Banking and Finance Law Daily Justice Department amplifies reasons to reject Mulvaney appointment challenge
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Monday, January 8, 2018

Justice Department amplifies reasons to reject Mulvaney appointment challenge

By Richard A. Roth, J.D.

A Justice Department memorandum supporting its motion to dismiss a suit challenging Mick Mulvaney’s appointment as the Consumer Financial Protection Bureau’s Acting Director repeats much of what was covered in the government’s original motion and memo, but it adds weight to two attacks on the federal district court judge’s jurisdiction. Replying to a memo by Lower East Side People’s Federal Credit Union that resists the dismissal of its suit, the DOJ asserts that the institution cannot show any injury from the appointment and that the federal quo warranto statute makes clear that Lower East Side’s suit is premature.

In its suit, Lower East Side alleges that, under the Dodd-Frank Act, CFPB Deputy Director Leandra English automatically became acting director when Richard Cordray resigned. The Federal Vacancies Reform Act does not authorize President Donald Trump to appoint Mulvaney, the credit union asserts (see Banking and Finance Law Daily, Dec. 7, 2017).

Standing to sue. For Lower East side to establish federal court jurisdiction, it must demonstrate that the appointment has caused or will cause it an injury in fact, giving it standing to sue. In resisting the DOJ motion to dismiss, the credit union relies heavily on an assertion that it has standing simply because it is an institution that is regulated by the CFPB.

That is not enough, the DOJ says. The precedents on which Lower East Side relies simply do not support that proposition.

The credit union cannot show that a statement on implementing the Home Mortgage disclosure Act creates an injury, either, the DOJ says. That statement was issued after the suit was filed and so cannot create standing at the time of filing, the memo points out. Even if the timing of the statement were disregarded, Lower East Side "misunderstands the agency’s statement, offers an impermissibly speculative and attenuated theory of injury, and cannot establish standing based on how the CFPB exercises its enforcement discretion against third parties," the government explains.

Quo warranto statute. The DOJ also claims that the federal quo warranto statute is the only avenue open to someone who wishes to challenge another’s authority to carry out the duties of a federal office. Quo warranto—meaning "by what authority"—applies only when the challenger claims a personal interest in the office, and the credit union raises no such claim, the government says.

Instead, Lower East Side should be required to wait until the CFPB has taken some action that actually causes it an injury and then raise a collateral attack on Mulvaney’s authority, according to the DOJ.

Appointment authority. The reply brief also repeats the DOJ’s earlier argument that Trump has the authority to appoint Mulvaney under the Federal Vacancies Reform Act because that law is not displaced by the Dodd-Frank Act. Rather, the FVRA creates an alternative way to fill vacant offices.

The case is No. 17 Civ. 09536 (PGG).

Attorneys: Ilann M. Maazel and Debra L. Greenberger (Emery Celli Brinckerhoff & Abady LLP) for Lower East Side Federal Credit Union. Benjamin T. Takemoto, Mathew J. Berns, and Elizabeth Tulis (U.S. Department of Justice) for President Donald Trump and John Mulvaney.

Companies: Lower East Side People’s Federal Credit Union

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