United States District Court, District of Columbia
SEGAL HUVELLE United States District Judge
filed this suit in 2012 to challenge the constitutionality of
the Consumer Financial Protection Bureau ("CFPB"),
which was created as part of the Dodd-Frank Act. See
Dodd-Frank Wall Street Reform and Consumer Protection Act,
Pub. L. No. 111-203, 124 Stat. 1376 (2010). They also allege
that the recess appointment of CFPB Director Richard Cordray
was unconstitutional and seek an injunction that would
prevent him from taking any further action in that role.
After this Court dismissed the lawsuit on standing and
ripeness grounds, State Nat. Bank of Big Spring v.
Lew, 958 F.Supp.2d 127, 166 (D.D.C. 2013), the Court of
Appeals reversed in part. See State Nat. Bank of Big
Spring v. Lew, 795 F.3d 48, 57 (D.C. Cir. 2015). It held
that State National Bank of Big Spring ("SNB") had
standing to challenge (1) the constitutionality of the
CFPB's structure, and (2) Director Cordray's recess
appointment. See Id. at 54. Upon remand, the parties
filed cross-motions for summary judgment. (See
Pls.' Mot. for Summ. J. [ECF No. 53-1]); Defs.'
Cross-Mot. for Summ. J. [ECF No. 59-1].)
time, the Court will defer ruling on plaintiffs' attack
on the CFPB on separation-of-powers grounds. This same
constitutional challenge was made to the D.C. Circuit in a
recently argued case. See Pet'rs' Statement
of Issues, PHH Corp. v. Consumer Fin. Prot. Bureau,
Case No. 15-1177 (D.C. Cir. July 24, 2015) (raising the
question of "[w]hether the unprecedented structural
features of the CFPB, which combine legislative, executive,
and judicial power in the hands of a single individual,
violate the separation of powers"). Plaintiffs in this
case filed an amicus brief in support of petitioners, making
largely the same arguments that they make here. See
generally Br. of State National Bank of Big Spring, The
60 Plus Association, Inc.; and Competitive Enterprise
Institute, PHH Corp. v. Consumer Fin. Prot. Bureau,
Case No. 15-1177 (D.C. Cir. Oct. 5, 2015). Given the
likelihood that this issue will soon be decided by the
Circuit, this Court will hold this matter in abeyance until
the Court of Appeals rules in PHH Corp. See,
e.g., Al Qosi v. Bush, 2004 WL 4797470, at *1
(D.D.C. Dec. 17, 2004) (holding further proceedings in
abeyance pending resolution of the same issues in a case
already before the D.C. Circuit).
will, however, address the merits of plaintiffs'
challenge to the recess appointment of Director Cordray. To
do this, it will limit its background discussion to
information that is relevant only to that issue.
18, 2011, President Obama first nominated Richard Cordray to
serve as CFPB Director. (See Defs.' Resp. to
Pls.' Statement of Material Facts Not in Dispute
("Defs.' Resp.") [ECF No. 59-2] ¶ 18.)
When the Senate took no action on that nomination, the
President then appointed him to the position on January 4,
2012, invoking his authority under the Recess Appointments
Clause. (See Id. ¶ 19.) That same day, the
President also invoked his Recess Appointment authority to
appoint three members to the National Labor Relations Board
("NLRB"). (See Id. ¶ 21.) The Supreme
Court subsequently found in National Labor Relations
Board v. Noel Canning, 134 S.Ct. 2550, 2578 (2014),
that these NLRB appointments were made in violation of the
Recess Appointments Clause.
recess appointee, Cordray exercised final decision-making
authority concerning several CFPB rulemakings. (See
Defs.' Resp. ¶ 27; Electronic Fund Transfers
(Regulation E), 77 Fed. Reg. 6, 193 (Feb. 7, 2012); 77 Fed.
Reg. 50, 243 (Aug. 20, 2012); 78 Fed. Reg. 30, 661 (May 22,
2013); Integrated Mortgage Disclosures Under the Real Estate
Settlement Procedures Act (Regulation X) and the Truth In
Lending Act (Regulation Z), 77 Fed. Reg. 51, 115 (Aug. 23,
2012); Escrow Requirements Under the Truth in
Lending Act (Regulation Z), 78 Fed. Reg. 4, 725 (Jan. 22,
2013); Ability to Repay and Qualified Mortgage Standards
Under the Truth in Lending Act (Regulation Z), 78 Fed. Reg.
6, 407 (Jan. 30, 2013); Mortgage Servicing Rules Under the
Real Estate Settlement Procedures Act (Regulation X), 78 Fed.
Reg. 10, 695 (Feb. 14, 2013).
January 24, 2013, President Obama re-nominated Cordray to
serve as CFPB Director, and the Senate confirmed his
nomination on July 16, 2013. (Defs.' Resp. ¶ 26.)
The following month, Director Cordray published a Notice of
Ratification in the Federal Register, which read as follows:
The President appointed me as Director of the Bureau of
Consumer Financial Protection on January 4, 2012, pursuant to
his authority under the Recess Appointments Clause, U.S.
Const. art. II, § 2, cl. 3. The President subsequently
appointed me as Director on July 17, 2013, following
confirmation by the Senate, pursuant to the Appointments
Clause, U.S. Const. art. II, § 2, cl. 2. I believe that
the actions I took during the period I was serving as a
recess appointee were legally authorized and entirely proper.
To avoid any possible uncertainty, however, I hereby affirm
and ratify any and all actions I took during that period.
Notice of Ratification, 78 Fed. Reg. 53, 734, 53, 734 (Aug.
primary point of contention between the parties is what legal
effect, if any, this purported ratification has.
finding that plaintiffs had standing to challenge Director
Cordray's recess appointment as unconstitutional, the
Court of Appeals left it to this Court "to consider the
significance of Director Cordray's later Senate
confirmation and his subsequent ratification of the actions
he had taken while serving under a recess appointment."
State Nat. Bank of Big Spring, 795 F.3d at 54.
Defendants now argue that the ...