This past Friday, the U.S. Supreme Court announced that it has agreed to decide whether the CFPB’s single-director-removable-only-for-cause structure is constitutional.  The Court granted Seila Law’s petition for a writ of certiorari seeking review of the Ninth Circuit’s decision that held the CFPB’s structure is constitutional.

Tomorrow, October 22, from 12:00 to 1:00 p.m. (ET), Ballard Spahr will hold a webinar, “The Battle Over the CFPB’s Constitutionality Moves to the U.S. Supreme Court: What It Means for You.”  In the webinar, Ballard attorneys will be joined by Professor Kent Barnett of the University of Georgia School of Law.  Professor Barnett specializes in administrative law and consumer law and is an expert on constitutional separation of powers.  Click here to register.

The question presented in Seila Law’s petition is:

Whether the vesting of substantial executive authority in the Consumer Financial Protection Bureau, an independent agency led by a single director, violates the separation of powers.

In its Order granting the petition, the Supreme Court directed the parties, in addition to the question presented by the petition, to brief and argue the following question:

If the Consumer Financial Protection Bureau is found unconstitutional on the basis of the separation of powers, can 12 U.S.C. §5491(c)(3) [the for-cause removal provision] be severed from the Dodd-Frank Act?

Seila Law asserts that the proper remedy for a constitutional violation would be to invalidate the CFPB as a whole or, at a minimum, to hold that the civil investigative demand (CID) issued by the CFPB to Seila Law is unenforceable.  Although the DOJ agrees with Seila Law that the CFPB’s structure is unconstitutional, it takes the position that the appropriate remedy is to sever the for-cause removal provision and hold that the CID is enforceable.  With the CFPB having announced that it agrees with the DOJ’s position on both its constitutionality and the appropriate remedy, the Supreme Court is expected to appoint an amicus curiae to defend the Ninth Circuit’s judgment.

In addition to granting the motion of the U.S. House of Representatives to file an amicus brief out of time, the Supreme Court granted the motion of Alan B. Morrison, Associate Dean, George Washington Law School, to file an amicus brief out of time.  In his brief,  Mr. Morrison argued that there were significant jurisdictional issues that precluded the Supreme Court from deciding the merits, including that there was no case or controversy under Article III because the parties agree that the Dodd-Frank provision at issue is unconstitutional.  He also urged the Supreme Court to appoint an amicus to address the jurisdictional issues.

The Supreme Court still has before it the Petition for a Writ of Certiorari Before Judgment filed by All American Check Cashing that asks the Court to rule on All American’s interlocutory appeal from the district court’s ruling upholding the CFPB’s constitutionality rather than wait for a decision from the Fifth Circuit panel.  Also still pending is the petition for a writ of certiorari filed by the plaintiffs in Collins v. Mnuchin that seeks review of the en banc Fifth Circuit’s decision that held the FHFA’s structure is unconstitutional.  Briefing on both petitions should be completed by mid-November.  It is possible either or both cases could become a companion case to Seila Law should the Supreme Court grant either or both petitions.  Alternatively, the Court might grant one or both petitions but hold the case(s) pending the outcome in Seila Law.

Oral argument in Seila Law is expected to take place early next year, with a decision to be issued by the Supreme Court by the end of its term in June 2020.  Pending a decision from the Supreme Court, companies targeted by the CFPB in investigations or enforcement actions are likely to urge the CFPB and courts to stay any further activity until the Supreme Court issues a decision in Seila Law.