July 2, 2021

VIA CM/ECF

Lyle W. Cayce
Clerk of the Court
U.S. Court of Appeals for the Fifth Circuit
Edward Herbert Building 600 S. Maestri Place

New Orleans, LA 70130

Re:    Consumer Fin. Prot. Bureau v. All Am. Check Cashing, Inc., et al., No.

18-60302

Dear Mr. Cayce:

Pursuant to the Court’s June 24, 2021 order, Appellants All American Check Cashing, Inc., Mid-State Finance, Inc., and Michael E. Gray (collectively, “All American”) submit this letter brief addressing “[h]ow the case should proceed from here, in light of the Supreme Court’s decision in Collins v. Yellen, 2021 WL 2557067 (June 23, 2021).” Doc. No. 515912627 at 1.

This Court granted rehearing en banc after a divided panel held that the for-cause removal protection that the Director of the Consumer Financial Protection Bureau (“CFPB”) enjoyed did not violate the Constitution. CFPB v. All Am. Check Cashing, Inc., 952 F.3d 591, 593 (5th Cir. 2020); 953 F.3d 381 (granting rehearing en banc). The Supreme Court subsequently rejected that conclusion in Seila Law LLC v. CFPB, holding that the removal restriction transgressed the separation of powers. 140 S. Ct. 2183 (2020).

Thus, the only remaining questions in this case are remedial, and Collins instructed that the lower courts should address those questions in the first instance. Further, Collins expressly contemplated that litigants challenging unconstitutionally structured agencies would be entitled to a remedy in circumstances that closely resemble those at issue here. As set forth below, All American is entitled to relief in this case.

Lyle W. Cayce
July 2, 2021
Page 2

I.     Collins Expressly Left The Question Of Remedies To This Court.

In Collins, plaintiff shareholders brought suit seeking injunctive relief against the Department of Treasury to recover millions of dollars that their companies had transferred to the Treasury through an agreement created by the Federal Housing Finance Agency (“FHFA”).

Collins v. Yellen, Nos. 19-422 & 19-563, slip op. at 2 (June 23, 2021).

The Supreme Court found Seila Law “all but dispositive” and held that “[a] straightforward application” of Seila Law’s reasoning “dictate[d]” that the FHFA’s “for-cause restriction on the President’s removal authority violates the separation of powers.” Id. at 26.

Collins then turned to the question of remedies. The Court was clear that, despite refusing to necessarily undo every action the FHFA Director had ever taken, this “does not necessarily mean . . . that the shareholders have no entitlement to retrospective relief.” Id. at 35.

The Court found that “it is still possible for an unconstitutional provision to inflict compensable harm” and offered two non-exhaustive examples of the sorts of situations where such a provision “would clearly cause harm”:

(1) when “the President had attempted to remove a Director but was prevented from doing so by a lower court decision holding that he did not have ‘cause’ for removal,” id.;

and

(2) when “the President had made a public statement expressing displeasure with actions taken by a Director and had asserted that he would remove the Director if the statute did not stand in the way,” id. Finally, the Court ruled that “[t]he parties’ arguments should be resolved in the first instance by the lower courts.” Id. at 36.

II.     Dismissal Of The CFPB Enforcement Action Is Consistent With Collins.

Dismissal of the CFPB’s enforcement action against All American is consistent with Collins. First, the CFPB’s enforcement action here inflicts the type of constitutional injury that Collins envisioned as requiring a remedy. Second, Collins does not foreclose dismissal of this enforcement action in any event because Collins was decided in a fundamentally different litigation posture.

A. Collins Envisioned The Exact Type Of Constitutional Injury Here.

The public record amply demonstrates that President Trump desired to remove Director Cordray but was impeded by the for-cause removal provision. The President gave Cordray an “ultimatum”:

“Go the easy way, or go the hard way.”

Lyle W. Cayce
July 2, 2021
Page 3

Lorraine Woellert et al., Can the Consumer Watchdog Trump Loathes Win an Ohio Election?, Politico (Apr. 17, 2017, 5:09 AM), https://www. politico.com/story/2017/04/cordray-ohio-election-banks-237272.

Cordray knew that President Trump was “on the verge of forcing him out.”

Kate Berry, In Tell- all, Ex-CFPB Chief Cordray Claims Trump Nearly Fired Him, American Banker (Feb. 27, 2020, 9:30 PM), https://www.americanbanker.com/news/in-tell-all-ex- cfpb-chief-cordray-claims-trump-nearly-fired-him.

According to Cordray’s published book, after President Trump was elected, he hired a lawyer in case President Trump fired him.  Id.

