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English v. Trump

United States District Court, District of Columbia

January 10, 2018

DONALD J. TRUMP et al., Defendants.


          TIMOTHY J. KELLY, United States District Judge

         This case concerns whether the President is authorized to name an acting Director of the Consumer Financial Protection Bureau (“CFPB”) or whether his choice must yield to the ascension of the Deputy Director, who was installed in that office by the outgoing Director in the hours before he resigned. The CFPB is a government agency created after the financial crisis of 2007-2008 by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act” or “Dodd-Frank”), Pub. L. No. 111-203, 124 Stat. 1376 (2010). The CFPB's previous Director, Richard Cordray, resigned effective at midnight on the day after Thanksgiving: Friday, November 24, 2017. That same day, he named Plaintiff Leandra English the CFPB's Deputy Director, in an apparent attempt to select his successor. But the President, Defendant Donald John Trump, made his own appointment that day, announcing that Defendant John Michael Mulvaney, who serves as the Director of the Office of Management and Budget (“OMB”), would also serve as acting Director of the CFPB upon Cordray's resignation.

         English claims that, by operation of the Dodd-Frank Act, she-and only she-is now entitled to be the acting Director of the CFPB. She seeks a preliminary injunction that would restrain the President from appointing an acting Director other than her, require the President to withdraw Mulvaney's appointment, and prohibit Mulvaney from serving as acting Director. Defendants, joined by the CFPB's General Counsel, argue that the President's appointment of Mulvaney is valid under a separate statute, the Federal Vacancies Reform Act of 1998 (the “FVRA”), 5 U.S.C. § 3345 et seq., which they contend provides the President an available method to fill Executive Branch vacancies such as this one. They urge the Court to deny the injunction.

         The merits of this case turn on a question of statutory interpretation, where “[t]he ‘role of this Court is to apply the statute[s] as [they are] written-even if . . . some other approach might accord with good policy.'” Loving v. IRS, 742 F.3d 1013, 1022 (D.C. Cir. 2014) (quoting Burrage v. United States, 134 S.Ct. 881, 892 (2014)). Thus, the particular policies or priorities that English or Mulvaney might pursue as the CFPB's acting Director are irrelevant to the Court's analysis. For the reasons explained below, including that English has not demonstrated a likelihood of success on the merits or shown that she will suffer irreparable injury absent injunctive relief, her request for a preliminary injunction is DENIED.

         I. Statutory Background

         A. The Federal Vacancies Reform Act of 1998

         “Article II of the Constitution requires that the President obtain ‘the Advice and Consent of the Senate' before appointing ‘Officers of the United States.'” NLRB v. SW Gen., Inc., 137 S.Ct. 929, 934 (2017) (quoting U.S. Const. art. II, § 2, cl. 2). “Given this provision, the responsibilities of an office requiring Presidential appointment and Senate confirmation- known as a ‘PAS' office-may go unperformed if a vacancy arises and the President and Senate cannot promptly agree on a replacement.” Id. “Congress has long accounted for this reality by authorizing the President to direct certain officials to temporarily carry out the duties of a vacant PAS office in an acting capacity, without Senate confirmation.” Id.

         In some cases, Congress has provided agency-specific rules for acting officers. See, e.g., 12 U.S.C. § 4 (providing that the Deputy Comptrollers of the Currency shall perform the duties of the Comptroller during the latter's “vacancy, ” “absence, ” or “disability”). But since at least the 1860s, Congress has also provided general rules that apply to executive vacancies more broadly, across a wide range of government agencies. See SW Gen., 137 S.Ct. at 935-36. Over the years, these authorizations have evolved, and have included default rules that allowed a PAS officer's “assistant” to take over her duties automatically, with provisions that also permitted the President to fill the vacancy with another person meeting certain qualifications, such as a person currently serving in a PAS office. See id.

