John Doe Company v. Consumer Financial Protection Bureau
235 F. Supp. 3d 194
| D.D.C. | 2017Background
- In Oct. 2016 a D.C. Circuit panel in PHH Corp. v. CFPB held the CFPB’s single‑Director, for‑cause removal protection unconstitutional and severed the removal restriction so CFPB could operate as an executive agency; the panel stayed issuance of mandate pending rehearing en banc.
- While the panel mandate was stayed, CFPB issued a Civil Investigative Demand (CID) to John Doe Company and denied its request to set aside the CID or to treat related filings as confidential, informing John Doe the CID and denial would be posted publicly.
- John Doe sued in D.D.C., seeking a TRO / preliminary injunction to bar CFPB from taking adverse action (including publishing the CID and denial) on the ground CFPB was unconstitutionally structured.
- On Feb. 16, 2017 the D.C. Circuit granted rehearing en banc in PHH, vacating the panel opinion that John Doe relied on, undermining John Doe’s likelihood of prevailing on the constitutional claim.
- The district court denied the TRO and preliminary injunction (finding no substantial likelihood of success or irreparable harm), but granted a narrow injunction preventing CFPB from publicizing John Doe’s identity for two weeks to permit John Doe to seek a stay from the D.C. Circuit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CFPB was unconstitutionally structured such that its actions should be enjoined | CFPB Director was removable only for cause; panel decision in PHH shows CFPB lacks constitutional accountability, so its CID and actions are invalid | PHH panel opinion was vacated by grant of rehearing en banc; no briefing here supports finding the CFPB unconstitutional; CFPB actions remain operative | Court: Plaintiff unlikely to succeed; vacatur of PHH panel undermines plaintiff’s reliance and no briefing supports constitutional finding |
| Whether issuance/enforcement of CID causes irreparable harm warranting preliminary relief | Publication of CID and denial will irreparably harm business reputation, cause employees/providers to abandon company, and litigation burden is severe | CIDs are not self‑enforcing; economic and litigation harms are speculative and remediable in later proceedings; plaintiff offers no concrete evidence | Court: No likely irreparable harm shown; economic/litigation burdens insufficient absent strong evidence |
| Whether publication of CID-related filings should be enjoined pending appeal | Publication would moot key portions of relief and cannot be undone on appeal; substantial legal question exists | CFPB has public‑interest and investigatory reasons to publish; public already aware of industry scrutiny | Court: Narrowly enjoined CFPB from publicizing John Doe’s identity for two weeks to allow filing for stay; weighed seriousness of legal question and risk of mootness |
| Whether CID compliance must be enjoined because CID was issued during legal "limbo" | CID issued while CFPB structure allegedly unconstitutional; therefore further action should be stayed | CID authority remains effective; CIDs are non‑penal and enforceable later via court order; plaintiff can raise constitutional defenses in enforcement proceedings | Court: Denied broad injunction against CID enforcement; CID not self‑enforcing and plaintiff may raise defenses later |
Key Cases Cited
- PHH Corp. v. CFPB, 839 F.3d 1 (D.C. Cir. 2016) (panel holding CFPB structure unconstitutional and severing for‑cause removal provision)
- Free Enter. Fund v. PCAOB, 561 U.S. 477 (2010) (courts should attempt narrow severance remedies for constitutional defects)
- Jarkesy v. SEC, 803 F.3d 9 (D.C. Cir. 2015) (cost of defending enforcement proceeding does not normally constitute irreparable harm)
- Winter v. NRDC, 555 U.S. 7 (2008) (plaintiffs seeking preliminary injunction must show likely irreparable injury)
- Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290 (D.C. Cir. 2006) (standard for granting preliminary injunctions and high standard for irreparable injury)
- Morgan Drexen, Inc. v. CFPB, 979 F. Supp. 2d 104 (D.D.C. 2013) (CFPB CIDs are not self‑enforcing)