Law Firm Accuses CFPB of Making ‘End-Run’ by Dropping Case, Then Filing New CID

A collection law firm is seeking judicial intervention after accusing the Consumer Financial Protection Bureau of making an “end-run” by dropping its case against the law firm, only to tell the law firm hours later that it would be sending the firm a new Civil Investigative Demand letter. The CFPB, meanwhile, says the new CID is exactly what the law firm asked for in the first place.

The law firm is seeking a pre-motion conference with a District Court judge to alter or amend a judgment because it is accusing the CFPB of “manufactur[ing]” the mootness of its case.

In July 2017, the CFPB issued the CID to the defendant, seeking information that might be relevant to its investigation. The defendant, according to the CFPB, failed to fully comply with the CID, which led the agency to ask a federal judge to compel the defendant to comply. 

In response to the suit, the law firm filed a motion to dismiss the case asserting several challenges to the CFPB’s action, including accusing the Bureau’s structure of being unconstitutional. The law firm pointed to several cases supporting its position, including the case of CFPB v. RD Legal Funding, which was decided in the same court. 

Instead of replying to the law firm’s motion to dismiss, the CFPB opted to abandon the case and avoid the legal fight over constitutionality, potentially saving those arguments for its case before the Supreme Court.

Now, it appears as though the CFPB is going to open a new investigation into the law firm through a new CID.

In its response letter, the CFPB accuses the law firm of requesting the pre-motion conference rather than returning a voicemail that was left by the agency with the law firm’s legal team to discuss the case.

The new CID is separate from the original request, the CFPB argues, and the law firm is “under no binding legal obligation to comply” with it. The law firm “can hardly complain in the interim that the Bureau has now issued a revised CID giving it exactly what it claimed to want: additional information about the scope and purpose of the Bureau’s investigation,” the CFPB wrote in its response to the request for a pre-motion conference.

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