CFPB, New York AG ask court to lift stay after 2nd Circuit decision
On March 31, plaintiffs CFPB and the New York Attorney General moved the U.S. District Court for the Southern District of New York to lift its stay order in their litigation against a remittance provider in response to a recent U.S. Court of Appeals for the Second Circuit decision upholding the CFPB’s funding structure under the Constitution’s Appropriations Clause. (Covered by InfoBytes here.) The plaintiffs argued that the 2nd Circuit’s binding opinion has now “answer[ed] the question at the heart of this Court’s stay order: whether the Bureau’s statutory funding mechanism violates the Constitution.”
As previously covered by InfoBytes, the district court had originally paused the proceedings at the defendant’s request when the Supreme Court was considering whether to hear an appeal in a different matter relating to the Bureau’s funding structure. The district court continued the stay after the Supreme Court agreed to review the 5th Circuit’s decision in Community Financial Services Association of America v. Consumer Financial Protection Bureau, where it found that the CFPB’s “perpetual self-directed, double-insulated funding structure” violated the Constitution’s Appropriations Clause. The Supreme Court is scheduled to review the 5th Circuit’s decision next term (covered by InfoBytes here).
The agencies argued primarily that (i) the 2nd Circuit “expressly considered and rejected the Fifth Circuit’s contrary view in CFSA;” (ii) it “did so notwithstanding that the Supreme Court will consider the same issue next Term”; and (iii) “[g]rants of certiorari do not change the law, and a district court remains bound by circuit precedent until the Supreme Court or the court of appeals changes that precedent.”
On April 7, the court issued an order denying the Bureau's request and electing to keep the stay in place while the Supreme Court resolves the circuit split on this issue.