Geopolitics

CFPB Law Suit – More At Stake Than Legal Issues

Ms. English Could Have Legal Right, But Still Be Denied Extraordinary Relief 

WASHINGTON, D.C. (Nov. 28, 2017):  More than mere legal issues may be involved – and could even be decisive – in the law suit in which Leandra English, appointed by the outgoing Director as the CFPB’s deputy director, is seeking court orders prohibiting President Trump’s Mick Mulvaney from taking over as head of the agency, says public interest law professor John Banzhaf.

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CFPB Consumer Financial Protection Board

While most reporting on the legal action has focused on the so-called dueling federal statutes - the Dodd-Frank Act of 2010 [12 U.S.C. § 5491] which apparently supports English, and the Federal Vacancies Reform Act of 1988 [5 U.S.C. § 3345(a)(2)] upon which Mulvaney relies - the rules relating to the equitable relief requested cannot be ignored.

A party may have a clear legal right as a matter of law but still be denied extraordinary relief in the form of a T.R.O, preliminary injunction, or similar court order if doing so is inconsistent with various maxims governing equitable relief, notes Banzhaf, who teaches this area of law.

While English may have the stronger legal argument because a specific statute such as Dodd-Frank usually takes preference over a general one such as the Vacancies Act, and there is some legislative history which supports her position, a court must still decide whether issuing an injunction would be consistent with various equitable maxims.

One maxim, for example, provides that "equity does not require an idle gesture."

A recent U.S. Court of Appeals ruling, which struck down the statutory requirement that the CFPB director could be removed by the President only for cause such as "inefficiency, neglect of duty or malfeasance," means that, like many other agency heads, he serves at the will of the President and can be removed from his position at any time and without any reason.

If a director appointed by the President and confirmed by the Senate can be removed by Trump at any time, it would seem that an acting director, not appointed by the President nor confirmed by the Senate, can likewise be removed. If so, issuing an injunction to permit English to assume control as director of the CFPB might seem like an idle gesture, since Trump can nullify the order simply by firing her.

Another maxim says that one who comes into equity must come with "clean hands," or alternatively, that equity will not permit a party to profit by his own questionable conduct.

Thus former Director Richard Cordray's unexpected decision to suddenly leave the agency earlier than anticipated, and to make this unusual appointment as he did, could well be viewed - although perfectly legal - as a ploy to frustrate or at least significantly delay Trump's announced intention to make changes at the agency, and/or to embarrass the President.  So if English's claim does not arise from perfectly clean hands, and/or was done for questionable means, a court may likewise deny extraordinary relief.

The court might also notice that English did not bring her legal action challenging Mulvaney's right to hold the office under the very statutes designed for such a purpose [D.C. Code Ann. § 16-3501-03], perhaps in part because it limits when and by whom such challenges can be made, and also provides in most situations that any challenger provide as a precondition "security for costs."

If the court decides that these conditions and restrictions should be applied here, it could likewise adversely affect English's law suit, along with possible problems showing that she herself will suffer "irreparable injury," a necessary requirement for any injunction relief.