Moreover, just weeks after President Trump took office, the en banc D.C. Circuit vacated the panel decision in PHH Corp. v. CFPB, 839 F.3d 1 (D.C. Cir. 2016)—which had held that the CFPB’s for-cause removal provision was unconstitutional—“in its entirety” and ordered that that case be reheard. PHH Corp. v. CFPB, 881 F.3d 75, 83 (D.C. Cir. 2018), abrogated by Seila Law, 140 Ct. 2183.

And nearly every other federal court to confront the issue had upheld the for-cause removal provision. President Trump was thus “being advised to hold off on firing Cordray to get the Supreme Court to rule on the extent of the president’s executive powers.”

Kate Berry, Why Hasn’t Trump Fired CFPB’s Cordray?, American Banker (Feb. 8, 2017, 3:17 PM), https://www. americanbanker.com/news/why-hasnt-trump-fired-cfpbs-cordray.

Thus, the public record shows that for a substantial period of time in which this enforcement action was pending in the district court, President Trump’s desire and inclination was to replace Cordray—the CFPB’s Director at the time this case was filed, Appellants’ Suppl. En Banc Reply Br. at 9—but was restricted by the removal restriction.

In the words of Collins, “the statutory provision [has] clearly cause[d] harm” to All American. Slip op. at 35.

B. In Any Event, Collins Did Not Limit Remedies For Defendants.

Moreover, Collins’ discussion of remedies is far afield from this case because, quite unlike the enforcement action at issue here, Collins was decided in the “unique context” of shareholder plaintiffs seeking affirmative relief in the form of millions of dollars from the Treasury Department. Id. at 8 (Gorsuch, J., concurring in part).

Justice Gorsuch’s concurrence observed—without objection from the majority—that the Court’s remedies analysis was “prompted by the

Lyle W. Cayce
July 2, 2021
Page 4

prospect that affording a more traditional remedy here could mean unwinding or disgorging hundreds of millions of dollars that have already changed hands.” Id.

Accordingly, “nothing” in the Court’s opinion “undoes [its] prior guidance authorizing more meaningful relief in other situations.” Id.

Indeed, Collins’ unique litigation posture explains why the majority discussed constitutional injuries as inflicting “compensable harm.” Id. at 35 (majority op.) (emphasis added).

Compensable harm has no relevance here because, unlike plaintiff shareholders seeking to recover money, All American is a defendant seeking to dismiss an enforcement action.

All American’s litigation posture is one of the “other situations” deserving relief that Collins did not foreclose. Id. at 8 (Gorsuch, J., concurring in part).

In Seila Law, Justice Thomas, joined by Justice Gorsuch, reasoned that “[i]t is the attempted enforcement of a civil investigative demand under § 5562(e)(1) by an unconstitutionally insulated Director that causes the constitutional injury in this case.” Seila Law, 140 S. Ct. at 2222 n.7 (Thomas, J., concurring).

Because the enforcement action “injure[d] Seila,” Justice Thomas would have “simply den[ied] the CFPB’s petition for an order of enforcement.” Id. at 2220.

Notably, Justice Thomas joined the Collins majority “in full,” slip op. at 1 (Thomas, J., concurring), while stating in his concurrence that he “continue[s] to adhere to the views that [he] expressed in Seila Law.” Id. at 8 n.5.

“[M]eaningful relief” is available here. Id. at 8 (Gorsuch, J., concurring in part). Like the defendant in Seila Law, All American faces a civil enforcement action from the CFPB.

The constitutional injury that Justice Thomas identified in Seila Law also exists in the virtually identical situation here.

Because All American has experienced a constitutional injury, this Court should “simply deny” this enforcement action. Seila Law, 140 S. Ct. at 2220 (Thomas, J., concurring).

Nothing in Collins contemplates abrogating the separation of powers as a valid, remedial defense to an enforcement action.

C. The CFPB Missed The Statute Of Limitations To Ratify This Constitutional Injury.

Collins observed that Seila Law remanded the case to the lower courts to “resolve any issue concerning ratification,” while remaining agnostic on whether ratification was necessary or proper. Slip op. at 34.

Here, the CFPB cannot rely

on ratification to save the day, because it has missed the statute of limitations.

The CFPB lacked authority to ratify at the time of the purported ratification on February 5, 2018 because, by that time, the CFPA’s three-year statute of limitations had long since lapsed, as All American has explained in its briefs before this Court.

See Appellants’ Suppl. En Banc Br. at 39–48; Appellants’ Suppl. En Banc Reply Br. at 13–17.

The “ratification” came “too late in the day to be effective” and is therefore a nullity.

FEC v. NRA Political Victory Fund, 513 U.S. 88, 98 (1994).

*       *        *

This Court should declare the CFPB unconstitutionally structured and grant All American judgment on the pleadings.

