Leandra English, the Deputy Director of the Consumer Financial Protection Bureau (“CFPB”), has filed suit against President Trump seeking a declaration that she is the rightful Acting Director of the CFPB. On Friday, November 24, Richard Cordray officially resigned as Director of the CFPB following reports earlier this month that he planned to step down at the end of November. Also on Friday, the CFPB announced that Cordray named Leandra English, Chief of Staff of the CFPB, as the CFPB’s Deputy Director. After the announcement of English as the CFPB’s Deputy Director, the White House issued a press release stating that President Trump designated Mick Mulvaney, the Director of the Office of Management and Budget, to serve as the CFPB’s Acting Director until Cordray’s successor is nominated by the President and then confirmed by the Senate. On Sunday, English filed a complaint in the United States District Court for the District of Columbia, seeking declaratory judgment that she is the CFPB’s Acting Director and that Mick Mulvaney, who was appointed by President Trump to function as Acting Director, is not.

English also filed an emergency motion for a temporary restraining order (“TRO”) to prevent President Trump and Mulvaney from interfering with her ability to function as the CFPB’s Acting Director. After prompt hearing, Judge Timothy Kelly denied the TRO finding that President Trump has the authority to name the CFPB’s Acting Director and that English was unable to show irreparable harm in the event the TRO was not granted. Despite his ruling, Judge Kelly acknowledged there are crucial constitutional issues that have not yet been briefed. Counsel for Deputy Director English, Deepak Gupta of Gupta Wessler PLLC, stated he most likely will not pursue a preliminary injunction and expressed his intention to pursue the case on its merits.

Deputy Director English bases her claim to the position of Acting Director on a provision of the Consumer Financial Protection Act (“CFPA”), which states that the Deputy Director will become Acting Director in the “absence or unavailability” of the Director. She argues that this provision covers the current vacancy created by Cordray’s resignation. The Department of Justice’s Office of Legal Counsel, on the other hand, delivered a memorandum to President Trump’s counsel, opining that the Federal Vacancies Reform Act (“FVRA”) gave the President the legal right to appoint the Acting Director of the CFPB. A particular provision of the FVRA allows the President to fill a vacant position in the “executive agency” where the position is vacant due to events such as death or resignation. The Office of Legal Counsel also opined that the CFPA provision referring to “unavailability” of the Director should be interpreted to include vacancies created by resignation in addition to temporary absences such as sickness. Although the Office of Legal Counsel stated that both the CFPA and FVRA allow for the appointment of the CFPB’s Acting Director, it opined that “when the President designates an individual under the [FVRA] outside the ordinary order of succession, the President’s designation necessarily controls.” Otherwise, the FVRA would not remain as an alternative in scenarios where an office-specific statute sets out an order of succession, which would be “contrary to Congress’s stated intent.”

Although Mulvaney and Trump have won the first battle by securing the denial of English’s TRO, it still remains to be seen whether English or Mulvaney and President Trump will prevail considering the validity of each legal argument. However, what is clear is that consumers and financial institutions alike should stay updated on this case as it develops.