Morgan Drexen, Inc. v. Consumer Financial Protection Bureau
2013 U.S. Dist. LEXIS 149387
| D.D.C. | 2013Background
- CFPB (created by Dodd-Frank Title X) investigated Morgan Drexen for alleged violations of the Telemarketing Sales Rule and Dodd‑Frank, issued CIDs, and informed Drexen it was considering enforcement. Drexen and attorney Kimberly Pisinski sued in D.C. district court challenging the constitutionality of Title X (separation of powers) and sought declaratory and injunctive relief.
- CFPB filed a separate enforcement action against Morgan Drexen and its CEO in the Central District of California shortly after Drexen filed the D.C. suit.
- Drexen moved for summary judgment; Pisinski sought a restraining order/preliminary injunction to enjoin the California action. CFPB moved to dismiss or for summary judgment.
- The D.C. court found Drexen could pursue its constitutional defense in the California enforcement action (an adequate remedy at law), and therefore injunctive and declaratory relief in D.C. was inappropriate.
- The court also held Pisinski lacked Article III standing: her alleged injuries were speculative (privilege concerns and business disruption) and not sufficiently imminent or concrete.
- Court dismissed the D.C. action without prejudice, denied Drexen’s summary judgment motion without prejudice, and denied as moot Pisinski’s injunction motion; the court did not reach the merits of the constitutional challenge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether D.C. court should enjoin CFPB’s later-filed California enforcement action and adjudicate facial constitutional challenge | Drexen: facial challenge is presumptively reviewable; need immediate relief; avoid being forced to litigate as defendant | CFPB: Drexen has adequate remedy at law in California enforcement action; equitable principles (avoid injunctions, final‑judgment rule, constitutional avoidance) counsel dismissal | Court: Denied injunctive relief; Drexen may raise constitutional defense in California action; D.C. injunctive relief inappropriate |
| Whether declaratory relief in D.C. is appropriate | Drexen: declaratory judgment proper to resolve constitutionality now | CFPB: Declaratory relief is discretionary; other proceedings pending that can resolve the dispute; plaintiff engaged in forum‑shopping/procedural fencing | Court: Declined to exercise discretionary declaratory jurisdiction; dismissed action to avoid piecemeal litigation |
| Whether Pisinski has Article III standing to bring claims in D.C. | Pisinski: her attorney‑client privilege and law practice will be harmed by CFPB investigation/regulation of Morgan Drexen | CFPB: Alleged harms are speculative; CIDs are not self‑enforcing; privilege assertion and judicial process would protect her; injury not imminent | Court: Pisinski lacks standing; alleged injuries are conjectural and not redressable here |
| Whether the case should be decided on the merits of the constitutionality of CFPB | Drexen: asks court to decide statutory constitutionality now | CFPB: jurisdictional/prudential defects and remedies in enforcement forum render merits premature | Court: Did not reach merits; dismissed on jurisdictional/prudential grounds |
Key Cases Cited
- Monsanto Co. v. Geertson Seed Farms, 130 S. Ct. 2743 (2010) (injunction is an extraordinary remedy and should not issue as a matter of course)
- Deaver v. Seymour, 822 F.2d 66 (D.C. Cir. 1987) (declining pre‑enforcement facial separation‑of‑powers challenge where it could be raised as a defense in pending prosecution)
- Free Enterprise Fund v. Public Co. Accounting Oversight Bd., 130 S. Ct. 3138 (2010) (discussed limits on administrative‑review provisions and reviewability of facial constitutional challenges)
- Wilton v. Seven Falls Co., 515 U.S. 277 (1995) (Declaratory Judgment Act gives courts discretion whether to entertain declaratory actions)
- MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007) (courts have substantial discretion in declaratory‑judgment jurisdiction)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requires concrete, particularized, and imminent injury; redressability)
- Younger v. Harris, 401 U.S. 37 (1971) (abstention principles limiting federal court interference with ongoing state prosecutions extended to certain civil enforcement contexts)
- Hanes Corp. v. Millard, 531 F.2d 585 (D.C. Cir. 1976) (factors guiding discretionary exercise of declaratory judgment jurisdiction)