On October 18, the U.S. Supreme Court granted cert in Seila Law LLC v. CFPB, to answer the question of whether an independent agency led by a single director violates the Constitution’s separation of powers under Article II. The Court also directed the parties to brief and argue whether 12 U.S.C. §5491(c)(3), which sets up the Bureau’s single director structure and imposes removal for cause, is severable from the rest of the Dodd-Frank Act, should it be found to be unconstitutional. As previously covered by InfoBytes, the law firm filed a petition for a writ of certiorari with the Court, appealing the May decision by the U.S. Court of Appeals for the Ninth Circuit, which held that (i) the Bureau’s single-director structure is constitutional, and (ii) the district court did not err when it granted the Bureau’s petition to enforce the law firm’s compliance with a 2017 Civil Investigative Demand (previously covered by InfoBytes here). In response to the petition, the Bureau and the DOJ filed a brief arguing that the for-cause restriction on the president’s authority to remove the Bureau’s single director violates the Constitution’s separation of powers. While the Bureau previously defended the single-director structure to the 9th Circuit, the brief notes that since the May decision was issued, “the Director has reconsidered that position and now agrees that the removal restriction is unconstitutional.”

In response to the Court’s decision to grant cert, an online loan servicer that operated on tribal lands has withdrawn its appeal from the 9th Circuit challenging the Bureau’s structure pending the Court’s decision in Seila Law. In the original action, the district court found that an online loan servicer that operated on tribal lands engaged in deceptive practices by collecting on loans that exceeded the usury limits in various states, and ordered it and its affiliates to pay a $10 million penalty, far short of the Bureau’s request. (Previously covered by InfoBtyes here and here.)