Consumer Fin. Prot. Bureau v. All Am. Check Cashing, Inc.

• Decision Date: 02 May 2022
• Docket Number: 18-60302
• Parties: CONSUMER FINANCIAL PROTECTION BUREAU, Plaintiff—Appellee, v. ALL AMERICAN CHECK CASHING, INCORPORATED ; Mid-State Finance, Incorporated; Michael E. Gray, Individually, Defendants—Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

33 F.4th 218

CONSUMER FINANCIAL PROTECTION BUREAU, Plaintiff—Appellee,

v.ALL AMERICAN CHECK CASHING, INCORPORATED ; Mid-State Finance, Incorporated; Michael E. Gray, Individually, Defendants—Appellants.

No. 18-60302

United States Court of Appeals, Fifth Circuit.

FILED May 2, 2022

Christopher J. Deal, Consumer Financial Protection Bureau, Washington, DC, for Plaintiff - Appellee.

Theodore Olson, Jeremy Max Christiansen, Joshua Seth Lipshutz, Esq., Lochlan Francis Shelfer, Helgard Clarice Walker, Esq., Gibson Dunn & Crutcher, L.L.P., Washington, DC, Bentley Edd Conner, Canton, MS, Michael Verdier Cory, Jr., Danks, Miller & Cory, Jackson, MS, for Defendants - Appellants.

Judd Edward Stone, II, Office of the Attorney General, Office of the Solicitor General, Austin, TX, for Amici Curiae State of Texas, State of Arkansas, State of Georgia, State of Indiana, State of Kansas, State of Louisiana, State of Nebraska, State of Oklahoma, State of South Carolina, State of Tennessee, State of Utah, State of West Virginia.

Ilan Wurman, Arizona State University, Sandra Day O'Connor College of Law, Phoenix, AZ, for Amicus Curiae Separation of Powers Scholars.

Oliver J. Dunford, Pacific Legal Foundation, Palm Beach Gardens, FL, for Amicus Curiae Chamber of Commerce of the United States of America.

Marc Gottridge, Herbert Smith Freehills, L.L.P., New York, NY, Ilya Shapiro, Esq., Cato Institute, Washington, DC, Allison Michele Wuertz, Esq., Hogan Lovells US, L.L.P., New York, NY, for Amicus Curiae Cato Institute.

Elizabeth Wydra, Chief Counsel, Constitutional Accountability Center, Washington, DC, for Amicus Curiae Current and Former Members of Congress.

Katharine M. Mapes, Jeffrey Michael Bayne, Esq., Spiegel & McDiarmid, L.L.P., Washington, DC, for Amici Curiae Harold H. Bruff, Gillian E. Metzger, Peter Shane, Peter L. Strauss, Paul R. Verkuil.

Scott Lawrence Nelson, Allison M. Zieve, Public Citizen Litigation Group, Washington, DC, for Amici Curiae Public Citizen, Incorporated, Americans for Financial Reform Education Fund, Center for Responsible Lending, Consumer Federation of America, Consumers Union, National Association of Consumer Advocates, National Consumer Law Center, Tzedek DC, United States Public Interest Research Group Education Fund.

Colin Michael Watterson, Susman Godfrey, L.L.P., Houston, TX, for Amicus Curiae Appleseed Foundation, Incorporated.

Before Richman, Chief Judge, and Higginbotham, Jones, Smith, Stewart, Dennis, Elrod, Southwick, Haynes, Graves, Higginson, Costa, Willett, Duncan, Engelhardt, Oldham, and Wilson, Circuit Judges.^*

Per Curiam:

This civil enforcement matter comes to the en banc court on interlocutory appeal under 28 U.S.C. § 1292(b). The action and its history are accurately described in the panel majority and separate opinions, Consumer Financial Protection Bureau [CFPB] v. All American Check Cashing, Inc. , 952 F.3d 591 (5th Cir. 2020).

In the district court, the defendants ("All American") moved for judgment on the pleadings per Federal Rule of Civil Procedure 12(c), urging that the CFPB is unconstitutionally structured because the Bureau is led by a single director removable by the President only for cause.¹ The district court denied the motion "[f]or the same reasons stated in" PHH Corp. v. CFPB , 881 F.3d 75 (D.C. Cir. 2018) (en banc), finding "that the Bureau is not unconstitutional based on its single-director structure." On All American's request, the court, in accordance with § 1292(b), certified, and this court accepted, the question "Does the structure of the [CFPB] violate Article II of the Constitution and the Constitution's separation of powers?"

Answering the question in the negative, the panel majority affirmed the denial of judgment on the pleadings. 952 F.3d at 594. Judge Smith dissented. Id. at 602. The court sua sponte voted to rehear the matter en banc, thus vacating the panel opinion. 953 F.3d 381 (5th Cir. 2020) (en banc). Three months later, in Seila Law LLC v. CFPB , ––– U.S. ––––, 140 S. Ct. 2183, 2192, 207 L.Ed.2d 494 (2020), the Supreme Court held that the CFPB's single-director structure"violate[d] the separation of powers."

