CFPB Constitutionality on Steps of Supreme Court Yet Again, Supported by U.S. Chamber of Commerce

The question concerning the constitutionality of the Consumer Financial Protection Bureau’s (CFPB) structure has found its way to the door of the United States Supreme Court yet again. This issue has been percolating for a couple of years. In January of this year, the Supreme Court denied a petition to review the matter in State National Bank of Big Spring, et al. v. Mnuchin. It appears that the Supreme Court will once again have to decide whether to hear the issue, as Seila Law LLC has filed a petition for writ of certiorari—which is fancy legalese for a request to have the Supreme Court hear the case—on June 28, 2019.

The petition stems from the CFPB’s investigation of Seila Law LLC, a debt resolution law firm. Seila Law objected to the CFPB’s civil investigation demand (CID) for information and documents about the firm, arguing that the CFPB was unconstitutionally structured. The CFPB petitioned a federal court for enforcement of the CID. The court found no issue with the CFPB’s structure. Seila Law appealed the matter to the Ninth Circuit, which affirmed the district court's decision. Seila Law is now seeking the Supreme Court’s decision on the matter, arguing that “This case, which cleanly presents the question whether the CFPB is constitutional, is an ideal vehicle for the Court’s review.”

Similar to the arguments we’ve seen in prior cases addressing this issue, Seila Law questions “[w]hether the vesting of substantial executive authority in the Consumer Financial Protection Bureau, an independent agency led by a single director, violates the separation of powers.”

According to the case’s docket, the groups and organizations listed below filed amicus briefs supporting the Supreme Court’s review:  

• U.S. Chamber of Commerce
• The States of Texas, Arkansas, Nebraska, Oklahoma, South Carolina, Tennessee, Utah, and West Virginia
• The Cato Institute
• Separation of Powers Scholars
• Southeastern Legal Foundation and the National Federation of Independent Business Small Business Legal Center
• Pacific Legal Foundation
• Landmark Legal Foundation

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insideARM Perspective

Not too long ago with PHH and State National Bank of Big Spring, financial services industry members were arguing that the CFPB was unconstitutional. Now, we have a debt resolution law firm—arguably the “other side of the aisle”—arguing the same thing. It’s interesting how this issue gets passed around like a hot potato. However, the question of constitutionality is an interesting one—at least for us legal eagles—and is best decided by the Supreme Court in its unique position as the final authority on constitutional matters.