Consumer Financial Protection v. Seila Law LLC, 997 F.3d 837

Background

Feb 2017: CFPB issued a civil investigative demand (CID) to Seila Law requiring documents and interrogatory answers; Seila refused.
June 2017: CFPB filed a petition to enforce the CID; district court granted the petition; Ninth Circuit originally affirmed in 2019.
2020 Supreme Court decision: held the CFPB Director’s for-cause removal protection violated separation of powers but was severable from the statute; vacated and remanded for consideration of whether the CID had been validly ratified.
July 9, 2020: CFPB Director Kathleen Kraninger expressly ratified the CFPB’s earlier decisions to issue and enforce the CID; she was removable at will by the President at that time.
On remand the Ninth Circuit held Kraninger’s ratification cured any constitutional injury and reaffirmed enforcement of the CID, rejecting Seila’s arguments that prior agency actions were void and that ratification was time-barred.

Issues

Issue	Plaintiff's Argument (Seila)	Defendant's Argument (CFPB)	Held
Whether the CID was validly ratified after the Supreme Court severed the Director’s for-cause removal protection	Ratification cannot cure actions that were unlawful when taken; CFPB lacked authority in 2017 so earlier acts were void	Ratification by a properly removable Director cures the Director-specific defect; the agency itself remained lawful	Kraninger’s ratification validly remedied any constitutional injury; CID enforcement affirmed
Whether a later official may ratify prior agency acts that were allegedly unlawful when done	Cites NRA PVF: ratifier must have authority both when act was done and when ratified; CFPB lacked authority in 2017	Gordon and Legi‑Tech: structural defects targeted the officer, not the agency; ratification cures such defects	Ninth Circuit: Gordon controls; defect was limited to Director; ratification available and effective
Whether Kraninger’s July 2020 ratification was invalid because it occurred after the statute-of-limitations for bringing an enforcement action	Ratification is untimely because the limitations period started earlier and has run	The statute governs bringing an enforcement action, not investigatory CIDs; ratification of CID issuance/enforcement is not time‑barred	Court held statute-of-limitations argument premature and rejected it
Whether the panel must decide whether Acting Director Mulvaney ratified the CID during his tenure	Seila argued any earlier ratification by Mulvaney (if relied on) was invalid	CFPB pointed to Kraninger’s express ratification, mooting need to resolve Mulvaney question	Court declined to decide Mulvaney’s ratification because Kraninger’s ratification independently validated the CID

Key Cases Cited

Seila Law LLC v. Consumer Financial Protection Bureau, 140 S. Ct. 2183 (2020) (Supreme Court held CFPB Director’s for-cause removal protection unconstitutional but severable)
Federal Election Commission v. NRA Political Victory Fund, 513 U.S. 88 (1994) (ratification requires the ratifier to have authority both when the act was done and when ratification occurs)
CFPB v. Gordon, 819 F.3d 1179 (9th Cir. 2016) (Director-specific defects can be cured by later ratification without voiding the agency’s prior acts)
Federal Election Commission v. Legi‑Tech, Inc., 75 F.3d 704 (D.C. Cir. 1996) (ratification valid to cure structural agency composition defects)
NLRB v. Noel Canning, 573 U.S. 513 (2014) (addressed limits on recess appointments relevant to Gordon)
EEOC v. Children's Hospital Medical Center, 719 F.2d 1426 (9th Cir. 1983) (agency investigatory demands cannot be defeated by defenses that might apply only to a later enforcement action)
Pacific Maritime Ass'n v. Quinn, 491 F.2d 1294 (9th Cir. 1974) (statute-of-limitations defense to an investigatory demand may be premature)