Three amicus briefs have been filed in support of President Trump and Mick Mulvaney, who are opposing the motion for a preliminary injunction filed by Leandra English in her action in D.C. federal district court seeking a declaration that she, rather than Mr. Mulvaney, has the legal right to serve as CFPB Acting Director.

The three amicus briefs were filed by the following amici:

  • Credit Union National Association.  CUNA is the largest organization representing the nation’s 6,000 credit unions.  (CUNA’s amicus brief was authored by Ballard Spahr.)
  • Chamber of Commerce.  The Chamber represents 300,000 direct members and indirectly represents the interests of more than 3 million companies and professional organizations.
  • Republican State Attorneys General.  Amici are the attorneys general of the following 13 states: Texas, West Virginia, Alabama, Arizona, Arkansas, Florida, Georgia, Kansas, Louisiana, Michigan, Nebraska, Oklahoma, and South Carolina.  (Eight of these AGs filed an amicus brief in support of President Trump and Mick Mulvaney and opposing Ms. English’s request for a temporary restraining order.)

In its opposition to Ms. English’s preliminary injunction motion, the DOJ relies primarily on the argument that the provision in the Consumer Financial Protection Act (CFPA) that provides the CFPB Deputy Director “shall…serve as acting Director in the absence or unavailability of the Director” does not override the President’s authority under the Federal Vacancies Reform Act (FVRA) to temporarily fill a vacancy in an executive agency position requiring confirmation.  All three amici agree with the DOJ’s position that the President’s designation of Mr. Mulvaney as Acting Director was entirely proper under the FVRA.  They argue that Ms. English’s position, which would deny the President the ability to designate a CFPB Acting Director under the FVRA, raises serious constitutional issues by limiting the President’s executive authority.  Citing U.S. Supreme Court case law indicating that preference should be given to a statutory interpretation that avoids a constitutional issue, the amici contend that the D.C. court should rule in favor of President Trump and Mr. Mulvaney to avoid such constitutional issues.

In its amicus brief, CUNA argues further that the phrase “absence or unavailability” in the CFPA provision does not cover a vacancy created by the CFPB Director’s resignation.  For the reasons set forth in its brief, CUNA argues such language is more properly read to cover a temporary situation, such as an accident requiring the Director’s long term hospitalization, and not a permanent departure from office.   (The Chamber makes similar arguments in its amicus brief.)

In addition to raising constitutional issues by placing limits on the President’s executive authority, CUNA argues that Ms. English’s position raises substantial questions under the Appointments Clause.  First, it raises the question whether the Deputy Director/Acting Director is an “inferior officer” or instead a “principal officer” who may only be appointed by the President with the Senate’s consent.  In their amicus brief, the Republican State AGs argue that the powers wielded by a CFPB Acting Director are “on par with that of a principal officer who can be nominated and appointed only by the President.”

Second, if the Deputy Director/Acting Director is an “inferior officer,” Ms. English’s position raises the question whether the CFPB is a “department” whose head may constitutionally appoint inferior officers.  In its amicus brief, the Chamber argues that the CFPB does not qualify as a “department” for purposes of the Appointments Clause because (1) Congress described the CFPB as a “bureau” in the Dodd-Frank Act and did not designate the CFPB as an executive, Cabinet-level department, and (2) the CFPB is contained in the Federal Reserve and does not exist as  a freestanding component of the Executive Branch.

The Chamber also argues that because former Director Cordray was unconstitutionally insulated from Presidential control when he appointed Ms. English as Deputy Director, his appointment of Ms. English as Deputy Director was invalid.  The Chamber cites to the decision of a panel of the D.C. Circuit in PHH v. CFPB which held that limiting the President to for-cause removal of the CFPB Director was unconstitutional.


On December 12, the Credit Union National Association (“CUNA”) filed an amicus brief in D.C. Federal District Court opposing Leandra English’s motion for a preliminary injunction to block President Trump’s appointee for Acting CFPB Director, Mick Mulvaney, from exercising the powers of that office. The Court has already denied English’s motion for a temporary restraining order.

CUNA is the largest organization representing the nation’s 6,000 credit unions, which are heavily regulated by the CFPB. As such, it has a significant interest in the outcome of preliminary injunction hearing.

