RSSThe troubled appointment of Richard Cordray as Director of the Consumer Financial Protection Bureau four years ago continues to be a thorn in the side of the agency. This month, a three-judge panel of the United States Ninth Circuit Court of Appeals issued an opinion in a case that dates back to the earliest days of the Bureau, and although the opinion sided with the CFPB, there was an ominous coda to the decision that promises continued legal scrutiny.
The case, Gordon v. CFPB, was an early enforcement action by the Bureau against a business offering mortgage relief services. The CFPB sued Gordon, claiming he was illegally charging up-front fees for meaningless services. It is not, however, the merits of the charges that moved Gordon to sue. Rather, he claims that, at the time of the enforcement action, Cordray was not validly appointed as CFPB Director and therefore the enforcement action emanated from an unconstitutional authority. Lower courts have held that Cordray’s eventual confirmation resolved any earlier deficiencies, and the panel agreed. However, in a rare move, the panel invited Gordon to petition for an en banc rehearing, virtually ensuring that the question of Cordray’s appointment will have another day in court.
Obama appointed Cordray in 2012 after Elizabeth Warren’s expected appointment met significant political resistance. Senate Republicans, however, made it clear that they would not allow a floor vote to confirm anyone to the post until more controls were placed on the new agency. Undeterred, Obama waited for what he erroneously believed was a Senate recess and appointed Cordray without Senate approval.
Although Cordray was eventually confirmed as part of a larger compromise between Obama and the Senate, a 2014 Supreme Court decision, NLRB v. Noel Canning, cast doubt on Obama’s recess appointment of Cordray. In that case, the Court held that three board members appointed to the Nation Labor Relations Board at the same time were invalid because the Senate was not, in fact, in recess. According to the Court, the Constitution does not permit what the Obama Administration called “intra-session recesses.” This was the exact same exact process used to appoint Cordray.
Although it would seem that the Ninth Curcuit panel answered the question by siding with the lower courts, the invitation issued to Gordon to seek an en banc rehearing is significant. An en banc rehearing is one with all of the judges of the circuit present, not just a panel. According to the Federal Rules of Appellate Procedure, an en banc rehearing “is not favored and ordinarily will not be ordered” except where “the proceeding involves a question of exceptional importance.” That would strongly suggest that some in the Ninth Circuit feel there is still much to consider in the question of Cordray’s appointment and the other enforcement actions issued before his formal confirmation.
