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Illinois Supreme Court declines to reconsider BIPA accrual ruling
On July 18, the Illinois Supreme Court declined to reconsider its February ruling, which held that under the state’s Biometric Information Privacy Act (BIPA or the Act), claims accrue “with every scan or transmission of biometric identifiers or biometric information without prior informed consent.” Three justices, however, dissented from the denial of rehearing, writing that the ruling leaves “a staggering degree of uncertainty” by offering courts and defendants little guidance on how to determine damages. The putative class action stemmed from allegations that the defendant fast food chain violated BIPA sections 15(b) and (d) by unlawfully collecting plaintiff’s biometric data and disclosing the data to a third-party vendor without first obtaining her consent. While the defendant challenged the timeliness of the action, the plaintiff asserted that “a new claim accrued each time she scanned her fingerprints” and her data was sent to a third-party authenticator, thus “rendering her action timely with respect to the unlawful scans and transmissions that occurred within the applicable limitations period.”
In February, a split Illinois Supreme Court held that claims accrue under BIPA each time biometric identifiers or biometric information (such as fingerprints) are scanned or transmitted, rather than simply the first time. (Covered by InfoBytes here.) The dissenting judges wrote that they would have granted rehearing because the majority’s determination that BIPA claims accrue with every transmission “subvert[s] the intent of the Illinois General Assembly, threatens the survival of businesses in Illinois, and consequently raises significant constitutional due process concerns.” The dissenting judges further maintained that the majority’s February decision is confusing and lacks guidance for courts when determining damages awards. While the majority emphasized that BIPA does not contain language “suggesting legislative intent to authorize a damages award that would result in the financial destruction of a business,” it also said that it continues “to believe that policy-based concerns about potentially excessive damage awards under [BIPA] are best addressed by the legislature,” and that it “respectfully suggest[s] that the legislature review these policy concerns and make clear its intent regarding the assessment of damages under [BIPA].”
9th Circuit denies en banc hearing on COPPA preemption question
On July 13, a panel of the U.S. Court of Appeals for the Ninth Circuit entered an order amending an opinion filed on December 28, 2022 and denied a petition for rehearing en banc in a putative class action accusing a multinational technology company and search engine and its affiliated video-sharing platform of collecting children’s data and tracking their online behavior surreptitiously without parental consent in violation of state law and the Children’s Online Privacy Protection Act (COPPA). The panel unanimously voted against defendant’s en banc rehearing request, commenting that no other 9th Circuit judge has requested a vote on whether to consider the matter en banc.
Claiming the defendant used “persistent identifiers” — which the FTC’s regulations define as information “that can be used to recognize a user over time and across different Web sites or online services” — class members alleged state law claims arising under the constitutional, statutory, and common laws of California, Colorado, Indiana, Massachusetts, New Jersey, and Tennessee. Last December, the three-judge panel reversed and remanded the district court’s dismissal of the suit, disagreeing that the allegations were squarely covered, and preempted, by COPPA (covered by InfoBytes here.) On appeal, the 9th Circuit considered whether COPPA preempts state law claims based on underlying conduct that also violates COPPA’s regulations. The panel determined that “COPPA’s preemption clause does not bar state-law causes of action that are parallel to, or proscribe the same conduct forbidden by, COPPA. Express preemption therefore does not apply to the children’s claims.” The panel further noted that the U.S. Supreme Court and others have long held “that a state law damages remedy for conduct already proscribed by federal regulations is not preempted.”
The panel, however, amended its prior opinion to note that the FTC supports its conclusion that COPPA does not preempt the asserted state law privacy claims on the basis of either express preemption or conflict preemption. At the end of May, at the 9th Circuit’s request, the FTC filed an amicus brief (covered by InfoBytes here) arguing that COPPA does not preempt state laws that are consistent with the federal statute’s treatment of regulated activities. The panel concluded that neither express preemption nor conflict preemption bar the plaintiffs’ claims.
States urge Supreme Court to find CFPB funding unconstitutional
On July 10, the West Virginia attorney general, along with 26 other states, filed an amicus brief in support of respondents in Consumer Financial Protection Bureau v. Community Financial Services Association of America, arguing that the CFPB’s funding structure violates the Constitution and that by operating outside the ordinary appropriations process states are often left “out in the cold.” In their brief, the states urged the U.S. Supreme Court to uphold the U.S. Court of Appeals for the Fifth Circuit’s decision in which it found that the Bureau’s “perpetual self-directed, double-insulated funding structure” violated the Constitution’s Appropriations Clause (covered by InfoBytes here and a firm article here). The 5th Circuit’s decision also vacated the agency’s Payday Lending Rule on the premise that it was promulgated at a time when the Bureau was receiving unconstitutional funding.
