Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

9th Circuit denies en banc rehearing in CFPB case against Seila Law

Courts Appellate Ninth Circuit CFPB Seila Law

Courts

On May 14, the U.S. Court of Appeals for the Ninth Circuit denied en banc rehearing of CFPB v. Seila Law, LLC. As previously covered by InfoBytes, following remand from the U.S. Supreme Court, a three-judge panel of the 9th Circuit had reaffirmed a district court order granting the CFPB’s petition to enforce a civil investigative demand (CID) sent to Seila Law. The panel wrote that “Director Kraninger’s ratification [of the CID] remedied any constitutional injury that Seila Law may have suffered due to the manner in which the CFPB was originally structured. Seila Law’s only cognizable injury arose from the fact that the agency issued the CID and pursued its enforcement while headed by a Director who was improperly insulated from the President’s removal authority. Any concerns that Seila Law might have had about being subjected to investigation without adequate presidential oversight and control had now been resolved. A Director well aware that she may be removed by the President at will had ratified her predecessors’ earlier decisions to issue and enforce the CID.”

Judge Bumatay, joined by three other circuit judges, dissented from denial of en banc rehearing, arguing that “[o]ur court’s decision to deny rehearing en banc effectively means that Seila Law is entitled to no relief from the harms inflicted by an unaccountable and unchecked federal agency. Thus, while David slayed the giant, Goliath still wins.” Judge Bumatay further stressed that the doctrine of ratification does not permit the Bureau to “retroactively gift itself power that it lacked,” concluding that the panel’s condoning of the Bureau’s “power grab was erroneous.”

Share page with AddThis