Written for The National Law Review on May 6, 2019.

A unanimous Ninth Circuit Court panel has ruled in Consumer Financial Protections Bureau (“CFPB”) v. Seila Law LLC that the CFPB’s single-director-removable-only-for-cause structure is constitutional. Appellant Seila Law challenged the district court’s refusal to set aside a Bureau civil investigative demand (CID), arguing that the CID was invalid due to the CFPB’s unconstitutional structure. In addition to rejecting Seila Law’s constitutional challenge, the Ninth Circuit held that the Civil Investigative Demand did not violate the CFPA’s practice of law exclusion. 

In its ruling, the Ninth Circuit cited U.S. Supreme Court precedent that indicates that “the for-cause removal restriction protecting the CFPB’s Director does not ‘impede the President’s ability to perform his constitutional duty’ to ensure that the laws are faithfully executed.” The Ninth Circuit also considered the D.C Circuit’s en banc PHH decision holding that the CFPB’s structure is constitutional. Neither PHH Corporation nor the CFPB filed a petition for certiorari in that case. If Seila files for review, the Supreme Court is unlikely to grant an issuance of certiorari, as there is no split between the Circuits on this question.

Two other cases involving a challenge to the CFPB’s constitutionality are currently pending in the circuit courts. On March 12, the Fifth Circuit heard oral arguments in All American Check Cashing’s interlocutory appeal from the district court’s ruling which upholds the CFPB’s structural constitutionality. The other case, involving appellate RD Legal Funding, is still pending in the Second Circuit.

In defending its constitutionality in these cases, the CFPB stands at odds with the official position of the Department of Justice. In related CFPB news, Director Kathy Kraninger has been facing criticism for her stated intent to refocus the CFPB on supervision instead of enforcement. Skeptics such as the Consumer Federation of America are concerned that this approach could result in consumer harm going unaddressed.

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