In its brief, CUNA argues that Mulvaney’s appointment was entirely proper under the Vacancies Reform Act of 1998 (“VRA”). CUNA further argues that the language in Dodd-Frank stating that the Deputy Director shall become the Acting Director in the “absence or on availability” of the Director covers temporary situations, like an accident requiring long term hospitalization of the Director. It does not cover a vacancy in the office of the Director, including one resulting from a resignation.

Under the VRA, when an office is vacant, the President has the power to appoint an acting officer to fill the post, subject to certain limitations. Indeed, when the VRA was passed, the Senate committee that considered the VRA explicitly stated that, “statutes enacted in the future purporting to or argued to be construed to govern the temporary filling of offices covered by this statute are not to be effective unless they expressly provide that they are superseding the Vacancies Reform Act.” So, because Dodd-Frank did not explicitly override the VRA, the VRA governs.

In addition, CUNA points out the serious constitutional problems that would result if the court adopted English’s position. If she is right, then a departing CFPB Director would have the power to appoint anyone as his or her successor, including non-citizens, through the simple expedient of naming him or her as the Deputy Director, while the President would have more limited powers of appointment under the VRA. That would give the CFPB Director more power than the President over an agency in the executive branch of government.

What’s more, English’s argument also implies that the President would be as unable to remove an Acting CFPB Director as he is the CFPB Director. That only exacerbates the constitutional defects that are at the heart of the PHH case, which we have blogged about extensively.

CUNA’s brief, which Ballard Spahr authored, highlights the industry perspective on why Leandra English is wrong and why the court should not try to unwind the President’s appointment of an Acting CFPB Director. We will continue to follow this unfolding saga closely.

Five amicus briefs were filed last Friday in support of the motion for a preliminary injunction filed by Leandra English in her action seeking a declaration that she, rather than Mick Mulvaney, has the legal right to serve as CFPB Acting Director.

Like her unsuccessful motion for a temporary restraining order (TRO), Ms. English’s preliminary injunction motion relies primarily on the argument that the provision of the Federal Vacancies Reform Act (FVRA) that authorizes the President to temporarily fill a vacancy in an executive agency position requiring confirmation is superseded by the provision in the Consumer Financial Protection Act (CFPA) that provides the CFPB Deputy Director “shall…serve as acting Director in the absence or unavailability of the Director.”

The five amicus briefs were filed by the following amici:

  • Consumer Finance Regulation Scholars.  Amici consist of a group of 10 academics described as “leading scholars of financial regulation and consumer finance.”
  • Current and former Democratic members of Congress.  Amici consist of a group of 37 current and former Representatives and Senators described as “sponsors of Dodd-Frank [who] participated in drafting it, serve or served on committees with jurisdiction over the federal financial regulatory agencies and the banking industry, currently serve in the leadership, or served in the leadership when Dodd-Frank was passed.”  (The same amici filed substantially the same amicus brief in support of Ms. English’s TRO motion.)
  • Democratic State Attorneys General.  Amici consist of the attorneys general of 17 states and the District of Columbia.
  • Consumer advocacy groups.  Amici consist of 10 nonprofit organizations who are described as engaged in “work to defend the rights of consumers through education, advocacy, policy, research, and litigation.”
  • Peter Conti-Brown.  Professor Conti-Brown is an Assistant Professor at the Wharton School of the University of Pennsylvania who is described as “a scholar of the structure, history, and evolution of financial regulatory institutions, including especially the U.S. Federal Reserve System.”

Like Ms. English, the primary argument made by the Consumer Finance Regulation Scholars, the current and former members of Congress, and the Democratic state AGs in their amicus briefs is that the CFPA succession provision supplants the FVRA and provides the sole means for temporarily filling a vacancy in the position of CFPB Director until Senate confirmation of a new Director.  They assert that such a reading of the CFPA provision is consistent with the CFPA’s legislative history and structure and necessary to preserving the CFPB’s status as an independent agency.  (All three of these amicus briefs argue expressly or assume that the phrase “absence or unavailability” in the CFPA provision covers a vacancy created by the CFPB Director’s resignation.  However, for the compelling reasons set forth in our blog post, we believe the phrase should not be construed to cover such a vacancy.)

