A federal appeals court decision Wednesdayupholding the lawfulness of the Consumer Financial Protection Bureau’sindependent, single-director design will carry wide implications ascompanies continue to challenge the agency and sets the stage for afinal showdown in the U.S. Supreme Court.

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The decision Wednesday upholding the powerstructure at the agency won’t be the last word on the case. Eitherside could decide to take the dispute to the U.S. Supreme Court,and things could get tricky there.

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For the moment, the D.C. Circuit’s rulingin PHH v. CFPB keeps the status quo—thepresident can only remove the agency director for cause, not atwill, a protection that kept the Obama-appointed director, Richard Cordray,in power.

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Even as the Trump administration faced pressure to fire him.Mick Mulvaney, the White House budget director, is the interimleader of the agency. (The Cordray-picked successor, LeandraEnglish, is suing over Mulvaney’s appointment.)

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What follows are three considerations about the fallout fromWednesday’s ruling—and what might be next.

1. The Supreme Court’s probably the next venue, but it’ll gettricky there.

The U.S. Justice Department, under U.S. Attorney General JeffSessions, abandoned its defense of the CFPB back in March2017.

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Still, the CFPB—with Cordray still at the helm—was able todefend itself in the D.C. Circuit, sending appellate lawyerLawrence DeMille-Wagman to argue for the bureau in May.

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The CFPB’s authority to mount a self-defense ended there. Underthe Dodd-Frank Act, which created the agency, the CFPB enjoysindependent litigating up through the circuit court but needs theJustice Department’s permission to argue before the SupremeCourt.

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If PHH takes the case to the high court, it’sunclear who will defend the D.C. Circuit ruling.

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The Justice Department, in the Supreme Court, would argueagainst the constitutionality of the independent single-directorpower scheme. PHH was represented in the D.C. Circuit by one of thecountry’s top appellate lawyers, Theodore Olson of Gibson,Dunn & Crutcher.

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When asked Wednesday about whether the CFPB would make a writtenrequest to represent itself before the Supreme Court, a spokesmansaid only that the agency was “analyzing the decision.”

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In cases where no party is defending a lower-court ruling, thejustices have the option to appoint a lawyer to do just that. TheSupreme Court this month appointed an O’Melveny &Myers partner to defend a D.C. Circuit ruling upholding theconstitutionality of the U.S. Securities and Exchange Commission’sadministrative law judges.

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That case will be argued later this term. In that case, theJustice Department also reversed its earlier litigationstance.

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2. The consequences of the D.C. Circuit decision will touchmany pending cases.

The D.C. Circuit decision—unless or until it’soverturned—effectively forecloses one avenue of attack companiesmounted against the agency in many federal cases across thecountry.

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Companies in the CFPB’s crosshairs seized on the October2016 panel ruling that struck down the agency’s structure asunconstitutional.

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Lawyers for financial services companies pointed to the decisionto bolster their argument that the CFPB’s enforcement actionagainst them—whether a lawsuit or an investigation—was unlawfulbecause so too was the agency’s structure.

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In Florida, a mortgage servicing company took the piggybackingeven further. Ocwen Financial Corp.—represented by GreenbergTraurig and Goodwin Procter—invited the JusticeDepartment to tell the court that the government was no longerbacking the independence of the agency. The Justice Departmentultimately decided not to take Ocwen up on the offer to weighin.

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The decision will most immediately be felt in Washington federaldistrict court, which is bound by D.C. Circuit precedent.

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Shortly after the en banc D.C. Circuit handed down its decisionWednesday, a federal district judge ordered the CFPB and a companychallenging an agency investigation to state their positions“concerning the effect, if any,” ofthe PHH ruling.

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3. Don’t forget about RESPA. Companies will look anew at howthe CFPB reinterprets this law.

For the CFPB’s challenger, PHH, Wednesday’s ruling was not acomplete loss. And that part of the decision—concerning the RealEstate Settlement Procedures Act—could benefit companies facingCFPB investigations.

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The D.C. Circuit left intact the panel’s decision that the CFPBhad misinterpreted the law at issue in the underlying enforcementaction: the Real Estate Settlement Procedures Act.

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Cordray ordered PHH in 2015 to pay $109 million after findingthat the mortgage company had unlawfully referred consumers toinsurers in exchange for kickbacks.

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In 2016, the law firm Mayer Brown described Oct.11—the date of the D.C. Circuit panel decision striking down thatpenalty—as a “banner day” for real estate brokers,agents, lenders and title companies subject to the Real EstateSettlement Procedures Act.

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With Wednesday’s decision, it is likely that the CFPB willsharply reduce the $109 million in ordered disgorgement or drop thecase entirely.

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“The combination of that opinion and Acting Director Mulvaney’srecent statement that the bureau would stop ‘pushing theenvelope’ on enforcement matters will provide PHH with strongarguments for why the case should be dropped,” said EricMogilnicki, a partner at Covington & Burling.

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Olson of Gibson Dunn said in a statement: “We are pleasedthat the en banc D.C. Circuit Court of Appeals has reinstated thepanel’s decision holding that former Director Cordray improperlyinterpreted and applied RESPA to PHH and vacating his orderimposing $109 million in penalties and other sanctions.”

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He added: “The D.C. Circuit has now made clear that there was nolawful basis for the order under RESPA and the Due Process Clause.We have presented strong arguments showing that the ConsumerFinancial Protection Bureau’s unprecedented structure violates theConstitution. We are evaluating our options for seekingfurther judicial review, if necessary.”

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C. Ryan Barber

C. Ryan Barber, based in Washington, covers government affairs and regulatory compliance. Contact him at [email protected]. On Twitter: @cryanbarber