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WBK Industry News - Litigation Developments

Supreme Court Waits to Decide CFPB Constitutionality

On January 14, 2018, the Supreme Court denied certiorari in a case out of the D.C. Circuit that had challenged the constitutionality of the CFPB.

The case was brought by a state bank in 2012, which argued that the Dodd-Frank Act allowed the CFPB to function without checks by the legislative, executive, and judicial branches. The case was initially dismissed for lack of standing, but was reinstated in 2015 by the D.C. Circuit, and in 2018 summary judgement was entered for the CFPB based on the precedent set by the D.C. Circuit’s PHH decision (en banc), which upheld the CFPB’s constitutionality.

The bank then sought review in the Supreme Court.  In the government’s brief opposing cert, the government argued that this particular case was not the “best vehicle” for the Supreme Court to determine CFPB constitutionality as the case had other issues that would prevent the Supreme Court from determining the CFPB’s constitutionality.  Additionally, since Justice Kavanaugh was on the D.C. Circuit at the time the case was heard and since he authored the opinion that found standing and reinstated the appeal, it was assumed he would follow traditional practice and recuse himself, leaving only eight justices to consider the appeal.  With CFPB constitutionality cases pending in the Second Circuit, Fifth Circuit, and Ninth Circuit, the government argued in its brief that there are alternative cases that the Supreme Court may hear that may not have similar jurisdictional issues as the state bank case and would allow all nine justices to participate.  The Supreme Court has now denied the petition for certiorari, with Justice Kavanaugh not taking part in that decision.