CFPB Director Richard Cordray has a little more job security this week than last week. On February 16, 2017, the U.S. Court of Appeals for the District of Columbia granted the CFPB's request for an en banc review of its October 2016 decision finding the CFPB leadership structure unconstitutional. As detailed in our client alert: CFPB Hit by Major Setback In D.C. Circuit, the D.C. Circuit previously found that the single-director structure of the CFPB violated constitutional separation of powers principles. As a remedy, the D.C. Circuit had eliminated the director's "for cause" tenure protection from the statute, which made the director fireable at will.
This grant of review vacates the October judgment and bolsters Director Cordray's "for cause" tenure protection—at least for now. The rehearing is set to be heard on May 24, 2017. The D.C. Circuit has asked the parties to address the following three questions:
- Is the CFPB's structure as a single-director independent agency consistent with Article II of the Constitution and, if not, is the proper remedy to sever the for-cause provision of the statute?
- Can the court appropriately avoid deciding the constitutional question given the panel's ruling on the statutory issues in this case?
- If the en banc court, which has today separately ordered en banc consideration of Lucia v. SEC, 832 F.3d 277 (D.C. Cir. 2016), concludes in that case that the administrative law judge who handled the case was an inferior officer rather than an employee, what is the appropriate disposition of this case?
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
© Morrison & Foerster LLP. All rights reserved
