PHH files opening brief, asks court to eliminate CFPB


On March 10, 2017, PHH filed its opening brief with the DC Circuit and asked the court to “strike down the CFPB in its entirety.”

Last month, the DC Circuit granted the CFPB’s petition for rehearing en banc following an October 2016 ruling by a three-judge panel court that declared the CFPB’s single-director-removable-only-for-cause structure unconstitutional. The panel remedied the constitutional defect by severing the applicable provision in the Dodd-Frank Act and making the CFPB Director removable without cause by the President.

In its filing, PHH argued that the CFPB has multiple unconstitutional features that extend beyond whether the CFPB Director is subject to removal by the President at-will or for cause only.  According to PHH, the panel’s order to sever the CFPB Director’s removal restrictions set forth in the Dodd-Frank Act “is not an adequate or appropriate remedy because it would solve only one of the CFPB’s multiple structural problems while creating a new agency structure that Congress likely did not intend.” PHH also argues that the court cannot avoid deciding the separation-of-powers issues by “adopting the panel’s statutory holdings and remanding to the CFPB, because this Court cannot remand a case to an unconstitutional agency.” PHH proposes that the DC Circuit can avoid addressing the separation-of-powers issues only by “vacating the CFPB’s order without remand, so that the CFPB would not be free to resume proceedings against PHH.”

In addition to PHH’s opening brief, the following amicus briefs in support of PHH were filed last Friday:

With the exception of a brief submitted by the American Bankers Associations and twelve other trade groups which addressed the panel’s ruling that struck down Director Cordray’s RESPA interpretation, the amicus briefs address only the constitutional question and support PHH’s position that the agency is unconstitutionally structured.

Next Steps

Last week, the DC Circuit granted a motion from the DOJ to file its amicus brief by March 17. That brief will mark the Trump administration’s first formal involvement in the legal battle, and is widely anticipated to support PHH’s position in a manner similar to the amicus briefs filed last week.

The CFPB must file its response by March 31. Oral arguments remain scheduled for May 24. Last week, the DC Circuit entered an order announcing that each side will have 30 minutes to present their case.