         The current iteration of Congress' general rule for acting officers is the FVRA, which was passed in part to address perceived threats to the Senate's advice and consent power that arose in the 1990s. See Id. at 936. As such, the FVRA imposes carefully calibrated limits on who can be appointed as an acting PAS officer and how long they may serve. See 5 U.S.C. §§ 3345, 3346. Its default rule is that the officer's “first assistant” takes over as acting officer. Id. § 3345(a)(1). However, the President may override that rule by appointing a different officer or employee from within the same agency, see Id. § 3345(a)(3), or a PAS officer from a different agency, see Id. § 3345(a)(2). The FVRA generally forbids acting officers from serving for more than 210 days. See Id. § 3346. In addition, with certain exceptions, a person may not serve as an acting officer if he has been nominated for the permanent position. See Id. § 3345(b).

         The FVRA generally covers any PAS office in any “Executive agency” in the event the officer “dies, resigns, or is otherwise unable to perform the functions and duties of the office.” Id. § 3345(a). Certain offices are specifically excluded from the statute's scope, including members of any multi-member body that “governs an independent establishment or Government corporation.” Id. § 3349c(1)(B). In addition, unless another statute expressly addresses the appointment of an acting officer, the FVRA provides that it is the “exclusive means” for any such appointments within its scope. Id. § 3347(a). If no one can serve as acting officer under the FVRA, the position remains vacant. Id. § 3348(b).

         B. The Dodd-Frank Wall Street Reform and Consumer Protection Act

         “In response to the financial crisis in 2008 . . . Congress passed and President Obama signed the Dodd-Frank [Act].” State Nat'l Bank of Big Spring v. Lew, 795 F.3d 48, 51 (D.C. Cir. 2015). Title X of Dodd-Frank established the CFPB to “regulate the offering and provision of consumer financial products or services under the Federal consumer financial laws.” CFPB v. Accrediting Council for Indep. Colls. & Schs., 854 F.3d 683, 687 (D.C. Cir. 2017) (quoting 12 U.S.C. § 5491(a)); see also 12 U.S.C. § 5492(a) (listing the CFPB's powers). The CFPB's purpose is to “implement and, where applicable, enforce Federal consumer financial law consistently for the purpose of ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive.” 12 U.S.C. § 5511(a). The “Federal consumer financial law” the CFPB is charged with enforcing “includes [Title X of Dodd-Frank] and eighteen pre-existing consumer protection statutes.” Accrediting Council, 854 F.3d at 687 (citing 12 U.S.C. § 5481(12), (14)). Dodd-Frank vested the CFPB with “broad ‘rulemaking, supervisory, investigatory, adjudicatory, and enforcement authority'” to carry out its mission. Id. at 688 (quoting Morgan Drexen, Inc. v. CFPB, 785 F.3d 684, 687 (D.C. Cir. 2015)).

         The Dodd-Frank Act established the CFPB as an “independent bureau” within the Federal Reserve System. 12 U.S.C. § 5491(a). However, unlike many other independent agencies within the Executive Branch, it is led by a single Director. Id. § 5491(b)(1). The Director is appointed by the President with the advice and consent of the Senate, and may be removed only by the President for cause. Id. § 5491(b)(2), (c)(3).[1] The Dodd-Frank Act establishes a five-year term for the Director. Id. § 5491(c)(1). The CFPB's structure is also marked by a number of other unusual features: for example, the CFPB receives funding from the Federal Reserve, as opposed to Congress. Id. § 5497(a). Moreover, other Executive Branch officers may not exercise control over the CFPB's communications with Congress about potential legislation. See Id. § 5492(c)(4). The Dodd-Frank Act also created a Deputy Director of the CFPB, who “shall- (A) be appointed by the Director, and (B) serve as acting Director in the absence or unavailability of the Director.Id. § 5491(b)(5). In addition, Dodd-Frank provides that “[e]xcept as otherwise provided expressly by law, all Federal laws dealing with . . . officers [or] employees . . . apply to the exercise of the powers of the [CFPB].” Id. § 5491(a).

         II. Factual and Procedural Background

         A. Cordray's Resignation and the Dueling Appointments of English and Mulvaney

         This controversy was set in motion on the day after Thanksgiving: Friday, November 24, 2017. That day, as consumers thronged the country's shopping malls, CFPB Director Cordray resigned from his position effective as of midnight, well short of the completion of his five-year term. See ECF No. 22 (“Am. Compl.”) ¶¶ 11-12; ECF No. 24 (“English Decl.”) ¶ 6. He also named English, his Chief of Staff, to serve as the CFPB's Deputy Director-a position that apparently no one had occupied since August 2015-effective at noon. See English Decl. ¶ 4; ECF No. 41-2 at 2 n.1. At 2:30 p.m., Cordray publicly announced the decision, explaining that the appointment was intended “to ensure an orderly succession for this independent agency” by effectively making English the acting Director after he left office. English Decl. ¶ 5. He also stated that having his Chief of Staff serve as acting Director “would minimize operational disruption and provide for a smooth transition given her operational expertise.” Id. English had previously served in a number of other roles at the CFPB, OMB, and other federal agencies. See Id. ¶¶ 2-3.

