Consumer Financial Protection Bureau et al v. RD Legal Funding LLC et al

Filing 169

OPINION AND ORDER re: #132 MOTION to Dismiss . filed by RD Legal Funding Partners, LP, RD Legal Funding LLC, RD Legal Finance, LLC, Roni Dersovitz. In its June 21, 2018 opinion and order, the Court concluded that "the CFPB lacks authority to bring this enforcement action because its composition violates the Constitution's separation of powers, and thus the CFPB's claims are dismissed." RD Legal I, 332 F. Supp. 3d at 785 (cleaned up). The Supreme Court has since held that a properly appointed agency head does not lack the authority to undertake the responsibilities of his office simply because of an unconstitutional removal restriction. That decision is binding here. Because the CFPB possessed the authority to bring this enforcement action, and because the decision to bring this enforcement action was unaffected by the unconstitutional removal restriction then in effect, the motion to dismiss is DENIED and the CFPB's claims against Defendants may proceed. Counsel shall confer and inform the Court by letter no later than March 30, 2022, how they propose to proceed. SO ORDERED. (Signed by Judge Loretta A. Preska on 3/16/2022) (kv)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
CONSUMER FINANCIAL PROTECTION
BUREAU and THE PEOPLE OF THE
STATE OF NEW YORK, BY LETITIA
JAMES, ATTORNEY GENERAL FOR THE
STATE OF NEW YORK,
Plaintiffs,

17-cv-890 (LAP)

-against-

OPINION & ORDER

RD LEGAL FUNDING, LLC; RD LEGAL
FINANCE, LLC; RD LEGAL FUNDING
PARTNERS, LP; and RONI
DERSOVITZ,
Defendants.
Loretta A. Preska, Senior United States District Judge:
This is an action by Plaintiffs Consumer Financial
Protection Bureau (the “CFPB”) and the People of the State of
New York, by Letitia James,1 Attorney General for the State of
New York (“NYAG” or the “Attorney General”), against Defendants
RD Legal Funding, LLC; RD Legal Finance, LLC; RD Legal Funding
Partners, LP (collectively, the “RD Entities”); and Roni
Dersovitz, the founder and owner of the RD Entities (together
with the RD Entities, the “Defendants”).

The CFPB asserts that

the Defendants violated certain provisions of the Consumer
Financial Protection Act (“CFPA” or the “Act”).

The NYAG joins

At the time the Complaint was filed, the Attorney General of
the State of New York was Eric T. Schneiderman. The caption has
been amended to reflect the substitution. (See Dkt. No. 135.)
1

1

the CFPB in bringing claims under the CFPA and independently
asserts that the RD Entities are liable under New York law for
the same actions and events that form the basis of the CFPA
claims.
Following this Court’s dismissal of the CFPB’s claims on
the ground that the CFPA’s for-cause removal provision was
unconstitutional and not severable from the rest of the statute,
see Consumer Fin. Prot. Bureau v. RD Legal Funding, LLC (“RD
Legal I”), 332 F. Supp. 3d 729, 784 (S.D.N.Y. 2018),2 as amended,
2018 WL 11219167 (S.D.N.Y. Sept. 12, 2018), the Supreme Court
held that the for-cause removal provision was unconstitutional
but that the offending provision was severable from the rest of
the statute, Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S.
Ct. 2183, 2192 (2020).

In light of Seila Law, the Court of

Appeals affirmed in part and reversed in part RD Legal I and
remanded for this Court “to consider in the first instance the
validity of [then] Director Kraninger’s [July 2020] ratification

Before analyzing the CFPA’s constitutionality, the Court
concluded that the RD entities were “covered persons” within the
meaning of the CFPA, id. at 752-768, that the CFPB adequately
alleged deceptive and abusive conduct by the RD Entities under
the CFPA, id. at 772-779, and that the CFPB adequately alleged
substantial assistance by Roni Dersovitz under the CFPA, id. at
773-779. With respect to the NYAG’s state law claims, the Court
concluded that the NYAG adequately alleged state law claims for
violations of civil and criminal usury laws, New York General
Obligations Law, deceptive practices, false advertising, and
fraud. Id. at 780-784.
2

2

of this enforcement action.”