All American recommends that this Court issue an opinion on remedies and welcomes pairing this case with Collins on remand to the en banc Court. All American stands prepared for oral argument, and for further briefing if the Court so desires.

Sincerely,

s/ Theodore B. Olson

Theodore B. Olson

July 2, 2021

Lyle W. Cayce, Clerk of Court Office of the Clerk
United States Court of Appeals for the Fifth Circuit
Edward Hebert Building 600 S. Maestri Place
New Orleans, LA 70130-3408

Re:    Consumer Financial Protection Bureau v. All American Check Cashing, Inc., et al., No. 18-60302 (5th Cir.)

Dear Mr. Cayce:

Appellee Consumer Financial Protection Bureau (Bureau or CFPB) submits this Letter Brief pursuant to this Court’s June 24, 2021, request.

The Court sought additional briefing regarding the impact of the Supreme Court’s decision in Collins v. Yellen, 141 S. Ct. 1761 (2021) on the above-named case.

In Collins, a majority of the Court held that the for-cause removal provision that applied to the Director of the Federal Housing Finance Agency (FHFA) was unconstitutional. The Court’s discussion of the impact of that provision on actions taken by the FHFA is directly relevant to this case. Collins confirms that, even though the for-cause removal provision in the Consumer Financial Protection Act (CFPA) (12 U.S.C. § 5491(c)(3)) was unconstitutional, actions taken by the Bureau in this case were valid.

1 The petitioners in Collins challenged the third amendment to purchasing agreements that the FHFA had entered into with the Treasury. They argued that the amendment, and actions implementing the amendment, were invalid because the FHFA’s enabling statute purported to limit the President’s authority to remove the FHFA’s 141 S. Ct. at 1775.

The Court, relying on Seila Law LLC v. CFPB,

140 S. Ct. 1082 (2020), agreed that the removal limitation was unconstitutional. 141 S. Ct. at 1783-87.

The Court then addressed the appropriate remedy. Petitioners argued that, because of the for-cause removal provision, actions taken by the FHFA, including the third amendment and the implementing of the amendment, were void ab initio. Id. at 1787.

But the Court rejected this argument because “[a]ll the officers who headed the FHFA during the time in question were properly appointed.” Id. (emphasis in original); see also id. at 1793 (Thomas, J., concurring) (because the Directors of the FHFA were properly appointed, “[t]here is thus no barrier to them exercising power in the first instance”).

As a result, “there is no reason to regard any of the actions taken by the FHFA in relation to the third amendment as void.” Id. at 1787. Indeed, the Court characterized petitioners’ request for the wholesale invalidation of the third amendment as “neither logical nor supported by precedent.” Id.1

The Court also held that petitioners could draw no support from cases addressing the Appointments Clause or other separation-of-powers violations because those cases “involved a Government actor’s exercise of power that the actor did not lawfully possess.”

Id. at 1788; see also id. at 1801(Kagan, J., concurring regarding remedy) (“our Appointments Clause precedents have little to say about remedying a removal problem”). The Court stressed that, regardless of the for-cause removal provision, “there is no basis for concluding that any head of the FHFA lacked the authority to carry out the functions of the office.” Id. at 1788.
Petitioners in Collins argued that the Court’s decision in Seila Law “implicitly meant that the [Bureau] Director’s actions would be void unless lawfully ratified.” Id.

But the Court answered that argument emphatically: “we said no such thing.” Id.

Indeed, the Court explained that the remand ordered in Seila Law did not even “resolve any issue concerning ratification, including whether ratification was necessary.” Id.

Nonetheless, the Court held that the petitioners might be entitled to relief if, on remand, they could show that, but for the for-cause removal provision, the agency would have acted differently in a way that affected petitioners. Id. at 1788-89; see id. at

1801 (Kagan, J., concurring regarding remedy) (“plaintiffs alleging a removal violation are entitled to injunctive relief – a rewinding of agency action – only when the President’s inability to fire an agency head affected the complained-of decision. … Granting relief in any other case would, contrary to usual remedial principles, put the plaintiffs in a better position than if no constitutional violation had occurred.” (internal quotation marks omitted)).

Limiting the situations in which relief is available “ensures that actions the President supports – which would have gone forward whatever his removal power – will remain in place.” Id. at 1801-02 (Kagan, J., concurring regarding remedy).

2. Collins answers the central issue raised by the Defendants in this case, which is whether the Bureau’s complaint must be dismissed. Defendants argue that dismissal is necessary because, when the Bureau filed the complaint in 2016, the CFPA’s for- cause removal provision purported to limit the President’s authority to remove the Bureau’s Director.

See Defendants-Appellants’ Supplemental En Banc Brief (Supp. Br.) at 10 (“This action must be dismissed because ‘the structure of the CFPB violate[d] the separation of powers’ when the enforcement action was first brought,” quoting Seila Law, 140 S. Ct. at 2192).

