We have been following very closely developments in NLRB v. Noel Canning, the case seeking Supreme Court review of the D.C. Circuit Court’s judgment invalidating President Obama’s January 4, 2012 appointment of several NLRB members. This case will likely determine the fate of Richard Cordray, who was appointed as Director of the CFPB on the same day and through the same assertion of “recess” appointment authority as the NLRB members in Noel Canning. Accordingly, the outcome of Noel Canning should control Richard Cordray’s current status as CFPB Director and any future purported “recess” appointments by the President of a CFPB director. See our prior posts here and e-alerts here and here.

On May 28, we reported that Noel Canning had advised the Supreme Court on May 23 that it does not oppose the NLRB’s cert petition. We pointed out, however, that the brief urges the Court to consider a third question (in addition to the two questions presented by the NLRB): “Whether the President’s recess appointment power may be exercised when the Senate is convening every three days in pro forma sessions.” The NLRB’s deadline for filing a reply brief is June 4. Once that occurs, the briefing on the NLRB’s cert petition will be complete. Accordingly, we expect that the petition will be considered at the Court’s June 20 Conference, the last scheduled Conference before the Court recesses for the summer. Assuming that the Court grants cert (which we regard as virtually a foregone conclusion), briefing on the merits will take place during the summer and the case will probably be set for oral argument shortly after the Court begins its new term in October. Unless the Court accelerates the issuance of its opinion, it is doubtful that the opinion will be issued before the end of this year, when Mr. Cordray’s term will expire.

In the meantime, a cloud continues to hang over the CFPB and the actions it has taken that require a lawful director. This cloud will not dissipate unless and until the Administration and the Senate Democrats negotiate a legislative compromise regarding the future governance of the CFPB. The President and Senate Democrats seem intent to play out the string in court before negotiating a deal with Senate Republicans. That strategy is not in anyone’s interest – consumers, the consumer financial services industry, and even the President and Senate Democrats. While uncertainty remains as to the outcome of Noel Canning, Senate Republicans will undoubtedly be more limited in their demands than they will be if and when the Supreme Court affirms the D.C. Circuit and holds that the President’s appointments to the NLRB are invalid. I recognize that Majority Leader Reid has threatened to change Senate Rules in order to enable Presidential appointments to be confirmed by a simple majority of 51 Senators rather than the 60 Senators now required to kill a Republican filibuster. Political pundits, including Senate Republicans, don’t believe that Senator Reid will deploy this so-called “nuclear option” since it will come back to haunt the Democrats when there is a Republican President and Republican-controlled Senate. Certainly, a reasonable compromise over CFPB structure and governance is a better option than further impasse and division.