Consumer Fin. Prot. Bureau v. RD

Legal Funding, LLC (“RD Legal II”), 828 Fed. Appx. 68 (2d Cir.
2020) (summary order) (Mem.).3

In other words, the case was

remanded to determine whether the July 2020 ratification of this
enforcement action by the then Director of the CFPB was
sufficient to ratify the CFPB’s original decision to bring this
enforcement action in February 2017, when the CFPB was
unconstitutionally structured.
On remand, the Court sought the parties’ views as to how
they wished to proceed.

(See Dkt. Nos. 120-121.)

On March 1,

2021, the parties jointly proposed a briefing schedule “to
address the validity of CFPB Director Kraninger’s ratification
of this action.”

(Dkt. No. 129.)

On March 12, 2021, Defendants filed the instant motion “to
dismiss this enforcement action filed by the [CFPB] because it
was brought by an unconstitutionally constituted agency, and the
CFPB’s untimely attempt to subsequently ratify this action
cannot cure the agency’s constitutional infirmity.”
132 at 1.)

(Dkt. No.

The CFPB filed its brief in opposition on March 19,

The Court of Appeals did “not reach defendants’ other
arguments” (id. n.1) and did not purport to reverse any part of
this Court’s June 21, 2018 order, as amended by its September
12, 2018 order, other than Part IV.C, which addressed the CFPB’s
constitutionality and Acting Director Mulvaney’s ratification.
3

3

2021 (dkt. no. 136), and Defendants filed their reply on April
2, 2021 (dkt. no. 138).
Over the ensuing nine months, the CFPB and Defendants
submitted over a dozen letters addressing supplemental authority
that they believe may be relevant to the ratification issue and
the pending motion to dismiss.

Of note, the parties exchanged a

series of letters on the import, if any, of the Supreme Court’s
June 2021 decision in Collins v. Yellen, 141 S. Ct. 1761 (2021).
(See Dkt. Nos. 149, 150, 154, 155, 158, 161, 162, 163.)

The

Court construes these numerous detailed submissions as
supplemental briefing on the motion to dismiss.
Accordingly, the question presented in this motion to
dismiss is narrow and concerns only Counts I-V of the Complaint—
those counts brought under the CFPA—and it concerns those counts
only to the extent they are brought by the CFPB.4

As explained

in more detail below, the Supreme Court’s decision in Collins v.
Yellen compels the conclusion that the CFPB possessed the
authority to bring this action in February 2017 and, hence, that
ratification by Director Kraninger was unnecessary.

The motion

to dismiss is denied.

4

Counts I-V are asserted independently by the NYAG.
4

I.

Background

The facts of this case are set forth in the Court’s prior
opinion.

RD Legal I, 332 F. Supp. 3d at 746-750.

Recited below

are only those facts necessary to decide the narrow question
presented.
The RD Entities are companies that offer cash advances to
consumers waiting on payouts from settlement agreements or
judgments entered in their favor.

The CFPB alleges that

Defendants violated the CFPA by misleading these consumers into
entering cash advance agreements that the Defendants represented
as valid and enforceable sales but in reality functioned as
usurious loans that were void under state law.
In bringing this action, the CFPB invokes its authority
under Section 1054 of the Consumer Financial Protection Act of
2010 (CFPA), 12 U.S.C. § 5564.

That statute provides, in

relevant part, that:
If any person violates a Federal consumer
financial law, the Bureau may . . . commence
a civil action against such person to impose
a civil penalty or seek all appropriate legal
and equitable relief including a permanent or
temporary injunction as permitted by law.
12 U.S.C. § 5564(a).

