SAN FRANCISCO–The U.S. Court of Appeals for the Ninth Circuit has ruled the CFPB’s single-director structure is constitutional. The ruling is a blow for the CU trade groups and other organizations, which have long called for the single director to be replaced by a five-person, bipartisan commission.
In its ruling, the Ninth Circuit cited a decision last year from the U.S. Court of Appeals for the D.C. Circuit sitting en banc, which had ruled in favor of the bureau’s constitionality in a case that had been originally filed by PHH Corp.
But the Ninth Circuit ruling isn’t the final word, as the Fifth Circuit Court of Appeals also recently heard oral argument’s in a similar case bro0ught by defendants that had been accused by the Bureau of engaging in unfair payday lending practices. That case, too, challenges the constitutionality of the single director structure. And in March of this year the CFPB argued in defense of its structure before the U.S. Court of Appeals for the Second Circuit that Supreme Court precedent reinforces its constitutionality, and also that its structure "does not impede the president's ability to perform his constitutional duties."
The Appeals Courts’ rulings have become even more important after the Supreme Court declined to hear a challenge to the structure of the agency, which was created by the Dodd-Frank Act of a decade ago.
The ruling by the U.S. Court of Appeals for the Ninth Circuit involved a law firm under investigation for allegedly violating telemarketing rules, with the CFPB stating it must comply with its rules. The court affirmed a district court’s ruling ordering Seila Law’s compliance with the CFPB’s civil investigative demand (CID), rejecting the law firm’s arguments that the bureau is unconstitutionally structured and that it had no authority to issue the CID.
Ninth Circuit Judge Paul J. Watford issued the opinion in the case.