The nine Justices of the United States Supreme Court appeared divided during oral arguments in the case Seila Law v. CFPB last week, where the core issue revolves around the constitutionality of the single director structure of the Consumer Financial Protection Bureau (CFPB). This is according to the account of reporter Amy Howe, writing for SCOTUSblog.
“[B]oth a California law firm under investigation by the CFPB and the CFPB itself told the Supreme Court that these restrictions on the removal of the bureau’s director are unconstitutional,” Howe writes about the question before the Court. “If the justices agree, they must then decide what the remedy should be for the constitutional violation. The fate of the CFPB, as well as other agencies with similar structures, could hinge on their answer.”
One Justice who appeared skeptical about whether or not the Supreme Court should even be weighing in on the question at all was Ruth Bader Ginsburg in her remarks to Seila Law counsel Kannon Shanmugam.
The case has an “academic quality” about it, Ginsburg reportedly told Shanmugam, “because the bureau’s request for information was ratified by the acting director, who can be removed by the president for any reason,” Howe recounts. Also appearing skeptical was Justice Sonya Sotomayor, based on Howe’s reporting.
“There are at least two other agencies that are headed by a single individual and have limits on the president’s ability to remove them, she noted: the Office of Special Counsel and the Social Security Administration,” Howe recalls Justice Sotomayor contending. “And in her view, the Social Security Administration is even more powerful and ubiquitous than the CFPB.”
Another prominent Justice related reticence in the core decision that must be decided by the Court, Howe notes.
“Chief Justice John Roberts observed that the Supreme Court’s normal practice of trying to avoid deciding constitutional questions might suggest that the court should scrutinize how stringently the ‘inefficiency, neglect of duty, or malfeasance’ standard [about what justifies a president to remove the CFPB director from office] should actually be interpreted,” Howe reports. “A term like ‘inefficiency,’ Roberts noted, could be interpreted expansively to set a relatively low bar – closer to an ‘at will’ standard than a ‘for cause’ standard.”
Taking issue with Roberts’ characterization of that concern included counsel for the U.S. House of Representatives Douglas Letter, as well as Justices Brett Kavanaugh and Neil Gorsuch.
After 70 minutes of oral arguments, it was difficult to determine how exactly the Court will ultimately decided the question before it, Howe writes.
“There seemed to be relatively little appetite, beyond Ginsburg and Sotomayor, for dismissing the case without deciding the merits,” Howe says. “The most likely scenario seems to be that a majority on the court will conclude that the CFPB structure is unconstitutional but will allow the CFPB itself to survive. We won’t know for sure until the decision is released sometime this summer.”
Seila Law LLC v. Consumer Financial Protection Bureau asks the Court to decide on whether the vesting of substantial executive authority in the CFPB – which features a high degree of independence and is led by a single director who is difficult to remove from office – violates the Constitutional principle of the separation of powers between the branches of the federal government. It was revealed in December that the Court will decide the case this year.
Seila Law is a law firm that primarily provides legal services which include resolutions to issues of consumer debt. Seila at one point was the target of investigation by the CFPB, which requested company documents and information that Seila objected to. In its objection, the firm argued that the CFPB’s structure was unconstitutional due to its leadership structure.
Read the report on the oral arguments at SCOTUSblog.
