The oral argument before the DC Circuit in the Consumer Financial Protection Bureau's (CFPB or Bureau) case against PHH Corporation1 has garnered a fair amount of coverage, in light of the panel's apparent interest in arguments about the constitutionality of the CFPB's structure and the CFPB's interpretation of the Real Estate Settlement Procedures Act (RESPA). (Mayer Brown summarized the oral arguments in PHH in a Consumer Financial Services Review blog post.)
One of the key issues raised in PHH that has received relatively less notice is the question of whether a statute of limitations applies to the matter. CFPB Director Richard Cordray had concluded that no statute of limitations applies "when the Bureau challenges a RESPA violation in an administrative proceeding."2 This is one of a number of circumstances in which the CFPB has asserted that an enforcement case is not limited by any statute of limitations.
The DC Circuit panel asked skeptical questions about this contention, and one question in particular is especially relevant for all CFPB regulated entities. Counsel for the Bureau argued that finding no statute of limitations applicable to the CFPB in administrative proceedings would not be unusual, asserting that there is no statute of limitations for administrative proceedings brought by the federal banking agencies or by the Federal Trade Commission (FTC). This moved Judge A. Raymond Randolph to ask: "Can they collect fines? Can they collect forfeitures? Can they collect civil penalties?... There is a statute of limitations. It's 28 U.S.C. 2462 that covers it.... It covers every agency in the federal government, unless Congress provides otherwise, and silence has never been construed as providing otherwise.... Otherwise the statute would make no sense."3
The statute cited by Judge Randolph provides that: "Except as otherwise provided by Act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued if, within the same period, the offender or the property is found within the United States in order that proper service may be made thereon."4
Section 2462 could be a significant constraint on the CFPB's authority to reach back in time to punish companies for older violations of numerous statutes. In this Legal Update, we provide an overview of: (i) the situations in which the CFPB has asserted that Congress was silent regarding the applicable statute of limitations, so that none applies; (ii) whether Section 2462 might apply to those situations; and (iii) what limits are imposed by Section 2462 if it does apply.
Situations Where the CFPB Has Asserted That Congressional Silence Regarding the Statute of Limitations Means None Applies
Title X of the Dodd-Frank Act authorizes the CFPB to bring enforcement cases either (a) through a "civil action" filed in federal district court or (b) through an "administrative proceeding" like PHH before an administrative law judge (ALJ), with an appeal to the CFPB Director.5 Notably, the CFPB can obtain the same remedies—including disgorgement, restitution, injunctive relief, and civil money penalties—in either forum. The CFPB has taken the position that Congress was silent regarding the statute of limitations in certain civil actions and administrative proceedings.
CERTAIN CIVIL ACTIONS IN FEDERAL DISTRICT COURT
Title X of the Dodd-Frank Act provides that generally "no action may be brought under this title more than 3 years after the date of discovery of the violation to which an action relates."6 However, an "action arising under this title does not include claims arising solely under enumerated consumer laws," which is a defined term that includes an alphabet soup of statutes including RESPA, TILA, FDCPA, ECOA, EFTA, and HMDA.7 The Bureau has taken the position that if the Bureau "brings an action under one of the enumerated consumer laws," then "the Bureau has to use the limitations period in that law."8
In two cases litigated in district court, one involving TILA claims and the other FDCPA claims, the CFPB argued that certain one-year statutes of limitations found in those statutes apply only to private suits, not government enforcement actions.9 The implication was that Congress was silent regarding the statute of limitations applicable to the CFPB when it enforces TILA or the FDCPA in district court. In the TILA case, the district court disagreed and held that the one-year statute of limitations was applicable to the CFPB's action.10 The Bureau later characterized the court's conclusion as "wrong."11 In the FDCPA case, a different district court "reject[ed] the Bureau's argument that no statute of limitations should apply," on the grounds that "Congress envisioned some statute of limitations applying when the Bureau brings an action."12 But the court postponed ruling on what statute of limitations was applicable, and the case was settled before the issue was resolved.13
Despite these setbacks in court, the CFPB shows no sign of abandoning its position that Congress was silent regarding the statute of limitations for CFPB actions in district court to enforce TILA and the FDCPA. The Bureau is likely to take a similar position with respect to ECOA, EFTA, and various other statutes that contain statutes of limitation.14
The CFPB also maintains that no statute of limitations applies to claims it brings in administrative proceedings, because of Congress's alleged silence on the issue. In the PHH case, the parties dispute whether RESPA's three-year statute of limitations on "any action" applies to a CFPB administrative proceeding.15 CFPB Director Cordray held that an administrative proceeding is not an "action" for these purposes, so he "agree[d]" with the ALJ that "no statute of limitations applies."16 The matter now rests with the DC Circuit.
