D.C. Circuit grants CFPB’s petition for rehearing en banc in PHH case

by Ballard Spahr LLP
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The D.C. Circuit has entered an order granting the CFPB’s petition for rehearing en banc in the PHH case.  Because the order was issued per curiam, it does not indicate which of the active judges voted to grant the petition but only indicates that Chief Judge Garland did not participate.

The order vacates the panel’s October 2016 judgment, sets a briefing schedule, and sets May 24, 2017 as the date for oral argument.   The order also provides that “[w]hile not otherwise limited, the parties are directed to address the following three issues in their briefs:

  • Is the CFPB’s structure as a single-Director independent agency consistent with Article II of the Constitution and, if not, is the proper remedy to sever the for-cause provision of the statute?
  • May the court appropriately avoid deciding that constitutional question given the panel’s ruling on the statutory issues in this case?
  • If the en banc court, which has today separately ordered en banc consideration of Lucia v. SEC, 832 F. 3d 277 (D.C. Cir. 2016), concludes in that case that the administrative law judge who handled that case was an inferior officer rather than an employee, what is the appropriate disposition of this case?

In Lucia, the decision cited in the third issue, a panel of the D.C. Circuit held that because the SEC’s ALJ was an “employee” rather than “inferior officer” who must be appointed in accordance with the Appointments Clause of the U.S. Constitution, the ALJ’s appointment by the SEC’s Office of Administrative Law Judges rather than an SEC Commissioner was constitutional.  In its brief to the D.C. Circuit filed in connection with its appeal from Director Cordray’s order affirming the ALJ’s ruling that PHH had violated RESPA, PHH argued that the ALJ was an “inferior officer” whose appointment did not satisfy the Appointments Clause.  PHH indicated in its brief that it was preserving an Appointments Clause challenge to the CFPB’s use of an ALJ for review by the en banc D.C. Circuit or the U.S. Supreme Court.

Because Chief Judge Garland will not be participating, ten active judges will sit on the en banc court, six of whom were appointed by either President Obama or President Clinton.  Since he was on the original panel, Senior Judge Randolph, appointed by President George H.W. Bush, can also sit on the en banc court should he wish to do so.

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