In CFPB v. Law Offices of Crystal Moroney, a three-judge panel of the U.S. Court of Appeals for the Second Circuit unanimously ruled in March 2023 that the CFPB’s funding structure does not violate the Appropriations Clause of the U.S. Constitution and rejected Moroney’s attempt to invalidate the CFPB’s civil investigative demand issued to Moroney.  Moroney has now filed a motion with the Second Circuit to stay its mandate pending the filing of a petition for a writ of certiorari by Moroney. 

In its decision, the Second Circuit panel expressly declined to follow the Fifth Circuit panel decision in Community Financial Services Association of America Ltd. v. CFPB that reached the opposite conclusion.  In February 2023, the Supreme Court granted the CFPB’s certiorari petition seeking review of the Fifth Circuit decision and agreed to hear the case next Term.  It seems unlikely that the CFPB will oppose Moroney’s petition and likely that the Supreme Court will grant the petition and either consolidate it for argument with CFSA or hold it pending the outcome in CFSA

For the reasons discussed in our recent blog post, we believe that the Second Circuit’s opinion will not, in itself, materially impact the ultimate outcome in the Supreme Court and a majority of the Court will conclude that the CFPB’s funding is unconstitutional.