Arguing that the Bureau is operating beyond the boundaries established by the Constitution, the states maintained that the current funding mechanism limits Congress’s ability to oversee the agency. “Even if the CFPB has done some good—and some would even dispute that premise—it wouldn't matter,” the states said, warning that “sidelining Congress can greenlight an agency to wreak havoc,” especially if the “agency wields broad regulatory and enforcement powers over the entire U.S. financial system, acts under the control of a single powerful figure, and lacks other protections from meaningful oversight.”
The appropriations process plays a crucial role in enabling states to influence agency actions indirectly, the states maintained, explaining that when an agency initiates a new enforcement initiative or significant rulemaking endeavor, it is required to publicly outline its projected work in order to secure the necessary funding to carry it out. “Disclosure on the front end of the appropriations process can empower affected parties—including the [s]tates—to take quick, responsive actions beyond lobbying their representatives (up to suing to stop illegal action, if need be).” In contrast, the Bureau’s insulation from this process has allowed it to hide its actions from public view, the states wrote. As an example, the Bureau has repeatedly declined to interpret or provide further clarity on how the provisions governing unfair, deceptive, or abusive acts or practices work.
The brief also highlighted examples of when Congress used funding cuts through the appropriations process to curtail agencies’ powers. Additionally, unlike the challenges of amending authorizing statutes, appropriations bills must be passed by Congress each year to avoid a government shutdown, which can be “a painful pill to swallow for the sake of standing up for an agency’s policy choice,” the states noted, adding that “[b]ecause appropriations involves both oversight committees and appropriations committees, agencies may have ‘less flexibility to ally themselves with executive branch officials or interest groups.’”
The states also urged the Court to “ignore doomsaying” about the consequences of finding the funding structure unconstitutional. Should the Court agree to invalidate the funding structure, Congress can pass a proper appropriations bill for the Bureau, the states explained, adding that “a rebuke from this Court would no doubt grease the sticky wheels of the legislative process and move them a bit faster.” Moreover, states could also fill any gaps should Congress somehow pare back the CFPB’s funding, the brief stressed.
Several amicus briefs were also filed this week in support of CFSA, including an amici curiae brief filed by the U.S. Chamber of Commerce and several banking associations and an amici curiae brief filed by 132 members of Congress, including 99 representatives and 33 senators, which urged the Court to uphold the 5th Circuit’s decision.
CFSA says CFPB funding violates Constitution
On July 3, the Community Financial Services Association of America (CFSA) and the Consumer Service Alliance of Texas filed their brief with the U.S. Supreme Court, urging the high court that the CFPB’s independent funding structure is “unprecedented and must be stopped before it spreads without limit.” Respondents asked the Court to affirm the U.S. Court of Appeals for the Fifth Circuit’s decision in Community Financial Services Association of America v. Consumer Financial Protection Bureau, where the appellate court found that the Bureau’s “perpetual self-directed, double-insulated funding structure” violated the Constitution’s Appropriations Clause (covered by InfoBytes here and a firm article here). The 5th Circuit’s decision also vacated the agency’s Payday Lending Rule on the premise that it was promulgated at a time when the Bureau was receiving unconstitutional funding.
The Bureau expanded on why it believes the 5th Circuit erred in its holding in its opening brief filed with the Court in May (covered by InfoBytes here), and explained that even if there were some constitutional flaw in the statute creating the agency’s funding mechanism, the 5th Circuit should have looked for some cure to allow the remainder of the funding mechanism to stand independently instead of presuming the funding mechanism created under Section 5497(a)-(c) was entirely invalid. Vacatur of the agency’s past actions was not an appropriate remedy and is inconsistent with historical practice, the Bureau stressed.
In their brief, the respondents challenged the Bureau’s arguments, writing that the “unconstitutionality of the CFPB’s funding scheme is confirmed by both its unprecedented nature and lack of any limiting principle. Whether viewed with an eye toward the past or the future, the threat to separated powers and individual liberty is easy to see.” Disagreeing with the Bureau’s position that the Constitution gives Congress wide discretion to exempt agencies from annual appropriations and that independent funding is not uncommon for a financial regulator, the respondents stated that Congress gave up its appropriations power to the Bureau “without any temporal limit.” The respondents further took the position that the Bureau “can continue to set its own funding ‘forever’” unless both chambers agree and can persuade or override the president. Moreover, because the Federal Reserve Board is required to transfer “the amount determined by the Director to be reasonably necessary to carry out the [CFPB’s] authorities, . . . it ‘foreclose[s] the application of any meaningful judicial standard of review.’”
