Pursuant to the agreed motion for a stay filed by the CFPB and Populus Financial Group, Inc., which does business as ACE Cash Express, the Texas federal district court hearing the CFPB’s enforcement action against Populus has stayed the lawsuit until after the Fifth Circuit issues its mandate in Community Financial Services Association of America Ltd. v. CFPB. (CFSA Decision).  In its lawsuit, which was filed in July 2022, the CFPB alleges that Populus engaged in unfair, deceptive, and abusive acts or practices by concealing the option of a free repayment plan to consumers and making unauthorized debit-card withdrawals. 

In September 2022, Populus filed a motion to dismiss in which it argued that the CFPB’s enforcement action is invalid because the CFPB’s funding structure violates the separation-of-powers principle embodied in the Appropriations Clause of the U.S. Constitution.  It also filed a motion to stay all proceedings in the case pending the Fifth Circuit’s forthcoming CFSA Decision.  On October 19, 2022, a Fifth Circuit panel issued the CFSA Decision holding that the CFPB’s funding mechanism violates the Appropriations Clause.

According to the agreed stay motion, following the Fifth Circuit’s issuance of the CFSA Decision, the CFPB and Populus conferred and agreed to jointly seek a stay until after the Fifth Circuit issues it mandate in the CFSA Decision.  The parties assert in the motion that there is good cause for a stay because it “will promote efficient resolution of the case, as the final decision in CFSA will control the resolution of key issues presented in ACE’s pending motion to dismiss.”  They further assert that “waiting for the mandate in CFSA will simplify the issues in the case and potentially resolve the motion to dismiss outright.” 

In its order granting the stay, the court also vacated all briefing deadlines on Populus’s motion to dismiss and denied its motion to stay as moot.  The order directs the parties to file a joint report within 45 days of the conclusion of the stay that contains statements of how the parties wish to proceed.

The CFPB is expected to seek to overturn the CFSA Decision by either petitioning the Fifth Circuit for a rehearing en banc or proceeding directly to the Supreme Court with a certiorari petition.  If a rehearing en banc is granted, the CFSA Decision would be vacated.

The issuance of the mandate by the Fifth Circuit in the CFSA case is automatically stayed until the expiration of the 45-day period for the CFPB to file a petition for rehearing.  If it files such a petition, the issuance of the mandate is further stayed until disposition of that petition.  If no rehearing petition is filed or such a petition is denied, the CFPB can seek a discretionary stay of issuance of the mandate from the Fifth Circuit pending the outcome of its certiorari petition, and if the Fifth Circuit denies a stay, the CFPB can then seek a stay from  the Supreme Court.  

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