We have been following the case filed this past summer by the CFPB in a California federal court against an attorney and his law firm that offered mortgage assistance relief services to consumers. In CFPB v. Chance Edward Gordon, the CFPB obtained a preliminary injunction freezing the law firm’s assets and appointing a receiver. The defendants in the case had included a challenge to President Obama’s recess appointment of Director Cordray as part of their affirmative defenses.
Earlier this week, the defendants raised that challenge in their opposition to the receiver’s request for payment, citing to the D.C. Circuit’s Canning decision and its implications for the validity of Mr. Cordray’s appointment. They argued that because a finding that Mr. Cordray’s appointment was unconstitutional would mean the CFPB lacked authority to bring the underlying action against the non-bank defendants, the court should defer a decision on the receiver’s request until the validity of the CFPB’s action is determined. In their opposition papers, the defendants state that they have sent requests for admission to the CFPB regarding “the date and nature of Mr. Cordray’s appointment” and, once they receive the CFPB’s response, expect to file a motion for summary judgment based on Canning.