Supreme Court to hear CFPB constitutionality case in March

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The Supreme Court on Tuesday said it will hear arguments March 3 in a case challenging the constitutionality of the Consumer Financial Protection Bureau's leadership structure.

The high court listed the case, Seila Law LLC v. Consumer Financial Protection Bureau, in a release of its calendar for the session beginning in late February. The case will determine whether a president has the discretion to fire the head of the independent agency without cause.

At issue is whether Congress, in creating the CFPB, infringed on the authority of the president by concentrating so much power in the single head of an agency. Independent agencies have statutes that protect appointees from removal except in cases of “inefficiency, neglect of duty, or malfeasance in office.”

Republicans have long wanted a case to reach the high court to knock down the single-director leadership framework. A Supreme Court ruling could potentially affect other agencies with similar structures, including the Federal Housing Finance Agency.

In agreeing to take the case in October, the court asked the parties to address whether a provision in the Dodd-Frank Act that allows a president to oust the CFPB director only “for cause,” is unconstitutional.

The court also asked for arguments about whether the CFPB's leadership structure calls into question the constitutionality of the entire agency, or whether the "for cause" provision is separate from the rest of Dodd-Frank.

In September, the Department of Justice and the CFPB’s own director, Kathy Kraninger, filed briefs arguing that the president should have more flexibility to be able to fire a sitting CFPB director. Because Kraninger sided with Seila Law, the court appointed former U.S. Solicitor General Paul Clement to defend the bureau.

Last year, a panel for the U.S Court of Appeals for the Ninth Circuit had unanimously ruled that the CFPB’s single-director structure is constitutional, prompting Seila to appeal to the Supreme Court.

Meanwhile, the plaintiffs in a separate case challenging the CFPB’s constitutionality, which is still pending before the U.S. Court of Appeals for the Fifth Circuit, have sought the Supreme Court's review. That case, All-American Check Cashing v. Consumer Financial Protection Bureau, is expected to come up at a conference of the justices in December.

That case asks whether the structure of the CFPB violates the separation of powers and whether a company subject to an enforcement action by an unconstitutionally structured agency is entitled to dismissal of the action because of a constitutional defect.

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Dodd-Frank Court cases Litigation Kathy Kraninger CFPB SCOTUS