Fifth Circuit listens to an oral argument on All American Check Cashing | Ballard Spahr LLP


On March 12, the US Court of Appeals for the Fifth Circuit heard oral argument in All American Check Cashing’s interlocutory appeal against the district court ruling confirming the constitutionality of the CFPB.

All American Check Cashing and the other appellants requested the interlocutory appeal after the district court denied his motion for judgment on the allegations in a lawsuit filed by the CFPB alleging that appellants engaged in abusive, deceptive, and unfair conduct in connection with making certain payday loans, failing to repay overpayments on those loans, and cashing consumer checks . Quoting the DC circuit in bank PHH, the district court rejected the defendants’ argument that the CFPB is unconstitutional based on its sole removable director structure for cause only. Later, it agreed to certify the question of constitutionality for interlocutory appeal before the Fifth Circuit that accepted the appeal. (The district court also rejected All American Check Cashing’s other three grounds for its motion for judgment on the allegations: The CFPA violates due process because it does not give fair notice of the conduct it prohibits; the CFPA violates the doctrine of no delegation because Congress did not clearly delineate general policy or the limits of authority delegated to the CFPB; and the CFPA violates the principles of federalism because the CFPB based several of its CFPA claims on alleged violations of state law by All American Check Cashing).

The Fifth Circuit panel that heard oral argument consisted of two judges appointed by President Reagan, Judge Jerry Smith and Chief Justice Patrick Higginbotham, and a third judge appointed by President Obama, Judge Stephen Higginson. The panel’s questions and comments did not provide clear clues as to how the individual judges were leaning. Most of the questioning was spent exploring each party’s arguments as to why the US Supreme Court precedent supported their position on the constitutionality of the CFPB.

In his writings, the CFPB relied primarily on the argument that because Acting Director Mulvaney was removed at will by the President and upheld the CFPB’s decision to sue the appellants, any constitutional defects that may have existed were remedied with the initiation of the lawsuit by the CFPB. While it also argued that the CFPB’s structure is constitutional under the existing precedent of the United States Supreme Court, the CFPB did so as an alternative argument. In oral argument, however, CFPB’s lawyer made the constitutionality of the CFPB’s structure his main argument, using the ratification argument only for the purpose of arguing why All American Check Cashing would not have the right to judge the pleadings in the CFPB’s complaint whether the panel should conclude that the CFPB’s structure is unconstitutional and annul the just cause removal provision. CFPB’s attorney argued that Acting Director Mulvaney’s ratification would satisfy All American Check Cashing’s right to have the complaint filed by a CFPB Director removable at will, and that Director Kraninger may also be removed at will, the The company’s right to have the claim processed by a removable Director at will would be satisfied. To the extent that the panel provided any clues as to how it might fail, their questions and comments suggested significant concern about the possible far-reaching consequences of a decision that affects all of CFPA Title X rather than one that only affects removal for cause. provision.

At the end of January, a in bank The Fifth Circuit heard an oral argument at the new hearing of Collins vs. Mnuchin, in which a Fifth Circuit panel found that the Federal Housing Finance Agency (FHFA) is unconstitutionally structured because it is excessively isolated from executive branch oversight. It determined that the appropriate remedy for the constitutional violation was to cut the provision of the Housing and Economic Recovery Act of 2008 (HERA) that only allows the President to remove the Director of the FHFA “for cause” but “leave intact the rest of HERA and past actions of the FHFA. “

Both the plaintiffs and the FHFA filed petitions for a new en banc hearing. The plaintiffs, shareholders of two of the government housing services (GSE) companies, seek to invalidate an amendment to a preferred stock agreement between the Treasury Department and the FHFA as conservator of the GSEs. Your request to listen again in bank requested reconsideration of the panel’s decisions that the FHFA acted within its legal authority in entering into the agreement and that the unconstitutional structure of the FHFA did not affect the validity of the agreement.

The FHFA’s request for a new hearing in bank requested reconsideration of the Fifth Circuit’s ruling that the FHFA’s structure is unconstitutional. In addition to arguing that the panel’s constitutionality ruling conflicts with the precedent of the US Supreme Court. in bank PHH, the FHFA argued that plaintiffs are not entitled to Article III to file a challenge to the separation of powers.

At All American Check Cashing orally, both parties were asked whether the panel should uphold its decision until the in bank court issues its decision in Collins vs. Mnuchin, with a judge observing that the in bank court could “invalidate” its decision in All American check cashing. All American Check Cashing’s attorney urged the panel not to uphold its decision because the in bank the court may not get to the question of constitutionality. However, CFPB’s attorney indicated that it may be appropriate for the panel to wait to issue its decision if the panel members knew that the in bank Court will come to the issue of constitutionality.

A recording of the oral argument is available here.

Two other cases involving a challenge to the CFPB’s constitutionality are currently pending in the circuit courts. On RD Legal Financing, pending in the Second Circuit, the CFPB and the New York Attorney General filed their initial briefs late last week. On Seila Law, that is pending in the Ninth Circuit, oral argument took place on January 9, 2019.


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