar constitutional challenge but would be a better vehicle.  (The DOJ also pointed to All American Check Cashing (in which the Fifth Circuit held oral argument in March 2019) and RD Legal Funding (in which briefing is still ongoing in the Second Circuit) as two other examples.  SNB’s petition was denied by the Supreme Court.)

The CFPB, which has defended its constitutionality to date, may be unable to separately oppose Seila Law’s petition for certiorari.  Dodd-Frank Section 1054(e) provides:

The Bureau may represent itself in its own name before the Supreme Court of the United States, provided that the Bureau makes a written request to the Attorney General within the 10-day period which begins on the date of entry of the judgment which would permit any party to file a petition for writ of certiorari, and the Attorney General concurs with such request or fails to take action within 60 days of the request of the Bureau.

The Ninth Circuit’s judgment was entered on May 6 and we are not aware of a request by the CFPB to the Attorney General to represent itself before the Supreme Court.  The DOJ’s position regarding SNB’s certiorari petition makes it seem unlikely that the DOJ would oppose Seila Law’s petition.  The more likely scenario would seem to be for the DOJ to agree with Seila Law that the Supreme Court should agree to hear the case and rule that CFPB’s structure is unconstitutional.  As a result, should the Supreme Court grant Seila Law’s petition, it may be necessary for the Supreme Court to appoint an amicus curiae to defend the Ninth Circuit’s judgment, an action that is part of the Supreme Court’s usual practice when no party is defending the circuit court’s judgment.

Copyright © by Ballard Spahr LLP

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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.

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