The statute also provides that, subject to

certain exceptions not relevant here or “as otherwise permitted
by law or equity, no action may be brought under this title  more

5

than 3 years after the date of discovery of the violation to
which an action relates.”

Id. § 5564(g)(1).

The CFPB filed the Complaint on February 7, 2017.
no. 1.)

(Dkt.

On that date, the CFPB was headed by Richard Cordray,

who was appointed by President Obama and confirmed by the
Senate.

Director Cordray was removable only for cause under the

CFPA, a provision that the Supreme Court has ruled is
unconstitutional in violation of the separation of powers.
Seila Law, 140 S. Ct. at 2192.

See

That provision has been severed

from the CFPA, and CFPB directors are now removable at will by
the President.

Id.

According to Defendants, because the

enforcement action was brought at a time when the CFPB’s
director was not removable at will, the CFPB Director’s (and
therefore the CFPB’s) decision to bring an enforcement action
was void ab initio.
On November 24, 2017, Director Cordray resigned his
position at the CFPB.
313 (D.D.C. 2018).

English v. Trump, 279 F. Supp. 3d 307,

Later that day, President Trump appointed

Mick Mulvaney, the incumbent director of the Office of
Management and Budget, to be the acting director of the CFPB.
Id. at 314; see also Dkt. No. 78.

Acting Director Mulvaney was

removable by President Trump at will because the CFPA’s removal
provision by its terms applied only to “the Director,” not to an
acting director.

See 12 U.S.C. § 5491(c)(3); see also RD Legal
6

I, 332 F. Supp. 3d at 785 (noting that “the President may remove
Mr. Mulvaney at will”).
On May 11, 2018, Eric Blankenstein, then Policy Associate
Director for Supervision, Enforcement, and Fair Lending of the
CFPB, submitted a declaration ratifying this enforcement action
under authority delegated to him by Acting Director Mulvaney:
On March 11, 2018 . . . , Acting Director
Mulvaney delegated to me the authority to
ratify on behalf of the Bureau those
enforcement matters where a lawsuit has been
initiated and a complaint has been filed in
court prior to November 25, 2017.
. . .
After having been briefed by the Bureau
staff regarding this case, and pursuant to the
authority delegated to me, I ratified the
Bureau’s decision to file a lawsuit against RD
Legal Funding, LLC; RD Legal Finance, LLC; RD
Legal
Funding
Partners,
LP;
and
Roni
Dersovitz.
(Dkt. No. 78-1.)
On December 11, 2018, Acting Director Mulvaney was replaced
by Director Kathleen Kraninger, who was appointed by President
Trump and confirmed by the Senate.

(Dkt. No. 136-1.)

On July

8, 2020, following the Supreme Court’s decision in Seila Law,
Director Kraninger, who was removable by the President at will,
submitted a declaration ratifying this enforcement action:
In my capacity as the Bureau’s Director,
I have considered the basis for the Bureau’s
decisions
to
file
the
lawsuit
against

7

Defendants and to appeal the district court’s
dismissal of that action.
On behalf of
the decisions to
Defendants and to
dismissal of that
(Dkt. No. 136-1.)

the Bureau, I hereby ratify
file the lawsuit against
appeal the district court’s
action.

The July 8, 2020 ratification came more than

three years after the filing of the Complaint on February 7,
2017 and, therefore, more than three years “after the date of
discovery of the violation to which [the] action relates.”

12

U.S.C. § 5564(g)(1).
Defendants argue that the ratification doctrine does not
apply here as a legal matter and, even assuming it does, that
Director Kraninger’s ratification came too late because at the
time of ratification the three-year statute of limitations had
expired.

The CFPB, relying on the Supreme Court’s recent

decision in Collins, disagrees and argues that the decision to
bring suit is and was always valid and therefore ratification
was not necessary.

Defendants respond that Collins does not

apply here and, even if it does, the remedial test set forth in
Collins is met and warrants relief for Defendants in the form of
dismissal.
II.