The respondents also argued that the Bureau’s funding structure is clearly distinguishable from other assessment-funded agencies in that these financial regulators are held to “some level of political accountability” since “they must consider the risk of losing funding if entities exit their regulatory sphere due to imprudent regulation.” Additionally, the respondents claimed that the fundamental flaws in the funding statute cannot be severed, reasoning, among other things, that courts “cannot ‘re-write Congress’s work’” and are not able to replace the Bureau’s self-funding discretion with either a specific sum or assessments from regulated parties.
With respect to the vacatur of the Payday Lending Rule and the potential for unintended consequences, the respondents urged the Court to affirm the 5th Circuit’s rejection of the rule, claiming it was unlawfully promulgated since a valid appropriation was a necessary condition to its rulemaking. “Lacking any viable legal argument, the Bureau resorts to fear-mongering about ‘significant disruption’ if all ‘the CFPB’s past actions’ are vacated,” the respondents wrote, claiming the Bureau “grossly exaggerates the effects and implications of setting aside this Rule.” According to the respondents, the Bureau does not claim that any harm would result from setting aside the rule, especially since no one has “reasonably relied” on the rule as it has been stayed and never went into effect. As to other rules issued by the agency, the respondents countered that Congress could “legislatively ratify” some or all of the agency’s existing rules and that only “‘timely’ claims can lead to relief” in past adjudications. Additionally, the respondents noted that many of the Bureau’s rules were issued outside the six-year limitations period prescribed in 28 U.S.C. § 2401(a). This includes a substantial portion of its rules related to mortgage-related disclosure. Even for challenges filed within the time limit, courts can apply equitable defenses such as “laches” to deny retrospective relief and prevent disruption or inequity, the respondents said.
Biden announces FTC nominees
On July 3, President Biden announced his intention to nominate Andrew N. Ferguson and Melissa Holyoak to serve as Republican members of the FTC. Ferguson currently serves as the solicitor general of the Commonwealth of Virginia where he oversees appellate litigation of the state and its agencies. Prior to his time as solicitor general, Ferguson served as chief counsel to U.S. Senate Republican Leader Mitch McConnell, chief counsel for nominations and constitution to then-Judiciary Committee Chairman Lindsey Graham (R-SC), and senior special counsel to then-Judiciary Committee Chairman Chuck Grassley (R-IA). Ferguson also has extensive antitrust experience, including in litigation before the FTC and DOJ.
Holyoak is currently the solicitor general with the Utah Attorney General’s Office where she oversees areas including civil appeals, criminal appeals, constitutional defense, and the antitrust and data privacy divisions. She is an experienced litigator, where much of her 20 years of practice has focused on consumer protection, Biden said. Before joining the Utah Attorney General’s Office, Holyoak was president and general counsel of the Hamilton Lincoln Law Institute, a Washington, D.C.-based public interest firm that represents consumers challenging unfair class actions and regulatory overreach.
Following the announcement, FTC Chair Lina M. Khan issued a statement congratulating the nominees. The two seats have been vacant since former Commissioner Christine Wilson announced her resignation earlier in the year (covered by InfoBytes here).
Split 9th Circuit: Nevada’s medical debt collection law is not preempted
The U.S. Court of Appeals for the Ninth Circuit recently issued a split decision upholding a Nevada medical debt collection law after concluding the statute was neither preempted by the FDCPA or the FCRA, nor a violation of the First Amendment. SB 248 took effect July 1, 2021, in the wake of the Covid-19 pandemic, and requires debt collection agencies to provide written notification to consumers 60 days “before taking any action to collect a medical debt.” Debt collection agencies are also barred from taking any action to collect a medical debt during the 60-day period, including reporting a debt to a consumer reporting agency.
Plaintiffs, a group of debt collectors, sued the Commissioner of the Financial Institutions Division of Nevada’s Department of Business and Industry after the bill was enacted, seeking a temporary restraining order and a preliminary injunction. In addition to claiming alleged preemption by the FDCPA and the FCRA, plaintiffs maintained that SB 248 is unconstitutionally vague and violates the First Amendment. The district court denied the motion, ruling that none of the arguments were likely to succeed on the merits.
