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Consumer Financial Protection Bureau v. Seila Law LLC

United States Court of Appeals, Ninth Circuit

May 6, 2019

Consumer Financial Protection Bureau, Petitioner-Appellee,
v.
Seila Law LLC, Respondent-Appellant.

          Argued and Submitted January 8, 2019 Pasadena, California

          Appeal from the United States District Court for the Central District of California D.C. No. 8:17-cv-01081-JLS-JEM Josephine L. Staton, District Judge, Presiding

          Anthony Bisconti (argued) and Thomas H. Bienert Jr., Bienert Miller & Katzman PLC, San Clemente, California, for Respondent-Appellant.

          Kevin E. Friedl (argued) and Christopher J. Deal, Attorneys; Steven Y. Bressler, Assistant General Counsel; John R. Coleman, Deputy General Counsel; Mary McLeod, General Counsel; Consumer Financial Protection Bureau, Washington, D.C.; for Petitioner-Appellee.

          Before: Susan P. Graber and Paul J. Watford, Circuit Judges, and Jack Zouhary, [*] District Judge.

         SUMMARY [**]

         Consumer Financial Protection Bureau

         The panel affirmed the district court's order granting the petition of the Consumer Financial Protection Bureau ("CFPB") to enforce Seila Law LLC's compliance with the CFPB's civil investigative demand to respond to seven interrogatories and four requests for documents.

         The CFPB is headed by a single Director who exercises substantial executive power but can be removed by the President only for cause.

         The panel held that the CFPB's structure is constitutionally permissible. The panel held that the Supreme Court's separation-of-powers decisions in Humphrey's Executor v. United States, 295 U.S. 602 (1935), and Morrison v. Olson, 487 U.S. 654 (1988), were controlling. Those cases indicate that the for-cause removal restriction protecting the CFPB's Director does not "impede the President's ability to perform his constitutional duty" to ensure that the laws are faithfully executed. Morrison, 487 U.S. at 691.

         The panel rejected Seila Law's contention that the civil investigative demand violated the Consumer Financial Protection Act's practice-of-law exclusion, which provides that the CFPB may not exercise "authority with respect to an activity engaged in by an attorney as part of the practice of law under the laws of a State in which the attorney is licensed to practice law." 12 U.S.C. § 5517(e)(1). The panel held that one of the exceptions to the practice-of-law exclusion applied - Section 5517(e)(3) - which empowered the CFPB to investigate whether Seila Law was violating the Telemarketing Sales Rule, 75 Fed, . Reg. 48, 458-01, 48, 467-69 (Aug. 10, 2010).

         The panel also rejected Seila Law's contention that the civil investigative demand violated 12 U.S.C. § 5562(c)(2) because the demand provided information sufficient to put Seila Law on notice of the nature of the conduct the CFPB was investigating, and was not so general as to raise vagueness or overbreadth concerns.

          OPINION

          WATFORD, Circuit Judge.

         The Consumer Financial Protection Bureau (CFPB) is investigating Seila Law LLC, a law firm that provides a wide range of legal services to its clients, including debt-relief services. The CFPB is seeking to determine whether Seila Law violated the Telemarketing Sales Rule, 16 C.F.R. pt. 310, in the course of providing debt-relief services to consumers. As part of its investigation, the CFPB issued a civil investigative demand (CID) to Seila Law that requires the firm to respond to seven interrogatories and four requests for documents. See 12 U.S.C. § 5562(c)(1). After Seila Law refused to comply with the CID, the CFPB filed a petition in the district court to enforce compliance. See ยง 5562(e)(1). The district court granted the petition ...


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