Collins squarely rejects Defendants’ argument that dismissal is appropriate.

When the Bureau filed its complaint in this case, it was headed by a Director who, as required by the CFPA, had been appointed by the President and confirmed by the Senate.

Defendants have never challenged the Director’s appointment. As Collins explains, there is “no reason” to regard actions taken by a properly appointed official as void merely because the agency’s enabling statute contained an invalid for-cause removal provision. 141 S. Ct. at 1787. That is the situation here.

In arguing for dismissal, Defendants rely on Appointments Clause cases. Supp. Br. at 15-16. But those cases have no relevance where the official in question was properly appointed and only the President’s removal authority has been challenged. Collins, 141 S. Ct. at 1788.

And Defendants cannot show that the invalid removal provision in any way affected the decision to file, or pursue, this case.

Quite the contrary, directors not subject to the removal restriction have ratified this enforcement action, thus eliminating any reason to believe that Defendants would be off the hook if the removal restriction had not been in place.

3. Collins also undercuts Defendants’ arguments that the Bureau did not validly ratify the complaint. The Bureau ratified the issuance of the complaint in this case on two occasions.

The first ratification, by the Bureau’s then-Acting Director Mick Mulvaney, occurred on February 5, 2018. ROA 7177–7184.

Then, on July 17, 2020, after the Supreme Court’s decision in Seila Law, the Bureau submitted a letter to this Court explaining that Kathleen Kraninger, who at that time was the Bureau’s Senate- confirmed Director, had also ratified the decision to file the complaint.

Defendants argue that these ratifications were invalid because the Bureau lacked authority to file the complaint in the first instance, and because the ratifications occurred after the CFPA’s statute of limitations (12 U.S.C. § 5564(g)(1)) had expired. Supp. Br. at 29-54; Defendants-Appellants’ Supplemental En Banc Reply Brief (Supp. Rep.) at 3-23.

Collins demonstrates that Defendants misunderstand the role of ratification in this case.
The only action at issue in this case, which arises from the denial of Defendants’ motion for judgment on the pleadings, is the filing of the complaint.

Defendants argue that the complaint was not valid when it was filed, and that it could only be made valid through subsequent ratification if that ratification occurred prior to the expiration of the CFPA’s statute of limitations. Supp. Br. at 29-48.

But when the complaint was filed, the Bureau’s Director had been properly appointed and confirmed. Therefore, “there is no basis for concluding that … [the Bureau’s Director] lacked the authority to carry out the functions of the office.” See 141 S. Ct. at 1788.

As a result, the complaint was valid when filed, and that filing properly commenced this action thereby satisfying the CFPA’s statute of limitations.

Defendants contend that they are entitled to relief (in the form of dismissal) as an “incentive” for having challenged the constitutionality of the CFPA’s for-cause removal provision. See, e.g., Supp. Rep. at 19.

But the Court rejected that approach in Collins and held that a challenger could obtain relief only if an invalid removal restriction actually caused some harm. 141 S. Ct. at 1789. Otherwise, dismissal would, “contrary to usual remedial principles,” put Defendants “in a better position than if no constitutional violation had occurred.” Id. at 1801 (Kagan, J., concurring regarding remedy) (internal quotation marks omitted).

Instead, Defendants are entitled to relief “only when the President’s inability to fire an agency head affected the complained-of decision.” Id. The ratifications in this case demonstrate that there was no such effect – any impediment to the President’s ability to remove the Bureau’s Director did not affect the decision to file the complaint.

Because Acting Director Mick Mulvaney was appointed pursuant to the Federal Vacancies Reform Act, he was removable by the President at will. See Supplemental En Banc Brief of Plaintiff-Appellee CFPB at 9.

And because Director Kraninger’s July 2020 ratification occurred after the decision in Seila Law, she was also unquestionably removable by the President at will.2

On either occasion, the President could have expressed his displeasure with this case and directed either Acting Director Mulvaney or Director Kraninger to stand down. But that did not happen.3

This Court should affirm the district court’s denial of Defendants’ Motion for Judgment on the Pleadings, and this case should go forward because that is the will of officials who were, and are, fully accountable to the President.

Collins demonstrates that Defendants are entitled to nothing more.4

Respectfully submitted,

/s/Lawrence DeMille-Wagman

Lawrence DeMille-Wagman
Senior Litigation Counsel

Consumer Financial Protection Bureau
1700 G Street, NW
Washington, D.C. 20552
(202) 435-7957 (telephone)
lawrence.wagman@cfpb.gov
Counsel for Plaintiff-Appellee
Consumer Financial Protection Bureau