958 F. Supp. 2d 127
D.D.C.2013Background
- Plaintiffs (State National Bank of Big Spring, 60 Plus, Competitive Enterprise Institute, and 11 States) challenged Titles I, II, and X of the Dodd-Frank Act and the constitutionality of Richard Cordray’s recess appointment as CFPB Director. Defendants moved to dismiss for lack of Article III standing and ripeness. The Court granted the motion.
- Title I (FSOC) allows designation of nonbank SIFIs, triggering Fed supervision; designations require notice, hearing, and permit judicial review only by the designated company.
- Title II (Orderly Liquidation Authority) permits the Treasury Secretary to seek FDIC receivership of certain failing financial companies in sealed, expedited proceedings; many statutory findings and contingencies must occur before OLA is used.
- Title X created the CFPB with for-cause removal protection for its Director; CFPB has rulemaking, supervisory, and UDAAP enforcement authority and issued rules (Remittance Rule, RESPA servicing rule, ATR‑QM rule) but had limited direct enforcement against the plaintiffs.
- The court analyzed standing (injury-in-fact, causation, redressability) and ripeness (fitness and hardship), and dismissed each challenged Title or claim for lack of standing or because claims were not ripe.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Title I – FSOC separation of powers / competitor standing (SNB) | SNB says FSOC’s SIFI designations will advantage designated competitors (e.g., GE Capital), injuring SNB as a direct competitor. | Defendants say any competitive effect is speculative, depends on many independent market reactions, and any benefit to designees may be negative; causation/redressability fail. | Dismissed: SNB’s competitor injury is too speculative; no imminent, concrete injury, and causation/redressability lacking; claim not ripe. |
| Title II – OLA (States as creditors) | States assert loss of bankruptcy-backed protections for equal treatment of creditors constitutes present injury to their investments and property rights. | Defendants contend the OLA has not been invoked; any harm is contingent on multiple events (default, Secretary action, differential creditor treatment) and thus speculative. | Dismissed: States lack standing; alleged injuries are conjectural and not certainly impending; claims also not ripe. |
| Title X – CFPB structure (separation of powers) and Cordray appointment (Appointments Clause) | Private plaintiffs challenge CFPB’s insulation and Cordray’s recess appointment; Bank claims regulatory costs and effects from CFPB rules supply injury. | Defendants argue the Bank’s asserted injuries (monitoring/compliance expenditures, curtailed business, rules issued after filing) are self-inflicted or speculative and not traceable/redressable to the challenged structural features or appointment. | Dismissed: Bank’s asserted compliance costs and business‑curtailment are speculative or self-inflicted; some rules post‑date suit; no concrete, imminent injury tied to Cordray’s appointment or Title X; claims fail standing and/or ripeness. |
| Standing based on compliance costs, rulemaking, and UDAAP authority | Plaintiffs contend compliance costs, reduced remittance activity, foreclosure/mortgage-rule impacts, and chilling by UDAAP enforcement support immediate challenge. | Defendants: monitoring/subscription costs are voluntary (self-inflicted); safe harbors and rule amendments limit plaintiffs’ exposure; enforcement likelihood is low/uncertain; many rules not yet effective at filing. | Dismissed: The court rejects broad "monitoring" costs as Article III injury; remittance and mortgage claims are speculative, often post‑filing, and prudentially unripe; UDAAP fear is not a credible, imminent enforcement threat. |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires concrete, particularized, actual or imminent injury)
- Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138 (standing cannot rest on speculative chains of inferences about third‑party actions)
- Summers v. Earth Island Inst., 555 U.S. 488 (harder standing when plaintiff is not the object of challenged regulation)
- Already, LLC v. Nike, Inc., 133 S. Ct. 721 (limits on expansive competitor‑standing theories)
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (plaintiff bears burden to show jurisdiction)
- Nat’l Wrestling Coaches Ass’n v. Dep’t of Educ., 366 F.3d 930 (standing rarely found when claims rely on third‑party responses to government action)
- Committee for Monetary Reform v. Bd. of Governors, 766 F.2d 538 (no standing where parties not directly subject to the challenged authority)