The amicus brief filed by the consumer advocacy groups does not directly discuss the FVRA and CFPA provisions.  Instead, the consumer advocacy groups describe regulatory, enforcement, and other actions taken by the CFPB that have “meaningfully improved consumer financial markets and concretely benefited consumers.”  They argue that the public interest weighs in favor of a preliminary injunction because, without an injunction, the CFPB “will be stymied from pursuing its [consumer protection] mission and “the public will lose the CFPB’s independence.”  According to the consumer groups, Mr. Mulvaney’s position as Director of the Office of Management and Budget, actions he has taken such as the imposition of a regulatory and hiring freeze, and his stated support for White House priorities demonstrate that he “is inherently conflicted from supporting [the CFPB’s congressionally-mandated independence and] already, he is taking active steps to eviscerate it.”

Professor Conti-Brown also does not directly address the FVRA and CFPA provisions in his amicus brief.  Instead, he argues that even if the FVRA applies, the President’s “decision to appoint a White House official to act as the Bureau’s director eliminates the independence that Congress has required for the Bureau.”  According to Professor Conti-Brown, under the FVRA, “President Trump does not have the legal authority to appoint a White House official to lead the CFPB.”

We find no support in the FVRA for Professor Conti-Brown’s argument.  The FVRA (5 U.S.C.§ 3345) provides that when an “executive agency” position requiring confirmation becomes vacant because the person holding the position “dies, resigns, or is otherwise unable to perform the functions and duties of the office,” it may be filled temporarily by someone serving in an acting capacity in several ways.  The first way is for the “first assistant” to such a position to assume the functions and duties of the office.

However, the FVRA gives the President other options for filling the vacancy, one of which allows the President to “direct a person who serves in an office for which appointment is required to be made by the President, by and with the advice and consent of the Senate, to perform the functions and duties of the vacant office temporarily in an acting capacity subject to the [FVRA] time limitations.”  Nothing in the FVRA would disqualify someone who satisfies such criteria from serving as CFPB Acting Director because he or she is a “White House official.”  As OMB Director, Mr. Mulvaney serves in an office to which he was appointed by the President and confirmed by the Senate.  As such, he is qualified to serve as CFPB Acting Director and his appointment to that position by President Trump complies fully with the FVRA.


The CFPB has filed an amicus brief in Regions Bank v. Legal Outsource PA, a case on appeal to the Eleventh Circuit that involves two important issues under the Equal Credit Opportunity Act (ECOA): whether the ECOA provides a cause of action to loan guarantors and whether a business entity can assert a marital status discrimination claim under the ECOA.

The ECOA defines an “applicant” as someone who “applies to a creditor directly for an extension … of credit, or … indirectly by use of an existing credit plan for an amount exceeding a previously established credit limit.”  In 1985, the Federal Reserve Board amended the Regulation B definition of “applicant” to include a guarantor “[f]or purposes of section 202.7(d)” (as adopted by the CFPB, now Section 1002.7(d)).  Section 1002.7(d) of Regulation B specifies when a creditor may require the signature of a spouse or other person (Additional Signature Rule).

Only a few U.S. Courts of Appeal have addressed whether the ECOA provides a cause of action to guarantors.  The Seventh Circuit, in a 2007 decision, interpreted the ECOA’s plain language in a straightforward manner and found that there was “nothing ambiguous about ‘applicant’ and no way to confuse an applicant with a guarantor.”  The court went on to explain that interpreting the term “applicant” to include guarantors would “open[] vistas of liability that the Congress that enacted [the ECOA] would have been unlikely to accept.”

In mid-2014, two other circuits ruled on the same issue.  The Sixth Circuit, rejecting the Seventh Circuit’s reasoning, found that the ECOA’S  definition of “applicant” was ambiguous and that the Federal Reserve Board’s definition of the same term in Regulation B–modified to expressly include guarantors–was entitled to Chevron deference.  Shortly thereafter, the Eighth Circuit, in Hawkins v. Community Bank of Raymore, came to precisely the same result as the Seventh Circuit.  The Eighth Circuit found it patently clear that “assuming a secondary, contingent liability does not amount to a request for credit,” and thus concluded that guarantors are not “applicants” within the plain meaning of the statutory definition provided in the ECOA.”

Last year, an equally divided U.S. Supreme Court affirmed the Eighth Circuit’s decision in Hawkinsthereby upholding the Eighth Circuit’s ruling that the ECOA does not provide a cause of action to loan guarantors.  The affirmance by a 4-4 vote meant that the Eighth Circuit’s ruling had no precedential effect in any other circuit.  (The CFPB, jointly with the Solicitor General, filed an amicus brief in the Supreme Court supporting the plaintiffs’ position in Hawkins.)