Legal Standard

Defendants do not identify in their papers the basis in
Rule 12(b) for their motion to dismiss.

Because the question

presented is not jurisdictional in nature and instead presents a
8

hybrid Article III and statute of limitations issue, the Court
construes the motion to dismiss as one brought under Rule
12(b)(6).

Accord Consumer Fin. Prot. Bureau v. Access Funding,

LLC, No. 16-cv-3759, 2021 WL 2915118, at *11 (D. Md. July 12,
2021); see also Consumer Fin. Prot. Bureau v. Nat’l Collegiate
Master Student Loan Tr., No. 17-cv-1323, 2021 WL 1169029, at *23 (D. Del. Mar. 26, 2021).
In considering a motion to dismiss pursuant to Rule
12(b)(6), a court must “accept the material facts alleged in the
complaint as true and construe all reasonable inferences in the
plaintiff’s favor.”

Phelps v. Kapnolas, 308 F.3d 180, 184 (2d

Cir. 2002) (citation and internal quotation marks omitted).
Though a court must accept all factual allegations as true, it
gives no effect to “legal conclusions couched as factual
allegations.”

Stadnick v. Vivint Solar, Inc., 861 F.3d 31, 35

(2d Cir. 2017) (quoting Starr v. Sony BMG Music Entm’t, 592 F.3d
314, 321 (2d Cir. 2010)).

“To survive a motion to dismiss, a

complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its
face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

“A claim

has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.”
9

Iqbal, 556 U.S. at 678.

Deciding whether a complaint states a

claim upon which relief can be granted is “a context-specific
task that requires the reviewing court to draw on its judicial
experience and common sense.”

Rahman v. Schriro, 22 F. Supp. 3d

305, 310 (S.D.N.Y. 2014) (quoting Iqbal, 556 U.S. at 679).
III. Discussion
The question before the Court, as instructed by the Court
of Appeals and as briefed by the parties, is whether Director
Kraninger’s July 2020 ratification of this enforcement action
against Defendants validly ratified, within the applicable
statute of limitations, the CFPB’s filing of the Complaint in
February 2017 at a time when Defendants contend the CFPB lacked
authority to initiate the action.
Although absent from the Complaint, the parties do not
dispute, and the Court therefore accepts as true for the
purposes of this motion, the Court of Appeals’s statement that
“now-acting CFPB Director Kathleen L. Kraninger ratified the
enforcement action on July 8, 2020.”
Appx. 68.5

RD Legal II, 828 Fed.

Indeed, RD Legal concedes that “the CFPB’s then-

Director Kraninger submitted a declaration dated July 8, 2020,”

The Court of Appeals appears to have been referencing the
“Declaration of Kathleen L. Kraninger, Director of PlaintiffCross-Appellee Consumer Financial Protection Bureau, Regarding
Ratification”, dated July 8, 2020 and filed in the Court of
Appeals, CA No. 18-2743, Dkt. No. 237-2.
5

10

in which “she asserted that she understood she was removable for
cause, that she had considered the bases for bringing the
enforcement action and for appealing its dismissal, and that she
ratified both decisions.”

(MTD at 2.)

The CFPB likewise states

that “the Bureau’s then-Director, Kathleen Kraninger, ratified
the decision to file this suit” (Opp. at 7) and filed Ms.
Kraninger’s July 8, 2020 declaration of ratification as an
attachment to its opposition to the motion to dismiss (see dkt.
no. 136-1).
A.

The CFPB Possessed the Authority to Initiate This
Enforcement Action, and No Ratification Was
Necessary.

After the Supreme Court decided Seila Law and the Court of
Appeals remanded to this Court for an inquiry into ratification,
the Supreme Court issued its opinion in Collins v. Yellen, 141
S. Ct. 1761 (2021).

There, the Supreme Court considered a

constitutional challenge to the structure of the Federal Housing
Finance Authority (FHFA), which was led by a single director
who--like the CFPB directors at issue in Seila Law--was
removable by the President only for cause.

