Bureau of Consumer Financial Protection v. Center for Excellence in Higher Education
2:19-cv-00877
D. UtahApr 20, 2022Background
- The Consumer Financial Protection Bureau (Bureau) issued a civil investigative demand (CID) to the Center for Excellence in Higher Education (CEHE) seeking testimony about CEHE’s private-student-loan (EduPlan) program and related litigation.
- CEHE previously was the subject of a Colorado Attorney General (COAG) investigation and litigation (investigation beginning 2012; bench trial Oct–Nov 2017) that produced extensive discovery.
- CEHE objected to the Bureau’s CID as overbroad, duplicative of the Colorado litigation, indefinite, and issued by an unconstitutionally-structured Bureau; CEHE filed an administrative petition to modify/set aside the CID, which the Bureau denied.
- After the Supreme Court’s Seila Law decision (ruling the Bureau’s single-director removal protection unconstitutional but severable), Bureau Director Kraninger ratified enforcement of the CID.
- The magistrate judge found the Bureau met its initial burden (authority, relevance, definiteness) but that parts of the CID were unduly burdensome; recommended enforcing the CID as to CEHE’s private-student-loan program but denying enforcement as to testimony about CEHE’s prior litigation since 2012; ordered compliance within 30 days.
Issues
| Issue | Plaintiff's Argument (Bureau) | Defendant's Argument (CEHE) | Held |
|---|---|---|---|
| Authority to issue CID given Bureau’s prior unconstitutional structure | Director’s post‑Seila ratification cures any defect and authorizes enforcement | CID issued by unconstitutionally structured Bureau; enforcement improper | Director’s ratification cures defect; CID is within Bureau authority (Seila severability + ratification) |
| Relevance and definiteness of requested information | CID targets conduct (loan offers, enrollment without consent, misleading statements) relevant to CFPA inquiry; two discrete subjects identified | Requests are not reasonably relevant or are indefinite; Bureau should provide specifics | Bureau met initial burden: information is relevant and CID is sufficiently definite |
| Scope/overbreadth and duplicative burden (temporal/scope limits) | Broad investigatory powers allow investigation even overlapping state litigation | CID duplicative of COAG investigation and overly burdensome (seven-year scope); should be limited to post-Colorado litigation | Court rejects wholesale limitation; narrows CID: enforceable as to private‑student‑loan program, but not as to testimony about CEAG/state litigation since 2012 (reduces burden) |
| Abuse of process / bad faith (collusion, secret complaints, perjury trap) | CID issued in good faith to investigate potential CFPA violations | CID was collusive with COAG, conceals complaint sources, and risks perjury traps | No evidence of bad faith; enforcement would not constitute an abuse of process |
Key Cases Cited
- Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183 (2020) (single‑director removal protection violates separation of powers; removal provision severable)
- Collins v. Yellen, 141 S. Ct. 1761 (2021) (actions by agency heads removable only for cause are not void and remedial principles apply)
- Consumer Fin. Prot. Bureau v. Seila L. LLC, 997 F.3d 837 (9th Cir.) (post‑Seila director ratification can cure prior constitutional defect)
- United States v. Morton Salt Co., 338 U.S. 632 (1950) (agency investigatory power is broad but bounded by relevance and reasonableness)
- Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186 (1946) (disclosure must not be unreasonable; subpoenas must be sufficiently specific)
- FTC v. Texaco, Inc., 555 F.2d 862 (D.C. Cir. 1977) (agency may investigate on suspicion and breadth alone does not defeat enforcement)
- Santa Fe Energy Prod. Co. v. McCutcheon, 90 F.3d 409 (10th Cir. 1996) (administrative investigatory authority is broad)