Consumer Finance Insights
August 6, 2019

Seila Law LLC Files Petition for Writ of Certiorari Regarding the CFPB’s Constitutionality

On June 28, 2019, Seila Law LLC filed a petition for a writ of certiorari with the U.S. Supreme Court seeking review of the Ninth Circuit’s ruling that the Consumer Financial Protection Bureau’s (CFPB) single-director structure is constitutional.  As Lender Law Watch covered previously, in CFPB v. Seila Law LLC, No. 7-56324 (9th Cir. 2019), the CFPB had filed petition to force Seila Law to comply with a civil investigative demand (CID) it had issued to determine whether the firm had violated the Telemarketing Sales Rule.  On May 6, 2019, in agreeing with the en banc D.C. Circuit’s conclusion in PHH Corp. v. CFPB, 881 F.3d 75 (DC Cir. 2018), the Ninth Circuit held that the CFPB’s structure was lawful and did not interfere with the President’s ability to exercise his executive power.

Seila Law LLC now seeks review of the Ninth Circuit’s decision by presenting the question of whether “the vesting of substantial executive authority in the [CFPB] [] violates the separation powers.”  This is not the first time this sort of petition has come before the Court.  As recently as January of 2019, the U.S. Supreme Court denied review of a petition filed by State National Bank of Big Spring (SNB) seeking for the Court to determine the constitutionality of the CFPB.  Notably, in relation to this effort, the U.S. Department of Justice (DOJ) had opposed SNB’s petition because it viewed the matter as a “poor vehicle to consider the [constitutionality] question,” but did, however, make a point to state that the constitutionality question is an “important one that warrants the Court’s review in an appropriate case.”  Given this recent opposition by the DOJ, it is unlikely the DOJ will again oppose another constitutional challenge in such a close time frame, this time brought by Seila Law LLC.

Currently, there is no circuit split regarding the CFPB’s constitutionality.   However, there are two pending CFPB constitutionality challenges in both the Second Circuit (CFPB v. RD Legal Funding, 17-00890) and the Fifth Circuit (CFPB v. All American Check Cashing, No. 18-60302).  Should the U.S. Supreme Court decide to grant writ of certiorari, it may put the question to rest.  A response to the petition is due by August 28, 2019.