         But the President had other plans on that busy day. He issued a memorandum directing Mulvaney to “perform the functions and duties” of the CFPB Director “until the position is filled by appointment or subsequent designation, effective 12:01 a.m. eastern standard time, November 25, 2017.” ECF No. 41-1. The President cited the FVRA as the basis for Mulvaney's designation as the CFPB's acting Director. Id. At approximately 8:50 p.m., the White House issued a statement announcing the designation. English Decl. ¶ 7.

         The next day, Saturday, November 25, the Department of Justice's Office of Legal Counsel issued a memorandum confirming legal advice it had provided orally the previous day: that the President was lawfully permitted to designate an acting Director of the CFPB pursuant to the FVRA. See ECF No. 41-2. That same day, the CFPB's General Counsel issued a memorandum to CFPB senior management reaching the same conclusion. See ECF No. 41-3. Subsequently, in a conference call on Sunday, November 26, the Associate Directors of the CFPB's six divisions agreed that they would act consistently with the understanding that Mulvaney was the acting Director. See ECF No. 41-4 (“Fulton Decl.”) ¶ 6.

         On Monday, November 27, Mulvaney showed up for work at the CFPB's facilities and was provided access to the Director's office. Id. ¶ 7. As of early December, he was spending three days a week working there, and three days a week at OMB. See ECF No. 41-5 at 1. He regularly receives memoranda intended for the CFPB Director, including memoranda requesting decisions from the Director. Fulton Decl. ¶ 9. He also issues directives with which CFPB staff comply. Id. ¶ 10. On December 4, he held a CFPB press roundtable during which he described some of the activity he had undertaken as acting Director. See ECF No. 41-5. Also, the CFPB's website lists him as the acting Director. See CFPB, (last accessed Jan. 10, 2018). In summary, the record evidence suggests that CFPB “operations have continued with the understanding that Mick Mulvaney is the Acting Director.” Fulton Decl. ¶ 8. Indeed, it is notable that the CFPB's General Counsel and other CFPB attorneys are listed as “Of Counsel” on Defendants' opposition brief. ECF No. 41 (“Def. Opp.”) at 40.

         For her part, English continues to work at the CFPB, apparently at a separate facility from Mulvaney. See ECF No. 41-5 at 2. She has held herself out as the acting Director by sending a number of emails to CFPB staff to that effect. See Id. at 12. She has also held herself out as the acting Director in meetings with Congressional leaders and other stakeholders. See ECF No. 16 at 11:19-24. In response, Mulvaney has sent her a number of emails asking her to stop holding herself out as acting Director. See ECF No. 41-5 at 4, 12. He has also sent her emails asking her to perform certain customary duties of the Deputy Director. See Id. at 4-5, 12. As of December 4, he had not received a response. Id. at 4. However, during the press roundtable held on that same day, Mulvaney unequivocally stated that he was not considering terminating her. Id. at 5. As of late December, all parties agreed that these basic facts remained unchanged. ECF No. 46 (“PI Hr'g Tr.”) at 4:3-10, 6:3-10.

