Plaintiffs' Motion for Summary Judgment and Incorporated Memorandum of Points and Authorities

INTRODUCTION

The CFPB has “vast authority,” Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183,2210 (2020), but even vast authority must have limits. The Dodd-Frank Act established the CFPB to“implement and . . . enforce Federal consumer financial law.” 12 U.S.C. §5511(a). In creating theagency, “Congress transferred the administration of 18 existing federal statutes to the CFPB, includingthe Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and the Truth in Lending Act.”Seila Law, 140 S. Ct. at 2193. Congress also charged the agency with enforcing a prohibition on “anyunfair, deceptive, or abusive act or practice”—often called the UDAAP authority. 12 U.S.C.§5536(a)(1)(B). To carry out these duties, the CFPB can “require reports and conduct examinationson a periodic basis” of certain entities—including members of each Plaintiff—to “assess[] compliancewith the requirements of Federal consumer financial law,” and “obtain[] information about [their]activities and compliance systems or procedures.” Id. §§5514-15. The CFPB can also “conduct investigations, issue subpoenas and civil investigative demands, initiate administrative adjudications, andprosecute civil actions in federal court.” Seila Law, 140 S. Ct. at 2193 (citing 12 U.S.C. §§5562, 5564(a),(f)). Through those processes, the CFPB can exact penalties like restitution, rescission of contracts,disgorgement, and injunctive relief. 12 U.S.C. §5565.

The CFPB’s vast authority makes the legal constraints that do exist on its authority all themore crucial. As relevant here, the CFPB must stay within the limits of Dodd-Frank, including thelimits on its UDAAP authority. Under the Administrative Procedure Act, the agency cannot take arbitrary or capricious actions, 5 U.S.C. §706(2)(A), and must submit legislative rules to the notice-and-comment process, §553. And the agency must of course follow the Constitution, including the Appropriations Clause. U.S. Const. art I, §9, cl. 7.

Through its recent examination manual update, the CFPB has, with the stroke of a pen, arrogated an open-ended and novel power to police regulated entities for discrimination—including for mere disparate impacts. This authority is nowhere to be found in the agency’s mandate from Congress.Indeed, the CFPB’s new rule flies in the face of the text, history, and structure of Dodd-Frank. Andwhile its “update” imposes substantial new obligations on regulated entities, the CFPB entirely bypassed the notice-and-comment process required by the APA. Further, as the Fifth Circuit recentlyheld, the funding structure that allowed the CFPB to announce or impose any of this authority in thefirst place is unconstitutional. Cmty. Fin. Servs. Ass’n of Am., Ltd. v. CFPB, 51 F.4th 616 (5th Cir. 2022).Judicial relief is thus needed to ensure that the CFPB remains accountable to legal constraints, the ruleof law, and the public as it pursues an aggressive agenda with far-reaching implications for the American economy, Plaintiffs, and their members.

For these reasons, Plaintiffs seek summary judgment on every claim in their complaint. Specifically, this Court should set aside the CFPB’s March 2022 update to the manual. It should alsopermanently enjoin the CFPB from pursuing any examinations or enforcement actions based on theinterpretation of its UDAAP authority announced in the March 2022 update. Plaintiffs are plainlyentitled to those remedies under the Appropriations Clause, given the Fifth Circuit’s recent decisionin Community Financial. But because the Supreme Court will likely review that case and take substantialtime to decide it, Plaintiffs respectfully ask the Court to alternatively hold that Plaintiffs are entitled tothose remedies under the APA as well.

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