The ruling in Seila Law decides the pure question of law raised by All American in this interlocutory appeal.² Moreover, the Supreme Court, in a holding speaking for seven Justices, found "the Director's removal protection severable from the other provisions of Dodd-Frank that establish the CFPB." Id. at 2211 (opinion of Roberts, C.J.). That holding means that, although the district court erred insofar as it declined to find the removal provision infirm, a judgment of dismissal on the pleadings is not called for under the present state of this record.

The interlocutory order denying judgment on the pleadings is therefore VACATED. The absence of a dismissal on the pleadings leaves the CFPB free to continue the enforcement action against All American, subject to further order of the district court.

We therefore REMAND for such proceedings as the district court, in its wide discretion, may find appropriate. In its order of certification, the court wisely directed its Clerk of Court "to stay all proceedings ... until the interlocutory appeal is concluded." The time has arrived for the district court to proceed. We place no limitation on the matters that that court may consider, including, without limitation, any other constitutional challenges, and we express no view on the actions it should take in accordance with this opinion or otherwise.

Edith H. Jones, Circuit Judge, joined by Elrod, Duncan, Engelhardt, and Oldham, Circuit Judges, concurring:

As this nation careens past $30 trillion in national debt, risking bankruptcy during our or our children's lifetimes, one may ask: is there no institutional check on government spending? In fact, there is. The Constitution commands that "[n]o money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." U.S. CONST. art I, § 9, cl. 7. The Constitution vests Congress not only with the power to tax and spend, but also removes "the option not to require legislative appropriations prior to expenditure."¹ The Appropriations Clause embodies a fundamental separation of powers principle—subjugating the executive branch to the legislature's power of the purse. And separation of powers is at the heart of our constitutional government in order to preserve the people's liberty and the federal government's accountability to the people. As Justice Kennedy explained, "Concentration of power in the hands of a single branch is a threat to liberty." Clinton v. City of New York , 524 U.S. 417, 452, 118 S. Ct. 2091, 2109, 141 L.Ed.2d 393 (1998) (Kennedy, J., concurring).

A critical issue yet undecided in this appeal is whether the historically unique structure of the Consumer Financial Protection Bureau violates the Constitution because its funding is doubly removed from congressional review. "[O]ur job as judges is to enforce the law, not abdicate to the political branches ...." PHH Corp. v. CFPB , 881 F.3d 75, 196 (D.C. Cir. 2018) (en banc) (Kavanaugh, J., dissenting) (citation omitted), abrogated by Seila Law LLC v. CFPB , ––– U.S. ––––, 140 S. Ct. 2183, 207 L.Ed.2d 494 (2020). I would hold that the CFPB's funding structure violates the separation of powers principle enshrined in the Appropriations Clause.

Created in 2009, the Consumer Financial Protection Bureau is an administrative agency that was expressly designed to answer to neither of the politically accountable branches. Unlike other agencies, Congress put the CFPB's staggering amalgam of legislative, judicial, and executive power in the hands of a single Director serving a five-year term and removable by the President only for cause; and Congress insulated the agency from the ordinary congressional appropriations process. In Seila Law LLC v. CFPB , ––– U.S. ––––, 140 S. Ct. 2183, 207 L.Ed.2d 494 (2020), the Supreme Court had no difficulty holding the presidential removal restriction inimical to the Constitution's separation of powers. Id. at 2192. The Supreme Court was not asked to decide whether CFPB's budgetary independence also violates the separation of powers. That issue is posed squarely to our court.²

I write to show that the CFPB's budgetary independence is antithetical to the constitutional origins of the Appropriations Clause; contrary to the Constitution's structural allocation of powers; unsupported by the funding structure of any previous federal agency; and indefensible by the CFPB.

I. INTRODUCTION

A. The Consumer Financial Protection Bureau

Following the 2008 financial crisis, Congress established the CFPB as an independent agency and tasked it with "implement[ing]" and"enforcing" consumer protection laws to "ensur[e] that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive." 12 U.S.C. § 5511(a). Congress transferred to the CFPB administrative and enforcement authority over eighteen existing federal statutes, which broadly include consumer loans, mortgages, credit cards, and other financial products. See 12 U.S.C. §§ 5512(a), 5481(12), (14). Additionally, Congress made it unlawful "to engage in any unfair, deceptive, or abusive act or practice," 12 U.S.C. § 5536(a)(1)(B), a vague command that gave the CFPB a veritable blank check for broad regulation.³ See 12 U.S.C. §§ 5531(a), (b).

The CFPB can "conduct investigations, issue subpoenas and civil investigative demands, initiate administrative adjudications, and prosecute civil actions in federal court." Seila Law , 140 S. Ct. at 2193 (citing 12 U.S.C. §§ 5562, 5564(a), (f) ). In administrative adjudications and civil actions, the CFPB can seek a dizzying array of penalties, including restitution, rescission of contracts, disgorgement, injunctive relief, and civil penalties (up to $1,190,546 per day⁴ ). 12 U.S.C. § 5565.

Further, "[t]he CFPB has a unique...