Ninth Circuit Rules CFPB Leadership Structure is Constitutional

The Ninth Circuit Court of Appeals yesterday ruled that the leadership structure of the Consumer Financial Protection Bureau is constitutional and affirmed a lower court’s ruling forcing a debt relief law firm to comply with a Civil Investigative Demand inquiry from the agency.

The Ninth Circuit’s ruling mirror’s a ruling from the Court of Appeals for the District of Columbia in the case of PHH Mortgage v. CFPB, which also determined that the single director structure who can only be removed for cause was constitutional.

A copy of the ruling in CFPB v. Seila Law LLC can be accessed by clicking here.

The defendant made several arguments against having to comply with the CID, but the Ninth Circuit rejected all of them. The CFPB is investigating the law firm for possible violations of the Telemarketing Sales Rule while selling debt relief services to consumers. The CFPB issued a CID seeking answers to seven interrogatories and four requests for documents. The defendant refused to provide the information, leading the CFPB to file a petition with a District Court, which sided with the regulator. Seila Law appealed that ruling to the Ninth Circuit, which also sided with the CFPB.

Similar to the D.C. Appeals Court in PHH, the Ninth Circuit looked to Humphrey’s Executor v. United States and Morrison v. Olson and saw no reason to diverge from those rulings.

“Those cases indicate that the for-cause removal restriction protecting the CFPB’s Director does not ‘impede the President’s ability to perform his constitutional duty’ to ensure that the laws are faithfully executed,” the Ninth Circuit wrote in its ruling. “The Supreme Court is of course free to revisit those precedents, but we are not.”

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