Id. at 1770.

On the

constitutional merits (Part III.B of the majority opinion), a
majority of six Justices held, relying heavily on Seila Law,
that the FHFA’s structure violated constitutional separation of
powers.

Id. at 1783-84.

In considering the appropriate remedy

(Part III.C of the majority opinion), eight of the nine Justices
11

agreed that the relevant criterion for determining whether an
agency head possesses “the authority to carry out the functions
of the office,” id. at 1788, is whether the agency head was
properly appointed, not whether she was properly removable:
All the officers who headed the FHFA during
the time in question were properly appointed.
Although
the
statute
unconstitutionally
limited the President's authority to remove
the
confirmed
Directors,
there
was
no
constitutional defect in the statutorily
prescribed method of appointment to that
office. As a result, there is no reason to
regard any of the actions taken by the FHFA in
relation to the third amendment as void.
Id. at 1787 (emphasis in original).

Put differently, “the

unlawfulness of the removal provision does not strip the
Director of the power to undertake the other responsibilities of
his office.”

Id. at 1788 n.23 (citing Seila Law, 140 S. Ct. at

2207-2211).
This reasoning applies with equal force here.

The CFPB

brought this enforcement action in February 2017, when Director
Cordray was removable by President Trump only for cause.

But

there is no dispute that Director Cordray was properly appointed
by President Obama and confirmed by the Senate and, therefore,
“there is no reason to regard any of the actions taken by the
[CFPB] in relation to [this enforcement action] as void.”
at 1787.

Id.

Director Cordray possessed “the authority to carry out

the functions of the office,” Id. at 1788, including the

12

authority to exercise enforcement functions under 12 U.S.C.
§ 5564.

Because the CFPB, under Director Cordray, brought this

enforcement action in February 2017 with the necessary authority
and within the applicable statute of limitations, no
ratification was necessary.

Accord Consumer Fin. Prot. Bureau

v. Nat’l Collegiate Master Student Loan Tr., No. 17-cv-1323, --F. Supp. 3d ---, 2021 WL 5936404, at *2 (D. Del. Dec. 13, 2021).
Defendants argue that Collins is distinguishable
principally on the grounds that (1) Collins involved a suit by
shareholders against the Treasury Department seeking prospective
relief in the form of damages and an injunction whereas this
case involves an enforcement action by the CFPB against
Defendants that seek to dismiss the action due to the
unconstitutional removal restriction; (2) the action challenged
in Collins was initially taken by an acting director who was
removable at will whereas the action here was brought by
Director Cordray who was removable only for cause; and (3) the
Court in Collins was not presented with a statute of limitations
issue.

(Dkt. No. 154 at 1-3.)

The Court has considered these

arguments and finds them to be unpersuasive.
As discussed above, the Court in Collins broadly held that
what matters in terms of authority to carry out the functions of
an executive agency is whether a director was properly
appointed, not whether she was properly removable.
13

It is

therefore of no moment for purposes of determining whether the
CFPB possessed the necessary authority to bring this action
whether Director Cordray was removable for cause or at will; it
is undisputed that Director Cordray was lawfully appointed and
confirmed by the Senate.

The CFPB possessed the necessary

authority when it initiated this enforcement action, so there is
no statute of limitations issue here,6 just as there was no
statute of limitations issue in Collins.

And nothing in the

Court’s decision in Collins purported to limit its holding to
the type of relief sought or to the side of the “v” on which the
government agency happens to appear.
Although the Court of Appeals directed this Court to
consider the validity of Director Kraninger’s ratification, RD
Legal II, 828 Fed. Appx. 68, the legal landscape has shifted
since the mandate issued such that ratification is no longer
directly implicated.

