PHH Files Supplemental Response to CFPB’s Rehearing petition; Opposes State AGs’ Motion to Intervene

This article previously appeared on Ballard Spahr’s CFPB Monitor and is re-published here with permission.

This past Friday, PHH filed a supplemental response to the CFPB’s petition for en banc rehearing and a response opposing the motion filed by Democratic Attorneys General of 16 states and the District of Columbia to intervene in the PHH appeal.

Supplemental Response.  The D.C. Circuit invited the Solicitor General to file a response to the CFPB’s petition expressing the views of the United States.  After the Department of Justice filed a response, PHH filed a motion for leave to file a supplemental response.  In that motion, PHH asserted that because the DOJ had argued that the D.C. Circuit should grant the CFPB’s petition on several grounds that were not pressed in the CFPB’s petition, PHH was seeking an opportunity to be heard on the views expressed by the United States.  Despite the CFPB’s opposition to PHH’s motion, the D.C. Circuit granted PHH’s motion and required PHH to file its supplemental response by January 27.

In its supplemental response, PHH asserts that the United States did not dispute the panel’s conclusion that the CFPB’s structure is unconstitutional or the panel’s remedy to address the constitutional violation (i.e. severance of the for-cause removal provision) but only challenged the panel’s reasoning in reaching that outcome.  While rejecting the United States’ reading of U.S. Supreme Court precedent with regard to the role of separation of powers in protecting individual liberty, PHH also argues that even under “the United States’ crabbed reading of [such precedent], the panel undoubtedly reached the correct result.”  According to PHH, “the United States identifies no reason for the full Court to grant rehearing simply to retrace the panel’s steps and arrive at the same place.”

PHH also calls “passing strange” the United States’ suggestion for the en banc court to conclude that it should not reach the separation of powers issue under the doctrine of constitutional avoidance while simultaneously arguing that the en banc court should review the panel’s separation of powers analysis.  PHH observes that the “United States cites no examples of an appellate court granting rehearing en banc for the purpose of not reaching an issue.” (emphasis provided).  PHH argues that because the panel properly reached the separation of powers question, the court should reject the United States’ suggestion that the court should grant rehearing on the question but then decline to decide it.

PHH also observes in its supplemental response that the United States did not contest the D.C. Circuit’s RESPA interpretation or its due process holding and instead only addressed its separation of powers holding.  PHH argues that the panel’s RESPA interpretation and due process holding were correct and that “there is no possible basis to rehear either the panel’s RESPA or due-process holdings.” 

Response to Motion to Intervene.  Last week, a motion to intervene was filed with the D.C. Circuit by the Democratic Attorneys General of 16 states and the District of Columbia.  In its response, PHH argues the motion should be denied for reasons that include the following:

• The motion was untimely because federal appellate rules require a motion to intervene to be filed within 30 days after a petition for review is filed and PHH filed its petition for review in June 2015.   The state AGs’ argument that good cause exists to extend the deadline is “implausible” because the results of the presidential election are not relevant to the question of intervention and even if they were relevant, the state AGs did not explain the reason for “their additional two-and-a-half-month [post-election] delay before seeking to intervene.”  In addition, “intervention would be grossly unfair to petitioners, who suddenly would be faced with the burden of litigating any further judicial proceedings against seventeen new (and sovereign) party opponents.”
• The state AGs lack standing to intervene because they have no legally protected interest.  With regard to RESPA, the state AGs’ involvement is not “necessary or appropriate to protect the Executive Branch’s interest in the interpretation and enforcement of RESPA.”  With regard to the CFPB Director’s independence, the state AGs “have no standing to defend the constitutionality of a federal statutory provision that applies only to one federal Officer–the Director of the CFPB.”  The panel’s decision does not, as the state AGs contend, “effectively giv[e] the President veto power over” the state AGs’ attempts to enforce the CFPA under Section 1042 because the CFPA merely requires the state AGs to notify the CFPB of an intended enforcement action before filing and allows the CFPB to intervene.  The state AGs “remain free to pursue their own enforcement actions, and the courts would remain the ultimate arbiters of any disagreements.”  The state AGs also provide no explanation for “their illogical and ultimately speculative contention that a constitutionally accountable CFPB would somehow ‘undermine’ regulatory coordination.  To the contrary, states routinely coordinate with constitutionally accountable federal agencies, such as the Department of Justice.”
• The motion “is simply an effort by the state AGs to intervene in order ‘to file a petition for certiorari,’ as they admit, in the event the Solicitor General does not.”  The state AGs should not be given control over efforts to seek Supreme Court review.  More specifically, granting intervention would circumvent the CFPA provision requiring the CFPB to seek approval from the United State AG to file a certiorari petition–which is “one of the only means that Congress provided the President to supervise litigation involving the CFPB.”

In addition to the state AGs’ motion, two other motions to intervene were filed last week.  One motion was filed by Democratic lawmakers Senator Sherrod Brown and Representative Maxine Waters who are, respectively, the Ranking Members of the Senate Banking Committee and the House Financial Services Committee.  The other motion was filed by Maeve Brown (who chairs the CFPB’s Consumer Advisory Board), Americans for Financial Reform, Center for Responsible Lending, Leadership Conference on Civil and Human Rights, Self-Help Credit Union, and United States Public Interest Research Group.  In a footnote to its response, PHH states that it “will promptly and separately respond to those motions.”