Bureau of Consumer Financial Protection v. Forster & Garbus, LLP

(2:19-cv-02928)

District Court, E.D. New York

APR 26, 2021

CFPB Can Carry On With RD Legal Suit In NY
NY judge rules the @CFPB can proceed with its deceptive practices claims against RD Legal, concluding the agency always had the power to bring suit even if the bureau was unconstitutionally structured at the time the suit was filed. pic.twitter.com/Rv48uDICmj

— lawsinusa (@lawsinusa) March 18, 2022

Update Aug. 31, 2021: After the death of Judge Sandra Feuerstein , she has been replaced by Judge Joanna Seybert. There’s a niggle about the stay in the case by CFPB but their July motion and argument seems weak, all while SCOTUS enjoys their vacation and before addressing the percolatin’ petitions.

Have y’all @ClarkHillLaw also noted that CFPB litigators can have different pseudonyms in different litigation proceedings, with different email, but it’s the same lawyer?🙃 Look at Jack or Bernard Barrett for instance in RD Legal Funding case vs. Owen case in Fl. https://t.co/gpCmFGLd4B

— LawsInTexas (@lawsintexasusa) April 26, 2021

March 22, 2021

(VIA ECF)
Honorable Sandra J. Feuerstein The United States District Court
for the Eastern District of New York Long Island Courthouse
100 Federal Plaza Central Islip, NY 11722

Re:    Bureau of Consumer Financial Protection v. Forster & Garbus, LLP, Case No. 2:19-cv-02928-SJF-ARL

Dear Judge Feuerstein:

Clark Hill, PLC represents defendant Forster & Garbus (“F&G”) in this matter. We submit this reply letter memorandum of law in response to Plaintiff Consumer Financial Protection Bureau’s (“CFPB”) letter of March 11, 2021 (“CFPB Letter”) [ECF39].

Essentially, and contrary to the assertion in the CFPB Letter’s second paragraph, F&B does not agree that the Supreme Court in Collins is unlikely to address ratification.

First, as we noted, the ratification question was addressed specifically by the Fifth Circuit in Collins v. Mnuchin, 938 F.3d 553, 562 (5^th Cir. Honorable Sandra J. Feuerstein, U.S.D.J. March 22, 2021 2019), cert. granted, 141 S. Ct. 193 (2020); see also F&G’s letter dated March 11, 2021 [ECF38].

The Court cannot address the second question raised in Collins’ petition for certiorari, whether an agency decision must be set aside if rendered when the agency was constitutionally infirm, without deciding the ratification issue.

As further noted, three of the justices at oral argument on December 9, 2020, specifically asked about ratification.

See F&G Letter at 6-8. Justice Gorsuch could not have been clearer:

“But what legally, what constitutionally would prohibit ratification?”

Id. at 7.

The response as equally clear, that this was a fundamental issue under the federal Administrative Procedure Act, 5 U.S.C. § 551 et seq. Inasmuch as the Plaintiff purported to ratify the decision at issue in this case, it is directly affected by a ruling by the Supreme Court on this point.

It is hard to believe that a question that was the focus of questioning by three separate justices would not be addressed one way or the other in the Court’s decision.

Plaintiff also refers to F&G’s Opposition to Plaintiff’s Motion for Reconsideration [ECF33] as an admission that “Collins will not address the specific issue of ratification.” (CFPB Letter at 1).

Plaintiff disingenuously omitted half the sentence and destroyed the context of F&G’s point.

What F&G actually said was

“It is undisputed that Collins will not address the specific issue of ratification, rather Collins will address the broader and more important issue of what is the appropriate remedy when agency action is taken when it had no constitutional authority to do so. Then, and only then, can the issue of whether the Bureau’s ratification is a proper cure to a prior constitutional deficiency.”

[ECF33 AT 4] (emphasis supplied).

This means that ratification is one possible remedy the Court in Collins is considering as part of the broader set of remedies available.

Once that broader question is resolved, of necessity it has direct impact on whether the Plaintiff’s ratification here is a proper cure.

Plaintiff bases most of its argument on the alleged “admission” by F&G that Collins will not address ratification.

It did so by cutting the quotation, referring to part of the sentence and ending it at “ratification,” divorcing it from its context.

[ECF39 at 1].

The Court will note that contrary to the full quotation above, the CFPB added a period after the word “ratification” to make it look as if the sentence ended there. Later, on page 3 of its letter, it claims that F&G merely “suggested” the Collins “might address” the broader issue of remedy.

It is a complete distortion of the point F&G made, namely, that the remedy will be addressed, and that ratification as one specific remedy will not be address on its own.

Given the points made at oral argument, and contrary to the abstract and generic citations that the Court will not decide issues not before it (CFPB Letter at 3-4, ECF39), the issue is very much before the Court and on the mind of at least three justices who commented on it specifically.

