State National Bank of Big Spring v. Geithner, 197 F. Supp. 3d 177

Background

Plaintiffs (State National Bank of Big Spring, Competitive Enterprise Institute, 60 Plus) sued in 2012 challenging the constitutionality of the CFPB and the validity of Richard Cordray’s January 4, 2012 recess appointment as CFPB Director.
Cordray, appointed during a Senate inaction period, exercised final authority on multiple CFPB rulemakings before being confirmed by the Senate on July 16, 2013.
After confirmation, Cordray published an August 30, 2013 notice ratifying "any and all actions" he took while serving as a recess appointee.
The D.C. Circuit held plaintiffs had standing to challenge Cordray’s recess appointment and remanded for consideration of the merits and the effect of Cordray’s later confirmation and ratification.
On remand, the district court deferred ruling on the CFPB structural separation-of-powers claim (awaiting a D.C. Circuit decision in PHH) but addressed the recess-appointment claim and whether Cordray’s ratification cured any defect.
The court concluded ratification by a properly appointed official (Cordray after confirmation) can cure Appointments Clause defects and granted defendants’ cross-motion in part, denying plaintiffs’ motion in part.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Cordray’s recess appointment invalidates rules issued before his confirmation	Cordray’s appointment violated the Recess Appointments Clause; rules promulgated while he was recess appointee should be enjoined	Cordray’s later Senate confirmation and his August 2013 ratification cured any Appointments Clause defect	Court held ratification by a properly appointed official can cure the defect; plaintiffs’ challenge to pre-confirmation rules fails insofar as ratification is effective
Mootness: Does post-confirmation status moot plaintiffs’ injunctive claims?	Plaintiffs concede confirmation moots broad injunction but seek relief against enforcement of specific pre-confirmation rules	Defendants argue confirmation renders the complaint’s injunctive claims moot or constructively amended	Court held partial relief remains available (challenge not moot) because complaint sought broad injunction that subsumes narrower remedy against pre-confirmation rules
Standing to seek relief against specific rules promulgated pre-confirmation	Plaintiffs assert standing based on SNB’s compliance costs under the Remittance Rule and seek declaration and injunction tied to recess appointment	Defendants argue plaintiffs lack standing for many rules and are improperly reframing relief	Court followed D.C. Circuit: SNB has standing via Remittance Rule costs; must adjudicate merits of recess-appointment claim
Whether ratification requires de novo repromulgation or new notice-and-comment	Plaintiffs argue ratification is ineffective unless agency repeats APA rulemaking or meaningful de novo reconsideration	Defendants rely on precedent that a proper later appointment and ratification cures defects without redoing procedures	Court held formal repetition or probing of internal deliberations unnecessary; a post-confirmation ratification by same properly appointed director is an adequate remedy

Key Cases Cited

National Labor Relations Board v. Noel Canning, 134 S. Ct. 2550 (2014) (Supreme Court invalidating certain recess appointments and signaling limits on Recess Appointments Clause authority)
Fed. Election Comm’n v. Legi-Tech, Inc., 75 F.3d 704 (D.C. Cir. 1996) (ratification by properly constituted agency can cure prior procedural/appointments defects)
Doolin Sec. Sav. Bank v. Office of Thrift Supervision, 139 F.3d 203 (D.C. Cir. 1998) (successor’s ratification upholds prior agency actions despite questions about predecessor’s appointment)
Intercollegiate Broad. Sys., Inc. v. Copyright Royalty Bd., 796 F.3d 111 (D.C. Cir. 2015) (ratification by properly constituted panel can remedy Appointments Clause challenge)
Landry v. Federal Deposit Insurance Corp., 204 F.3d 1125 (D.C. Cir. 2000) (Appointments Clause errors are structural but distinguishable where ratification occurs)
SW General, Inc. v. National Labor Relations Board, 796 F.3d 67 (D.C. Cir. 2015) (Appointments Clause discussion; did not involve ratification)
Advanced Disposal Servs. E., Inc. v. Nat’l Labor Relations Bd., 820 F.3d 592 (3d Cir. 2016) (post-reconstitution ratification upheld challenged actions)
Consumer Financial Protection Bureau v. Gordon, 819 F.3d 1179 (9th Cir. 2016) (held Cordray’s August 2013 ratification resolved Appointments Clause deficiencies)