In agreeing with the district court’s decision, the majority concluded that SB 248 is not unconstitutionally vague with respect to the term “before taking any action to collect a medical debt” and that any questions about what constitute actions to collect a medical debt were addressed by the statute’s implementing regulations. With respect to whether SB 248 violates the First Amendment, the majority held that debt collection communications are commercial speech and thus not subject to strict scrutiny. As to questions of preemption, the majority determined that SB 248 is not preempted by either the FDCPA or the FCRA. The majority explained that furnishers’ reporting obligations under the FCRA do not include a deadline for when furnishers must report a debt to a CRA and that the 60-day notice is not an attempt to collect a debt and therefore does not trigger the “mini-Miranda warning” required in a debt collector’s initial communication stating that “the debt collector is attempting to collect a debt.”
The third judge disagreed, arguing, among other things, that the majority’s “position requires setting aside common sense” in believing that the FDCPA does not preempt SB 248 because the 60-day notice is not an action in connection with the collection of a debt. “The only reason that a debt collector sends a Section 7 Notice is so that he can later start collecting a debt,” the dissenting judge wrote. “It is impossible to imagine a situation where a debt collector would send such a notice except in pursuit of his goal of ultimately obtaining payment for (i.e., collecting) the debt.” The dissenting judge further argued that by delaying the reporting of unpaid debts, SB 248 conflicts with the FCRA’s intention of ensuring credit information is accurately reported.
CFPB opposes Texas bankers’ request to delay small biz lending rule
The CFPB recently asked a district court in the 5th Circuit to deny a proposed injunction which would delay the implementation of its small-business lending data collection rule, arguing that plaintiffs have failed to establish standing or meet the requirements for preliminary relief. As previously covered by InfoBytes, plaintiffs (including a Texas banking association and a Texas bank) sued the Bureau, challenging the agency’s final rule on the collection of small business lending data. The small business lending rule, which implements Section 1071 of the Dodd-Frank Act, requires financial institutions to collect and provide to the Bureau data on lending to small businesses with gross revenue under $5 million in their previous fiscal year.
Plaintiffs explained in their complaint that the goal of invalidating the final rule is premised on the argument that it will drive from the market smaller lenders who are not able to effectively comply with the final rule’s “burdensome and overreaching reporting requirements” and decrease the availability of products to customers, including minority and women-owned small businesses. Plaintiffs also argued that the final rule is invalid because the Bureau’s funding structure is unconstitutional and that certain aspects of the final rule allegedly violate various requirements of the Administrative Procedure Act. Last month, plaintiffs filed a preliminary injunction motion asking the court to enjoin the final rule and stay the compliance deadlines.
Claiming plaintiffs failed to establish standing for preliminary relief, the Bureau argued that the Texas bank has not demonstrated that it would even have to comply with the final rule. The Bureau further maintained plaintiffs have also not satisfied all four factors required for preliminary relief, including that plaintiffs “have not shown that irreparable harm is imminent or that the balance of equities favors the requested relief,” which would lead to the postponement of reporting requirements mandated by Congress more than ten years ago. With respect to the funding structure constitutionality concerns raised by plaintiffs, the Bureau argued that “even assuming that [p]laintiffs have shown a likelihood of ultimately succeeding on the merits … that factor standing alone would not be enough to warrant preliminary relief.” The Bureau asked the court to, at a minimum, tailor any relief to apply only to plaintiffs and members who would face imminent harm absent such relief.
Chopra testifies at congressional hearings
On June 13, CFPB Director Rohit Chopra testified before the Senate Banking Committee to discuss the Bureau’s most recent semi-annual report to Congress. Covering the period beginning April 1, 2022 and ending September 30, 2022, the semi-annual report addressed a wide range of issues, including the adoption of significant rules and orders, supervisory and enforcement actions, and actions taken by states relating to federal consumer financial law. The report also stated the Bureau received approximately 1.237 million consumer complaints, for which roughly 75 percent pertained to credit or consumer reporting. With respect to the Bureau’s mandated objectives, Chopra’s prepared statement highlighted rulemaking progress on several topics, including small business lending data collection and PACE lending. He also emphasized the agency’s heightened focus on supervising nonbank financial firms and reiterated that the Bureau will continue to shift its enforcement focus from small businesses to repeat offenders.
