John Doe Co. v. Consumer Fin. Prot. Bureau

Decision Date03 March 2017
Docket NumberNo. 17-5026,September Term, 2016,17-5026
Citation849 F.3d 1129
Parties JOHN DOE COMPANY, Appellant v. CONSUMER FINANCIAL PROTECTION BUREAU and Richard Cordray, in his official capacity as Director of the Consumer Financial Protection Bureau, Appellees
CourtU.S. Court of Appeals — District of Columbia Circuit

Cathy A. Hinger, Attorney, Womble Carlyle Sandridge & Rice, LLP, Washington, DC, for PlaintiffAppellant.

Christopher J. Deal, Consumer Financial Protection Bureau, Legal Division, Washington, DC, for DefendantsAppellees.

BEFORE: Kavanaugh,* Millett, and Wilkins, Circuit Judges


Per Curiam

Upon consideration of the emergency motion for injunction pending appeal, the response thereto, and the reply, it is

ORDERED that the motion for injunction be denied.

Appellant John Doe Company is a California limited liability company with its principal place of business in the Philippines. The Company is in the business of purchasing and selling income streams. A recent Government Accountability Office study explained that income-stream-marketing businesses often target vulnerable clients such as our military veterans and the elderly, charging effective interest rates far in excess of state usury laws (up to 87% in some cases) and providing lump sum payouts that are roughly half the minimum required under federal law governing pensions. See U.S. GOV'T ACCOUNTABILITY OFFICE , GAO-15-846T, PENSION ADVANCE TRANSACTIONS: QUESTIONABLE BUSINESS PRACTICES IDENTIFIED 20–22, 23–26, 27 (2015). The GAO Report recommended that the Federal Trade Commission and the Consumer Financial Protection Bureau investigate income-stream marketers. The Company itself has been the subject of regulatory proceedings by at least six States under their consumer protection laws. As the district court found, "neither side seems to dispute that John Doe Co. has been the subject of considerable negative publicity throughout the past few years." Dist. Ct. Op. Denying Prelim. Inj. 7.

In November 2016, the Consumer Financial Protection Bureau issued a Civil Investigative Demand ("CID") to the Company pursuant to its statutory authority, 12 U.S.C. § 5562(c)(1). Congress authorized the Bureau to issue CIDs to collect information relevant to the enforcement of specified consumer protection laws. Id .; see also 12 U.S.C. § 5511. The issuance of a CID is purely investigatory. It does not initiate a law-enforcement proceeding or even signify that any violation of law has been committed. See 12 U.S.C. § 5562(e).

CIDs are not self-enforcing, and non-compliance triggers no fine or penalty. 12 U.S.C. § 5562(e)(1) ; Morgan Drexen, Inc. v. Consumer Fin. Prot. Bureau , 979 F.Supp.2d 104, 108 (D.D.C. 2013), aff'd , 785 F.3d 684 (D.C. Cir. 2015). The Company thus needed to do nothing in response to the CID it received. If a recipient declines to respond to the CID, the Bureau must obtain a court order to enforce it. 12 U.S.C. § 5562(e). In that court proceeding, the recipient can raise any relevant legal objection to enforcement of the CID.

In this case, the Company did not wait for the Bureau to seek enforcement of the CID, but instead filed a pre-enforcement suit in district court challenging the constitutionality of the Bureau's structure and seeking to halt any and all Bureau action "adverse" to the company, Mot. for Prelim. Inj. 26, including enjoining enforcement of the CID and forbidding the disclosure of the Company's identity. The district court denied Doe's request for a preliminary injunction, concluding that the Company had not met its burden of establishing either a likelihood of success or irreparable harm. The Company now requests an emergency injunction pending appeal.

A preliminary injunction is "an extraordinary remedy that may only be awarded upon a clear showing that the [movant] is entitled to such relief." Winter v. Natural Res. Def. Council, Inc. , 555 U.S. 7, 22, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). "A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Id. at 20, 129 S.Ct. 365. Because the Company seeks the exceptional remedy of an injunction pending appeal, the Company faces the difficult task of coming forward with evidence and argument showing that it is "likel[y]" that the district court "abused its discretion" in denying a preliminary injunction. See, e.g. , Washington Metro. Area Transit Comm'n v. Holiday Tours, Inc. , 559 F.2d 841, 844 (D.C. Cir. 1977) ; Chaplaincy of Full Gospel Churches v. England , 454 F.3d 290, 297 (D.C. Cir. 2006).

