A collection law firm fighting a Civil Investigative Demand from the Consumer Financial Protection Bureau is planning on appealing its case to the Supreme Court, and has asked the Court of Appeals for the Second Circuit to hold off issuing its final ruling in the case.
A copy of the motion in the case of Consumer Financial Protection Bureau v. Law Offices of Crystal Moroney can be accessed by clicking here.
In March, the Second Circuit upheld a lower court’s ruling that granted the CFPB’s petition to enforce the law firm to respond to the CID, after the law firm attempted to argue that the Bureau’s funding structure was unconstitutional. The ruling from the Second Circuit that the CFPB’s funding structure is constitutional conflicted with a ruling from the Fifth Circuit — which is now before the Supreme Court.
The law firm plans to ask the Supreme Court to review the Second Circuit’s decision, and “there is an extremely high probability” that the Court will either grant the petition or hold its decision pending the outcome of the Fifth Circuit case. “It makes little sense for the Court to issue its mandate now, given that the Supreme Court will soon address the precise constitutional issue raised in this case and will almost surely apply that decision to this case,” the law firm noted in its motion.
The CFPB’s case against the Law Office of Crystal Moroney began more than five years ago when the CFPB sent the firm a CID as it began an investigation into the firm’s collection practices. The law firm, according to the CFPB, failed to fully comply with the CID, which led the agency to seek a federal judge to compel compliance. The law firm fought back, questioning the constitutionality of the CFPB as grounds for its non-compliance. The CFPB opted to abandon that case and avoid the legal fight over its constitutionality at the time. But hours after it dropped the case, the CFPB filed a new CID with the law firm, which it said was “nearly identical” to the original request.
The CFPB is not funded through the traditional Congressional appropriations process, like most other federal agencies. Instead, it asks for money from the Federal Reserve Board. This was an intentional decision when the CFPB was created a decade ago because the authors of the law that created the CFPB wanted the agency to be independent and not subject to the whims of whichever political party happened to be in control at the time. The Fifth Circuit ruled back in February that Congress abdicated its power under the Constitution and violated the separation of powers.
