PHH Opts Not to Ask Supreme Court to Review CFPB Structure

By Evan Weinberger

Mortgage servicer PHH Corp. decided against taking its challenge to the Consumer Financial Protection Bureau’s leadership structure to the U.S. Supreme Court.

PHH, which was challenging the leadership structure at the federal consumer finance watchdog as part of a bid to escape a $109 million judgment imposed by the CFPB, had until May 1 to file a petition for writ of certiorari with the high court.

Dico Akseraylian, a spokesman for PHH, confirmed that the company did not petition the Supreme Court but declined to comment further.

The full U.S. Court of Appeals for the District of Columbia Circuit ruled Jan. 31 that the CFPB’s structure was constitutional, rejecting PHH’s argument that the bureau’s single director that could only be terminated by the president for cause was not a violation of the Constitution’s separation of powers clause. However, the court also ruled that the CFPB’s $109 million penalty against PHH for violating the Real Estate Settlement Procedures Act was improper, invalidating the penalty.

The ruling by the en banc panel at the D.C. Circuit overturned an October 2016 panel decision that both overturned the CFPB’s RESPA penalty and deemed the bureau’s structure to be unconstitutional. To fix that, the D.C. Circuit panel determined that the CFPB director could serve at the president’s will rather than the current for-cause termination requirement.

Escaping the $109 million penalty appears to have been enough of a victory for PHH, despite hope among conservatives and opponents of the bureau that the company would continue its fight.

Ted Olson, the Gibson Dunn & Crutcher partner who represented PHH at the D.C. Circuit, is also representing All American Check Cashing Inc. in a challenge to the CFPB’s structure at the U.S. Court of Appeals for the Fifth Circuit.

Other Paths

Other challenges to the CFPB’s constitutionality moving through the circuit courts could yet end up at the Supreme Court.

The Fifth Circuit agreed April 24 to hear the Mississippi-based check casher and payday lender’s case. All American is looking to stop a CFPB enforcement action over alleged deceptive and abusive treatment of customers that is pending in the U.S. District Court for the Northern District of Mississippi.

The CFPB under acting Director Mick Mulvaney asked the Fifth Circuit to reject All American’s appeal, arguing that many of the constitutional problems that the company cites were fixed by Mulvaney’s late November appointment.

A third CFPB constitutional challenge is pending in the U.S. Court of Appeals for the Ninth Circuit.

In the Ninth Circuit case, Seila Law LLC is trying to stop a 2017 CFPB civil investigative demand related to its work for defunct debt collection firm Morgan Drexen. The firm argues that the bureau’s alleged constitutional problems should torpedo its investigative efforts.

The CFPB has continued to defend the subpoena under Mulvaney’s leadership, and the Seila Law case is still in the briefing stage.

The cases are: PHH Corp. v. Consumer Financial Protection Bureau , D.C. Cir., No. 15-01177, decision 1/31/18 .

Consumer Financial Protection Bureau v. All American Check Cashing, Inc. et al , 5th Cir., 16-cv-00356, motion granted 4/24/18 .

Consumer Financial Protection Bureau v. Seila Law LLC , 9th Cir., No. 17-56324, appeal filed 9/1/17 .

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To contact the editor responsible for this story: Michael Ferullo at

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