In the Regions Bank case, the Bank made a loan to Legal Outsource, a company owned by Charles Phoenix.  It subsequently made a loan to Periwinkle Partners, a company indirectly owned by Lisa Phoenix, the wife of Charles Phoenix.  Legal Outsource, Charles Phoenix, and Lisa Phoenix guaranteed the loan to Periwinkle Partners.  After Legal Outsource defaulted on its loan, the Bank declared a default on its loan to Periwinkle Partners because, under the terms of that loan, a default on the Bank’s loan to Legal Outsource constituted an event of default on its loan to Periwinkle Partners.

Additional defaults occurred over the the course of more than a year prior to the Bank’s decision to commence suit, including the obligors’ failure to pay ad valorem taxes due on the collateral or provide required financial reports and the transfer of equity interests in Periwinkle Partners to third parties without the Bank’s knowledge or consent.  While under no obligation to do so, the Bank spent over a year attempting to negotiate an out-of-court resolution with the borrower and guarantors, to no avail.

The Bank thereafter sued Periwinkle Partners, Legal Outsource, and Lisa and Charles Phoenix in a Florida federal district court to foreclose on collateral securing its loan to Periwinkle Partners.  All of the defendants asserted counterclaims alleging that the Bank had violated the ECOA’s prohibition against discrimination on the basis of marital status and the Additional Signature Rule.  According to the defendants, the Bank required Charles Phoenix to guarantee the loan to Periwinkle Partners solely because he was married to Lisa Phoenix.

The district court dismissed the counterclaims of Legal Outsource and Lisa and Charles Phoenix “to the extent that defendants are asserting their counterclaims for violation of the ECOA in their capacities as guarantors.”  In dismissing the counterclaims, the district court relied on the Eighth Circuit’s Hawkins decision in which the Eighth Circuit concluded that ”the plain language of the ECOA unmistakably provides that a person is an applicant only if she requests credit.  But a person does not, by executing a guaranty, request credit.”  The Eighth Circuit also ruled that Regulation B’s definition of ”applicant” was not entitled to Chevron deference because the definition contradicted the text’s unambiguous statutory definition.

In a subsequent decision, the district court dismissed the ECOA counterclaim asserted by Periwinkle Partners on the grounds that, although it was an “applicant,” it could not assert an ECOA claim for discrimination based on marital status.  According to the district court, “Periwinkle Partners cannot avail itself of the protections of the Act because it is a company, not an individual, and it cannot have a marital status.”

In its amicus brief filed in support of the defendants, the CFPB argues that:

  • Under the plain text of the ECOA and Regulation B, a company can be an “applicant” protected against discrimination “on the basis…of marital status” because the ECOA does not require the alleged discrimination to “be on the basis of the applicant’s marital status.” (emphasis provided).
  • Under the Regulation B commentary, the ECOA prohibits discrimination based on the characteristics of corporate officers and of “individuals with whom an applicant is affiliated or with whom the applicant associates.”  Because the owner of a company is an officer, affiliate, or associate of the company, an applicant company can bring an ECOA claim “if it suffers discrimination on the basis of its owner’s marital status.”
  • The Regulation B definition of ”applicant” is a reasonable interpretation of the ECOA’s text that is entitled to Chevron deference.


On Friday, PHH filed its opening en banc brief with the D.C. Circuit in the rehearing of its appeal of Director Cordray’s June 2015 decision that affirmed an administrative law judge’s (ALJ) recommended decision concluding PHH had violated RESPA and increased the ALJ’s disgorgement award from over $6.4 million to over $109 million.  The rehearing was sought by the CFPB after a divided D.C. Circuit panel ruled that the CFPB’s single-director-removable-only-for-cause structure is unconstitutional and severed the unconstitutional provision to make the CFPB Director removable without cause by the President; rejected Director Cordray’s new RESPA interpretation and held that even assuming that his interpretation was consistent with RESPA, the CFPB’s attempt to apply that new interpretation retroactively violated due process; held that statutes of limitations apply to CFPB administrative enforcement actions; and remanded to the CFPB for further proceedings consistent with the panel’s decision.