Committee Chair Sherrod Brown (D-OH) praised Chopra’s leadership in his opening statement, highlighting actions taken by the Bureau since Chopra’s last hearing appearance and disagreeing with the U.S. Court of Appeals for the Fifth Circuit’s decision that the agency’s funding authority violates the Constitution’s Appropriations Clause and the separation of powers. However, Ranking Member Tim Scott (R-SC) argued that Chopra “has created uncertainty in the marketplace by attempting to regulate through speeches and blog posts under the guise of ‘clarifying guidance,’” and continues to mislabel payment incentives as “junk fees” or “illegal fees.” Scott also took issue with the Bureau’s small business lending rule and asked why the agency should be trusted to collect a large amount of lending data when the agency itself experienced a data breach when an employee transferred sensitive consumer data to a personal email account without authorization.
During the hearing, Chopra addressed concerns accusing him of bypassing regulatory review by issuing policy changes through agency guidance and press announcements. “The things we hear from small firms is they really want to know how existing law applies,” Chopra said. “We have so many changes in technology, and these small firms don’t have the ability to hire so many lawyers[,] [s]o I’ve actually continued a practice of my predecessor, Director Kraninger to issue these advisory opinions and other guidance documents. They do not create any new obligations. They simply restate what the existing laws are.”
Chopra also answered questions relating to the Bureau’s proposal to limit credit card late fees and, among other things, adjust the safe harbor dollar amount for late fees to $8 for any missed payment (issuers are currently able to charge late fees of up to $41). (Covered by InfoBytes here.) Chopra explained that the proposed rule still allows recovery of costs but said the agency is trying to make the process “more rigorous and make sure it reflects market realities.” “[I]ssuers tell us is that they don’t want to profit off of late fees,” Chopra added. “That's exactly the goal here, because the law says those penalty fees are supposed to be reasonable and proportional. We’re trying to make it more clear about the way we can do that, while also making the market more competitive.”
Republican senators expressed concerns with the proposal during the hearing, with Scott commenting that no one wants to pay the late fee, but that “the truth of the matter is that fee is going to be paid just in a different form. . . .whether it’s through increased interest rates or increased cost of products, it doesn’t go away.” Senator Elizabeth Warren (D-MA) countered that “if there’s an $8 cap on credit card late fees, unless the banks can show that their costs are higher, in which case they can charge more, all that will happen, as best I can tell is that the banks will have slightly lower profit margins.”
Chopra faced similar question during a hearing held the next day before the House Financial Services Committee. Among the topics, committee members raised questions relating to technology risks presented by artificial intelligence and how existing law applies to machine learning. Chopra was also accused of overseeing an unconstitutional agency and flouting the notice-and-comment rulemaking process. Also discussed during the hearing was a recently introduced joint resolution to nullify the Bureau’s small business lending rule. (Covered by InfoBytes here.) Representative Roger Williams (R-TX) stressed that community banks are “concerned that the complicated reporting requirements will tie up loan officers and increase compliance costs plus compliance officers, which will be passed down to the consumer.”
CFPB brief defends funding structure
On May 8, petitioner CFPB filed its brief with the U.S. Supreme Court, criticizing the U.S. Court of Appeals for the Fifth Circuit’s decision in Community Financial Services Association of America v. Consumer Financial Protection Bureau, where the appellate court found that the Bureau’s “perpetual self-directed, double-insulated funding structure” violated the Constitution’s Appropriations Clause (covered by InfoBytes here and a firm article here). The 5th Circuit’s decision also vacated the agency’s Payday Lending Rule on the premise that it was promulgated at a time when the Bureau was receiving unconstitutional funding.
Earlier this year, the Bureau filed a petition for a writ of certiorari, which the Court granted (covered by InfoBytes here). The Bureau explained in its petition that the 5th Circuit’s decision would negatively impact its “critical work administering and enforcing consumer financial protection laws” and “threatens the validity of all past CFPB actions as well” as the decision vacates a past agency action based on the purported Appropriations Clause violation. Community Financial Services Association of America (CFSA) filed a conditional cross-petition, seeking review on other aspects of the 5th Circuit’s decision, including that the 5th Circuit’s decision does not warrant review because the appellate court correctly vacated the Payday Lending Rule, which, according to the respondents, has “multiple legal defects, including but not limited to the Appropriations Clause issue.” (Covered by InfoBytes here.)
