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Plaintiffs in another case challenging CFPB’s constitutionality seek consolidation with PHH

Posted in CFPB Enforcement

The plaintiffs in State National Bank of Big Spring, Texas, et al. v. Lew, et al. want the D.C. federal district court to hold a status conference to determine how their case “can be most efficiently adjudicated” in light of the CFPB’s petition to the D.C. Circuit for rehearing en banc in PHH.

In July 2016, the D.C. federal district court rejected the plaintiffs’ attempt in State National Bank of Big Spring to invalidate the actions taken by Director Cordray while he was a recess appointee.  The district court deferred ruling on the plaintiffs’ separation of powers constitutional challenge pending a decision by the D.C. Circuit in PHH.  The D.C. Circuit subsequently ruled in PHH that the CFPB’s single-director-removable-only-for-cause structure is unconstitutional.

In their unopposed motion for a status conference, the plaintiffs in State National Bank of Big Spring argue that judicial economy would be served if the district court “were to pave the way for consolidation of this case with PHH on appeal by entering partial summary judgment in favor of Plaintiffs on their standalone claim that the Dodd-Frank Act’s for-cause removal provision …is unconstitutional.”  The plaintiffs assert that the district court could then certify the partial summary judgment order to the D.C. Circuit under 28 U.S.C. Section 1292(b) as “involv[ing] a controlling question of law as to which there is a substantial ground for difference of opinion,” thereby allowing the D.C. Circuit “to efficiently resolve in a single sitting all pending merits questions within its jurisdiction pertaining to the standalone constitutionality” of the for-cause removal provision.  Plaintiffs’ remaining claims would be reserved in the district court for further adjudication following en banc resolution of PHH.

The plaintiffs indicate in their motion that while the government defendants do not oppose their request for a status conference, the defendants do oppose certification.  They also note that if the two cases are not consolidated, the D.C. Circuit could vacate the panel’s decision on RESPA grounds and avoid the constitutional question.  According to the plaintiffs, that would leave the district court in the “unenviable position” of having to resolve the constitutional issue.