In its opening brief, PHH argues that the CFPB’s “unprecedented independence from the elected branches of government violates the separation of powers” and that because the CFPB’s “constitutional infirmities extend far beyond limiting the President’s removal power…the proper remedy is to strike down the agency in its entirety.”  According to PHH, the Dodd-Frank “for-cause removal provision is not severable from the rest of the provisions establishing the CFPB because severance would create a new agency unrecognizable to the Congress that passed Dodd-Frank.”  PHH contends that the court cannot avoid the separation-of-powers issues “simply by adopting the panel’s statutory holdings and remanding to the CFPB, because this Court cannot remand a case to an unconstitutional agency.”  PHH asserts that such issues can only be avoided “by vacating the CFPB’s order without remand, so that the CFPB would not be free to resume proceedings against PHH.” (emphasis provided).

In its order granting the CFPB’s petition for rehearing en banc, one of the issues the court ordered the parties to address was what the appropriate disposition would be in PHH if the court were to hold that the ALJ in Lucia v. SEC was an inferior officer.  In Lucia, a panel of the D.C. Circuit held that because the SEC’s ALJ was an “employee” rather than “inferior officer” who must be appointed in accordance with the Appointments Clause of the U.S. Constitution, the ALJ’s appointment by the SEC’s Office of Administrative Law Judges rather than an SEC Commissioner was constitutional.  The D.C. Circuit granted a petition for rehearing en banc in Lucia and, as noted below, has scheduled oral argument in that case and in PHH for the same day.

Responding to the issue posed by the D.C. Circuit, PHH argues in its brief that if the court holds the ALJ in Lucia was improperly appointed, then the ALJ in its case was also an “inferior officer” who was not appointed in accordance with the Appointments Clause.  As a result, the entire hearing before the ALJ was invalid, Director Cordray’s order would need to be vacated, and “any future proceeding must begin afresh before a constitutionally structured agency but also before a valid adjudicator.”  PHH further argues that merely restarting the current proceeding still would not provide PHH with full relief because “the unconstitutional taint stemming from the initial authorization of the Notice of Charges would continue to infect this matter.”  PHH asserts that for this reason, the court “must decide PHH’s separation-of-powers challenge even if the ALJ was improperly appointed.”

With regard to the RESPA issues, PHH contends they “should not properly be disputed” before the en banc court “and any en banc opinion should simply reinstate the panel’s statutory rulings.”  It also observes that the RESPA issues “plainly were not en banc-worthy” and Director Cordray’s RESPA interpretation, if adopted by the en banc court, “would create a circuit split with every other court to have considered RESPA’s proper scope.”  Nevertheless,  PHH states that “[i]n an abundance of caution and in light of the critical importance of the RESPA issues to PHH and to the entire settlement-services industry…PHH addresses those issues directly [in its brief] to demonstrate that there is no legitimate basis to revisit the panel’s statutory rulings.”

Amicus briefs in support of PHH were filed on Friday by:

The RD Legal amici are defendants in an enforcement action filed by the CFPB and the New York Attorney General last month alleging that a litigation settlement advance product offered by RD Legal is a disguised usurious loan that is deceptively marketed and abusive.  (In their brief, the RD Legal amici claim that the action was filed in retaliation for a preemptive challenge to the CFPB’s jurisdiction filed by RD Legal.)  State National Bank of Big Spring and the other amici on its brief are the plaintiffs in a separate lawsuit pending in D.C. federal district court challenging the CFPB’s constitutionality.  The State National Bank of Big Spring plaintiffs previously filed an unsuccessful motion with the D.C. Circuit seeking to intervene in the PHH en banc rehearing.

In their amicus brief, the Republican state AGs argue that separation of powers creates a structural check against the aggregation of power on the federal level and protects the role of the states in the federal system by limiting the range of permissible federal action and ensuring federal power can only be wielded by officials who are politically accountable.  A group of Democratic AGs from 16 states and the District of Columbia filed an unsuccessful motion with the D.C. Circuit seeking to intervene in the PHH appeal.  Among the arguments made by the Democratic AGs in support of their motion was that their intervention was necessary because the Trump Administration might not defend the CFPB’s constitutionality.

