Banking and Finance Law Daily CFPB seeks dismissal of challenge to civil investigative demands
Monday, March 27, 2017

CFPB seeks dismissal of challenge to civil investigative demands

By Richard A. Roth, J.D.

The Consumer Financial Protection Bureau has asked that a company’s suit to block enforcement of the bureau’s civil investigative demand be dismissed, claiming that decisions already rendered in the case mean there is "nothing left to do but dismiss" the suit. Due to previous decisions of the U.S. District Court for the District of Columbia and the U.S. Court of Appeals for the District of Columbia Circuit, and the provisions of the Dodd-Frank Act, the district court has no jurisdiction over the suit and the company has no ability to secure either injunctive or declaratory relief, according to the CFPB motion in John Doe Co. v. CFPB.

The company, which attempted to raise its challenge anonymously but has since been identified as Future Income Payments, LLC (FIP), is engaged in the business of buying and selling income streams—benefits from pensions, injury settlements, and other periodic payments. The bureau served the company with a CID in 2016 seeking information on the income stream marketing business.

Ordinarily, a company that objected to a CID would first ask the CFPB for relief and then contest the CID in the bureau’s subsequent enforcement suit. However, FIP attempted to "short-circuit" that process by suing the bureau and demanding an injunction against any enforcement efforts. Also, FIP attempted to litigate anonymously, claiming that it would suffer irreparable harm if it were identified.

Earlier decisions. FIP’s efforts were rejected, first by the district court (John Doe Co. v. CFPBBanking and Finance Law Daily, Feb. 21, 2017) and then by the appellate court (John Doe Co. v. CFPBBanking and Finance Law Daily, March 6, 2017). According to the appellate court, the company had shown neither that it was likely to succeed on the merits of its challenge to the bureau’s constitutionality nor that it would suffer irreparable harm from being identified.

CFPB motion. Those findings underpin most of the reasons the bureau is advancing for why the suit now should be dismissed. The courts have no jurisdiction over the suit, the bureau claims, and the company has not described any basis for blocking the bureau’s CID.

The bureau says the court has no jurisdiction over the suit for four reasons:

  1. The effort to proceed anonymously is moot because, in the wake of the appellate court decision, the bureau has named the company in a suit to enforce the CID.
  2. The company’s challenge to the CID must be raised in that enforcement proceeding, not in a separate suit.
  3. The company does not have standing to raise challenges to anything other than the CID, i.e., it cannot attack the constitutionality of the bureau’s organization.
  4. The challenge to the CID is not ripe, since it is possible that the bureau might not take any enforcement action that could harm the company.

As demonstrated by the earlier decisions, the FPI cannot show that it is threatened by an irreparable injury, the CFPB also says. The worst problem the company faces if it cannot secure an injunction against the CID is the need to defend itself in an enforcement proceeding, the bureau asserts, and that is not an irreparable injury.

FPI’s request for a declaratory judgment that the bureau’s structure is unconstitutional would be more appropriately addressed in the enforcement suit now pending in California, the CFPB also says.

Companies: Future Income Payments, LLC

MainStory: TopStory CFPB ConsumerCredit DistrictofColumbiaNews OversightInvestigations

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