CFPB files opposition to All American Check Cashing’s cert petition; All American replies

19 Nov., 2019

Although the CFPB now agrees that its structure is unconstitutional, it has filed a brief opposing the Petition for a Writ of Certiorari Before Judgment filed by All American Check Cashing with the U.S. Supreme Court.

All American’s interlocutory appeal from the district court’s ruling upholding the CFPB’s constitutionality is still pending before the Fifth Circuit (and a second oral argument is scheduled for December 4).

In its petition, All American argued that “there is nothing to be gained by waiting [for the Fifth Circuit’s decision]” because the arguments regarding the CFPB’s constitutionality have already been exhaustively explored in the circuit courts.

Having filed its petition before the Supreme Court granted Seila Law’s certiorari petition, All American argued that its case was a better vehicle than Seila Law for deciding the constitutionality question but that, at a minimum, its case should be heard as a companion case to Seila Law.

All American’s petition presents two questions: whether the CFPB’s structure violates the separation of powers and whether a constitutional defect would entitle a company subject to a CFPB enforcement action to “meaningful relief, such as dismissal of the action.”

In addition to arguing in its opposition that granting All American’s petition “would do nothing to enhance” the Supreme Court’s consideration of the constitutionality question also presented in Seila Law, the CFPB argues that All American’s second question does not warrant Supreme Court review.

According to the Bureau, “lower courts have not yet addressed the particular issue here—whether an enforcement action that was filed by an official who was unconstitutionally insulated from removal by the President must be dismissed even where an official fully accountable to the President decides that it should move forward.”

The Bureau observes that there is no circuit conflict on related remedial issues, with “the few reasoned decisions that address related issues [agreeing] that [a separation-of-powers violation] does not compel invalidation of the agency’s action if those actions are subsequently approved in compliance with separation-of-powers requirements.”

In addition, the Bureau notes that “the ratification is implicated in at most a handful of cases” and asserts that the courts “adjudicating those cases can decide that issue in the first instance if an when doing so becomes necessary.” (The Bureau states in a footnote that the constitutional issue has not been preserved in all of the 19 enforcement actions it currently has pending.)

Finally, the CFPB asserts that All American’s argument that the proper remedy for a constitutional violation is dismissal of the CFPB’s enforcement action is wrong on the merits because ratification by a CFPB Director who is subject to appropriate Executive oversight can cure any constitutional defect.

In its reply brief, All American reasserts its argument that actions by an unconstitutional agency cannot be made valid through ratification and that “[t]he only remedy to address the CFPB’s structural flaws is dismissal.”

It also argues that its case presents “a crucial companion issue to the merits question that the Court will resolve in Seila Law” and “the only opportunity for the Court to consider the full remedial consequences of the CFPB’s unconstitutionality.”

All American contends that if the Court does not resolve the remedial question now, it will haunt the CFPB’s pending enforcement actions “not to mention other invalid CFPB actions, and cases concerning the acts of the Federal Housing Finance Agency or any other unconstitutionally structured agency.”

All American states that it is “prepared to expedite briefing in this case to allow it to be heard together with Seila Law.”

It suggests a briefing schedule “in which the opening brief is filed 14 days after the petition is granted [which] would allow the CFPB to have the full 30 days to respond, and still enable this Court to schedule this case, as well as Seila Law, as early as February.”

All American also notes in its reply brief that a group of 11 (Republican) state Attorneys General have filed an amicus brief in support of All American’s petition. In their brief, the AGs also reject the CFPB’s ratification argument.

They urge the Supreme Court to resolve the “lingering question of whether the appropriate remedy [for the CFPB’s unconstitutionality] changes simply because an actor who claims to be removable at will purports to ratify the decision of an otherwise unconstitutional agency” and assert that “delay will only serve to prolong confusion in the multi-billion-dollar market in consumer financial products.”

The briefs in All American have been distributed for the Supreme Court’s conference on December 6.

While the Supreme Court might grant All American’s petition and make All American a companion case to Seila Law, it might instead grant the petition but hold All American until it decides Seila Law.