Except for the brief filed by the ABA and twelve other trade groups which addresses only the merits of PHH’s RESPA arguments, the amicus briefs only address the CFPB’s constitutionality and argue that the CFPB is unconstitutionally structured because of the CFPB Director’s expansive powers and insulation from Presidential and Congressional oversight.  (ACA International’s brief includes the argument that, in addition to being insulated from accountability, the CFPB’s funding mechanism also raises a conflict of interest.  According to ACA, the civil penalty fund “creates a perverse incentive for the Bureau to use its enforcement actions as a funding mechanism, where the Bureau is both prosecutor and beneficiary.”)

The ABA’s brief states that even though amici “do not understand the Court to have granted en banc review to reconsider the panel’s straightforward resolution of the RESPA and fair notice questions,” they are nonetheless “filing this brief out of an abundance of caution because [such] questions addressed by the panel are of critical importance to them and their members.”  The ABA amici argue that the CFPB “misread RESPA, overturned decades of settled interpretations without any notice, and disrupted a large sector of the economy.”  They assert that the panel’s decision “correctly restored the status quo” and urge the en banc court “to let that decision stand.”

Also on Friday, the D.C. Circuit entered an order allowing each side 30 minutes at the en banc oral argument scheduled for May 24, 2017.  The order also indicates that the oral argument in Lucia v. SEC, also scheduled for May 24, will be heard first to be followed by a “short recess” before the argument in PHH.  Finally, the order confirms that the en banc panel will consist of eleven judges, including Senior Judge Randolph.  In addition to Senior Judge Randolph, four of the other panel members were appointed by a Republican president.


The CFPB has filed an amicus brief in the U.S. Supreme Court in support of the respondent/consumer in Midland Funding, LLC v. Aleida Johnson, a decision of the Eleventh Circuit that held Midland’s alleged filing of an accurate proof of claim in the consumer’s bankruptcy case on a time-barred debt violated the FDCPA.

In its brief, the CFPB argues that the Supreme Court should reject Midland’s arguments that the filing of a proof of claim that is accurate (i.e. provides correct information about an unpaid debt) but is for a debt that is time-barred does not violate the FDCPA, and even if the filing does violate the FDCPA, the Bankruptcy Code (Code) would preclude such application of the FDCPA.  According to the CFPB, nothing in the Code allows a creditor to legitimately file a proof of claim that it knows is subject to disallowance under the Code because it is time-barred.  The CFPB also argues that because a debt collector implicitly represents that it has a good faith basis to believe its claim is enforceable in bankruptcy when it files a proof of claim, the filing is misleading and unfair in violation of the FDCPA when the collector knows the claim is time-barred and therefore unenforceable in bankruptcy.

With respect to Midland’s preclusion argument, the CFPB asserts that Code does not preclude an FDCPA action based on the filing of a proof of claim for a time-barred debt.  According to the CFPB, treating Midland’s alleged conduct as an FDCPA violation would not penalize Midland for conduct the Code authorizes and would not otherwise create any conflict between the FDCPA and the Code.

A group of 21 current and former members of Congress and a group of 10 consumer advocacy organizations have filed amicus briefs in support of the CFPB’s petition filed with the D.C. Circuit seeking a rehearing of its decision in CFPB v PHH Corporation.

Under D.C. Circuit Rules, “[n]o amicus curiae brief in response to or in support of a petition for rehearing en banc will be received by the clerk except by invitation of the court.”  Nevertheless, the two groups filed their briefs together with motions requesting an invitation from the court.

In its response to those motions, PHH “take[s] no position on the question whether the Court should invite amicus briefs on the rehearing petition and thus on the merits of the motions.”   However, PHH states that “the submission of the briefs together with the motions appears to conflict with the plain language of [the Circuit Rule].”  PHH asserts that allowing potential amici to submit briefs prior to an invitation “undermines the purpose of the Rule” and asks the court to clarify if its Rule “permits the submission of amicus briefs at the rehearing stage in this manner.”

PHH also comments that the court “need not invite or accept for filing briefs that are redundant of the CFPB’s petition or of the amicus brief that the Court has invited from the Solicitor General.”  In an order filed on November 23, 2016, the D.C. Circuit directed PHH to file a response to the CFPB’s petition and invited the Solicitor General to file a response.

Both amicus briefs contend that the D.C. Circuit’s decision threatens the CFPB’s ability to fulfill its consumer protection role and was wrongly decided because it is at odds with U.S. Supreme Court precedent.

