Consumer Finance Insights
December 20, 2022

CFPB Files Certiorari Petition With the U.S. Supreme Court Seeking Review of the Fifth Circuit’s Decision in Community Fin. Services

On November 15, 2022, less than one month after the Fifth Circuit panel’s decision in Community Fin. Services Assoc. of Am. Ltd., No. 21-50826 (5th Cir. Oct. 19, 2022) and more than two months before its 90-day deadline, the Consumer Financial Protection Bureau (CFPB) filed a certiorari petition with the U.S. Supreme Court seeking review of the Fifth Circuit’s decision.

In the petition, the CFPB noted that “to facilitate consideration of this case this Term,” it filed the petition less than one month after the Fifth Circuit issued its decision and “plans to waive the 14-day waiting period after the brief in opposition is filed, which will enable the Court to consider the petition at its January 6, 2023 conference and hear the case during its April 2023 sitting.” The CFPB urged the Supreme Court to quickly review the petition because the Fifth Circuit’s decision “threatens to inflict immense legal and practical harms on the CFPB, consumers, and the nation’s financial sector” and “threatens the validity of all past CFPB actions as well.” The CFPB also noted that “[n]o other court has ever held that Congress violated the Appropriations Clause by passing a statute authorizing spending.”

On November 21, 2022, the Supreme Court granted Community Financial Services’ unopposed request for a 30-day extension (until January 13, 2023) to file its opposition brief to the CFPB’s petition. In its request, Community Financial Services indicated that it would file a cross-petition for certiorari on the payday lending arguments rejected by the Fifth Circuit in its decision. Community Financial Services also urged the Supreme Court to deny the CFPB’s request for expedited briefing of both its petition and Community Financial Services’ cross-petition, as the matter is significant and novel and a more deliberate decision-making process would not adversely impact the CFPB as it could seek stays of relief in future cases.

On the same day, the CFPB responded that although it did not oppose Community Financial Services’ extension request, the Supreme Court should order expedited briefing to allow the case to be argued and decided this Term because “[d]elaying resolution of this case beyond this Term—and thus likely until sometime in 2024—would severely prejudice the Consumer Financial Protection Bureau (CFPB), consumers, and the entire financial industry … [the Fifth Circuit’s] holdings will remain governing Fifth Circuit precedent until this Court intervenes, and they have already created severe disruption and uncertainty for the CFPB and for the financial services industry, which has ordered its affairs in reliance on the CFPB’s regulations and administrative actions.”

Since the Fifth Circuit’s decision, litigants within that circuit have obtained stays of CFPB actions pending the resolution of the CFPB’s petition (see CFPB v. Populus Financial Group, Inc., 3:22-cv-01494-K (N.D. Tx. Oct. 13, 2022) (granting stay)), and brought Appropriations Clause challenges in other courts, such as the Ninth Circuit (see CFPB v. Nationwide Biweekly Admin., Inc., Nos. 18-15431, 18-15887) and the District of Massachusetts (see CFPB v. Commonwealth Equity Grp., No. 1:20-cv-10991 (D. Mass. Nov. 22, 2022) (denying stay)).

On December 15, 2022, two groups of State Attorneys General filed amicus briefs requesting that the Supreme Court grant the CFPB’s certiorari petition. The first brief, filed by a group of 22 Democratic State AGs, asks the Court to grant the petition and overturn the Fifth Circuit’s decision and argues that the Fifth Circuit’s reasoning could upend the CFPB’s past actions, which would cause damage to consumers within their states. The other amicus brief, filed by a group of 16 Republican State AGs, urges the opposite result and seeks the affirmance of the decision in Community Financial because the Fifth Circuit correctly “vacate[d] a rule enacted without constitutional funding.”

Community Financial Services’ opposition brief is due on January 13, 2023, and the CFPB has noted that it will respond on January 25.

The post CFPB Files Certiorari Petition With the U.S. Supreme Court Seeking Review of the Fifth Circuit’s Decision in Community Fin. Services appeared first on Consumer Finance Insights (CFI).