Banking and Finance Law Daily English gets grilled during oral argument in CFPB leadership dispute
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Thursday, April 12, 2018

English gets grilled during oral argument in CFPB leadership dispute

By Katalina M. Bianco, J.D.

Oral arguments were heard by the U.S. Court of Appeals for the District of Columbia Circuit on April 12, 2018, in the battle over the legitimate acting director of the Consumer Financial Protection Bureau. The court grilled counsel for English for close to twice his allotted 20 minutes of argument (English v. Trump, D.C. Cir. Docket No. 18-5007).

English v. Trump. Before resigning on Nov. 24. 2017, CFPB Director Richard Cordray appointed Leandra English deputy director of the CFPB and announced that she would be acting director until a permanent director would be appointed by President Trump and confirmed by the Senate. Trump subsequently named Mick Mulvaney, head of the Office of Management and Budget, as acting director, and English sued Trump and Mulvaney in response.

English contends that the Dodd-Frank Act (12 U.S.C. §5491(b)(5)(b)) provides that the Deputy Director "shall … serve as the Acting Director in the absence or unavailability of the Director." The Trump administration and Mulvaney claim the Federal Vacancies Reform Act (FVRA) supports Mulvaney’s leadership of the Bureau until a permanent director is appointed.

English lost on her motion for a preliminary injunction, and the case now is being appealed (see Banking and Finance Law Daily, Jan. 10, 2018).

Issue of redress contested. During argument, the court questioned counsel for English (English) about whether a preliminary injunction would provide relief to English. The redress has to be that English gets the job, but if the President can name a permanent director, then English loses that job again, the court noted, stating that English might only remain in place for two hours. The court stated that to prevail in a bid for a preliminary injunction, English would have to show that the President can be enjoined from naming someone else as director.

Further, there is the issue of "at will" vs. "for cause" removal of a Bureau director. While the director can be removed only "for cause," does that apply to an acting director? The court asked English to consider a hypothetical question: If Cordray had remained in his position as director until the end of his term, then stayed on until a permanent director was appointed, could he still only be removed for cause or could he be removed by the President "at will"? English and Trump were in agreement that he could be removed "at will." Therefore, English as acting director could be removed "at will" as well.

Vacancy vs. unavailability. English contended that the Dodd-Frank Act provision (§5491(b)(5)(b)) is controlling when there is no permanent director in place. The court noted that the provision uses the term "absence or unavailability" rather than vacancy. This seems to imply a more temporary situation. If Congress had intended the terms to mean vacancy, then why doesn’t the provision state so?

Mandatory. English argued that the use of the word "shall" in the provision makes the provision mandatory. The deputy director "shall" serve as acting director until a director is appointed. The court replied that the word "shall" is a "semantic mess" and does not always mean mandatory. Further, the court said, the Dodd-Frank Act is "ambiguous."

Trump’s counsel (Trump) argued that the word "shall" simply is not enough to displace the FVRA. Even with the word "shall" in the statute, the Dodd-Frank Act can co-exist with the FVRA. Further, he contended that if the Act is ambiguous as to successors, there is no way it can displace the FVRA. Trump stated that if Congress intended to displace the FVRA, it could have said so in many ways, such as "exclusive acting director." The court retorted that Congress "doesn’t talk like that." Asked by the court why "shall" is not enough to mean mandatory, Trump answered that the FVRA expressly addresses vacancies while the Dodd-Frank Act does not.

Independence. English asserted that Congress sought to insulate the Bureau from the Office of Management and Budget by providing that the CFPB is independent (12 U.S.C. §5491(a)). The President selected the director of the OMB to serve as acting director of the Bureau. He selected the wrong person for the position. The court questioned whether it would be acceptable to name "any person in the world but Mulvaney," and, if so, how would that help English?

The issue of Bureau independence also came into play during Trump’s arguments. Trump contended that the Social Security Administration is independent but subject to the FVRA. He also stated that English was "drastically over-reading the statute" as to the issue of the Bureau being independent of the OMB.

The court stated it was "troubled" by Mulvaney "wearing two hats," as OMB director and acting director of the CFPB. Further, if the acting director can be removed "at will" it could cripple the agency. If the President just keeps removing acting directors who do not adhere to his wishes, how can anything be accomplished by the Bureau, the court inquired of Trump. "I hear you saying you’re not concerned with this," the court stated.

Attorneys: Deepak Gupta, Jonathan E. Taylor, Joshua Matz, and Daniel Townsend (Gupta Wessler PLLC) for Leandra English. Chad A. Readler, Acting Assistant Attorney General, Hashim M. Mooppan, Deputy Assistant Attorney General, and Scott R. McIntosh and Melissa N. Patterson, Appellate Staff Civil Division of the U.S. Department of Justice, for Donald J. Trump and John M. Mulvaney.

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