In its opening brief, the Bureau expanded on why it believes the 5th Circuit erred in its holding. The Bureau argued that the text of the Appropriations Clause “does not limit Congress’ authority to determine the specificity, duration, and source of its appropriations.” The agency further explained that Congress has chosen similar funding mechanisms for many other financial regulatory agencies, including the FDIC, NCUA, FHFA, and the Farm Credit Administration (and agencies outside of the financial regulatory sector), where they are all funded in part through the collection of fees, assessments, and investments. The Bureau emphasized that the 5th Circuit and the CFSA failed “to grapple with the Appropriation Clause’s text, Congress’ historical practice, or [Supreme] Court precedent,” but instead asserted only that the funding mechanism was “unprecedented.” “Congress enacted a statute explicitly authorizing the CFPB to use a specified amount of funds from a specified source for specified purposes,” the Bureau emphasized. “The Appropriations Clause requires nothing more.” The 5th Circuit’s “novel and ill-defined limits on Congress’s appropriations authority contradict the Constitution’s text and congressional practice dating to the Founding.”
The Bureau also addressed the now-vacated Payday Lending Rule. Arguing that even if there were some constitutional flaw in 12 U.S.C. § 5497 (the statute creating the Bureau’s funding mechanism), the 5th Circuit should have looked for some cure to allow the remainder of the funding mechanism to stand independently instead of “adopting an unjustified and profoundly disruptive retrospective remedy” and presuming the funding mechanism created under Section 5497(a)-(c) was entirely invalid. The Bureau also stressed that vacatur of the agency’s past actions was not an appropriate remedy and is inconsistent with historical practice. Adopting a remedial approach, the Bureau warned, would inflict significant disruption by calling into question 12 years of past agency actions.
The Bureau urged the Court to at most grant only “prospective relief preventing the CFPB from enforcing the Payday Lending Rule against [CFSA] or their members until Congress provides the Bureau with funding from another source.” While such an approach could still “upend” the Bureau’s activities, “it would at least avoid the profoundly disruptive effect of unwinding already completed and concededly authorized agency actions like the Payday Lending Rule,” the Bureau wrote, adding that “[v]acatur of the CFPB’s past actions would be inappropriate in light of the significant disruption that such vacatur would produce.”
Texas bankers seek to invalidate CFPB’s small business lending rule
On April 26, plaintiffs, including a Texas banking association, sued the CFPB, challenging the agency’s final rule on the collection of small business lending data. As previously covered by InfoBytes, last month, the Bureau released its final rule implementing Section 1071 of the Dodd-Frank Act, which requires financial institutions to collect and provide to the Bureau data on lending to small businesses with gross revenue under $5 million in their last fiscal year. According to the Bureau, the final rule is intended to foster transparency and accountability by requiring financial institutions—both traditional banks and credit unions, as well as non-banks—to collect and disclose data about small business loan recipients’ race, ethnicity, and gender, as well as geographic information, lending decisions, and credit pricing.
The plaintiffs’ goal of invalidating the final rule is premised on the argument that it will drive from the market smaller lenders who are not able to effectively comply with the final rule’s “burdensome and overreaching reporting requirements” and decrease the availability of products to customers, including minority and women-owned small businesses. Plaintiffs argued that the Bureau “took the original three pages of legislation and the 13 reporting data points required by [Dodd-Frank] and turned them into almost 900 pages of rulemaking—a new [f]inal [r]ule that requires banks to develop and implement new software and compliance mechanisms to comply with over 80 reporting requirements that have been exponentially grown by the CFPB since the Act requiring this [r]ule was passed.”
The plaintiffs further pointed to a decision issued by the U.S. Court of Appeals for the Fifth Circuit in Community Financial Services Association of America v. Consumer Financial Protection Bureau, where the court found that the CFPB’s “perpetual self-directed, double-insulated funding structure” violated the Constitution’s Appropriations Clause (covered by InfoBytes here and a firm article here), as justification for why the final rule should be set aside. The plaintiffs also pointed out certain aspects of the final rule that allegedly violate various requirements of the Administrative Procedure Act, and claimed that a recent data breach involving sensitive information on numerous financial institutions and consumers indicates that the agency is unprepared “to adequately assess the security and privacy impacts of its massive § 1071 data collection on small businesses.” The complaint seeks a court order finding the final rule to have been premised on the same unconstitutional grounds as found in CFSA, preliminary and permanent injunctions to set aside the final rule, and attorney fees and costs.