         B. Procedural History

         On November 26, 2017, English filed this lawsuit against the President and Mulvaney, requesting declaratory and injunctive relief. ECF No. 1. Also on November 26, she filed an emergency motion for a temporary restraining order (“TRO”) restraining the President from appointing any acting Director other than her, requiring the President to withdraw Mulvaney's appointment, and prohibiting Mulvaney from serving as acting Director. ECF No. 2. On November 27, the Court held a hearing on the motion. ECF No. 15. That same day, Defendants filed their opposition to English's motion. ECF No. 9. The next day, November 28, the Court held another hearing and denied the TRO motion, finding that English had not shown a likelihood of success on the merits and had otherwise failed to meet the prerequisites for emergency relief. ECF No. 16. On December 6, English filed an amended complaint, Am. Compl., and moved for a preliminary injunction seeking substantially the same relief, ECF No. 23. On December 7, English filed a corrected version of her brief in support. ECF No. 26 (“Mot.”). On December 18, Defendants filed their opposition to English's motion. Def. Opp. On December 20, English filed her reply. ECF No. 44 (“Reply to Def. Opp.”). On December 22, the Court held a hearing on the motion for a preliminary injunction. PI Hr'g Tr.

         III. Legal Standard

         A preliminary injunction is “an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008). To warrant a preliminary injunction, a plaintiff must establish that (1) she “is likely to succeed on the merits”; (2) she “is likely to suffer irreparable harm in the absence of preliminary relief”; (3) the “balance of equities” tips in her favor; and (4) “an injunction is in the public interest.” Id. at 20; accord Aamer v. Obama, 742 F.3d 1023, 1038 (D.C. Cir. 2014). The last two factors “merge when the Government is the opposing party.” Nken v. Holder, 556 U.S. 418, 435 (2009). The plaintiff “bear[s] the burdens of production and persuasion” when moving for a preliminary injunction. Qualls v. Rumsfeld, 357 F.Supp.2d 274, 281 (D.D.C. 2005) (citing Cobell v. Norton, 391 F.3d 251, 258 (D.C. Cir. 2004)).

         “Before the Supreme Court's decision in Winter, courts weighed the preliminary-injunction factors on a sliding scale, allowing a weak showing on one factor to be overcome by a strong showing on another factor.” Standing Rock Sioux Tribe v. U.S. Army Corps of Eng'rs, 205 F.Supp.3d 4, 26 (D.D.C. 2016) (citing Davenport v. Int'l Bhd. of Teamsters, 166 F.3d 356, 360-61 (D.C. Cir. 1999)). However, the D.C. Circuit has “suggested, without deciding, that Winter should be read to abandon the sliding-scale analysis in favor of a ‘more demanding burden' requiring a plaintiff to independently demonstrate both a likelihood of success on the merits and irreparable harm.” Id. (quoting Sherley v. Sebelius, 644 F.3d 388, 392-93 (D.C. Cir. 2011)); see also Davis v. Pension Benefit Guar. Corp., 571 F.3d 1288, 1292 (D.C. Cir. 2009).

         Regardless of whether the sliding-scale analysis survives Winter in this Circuit, it is clear that a plaintiff's failure to show a likelihood of success on the merits is, standing alone, sufficient to defeat the motion. Standing Rock, 205 F.Supp.3d at 26 (citing Ark. Dairy Co-op Ass'n, Inc. v. USDA, 573 F.3d 815, 832 (D.C. Cir. 2009)). In addition, “the basis of injunctive relief in the federal courts has always been irreparable harm.” Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 297 (D.C. Cir. 2006) (quoting Sampson v. Murray, 415 U.S. 61, 88 (1974)). As such, a plaintiff must show that at least some “irreparable injury is likely in the absence of an injunction, ” regardless of whether she satisfies the other three factors. Winter, 555 U.S. at 21-22 (emphasis in original); see Chaplaincy, 454 F.3d at 297.

         Finally, the purpose of a preliminary injunction “is merely to preserve the relative positions of the parties until a trial on the merits can be held.” Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981). When a plaintiff seeks an injunction that would alter the status quo rather than merely preserve it (i.e., a mandatory injunction), some district courts in this Circuit have applied an even higher standard. See, e.g., Elec. Privacy Info. Ctr. v. DOJ, 15 F.Supp.3d 32, 39 (D.D.C. 2014) (collecting cases); Columbia Hosp. for Women Found., Inc. v. Bank of Tokyo-Mitsubishi Ltd., 15 F.Supp.2d 1, 4 (D.D.C. 1997) (“[W]here an injunction is mandatory-that is, where its terms would alter, rather than preserve, the status quo by commanding some positive act-the moving party must meet a higher standard than in the ordinary case by showing clearly that he or she is entitled to relief or that extreme or very serious damage will result from the denial of the injunction.” (internal quotation marks omitted) (quoting Phillip v. Fairfield Univ., 118 F.3d 131, 133 (2d Cir. 1997))), aff'd, 159 F.3d 636 (D.C. Cir. 1998). “The D.C. Circuit has not opined on the issue, but application of a heightened standard of review to requests for mandatory preliminary injunctive relief has been adopted in other Circuits.” Singh v. Carter, 185 F.Supp.3d 11, 17 n.3 (D.D.C. 2016) (collecting cases).