The CFPB has also brought an administrative proceeding against another set of defendants to enforce TILA, EFTA, and the prohibition on unfair, deceptive, or abusive acts or practices (UDAAPs) found in Title X of the Dodd-Frank Act.17 The ALJ recently ruled in favor of the enforcement staff's argument that none of these three statutes imposes any statute of limitations on an administrative proceeding.18
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1 PHH Corp. v. CFPB, No. 15-1177 (D.C. Cir. argued Apr. 12, 2016).
2 In the Matter of PHH. Corp., No. 2014-CFPB-0002, at 10 (June 4, 2015).
3 Oral Argument at 50:50, PHH Corp. v. CFPB, No. 15-1177 (D.C. Cir. Apr. 12, 2016), https://www.cadc.uscourts.gov/recordings/recordings.nsf/DocsByRDate?OpenView&count=100&SKey=201604.
4 28 U.S.C. § 2462 (emphasis added).
5 12 U.S.C. §§ 5563-65.
6 12 U.S.C. § 5564(g)(1).
7 12 U.S.C. § 5564(g)(2)(A) (emphasis added); 12 U.S.C. § 5481(12) (defining "enumerated consumer laws" to include the Real Estate Settlement Procedures Act, Truth in Lending Act, Fair Debt Collection Practices Act, Equal Credit Opportunity Act, Electronic Fund Transfer Act, Home Mortgage Disclosure Act, and certain other statutes); see also 12 U.S.C. § 5564(g)(2)(B) ("In any action arising solely under an enumerated consumer law, the Bureau may commence, defend, or intervene in the action in accordance with the requirements of that provision of law, as applicable.").
8 See, e.g., Transcript of Motion to Dismiss Proceedings at 29, CFPB v. Frederick J. Hanna & Assocs., P.C., No. 1:14-cv-02211 (N.D. Ga. June 3, 2015), ECF No. 40. 9 CFPB's Opposition to ITT's Motion to Dismiss the Complaint at 32, CFPB v. ITT Educ. Servs., Inc., No. 1:14-cv-00292 (S.D. Ind. June 12, 2014), ECF No. 25; Plaintiff's Response to Defendants' Motion to Dismiss at 34-39, CFPB v. Frederick J. Hanna & Assocs., P.C., No. 1:14-cv-02211 (Oct. 3, 2014), ECF No. 26.
10 CFPB v. ITT Educ. Servs., Inc., No. 1:14-cv-00292, 2015 WL 1013508, at *33 (S.D. Ind. Mar. 6, 2015), appeal dismissed on other grounds, No. 15-1761 (7th Cir. Apr. 20, 2016).
11 Plaintiff's Response to Defendants' Notice of Supplemental Authority at 1, CFPB v. Frederick J. Hanna & Assocs., P.C., No. 1:14-cv-02211 (March 24, 2015), ECF No. 34 (discussing ITT).
12 CFPB v. Frederick J. Hanna & Assocs., P.C., 114 F. Supp. 3d 1342, 1375-80 (N.D. Ga. 2015) (emphasis in original).
13 Id.; Stipulated Final Judgment and Order, CFPB v. Frederick J. Hanna & Assocs., P.C., No. 1:14-cv-02211 (Jan. 6, 2016), ECF No. 63.
14 See 15 U.S.C. §§ 1691c, 1691e(f) (ECOA); 15 U.S.C. §§ 1693m(g), 1693o (EFTA).
15 12 U.S.C. § 2614.
16 In the Matter of PHH. Corp., No. 2014-CFPB-0002, at 10 (June 4, 2015). The Director did acknowledge that the CFPB could not obtain relief for RESPA claims against PHH that were already time-barred by the time that the Bureau was created in 2011. Id.
17 In the Matter of Integrity Advance, LLC, No. 2015-CFPB-0029 (filed Nov. 18, 2015).
18 Order Denying Motion to Dismiss at 19-29, In the Matter of Integrity Advance, LLC, No. 2015-CFPB-0029 (Apr. 22, 2016).
Originally published 4 May 2016
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