A magistrate judge has denied the CFPB’s motion for partial dismissal of the lawsuit filed in a Massachusetts federal district court challenging the creation of the CFPB’s Taskforce on Federal Consumer Financial Law.  The plaintiffs in the lawsuit are the National Association of Consumer Advocates (NACA), U.S. Public Interest Research Group (U.S. PIRG), and Professor Kathleen Engel.  Professor Engel, currently a Research Professor of Law at Suffolk University, unsuccessfully sought membership on the Taskforce.

The CFPB created the Taskforce in October 2019 to examine ways to harmonize and modernize federal consumer financial laws.  The Taskforce was 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.  In January 2021, the Taskforce released its report containing its recommendations.

The plaintiffs’ complaint includes the following claims:

  • First Claim: The Bureau did not satisfy the requirements of the Federal Advisory Committee Act (FACA) regulations before creating the Taskforce.
  • 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.”

In its motion for partial dismissal, the Bureau asked the court to dismiss the plaintiffs’ first and fourth claims and dismiss the following elements of their prayer for relief: a declaration that the creation and establishment of the Taskforce is unlawful; setting aside 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.

In denying the CFPB’s motion for partial dismissal, the magistrate judge made the following principal rulings:

  • The plaintiffs have standing to challenge the creation of the Taskforce because they have plausibly alleged that the Bureau’s failure to comply with FACA’s requirements (1) impaired their activities by depriving them of information to which they were entitled, thereby impeding NACA’s and U.S. PIRG’s ability to conduct mission-driven educational activities and preventing Professor Engel from carrying out her academic work, and (2) forced them to divert resources in order to monitor the Taskforce.
  • Because the plaintiffs have standing to bring their first claim, they have standing to seek the elements of their prayer for relief that the CFPB asked the court to dismiss.
  • The plaintiffs have standing to challenge the Taskforce’s lack of balance even though Professor Engel had no entitlement to Taskforce membership. Professor Engel has sufficiently alleged that she suffered a cognizable injury through the loss of a fair opportunity to apply for membership.  Additionally, appointment to the Taskforce, which she did not request in the complaint, is not necessary to redress her injuries. Her injuries would be redressed through the plaintiffs’ request that the court set aside the Taskforce’s creation.
  • The release of the Taskforce’s report did not render the plaintiffs’ claims moot because the plaintiffs’ alleged injuries can be redressed by a use injunction that prohibits the CFPB from relying on the report.