         The Court need not resolve the question of whether the sliding scale test is viable after Winter. As explained in more detail below, because English “cannot meet the less demanding ‘sliding scale' standard, [she] cannot satisfy the more stringent standard alluded to by the Court of Appeals.” Kingman Park Civic Ass'n v. Gray, 956 F.Supp.2d 230, 241 (D.D.C. 2013). Similarly, the Court need not determine the nature of the injunction sought by English, because even under the standard governing prohibitive injunctions, she cannot meet her burden. See, e.g., Sataki v. Broad. Bd. of Governors, 733 F.Supp.2d 1, 11 n.12 (D.D.C. 2010) (declining to determine whether to apply a higher standard for a mandatory injunction because plaintiff could not meet the traditional standard).

         IV. Analysis

         The Court finds that English is not likely to succeed on the merits of her claims, nor is she likely to suffer irreparable harm absent the injunctive relief sought. Moreover, the balance of the equities and the public interest also weigh against granting the relief. Therefore, English has not met the exacting standard to obtain a preliminary injunction.

         A. Likelihood of Success on the Merits

         English asserts several different causes of action in her Amended Complaint, but all of them-including her claim that Mulvaney's appointment is invalid because it violates the Constitution's Appointments Clause-turn on her argument that the President is not statutorily authorized to appoint Mulvaney as the CFPB's acting Director. Am. Compl. ¶¶ 19-28; PI Hr'g Tr. at 16:20-19:25. Accordingly, the Court organizes its analysis of the merits around two issues: (1) whether the President is authorized by statute to appoint an acting Director of the CFPB; and (2) if he is so authorized, whether he may appoint Mulvaney to that position.

         1. The President's Authority to Appoint the CFPB's Acting Director

         English argues that she acceded to the CFPB's acting Director position by operation of the Dodd-Frank Act, and that the President lacks the authority under the FVRA to designate an acting Director. Mot. at 6-17. She asserts that the Dodd-Frank Act's provision that its Deputy Director “shall . . . be appointed by the Director [and] serve as acting Director in the absence or unavailability of the Director” displaces the President's authority under the FVRA to designate an acting CFPB Director. Id. at 7-8. According to English, Dodd-Frank and the FVRA are in “unavoidable conflict, ” id at 9, which “must be resolved against application of the FVRA” because “Dodd-Frank was enacted later in time, and speaks with greater specificity to the question at hand, ” id at 7. Defendants argue that the FVRA is not displaced by Dodd-Frank's Deputy Director provision, and remains available as an option for the President to fill the CFPB's acting Director position. Def Opp. at 12.

         a. The FVRA's Applicability

         As an initial matter, the Court must determine whether the FVRA-independent of whether it is displaced by the Deputy Director provision of the Dodd-Frank Act-authorizes the President's appointment of the CFPB's acting Director on its own terms. It clearly does.

         The FVRA applies if “an officer of an Executive agency . . . whose appointment to office is required to be made by the President, by and with the advice and consent of the Senate, dies, resigns, or is otherwise unable to perform the functions and duties of the office.” 5 U.S.C. § 3345(a). Under those conditions, the FVRA provides that “the President (and only the President) may direct a person who serves in an office for which appointment is required to be made by the President, by and with the advice and consent of the Senate, to perform the functions and duties of the vacant office temporarily in an acting capacity.” Id. § 3345(a)(2).

         The CFPB is “an Executive Agency.” 12 U.S.C. § 5491(a). The Director of the CFPB is “appointed by the President, by and with the advice and consent of the Senate.” Id. § 5491(b)(2). Director Cordray resigned effective at midnight on November 24, 2017. English Decl. ¶ 6. Therefore, a plain reading of the FVRA's text allows the President to direct a person who serves in a PAS office to ...

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