NY Court Dismisses Credit Union Suit Against Mulvaney

Last week the U.S. District Court for the Southern District of New York dismissed the case filed by the Lower East Side People's Federal Credit Union (LESPFCU) against President Trump and Acting CFPB Director Mick Mulvaney for lack of standing.

You can read the full 20-page Order here.

The LESPFCU filed suit on December 5, 2017 in support of Leandra English as the "only person permitted under law to be the Acting Director [of the CFPB]," and on December 12 moved for a prelimninary injunction to bar Mulvaney from working in that capacity. Among the claims made by the credit union was a complaint that the CFPB announced on December 21 that it planned to engage in rulemaking concerning the Home Mortgage Disclosure Act (HMDA) and that,

[t]he Credit Union is unable to engage in long-range planning about what HMDA disclosures it will have to make. The Credit Union will have to invest further resources now to plan for its alternative disclosure obligations depending on Mr. Mulvaney's various potential revisions to HMDA. For the Creidt Union, this is wasteful, time-consuming, and a direct result of the actions Mr. Mulvaney has taken since he seized power at the CFPB.

The defendants argued that simply being a regulated entity does not satisfy the requirements for Article III standing.

On February 1, 2018 the Court agreed with the defendants, saying that standing cannot be premised on post-complaint conduct, and that the alleged injury is too "hypothetical" to confer standing. Accordingly, the Court granted the motion to dismiss, and denied LESPFCU's motion for a preliminary injunction as moot.

This suit was filed against the backdrop of the case filed by Leandra English against President Trump and Acting Director Mulvaney, also claiming that she was the rightful person to have assumed the temporary CFPB leadership job. On November 24, 2017 former CFPB Director Richard Cordray named English, his Chief of Staff, Deputy Director. It was his last day in office following a sudden - yet not unexpected - resignation. Cordray is now campaigning to be the Governor of Ohio.

Because of two conflicting laws governing how to fill the CFPB vacancy, many claimed it was unclear who was actually in charge. One camp argued Dodd-Frank dictates that the Deputy Director fills the role until the President can nominate a replacement, and that person is confirmed by Congress. The other camp argued that the Federal Vacancies Act prevails, which gives authority to the President to name a temporary Director until the new person is confirmed. President Trump named Mulvaney, his Budget Director, to fill the post.

English's initial motion for a restraining order to bar Mulvaney from serving as Acting Director was denied on November 28, 2017. She then filed for a preliminary injunction, which was denied on January 10, 2018. On January 12 English filed an appeal with the U.S. District Court for the District of Columbia. She also requested that the decision be expedited, which has since been granted.

President Trump has yet to nominate a permanent successor to Richard Cordray. A number of names have been circulated, but it seems none have emerged yet as the obvious choice. Mulvaney is allowed to serve for up to 210 days, however that can be extended if there is a nominee who is going through the confirmation process.