Judge deals another blow to bid to unseat CFPB's Mulvaney

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WASHINGTON — A district court judge has denied an attempt to unseat Mick Mulvaney as acting director of the Consumer Financial Protection Bureau.

U.S. District Judge Timothy J. Kelly on Wednesday refused to grant Leandra English, the CFPB's deputy director, a preliminary injunction against Mulvaney's appointment, saying her suit was unlikely to succeed and she is unable to demonstrate irreparable harm.

"English has not demonstrated a likelihood of success on the merits or shown that she will suffer irreparable injury absent injunctive relief," Kelly wrote in the 46-page opinion.

English sued in late November, arguing that she should be acting director of the bureau on the basis of language in the Dodd-Frank Act. But Kelly said she had not met the legal burden and that replacing Mulvaney would disrupt the status quo.

"The moving party must meet a higher standard than in the ordinary case by showing clearly that he or she is entitled to relief or that extreme or very serious damage will result from the denial of the injunction," Kelly said.

Kelly said that the CFPB’s operations have carried on without major disruptions after President Trump appointed Mulvaney, and the agency’s own attorneys backed the president's right to make a temporary appointment.

That undermines English’s claim that she and the agency are suffering irreparable harm — a crucial element of a motion for a preliminary injunction — from Mulvaney's service as acting director, he said.

“In summary, the record evidence suggests that CFPB's operations have continued with the understanding that Mick Mulvaney is the acting director,” Kelly said. “Indeed, it is notable that the CFPB’s general counsel and other CFPB attorneys are listed as ‘of counsel’ on defendants’ opposition brief.”

"The balance of the equities and the public interest also weigh against granting the relief," Kelly added. "Therefore, English has not met the exacting standard to obtain a preliminary injunction."

This is the second time Kelly has ruled against English. Without ruling on the merits, he rejected an emergency injunction against Mulvaney shortly after English filed her suit.

The judge noted some practical points that clearly influenced the legal outcome.

English has argued that the CFPB is an independent agency and that the Dodd-Frank Act allowed former Director Richard Cordray to appoint her as his successor, overriding the president's appointment of Mulvaney.

"Under English’s interpretation, however, Cordray could have named anyone the CFPB’s Deputy Director, and the President would be virtually powerless to replace that person upon ascension to acting director — no matter how unqualified that person might be," Kelly wrote. "That alone threatens to undermine the president’s ability to fulfill his Take Care Clause obligations."

Kelly added that, even if English could demonstrate irreparable harm, more recent case law suggests that the critical burden for her to prove is that she has a reasonable prospect of success in her underlying suit. The central question is whether the Federal Vacancies Reform Act, the law President Trump used to appoint Mulvaney, is superseded by the Dodd-Frank Act, which says the deputy director is the rightful acting head of the CFPB once a director leaves. But Kelly said that is an easy question to resolve.

“It is clear that a plaintiff’s failure to show a likelihood of success on the merits is, standing alone, sufficient to defeat the motion,” Kelly said. “As an initial matter, the court must determine whether the FVRA — independent of whether it is displaced by the Deputy Director provision of the Dodd-Frank Act — authorizes the president’s appointment of the CFPB’s acting director on its own terms. It clearly does.”

Deepak Gupta, English's attorney, said he was disappointed in the decision.

"The law is clear: President Trump may not circumvent the Senate confirmation process by installing his White House budget director to run the CFPB part time," Gupta said. "Mr. Mulvaney’s appointment undermines the bureau’s independence and threatens its mission to protect American consumers.”

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