The CFPB has filed an amicus brief in support of the plaintiff in Arias v. Gutman, Mintz, Baker & Sonnenfeldt, PC and 1700 Development Co., a FDCPA case on appeal to the U. S. Court of Appeals for the Second Circuit.  In its brief, the CFPB states that its interest in the case stems from its FDCPA enforcement authority and its special mandate to protect older Americans from unfair, deceptive or abusive practices.

The defendants in the case are a landlord and a debt collection law firm seeking to collect a default judgment against the plaintiff for unpaid rent obtained by the landlord.  The law firm issued a restraining notice to the plaintiff’s bank  which restrained a portion of the plaintiff’s funds on deposit after establishing that the remaining funds were automatically protected as deposits of Social Security benefits.  The plaintiff subsequently claimed an exemption for all of the funds in his account on the basis that  the only deposits to the account were monthly Social Security benefits.  The law firm objected to the exemption claim by commencing a special proceeding in state court supported by an affirmation.   In its supporting affirmation, the law firm claimed that (1) it was not possible to determine the amount of exempt funds because the plaintiff did not provide any records starting from a zero balance, and (2) the Social Security benefits would lose their exempt status if commingled with non-exempt funds and the plaintiff failed to provide documents showing there had been no commingling.  The law firm eventually stipulated to the release of the restrained funds.

The plaintiff thereafter filed an action in federal district court in which he alleged that the law firm’s objection was false, misleading, and deceptive in violation of the FDCPA and was also unfair and unconscionable in violation of the FDCPA.  The district court assumed the claims made by the law firm in the objection were false but determined they were not actionable because they were not material.

The court found that the misrepresentations would not have impeded the ability of the “least sophisticated consumer” to respond to or dispute collection because the objection sought a prompt hearing and, even though he appeared pro se, the plaintiff had received an exemption notice that included information about how to obtain free legal representation.  The court also determined that the least sophisticated consumer would realize that the law firm’s misstatement about commingling funds would not have been a sufficient ground to allow the law firm to garnish the funds.

In addition, the court concluded that the law firm could not have engaged in unfair or unconscionable conduct because it had objectively complied with New York process, whether or not it had acted in bad faith.  The court also found that the existence of a separate remedy under New York law made it  unnecessary to impose liability under the FDCPA.  Accordingly, the court granted judgment on the pleadings to the defendants.

In its brief, the CFPB argues that the district court erred in rejecting the consumer’s claims and asks the Second Circuit to vacate the judgment on the pleadings and remand the case to the district court.  According to the CFPB, under the objective least sophisticated consumer standard, the district court should have considered the effect of the law firm’s misstatement about commingling on a hypothetical consumer, rather than on a plaintiff who claimed never to have commingled his account.  It also asserts that the law firm’s misrepresentations were material because the information would have been important to the least sophisticated consumer in deciding how (and whether to) respond to the law firm’s objection.

The CFPB also calls the district court’s reliance on the law firm’s compliance with New York procedures “fundamentally misplaced,” arguing that the plaintiff’s allegation that the law firm filed a baseless pleading in the hopes of recovering exempt funds stated a FDCPA claim.  It also argues that the plaintiff’s claim “is no less viable because he could have also pursued relief under New York law.”

The CFPB has filed a supplemental amicus brief with the U.S. Court of Appeals for the Third Circuit in Bock v. Pressler & Pressler, LLP, the case in which the district court ruled that a debt collection law firm violated the FDCPA by filing a complaint without “meaningful attorney involvement.”  In its amicus brief, which was filed jointly with the FTC, the CFPB argued that the “meaningful attorney involvement” standard that has been applied to debt collection letters should apply equally to debt collection complaints.

The supplemental amicus brief was filed in response to a Third Circuit order requesting that the parties file supplemental briefs addressing the applicability of the U.S. Supreme Court’s decision in Spokeo, Inc. v. Robins, including the question whether the plaintiff had established concrete harm sufficient to establish Article III standing or whether he had only established a bare procedural violation.  In Spokeo, the Supreme Court ruled that a plaintiff alleging a violation of the Fair Credit Reporting Act must be able to establish “an injury in fact” to have standing under Article III of the U.S. Constitution to sue for statutory damages in federal court.  The Supreme Court indicated that, to satisfy the “injury in fact” requirement, a plaintiff must show that he or she suffered “an invasion of a legally protected interest” that is both “concrete” and “particularized.”  To be particularized, an injury must affect the plaintiff “in a personal and individual way.”  To be concrete, an injury must “actually exist”; it must be “real.”