The Company's sole argument regarding likelihood of success on the merits before this court and the district court has been to point to the now-vacated majority opinion in PHH Corporation v. Consumer Financial Protection Bureau , 839 F.3d 1 (D.C. Cir. 2016), vacated, reh'g en banc granted, No. 15-1177, ––– F.3d ––––, 2017 WL 631740 (D.C. Cir. Feb. 16, 2017). But remember: the Company has to show not just that there is potentially persuasive authority for its legal position, but that the district court abused its discretion in not sufficiently crediting that showing in the balancing of equities that preliminary injunctive relief requires. Pointing to PHH is not enough for four reasons.

First , the PHH decision on which the Company relies has been vacated. And even within that decision, panel members differed on the appropriateness or necessity of issuing the separation-of-powers ruling given predicate statutory issues in the case. PHH , 839 F.3d at 56 (Henderson, J., concurring in part and dissenting in part) (declining to reach the constitutional question because an adequate remedy could be provided on the statutory ground); see also id . at 55 (Randolph, J., concurring) (also finding constitutional error in the ALJ who heard the proceeding). Without suggesting anything one way or the other about how the en banc court might ultimately resolve the PHH case and with all due respect to its panel members, the district court did not abuse its discretion in determining that simply pointing to the vacated majority opinion in PHH did not establish the likelihood of an identical constitutional ruling by the en banc court in PHH or the court in this case.

Second , even assuming for purposes of this motion that the en banc court were to reach the same constitutional ruling as the majority opinion in PHH , the Company is not remotely in the same constitutional position as PHH. PHH, remember, was on the receiving end of a completed law enforcement proceeding by the Bureau, and had been ordered to pay a $109 million fine. PHH , 839 F.3d at 7. In finding a separation-of-powers violation, the majority opinion repeatedly emphasized its view of the Constitution's assignment of "law enforcement" authority to the Executive Branch. See, e.g. , id. at 18 (discussing "the core Article II executive power of bringing law enforcement actions"); id. at 19 (Social Security Administrator distinguishable because he "does not possess unilateral authority to bring law enforcement actions against private citizens, which is the core of the executive power and the primary threat to individual liberty posed by executive power"); id. at 20 n.5 (court's holding would not invalidate other single-director independent agencies because they "do not exercise the core executive power of bringing law enforcement actions").

The Company, by contrast, filed a pre-enforcement suit to stop a non-self-executing investigative demand for regulatory information. The Company voices no objection here to the scope or content of the CID and does not argue that it falls beyond the Bureau's statutory authority. The Company's sole argument is that the Bureau's single-Director structure is unconstitutional. And the sole injury it asserts on appeal is the harm occasioned by having to respond to a non-self-executing CID.1

Standing is determined on a claim-by-claim basis. See, e.g. , Davis v. FEC , 554 U.S. 724, 734, 128 S.Ct. 2759, 171 L.Ed.2d 737 (2008) (explaining that standing is not "dispensed in gross" but a plaintiff "must demonstrate standing for each claim he seeks to press and for each form of relief that is sought") (quotation marks and citations omitted). And the only thing that happened prior to the Company filing its pre-enforcement suit was the Bureau's issuance of an investigative demand for information relevant to the Company's adherence to federal law. The Company accordingly has to demonstrate that the action of merely requesting information from private entities subject to regulation is by itself exclusively confined to the Executive Branch, and thus that issuance of this CID by the Bureau violates the separation of powers.

The Company has utterly failed that task. Nowhere in its arguments has it even acknowledged the distinct posture of its preemptive proceeding or the nature of the governmental action it seeks to halt. That failure to even attempt to discharge its particularized burden of proof is fatal. To obtain an injunction pending appeal on the ground that the Bureau transgresses the separation of powers just by issuing a CID—just by investigating a regulated entity's compliance with federal law—the Company would have to show that only the Executive Branch can demand information from regulated businesses or take such investigative steps. That is, to say the least, far from constitutionally self-evident. Congress issues subpoenas for information. And in Buckley v. Valeo , 424 U.S. 1, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976), the Supreme Court specifically carved out such investigative measures from its holding that the Commission there was exercising powers forbidden by the Constitution, id . at 137–138, 96 S.Ct. 612.

That the Company frames its argument as a facial challenge to the Bureau's ability to take any "action...

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