The F&G position, that remedies in general and not just ratification specifically, will be addressed, was born out in the Collins brief itself. The issue of ratification is intertwined with what the Court must decide in Collins, as specifically argued by Collins in his brief:

This understanding of the remedies for violations of the President’s removal power is confirmed by Seila Law. In that case, the petitioner raised the CFPB’s unconstitutional structure as a defense to an effort by the agency to enforce a civil investigative demand. After ruling that the petitioner had suffered a redressable injury and that the CFPB was unconstitutionally structured, the Chief Justice went on to address the remedy in a portion of his opinion joined by Justices Alito and Kavanaugh. See 140 S. Ct. at 2207-08. The plurality ultimately decided to remand the case because the Government argued that the civil investigative demand had been “ratified by an Acting Director accountable to the President,” and a remand was necessary to address in the first instance “whether this alleged ratification in fact occurred and whether, if so, it is legally sufficient to cure the constitutional defect in the original demand.” Id. at 2208.

The clear implication of this language is that absent a “legally sufficient cure,” the civil investigative demand issued by the unconstitutionally insulated CFPB Director would have to be vacated.

Although the Chief Justice only wrote for a plurality on this issue, all nine members of the Court appear to have taken it as a given that a violation of the President’s removal power could justify setting aside an unconstitutionally structured agency’s investigative demand. See id. at 2219 (Thomas, J., dissenting in part); id. at 2245 (Kagan, J., concurring in the judgment with respect to severability).

(Patrick J. COLLINS, et al., Petitioners, v. Steven T. MNUCHIN, Secretary of the Treasury, et al.; Steven T. Mnuchin, Secretary of the Treasury, et al., Petitioners, v. Patrick J. Collins, et al., 2020 WL 5731206 (U.S.), 62-63).

This is the very point that F&G has made. The decision in Collins as to remedies will of necessity inform the issue of the appropriateness of ratification as a remedy Ratification will not be the only remedy likely to be resolved.

As for its second point, regarding whether the Court should issue a stay, the CFPB’s entire premise is that the Supreme Court will not consider the matter.

It is a false premise.

Certainly, F&G cannot guarantee that it will be heard. It can only review the petition for certiorari and the Collins brief and the argument, and suggest that it makes little sense to proceed when, in a finite and foreseeable period of time, the Court is likely to rule and put to rest the immediate issue.

Nothing in the CFPB letter contradicts the standards or conclusions raised by F&G as to why this Court should stay this matter pending the decision in Collins.

Respectfully submitted, CLARK HILL PLC

s/Steven M. Richman/

Steven M. Richman Cc:          Counsel of record through ECF.

CFPB v. Cashcall, Inc.

(18-55407)

Court of Appeals for the Ninth Circuit

APR 26, 2021

A call for supplemental briefs. They’ve both filed. Now we wait for the Ninth’s next move.

Consumer Financial Protection Bureau v. RD Legal Funding LLC

(1:17-cv-00890)

District Court, S.D. New York

APR 26, 2021

Update Aug. 31, 2021: King and Spalding, attorneys for RD Legal waste little time or pleasantries in a letter to the court, askin’ for dismissal and rejection of ratification by CFPB’s Kraninger.

UPDATE: June 16, 2021:

RD Legal Funding file a petition at the US Supreme Court.

Counsel for RD, King & Spalding, submit letter to lower court with copy of petition on June 16.

—-

A call for letters. They’ve both filed with CFPB on the attack in a searing reply.  Now we wait for the judge’s next move.

Remember Title X was stricken in the lower court, what will happen now?

Title X of this Act (Dodd-Frank Wall Street Reform and Consumer Protection Act) creates a new Bureau of Consumer Financial Protection within the Federal Reserve Board as a new supervisor for certain financial firms and as a rulemaker and enforcer against unfair, deceptive, abusive, or otherwise prohibited practices relating to most consumer financial products or services.

RD LEGAL FUNDING is battling a long-running https://t.co/XueygAr6L1 enforcement action is urging the U.S. Supreme Court to cut through a “hopeless muddle”…https://t.co/hrwF9eZwuV #OperationWhiteout

— LawsInTexas (@lawsintexasusa) June 17, 2021

Consum Fincl Protc Bur v. All Amer Check Cashing, Inc.

(18-60302)

Court of Appeals for the Fifth Circuit

APR 26, 2021

https://t.co/Ieci2lEtoT to CFPB v All American;

“How the case should proceed from here, in light of the Supreme Court’s decision in Collins v. Yellen, 2021 WL2557067 (June 23, 2021).”

Answers via Supplemental Briefing due 1pm Fri., July 2, 2021.https://t.co/5nVthtk30O pic.twitter.com/TOQffGbvxl

— LawsInTexas (@lawsintexasusa) June 25, 2021

All activity suspended while the Yellen cases (formerly Collins v Mnuchin) are pending at the U.S. Supreme Court and then they have to have oral at Fifth Cir before full en banc panel in Louisiana.

“The judges in today’s majority desperately search for anything—anything at all—that might excuse the obligation to apply the law.
By counting to two, they succeed.
Collins does not deserve [nor the Burkes] the death sentence it now receives. I respectfully dissent.”
Judge Smith pic.twitter.com/7tzfE3uwOA

— LawsInTexas (@lawsintexasusa) April 25, 2021

Did y’all @ClarkHillLaw see this? https://t.co/YVajnbpPMN
And how, on appeal at CA11, Judge Branch appeared out of nowhere (not part of original 3-panel) and misinterpreted the rules and laws pertaining to CIPs?https://t.co/YSN3BNWO9B pic.twitter.com/ZZWvrr97HS

— LawsInTexas (@lawsintexasusa) April 26, 2021