The CFPB has filed a motion seeking the partial dismissal of the lawsuit filed in Massachusetts federal district court by the National Association of Consumer Advocates, U.S. Public Interest Research Group, and Professor Kathleen Engel challenging the CFPB’s creation of its Taskforce on Federal Consumer Financial Law.
The CFPB created the Taskforce in October 2019 to examine ways to harmonize and modernize federal consumer financial laws. The Taskforce is charged with examining the existing legal and regulatory environment for consumers and financial services providers and making recommendations to the Bureau’s leadership for improving consumer financial laws and regulations, with a focus on harmonizing, modernizing, and updating the enumerated consumer credit laws, and their implementing regulations. Professor Engel, currently a Research Professor of Law at Suffolk University, unsuccessfully sought membership on the Taskforce.
In their complaint, the plaintiffs alleged:
- First Claim: The Bureau did not meaningfully consult with the General Services Administration (GSA) before creating the Taskforce, and did not prepare a membership balance plan as required by the Federal Advisory Committee Act (FACA) regulations
- Second Claim: The Bureau violated FACA by failing to give adequate advance notice of, and allowing public participation at, Taskforce meetings
- Third Claim: The Bureau violated FACA by failing to make Taskforce records publicly available
- Fourth Claim: The Bureau failed to comply with FACA’s requirement that an advisory committee be “fairly balanced in terms of the points of view represented and the functions to be performed by the advisory committee.”
The lawsuit asks the court to declare the creation of the Taskforce unlawful and set aside the Taskforce’s charter and all aspects of its creation, including the appointments of Taskforce members; enjoin the Taskforce from holding further meetings, conducting any business, or from advising the Bureau’s Director; order the release of all materials prepared for the Taskforce; and enjoin the Bureau from relying on or using any Taskforce recommendations or advice.
In its motion to dismiss, the Bureau asks the court to dismiss the plaintiffs’ first and fourth claims and dismiss the following elements of its prayer for relief: a declaration that the creation and establishment of the Taskforce is unlawful; setting aside of the Taskforce’s charter and appointments of Taskforce members, an injunction barring the Taskforce from meeting, advising the Director, or otherwise conducting business, and an injunction barring the Bureau from relying on or using any Taskforce recommendations or advice.
The Bureau makes the following arguments in support of its motion:
- The plaintiffs do not have standing to challenge the procedures used by the Bureau to establish the Taskforce because they have not identified any way in which the Bureau’s failure to follow such procedures caused the informational injury they claim—preventing them from studying the Taskforce’s work and reporting on it to the public—or shown that they were deprived of information the Bureau was required to provide.
- The plaintiffs do not have standing to challenge the Taskforce’s membership (which they alleged “is comprised solely of members who have publicly adopted policy positions that expressly view regulation as paternalistic and harmful to consumers alike, or who have historically represented industry interests.”) The harms they allege resulted from the Bureau’s choice of Taskforce members are that Professor Engel was not appointed to the Taskforce and that the plaintiffs may make recommendations that they object to, causing them to have to expend further resources to monitor and advocate against such recommendations and resulting in Bureau action that is harmful to consumers and industry alike, or who have historically represented industry interests.” With respect to the rejection of Professor Engel’s application for Taskforce membership, the plaintiffs lack standing because she has no entitlement to Taskforce membership and the relief they seek would not result in her addition to the Taskforce or otherwise redress the denial of her application. With respect to alleged harm caused by the Taskforce’s recommendations, the plaintiffs’ possible need to allocate resources to advocating against Taskforce recommendations is not sufficient to establish standing nor is their speculation about possible consumer harm resulting from hypothetical Taskforce recommendations.
- With respect to the elements of the plaintiffs’ prayer for relief that the Bureau asks the court to dismiss, the plaintiffs remaining claims (the Bureau’s alleged failure to give notice of meetings and to make records publicly available) do not give the plaintiffs standing to seek declaratory or injunctive relief that would shut down the Taskforce and preclude the Bureau from using its recommendations.