Mick Mulvaney, President Donald J. Trump’s choice to head the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) until a permanent director can be appointed, will remain in place as Acting Director of the Bureau, following a ruling by Judge Timothy J. Kelly of the U.S. District Court for the District of Columbia on Tuesday denying a motion for a temporary restraining order (“TRO”) filed by Leandra English, the hand-picked choice of outgoing CFPB Director Richard Cordray.
English, who had been Cordray’s Chief of Staff, was named Acting Director by Cordray as he departed his office on Friday. Following Cordray’s announcement, President Trump quickly announced his own appointment of Mulvaney to head the Bureau.
English filed the lawsuit and sought a TRO based on language in the Dodd-Frank Act (the statute that created the CFPB), which provides that the deputy director “shall...serve as acting Director in the absence or unavailability of the Director.” 12 U.S.C. § 5491(b)(5).
Judge Kelly ruled from the bench that this language in Dodd-Frank was not the exclusive means by which an acting director could be appointed; the President also had the option of appointing an acting director under the Vacancies Reform Act of 1998 (“VRA”), 5 U.S.C. § 3341 et seq., which applies when “an officer of an Executive agency...whose appointment to office is required to be made by the President, by and with the advice and consent of the Senate, dies, resigns, or is otherwise unable to perform the functions and duties of the office.” 5 U.S.C. § 3345(a).
Judge Kelly’s ruling was consistent with another case involving competing appointment powers under the VRA and the federal statute governing the National Labor Relations Board, Hooks ex rel. NLRB v. Kitsap Tenant Support Servs., 816 F.3d 550, 555 (9th Cir. 2016). The ruling was also consistent with a legal opinion issued by the Department of Justice, as well as an opinion by the CFPB’s own general counsel.
Judge Kelly also pointed out that Dodd-Frank mentions “absent” directors, but not vacant positions, while vacancies are addressed by the VRA.
In addition, Judge Kelly observed that Mulvaney was appointed by the President and confirmed by the Senate, while English was not. So, of the two competing acting directors, Mulvaney was the only one qualified under the VRA to head the CFPB.
With the court ruling against English on the request for a TRO, English’s attorney indicated that she would not proceed with seeking a preliminary injunction, which, in all likelihood, would share the fate of the TRO.
Judge Kelly indicated that, given the constitutional implications of the case, he intended to proceed with full briefing on the merits before reaching a final decision, which could then be appealed to the D.C. Circuit Court of Appeals.
The case has significant ramifications for businesses regulated by the CFPB, because commentators believe Trump’s appointee, Mulvaney, who has called the CFPB a “joke…in a sick, sad kind of way,” will rein in some of the CFPB’s regulatory efforts. English, on the other hand, likely would carry on her predecessor’s policies.
The case is English v. Trump, No. 1:17-cv-02534, in the U.S. District Court for the District of Columbia.