The district court had ruled that the filing of a collection complaint without “meaningful attorney involvement” violates the FDCPA provision that prohibits a debt collector from using false, deceptive or misleading representations in connection with collecting a debt.  In its supplemental brief, the CFPB argues that the plaintiff’s injury is “particularized” because it was personal to him in that the defendant law firm “misrepresented to Bock that an attorney had been meaningfully involved in the lawsuit filed against him.” (emphasis provided)  Relying on the U.S. Supreme Court’s 1982 decision in Havens Realty Corp. v. Coleman (a case involving the FHA), the CFPB also argues that the plaintiff’s injury is “concrete” because “a person who has been subjected to a misrepresentation made unlawful by [the FDCPA] suffers a concrete injury that satisfies Article III.”  The CFPB asserts that under Havens Realty, the plaintiff has a “concrete” injury “even if he has not alleged that the misrepresentation cause additional consequential harm.”

With regard to whether the plaintiff had only established a bare procedural violation, the CFPB argues that the plaintiff’s “statutory right to be free from misleading debt-collection practices…is not a procedural right for which a separate ‘concrete harm’ must be identified.”  (emphasis provided)  According to the CFPB, an infringement of that statutory right, in itself, satisfies the Article III injury in fact requirement because it is a “specific injury.”



On March 29, 2016, the U.S. Supreme Court will hear oral argument in a Fair Debt Collection Practices Act case in which the CFPB joined the Solicitor General in filing an amicus brief in support of the plaintiffs.  The court granted the SG’s motion to participate in the oral argument.

The plaintiffs in Sheriff v. Gillie had received debt collection letters signed by individuals who purported to be special counsel hired by the Ohio Attorney General (OAG).  The letters included the OAG’s letterhead and state seal.  The plaintiffs sued the attorneys and their law firms, alleging that use of the OAG letterhead created a false impression that the letters were sent by the OAG in violation of the FDCPA provision that prohibits the false representation that a document was issued by a state official.  They also alleged that the letters violated the FDCPA provision that prohibits the use of a name other than the “true name” of the debt collector’s business or company. The OAG intervened in support of the defendants.

The district court granted summary judgment to the defendants, holding that Ohio’s special counsel are excluded from the FDCPA’s definition of “debt collector” as officers of the state.  It also concluded that even if special counsel were debt collectors, their use of the OAG letterhead did not violate the FDCPA because the letters accurately reflected their role as special counsel appointed by the OAG to collect debts owed to the state.

The Sixth Circuit reversed, holding that the special counsel did not qualify for the FDCPA’s state officer exemption which defines an “officer” to include “any person authorized by law to perform the duties of the office.”  The court found that the Ohio statutes authorizing the appointment of special counsel to collect debts owed the state did not authorize special counsel to fulfill the duties of any office and only established the framework under which the OAG within his discretion could delegate the collection of debts to a third party collector.  On the merits of the FDCPA claim, the court concluded that the letters would violate the FDCPA if they contained a representation that had the tendency to confuse the least sophisticated consumer but concluded that the letters, when read as a whole, may have clarified any confusion for the least sophisticated consumer resulting from the letterhead.  The Sixth Circuit remanded the case for the issue to be decided by a jury.

The plaintiffs’ certiorari petition presented two questions: whether (1) special counsel appointed by the OAG to collect debts owed the state are “officers” excluded from the FDCPA’s definition of “debt collector,” and (2) special counsel’s use of the OAG letterhead violated the FDCPA.  In their amicus brief, the SG and CFPB argue that the special counsel did not qualify for the FDCPA’s state officer exemption because they do not occupy any state “office” and do not exercise any portion of the state’s sovereignty.  Instead, their duties are defined by contracts that designate the special counsel to be independent contractors.  They also argue that whether the letters violated the FDCPA should be judged from the perspective of “the least sophisticated consumer” and, because a reasonable jury could conclude that the letters violated the FDCPA, the Sixth Circuit correctly reversed the district court’s grant of summary judgment for the defendants.

The Michigan Attorney General, joined by the AGs of 11 other states, filed an amicus brief in support of the defendants and Ohio AG.  It is unusual for state AGs to be on the opposite side from the CFPB and consumer advocacy groups.  While the Michigan and Ohio AGs are Republicans, two of the AGs who joined the amicus brief are Democrats.