Ninth Circuit Denies En Banc Petition in CFPB Case Against Seila Law

The Court of Appeals for the Ninth Circuit on Friday denied a petition from one of its own judges to hold an en banc rehearing of the case of CFPB v. Seila Law, arguing that while David may have slayed the giant before the Supreme Court, the Ninth Circuit has determined that “Goliath still wins.”

A copy of the ruling in the case can be accessed by clicking here.

For those of you who might not be familiar with the trials and tribulations of this case, here is the background:

Seila Law was issued a Civil Investigative Demand (CID) letter by the CFPB seeking answers to seven interrogatories and four requests for documents. The law firm refused to provide the information, leading the CFPB to file a petition with a District Court to have the CID enforced. The District Court sided with the regulator. Seila Law appealed that ruling to the Ninth Circuit, which also sided with the CFPB. Seila then appealed the ruling to the Supreme Court, which determined that the leadership structure of the agency was unconstitutional and the the director should be able to be fired for any reason by the president, not just for cause. It remanded the case back to the Ninth Circuit to deal with the question of whether the CID could be enforced or not. The Ninth Circuit, relying on ratifications from former CFPB Director Kathleen Kraninger, determined that Seila Law should have to comply with the CID and provide the information requested by the regulator.

Ratification, wrote Judge Patrick Bumatay in a dissenting opinion, does not allow the CFPB to “retroactively gift itself power that it lacked,” and the Ninth Circuit’s condoning of the CFPB’s “power grab was erroneous.”

In a majority opinion, Judge Paul Watford agreed with the panel’s earlier decision and wrote that an en banc rehearing was not required. Referring to Kraninger, Judge Watford wrote, “A Director well aware that she may be
removed by the President at will has ratified her predecessors’ earlier decisions to issue and enforce the CID.”

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