As the Supreme Court stated in Collins,

its decision in Seila Law to “remand the case so that the lower
courts could decide whether . . . the Board’s issuance of an
investigative demand had been ratified by an Acting Director who
was removable at will by the President” did not “implicitly
mean[] that the Director’s action would be void unless lawfully

Defendants do not argue that at the time this enforcement
action was initiated in February 2017, “more than 3 years” had
passed since “the date of discovery of the violation to which
[the] action relates.” 12 U.S.C. § 5564(g)(1).
6

14

ratified.”

141 S. Ct. at 1788.

The Court concludes that

Director Cordray’s exercise of authority in bringing this
enforcement action was not “void unless lawfully ratified.”
Hence, analysis of the ratification issue is unnecessary.
B.

Defendants Are Not Entitled to Dismissal Because
the Unconstitutional Removal Provision Did Not
Cause Them Harm.

Despite its holding that an unconstitutional removal
restriction does not void otherwise lawful exercises of agency
power by an agency head who is lawfully appointed, the Supreme
Court in Collins held that a remedy for an “unconstitutional
restriction on the President’s power to remove” could be
appropriate where the restriction itself “inflict[ed]
compensable harm,” which on the facts in Collins “[could not] be
ruled out.”

Id. at 1789.

The Court offered two examples in

which an unconstitutional removal provision “would clearly cause
harm”:
Suppose, for example, that the President had
attempted to remove a Director but was
prevented from doing so by a lower court
decision holding that he did not have “cause”
for removal.
Or suppose that the President
had made a public statement expressing
displeasure with actions taken by a Director
and had asserted that he would remove the
Director if the statute did not stand in the
way.
Id.

15

The parties dispute whether the Supreme Court’s majority in
Collins established a “but for” test, or an “inflicted
compensable harm”/“caused harm” test, or some other inquiry for
determining the causal relationship between an unconstitutional
removal provision and an alleged harm flowing from that
restriction, which might warrant a remedy such as dismissal.
(See Dkt. Nos. 161, 162, 163.)

The CFPB points to Judge Bibas’s

recent decision in Consumer Financial Protection Bureau v.
National Collegiate Master Student Loan Trust, which described
Collins as having established a test requiring a showing “that
the agency action would not have been taken but for the
President’s inability to remove the agency head.”

No. 17-cv-

1323, --- F. Supp. 3d ---, 2021 WL 5936404, at *2 (D. Del. Dec.
13, 2021).

In her partial concurrence in Collins, Justice Kagan

similarly summarized the majority’s holding on remedy, with
which she agreed, as providing a remedy “only when the
President’s inability to fire an agency head affected the
complained-of decision.”

141 S. Ct. at 1801 (Kagan, J.,

concurring in part).
For their part, Defendants argue that the test set forth by
the Collins majority simply requires that the unconstitutional
removal provision “inflict[ed] compensable harm” or “cause[d]
harm,” with reference to the non-exclusive examples that “would
clearly cause harm” provided by the Court and reproduced above.
16

(Dkt. No. 162 (quoting Collins, 141 S. Ct. at 1788-89).)
According to Defendants, the but-for test advocated by the CFPB
is contrary not only to Collins but also to the Supreme Court’s
statement in Seila Law that litigants are “not required to prove
that the Government’s course of conduct would have been
different in a ‘counterfactual world.’”

(Id. (quoting Seila

Law, 140 S. Ct. at 2196) (cleaned up).)

But this language

related to the parties’ standing, not their entitlement to a
remedy.

Indeed, the Court in Collins stated, in no uncertain

terms, that the passage on which Defendants rely “should not be
misunderstood as a holding on a party’s entitlement to relief
based on an unconstitutional removal restriction.”

141 S. Ct.

at 1788 n.24 (citing Seila Law, 140 S. Ct. at 2195-96).)
To the extent there is an actual dispute over the proper
test to be applied, the Court need not resolve the dispute
because the outcome is the same.

Suffice it to say that for

Defendants to be entitled to dismissal of this enforcement
action because of the CFPA’s unconstitutional removal provision,
there must be some nexus between the existence of the unlawful
removal provision and the bringing of (or maintenance of) this
enforcement action.

