A Nevada federal district court has stayed an action filed by the CFPB to enforce a civil investigative demand (CID) issued to a small-dollar lender pending the U.S. Supreme Court’s decision in Community Financial Services Association of America Ltd. v. CFPB. The issue in CFSA v. CFPB is whether the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution.
The CFPB issued the CID in late 2022 and the lender complied with the CID until March 2023, when it asked the CFPB to stay its investigation due to the Supreme Court’s grant of certiorari in CFPB v. CFSA. In June 2022, the CFPB petitioned the court for an order directing the lender to comply with the CID. Thereafter, the lender filed a motion asking the court to stay the case pending the Supreme Court’s decision in CFSA v. CFPB.
In response to the lender’s motion, the CFPB argued that stay was not justified simply because the Supreme Court’s decision might require the dismissal of its enforcement actions and that the public would be damaged by the CFPB’s inability to investigate consumer protection violations. In rejecting the CFPB’s arguments, the district court indicated that it did not find a delay of approximately one year to be prejudicial to the public interest and observed that since briefing and oral argument in CFSA v. CFPB were complete, the Supreme Court would decide the CFSA case within a reasonable time. According to the court, “[a] brief stay to avoid wasteful and unrecoverable investigation efforts and enforcement proceedings on a matter that may be dismissed pending the Supreme Court’s decision is justified.”