See Collins, 141 S. Ct. at 1789.

The relief sought by Defendants is dismissal of this
enforcement action.

According to Defendants, “but for the

unconstitutional removal provision, Director Cordray would have
17

been removed prior to approving the filing of this enforcement
action.”

(Dkt. No. 154 at 4.)

Even accepting that premise as

true, however, it does not follow that, once removed, Director
Cordray’s successor would have declined to bring this
enforcement action.

In fact, we know the opposite to be true.

After Director Cordray stepped down on Thanksgiving Day of
2017, President Trump appointed Mick Mulvaney to be acting
director of the CFPB.

If President Trump felt that the

initiation of this enforcement action was in error and
contravened his obligation “to ensure the faithful execution of
the laws,” he could have fired Acting Director Mulvaney for
refusing voluntarily to dismiss the action.

See, e.g., Seila

Law, 140 S. Ct. at 2235 & n.9 (Kagan, J., concurring in part).
He did not do so.

Rather, under Acting Director Mulvaney, the

CFPB reaffirmed its decision to bring this enforcement action7
and continued actively to prosecute the case,8 including an
appeal of this Court’s judgment against the CFPB.9

President

Trump then appointed Kathleen Kraninger to direct to CFPB; her
tenure as Director began on December 11, 2018.

Again, under

See Dkt. No. 78-1.
See, e.g., Dkt. Nos. 64 (letter dated 1/10/18), 67 (letter
dated 1/17/18), 73 (letter dated 3/5/18), 92 (letter dated
8/10/18), 95 (letter dated 8/16/18).
9 See Dkt. Nos. 103-104 (letter and proposed judgment to
facilitate appeal dated 9/4/18), 108 (notice of appeal dated
9/14/2018); see also Dkt. Nos. 114-115 (letter and revised
proposed judgment dated 10/23/2018).
7
8

18

Director Kraninger, the CFPB reaffirmed its decision to bring
this enforcement action10 and continued actively to prosecute the
case following issuance of the Court of Appeals’ mandate.11
Whatever harms might have flowed from President Trump’s
alleged desire--but inability--to fire Director Cordray, the
CFPB’s decision to bring, and years of unbroken prosecution of,
this enforcement action against these Defendants was not one of
them.

“Thus, the CFPB’s initial decision to bring this suit was

not ultra vires” and Defendants are not entitled to relief in
the form of dismissal of this action.

See Nat’l Collegiate

Master Student Loan Tr., 2021 WL 5936404, at *2.
*

*

*

In its June 21, 2018 opinion and order, the Court concluded
that “the CFPB lacks authority to bring this enforcement action
because its composition violates the Constitution’s separation
of powers, and thus the CFPB’s claims are dismissed.”
I, 332 F. Supp. 3d at 785 (cleaned up).

RD Legal

The Supreme Court has

since held that a properly appointed agency head does not lack
the authority to undertake the responsibilities of his office

See Dkt. No. 136-1.
See, e.g., Dkt. Nos. 121 (joint letter dated 2/18/21), 125
(appearance for telephonic status conference), 136 (opposition
to motion to dismiss dated 3/19/21), 143 (letter dated 4/15/21),
145 (letter dated 5/18/21), 149 (letter dated 6/25/21), 153
(letter dated 7/14/21), 155 (letter dated 7/23/21), 160 (letter
dated 10/4/21).
10
11

19

simply because of an unconstitutional removal restriction.
decision is binding here.

That

Because the CFPB possessed the

authority to bring this enforcement action, and because the
decision to bring this enforcement action was unaffected by the
unconstitutional removal restriction then in effect, the motion
to dismiss is DENIED and the CFPB’s claims against Defendants
may proceed.
Counsel shall confer and inform the Court by letter no
later than March 30, 2022, how they propose to proceed.
SO ORDERED.
Dated:

New York, New York
March 16, 2022
_____________________________
LORETTA A. PRESKA
Senior United States District Judge

20