Moroney v. CFPB

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CASE STATUS:
Active

CASE START DATE:
December 19, 2019

DECIDING COURT:
Southern District of New York, White Plains Division

ORIGINAL COURT:
N/A

 

CASE SUMMARY

The New Civil Liberties Alliance has filed a lawsuit in the U.S. District Court for the Southern District of New York challenging the funding mechanism for the Consumer Financial Protection Bureau (CFPB) as unconstitutional. Specifically, NCLA alleges that Congress unlawfully divested its legislative appropriations power when it gave CFPB the ability to draw funding directly from the Federal Reserve, without annual appropriations from Congress and without oversight from the appropriations committees of Congress. By giving the power of the purse—a core legislative power—over to an executive branch agency, Congress violated Article I of the Constitution, which vests ALL legislative power in Congress, including appropriations power.

This case, entitled Law Offices of Crystal Moroney v. Bureau of Consumer Financial Protection, may ultimately provide the U.S. Supreme Court the opportunity to revive the Non delegation Doctrine that five justices expressed interest in revisiting earlier this year in the wake of last June’s Gundy v. United States decision.

NCLA also contends that CFPB acted beyond its constitutional authority when it targeted Ms. Maroney’s Law Firm with a Civil Investigative Demand, withdrew that CID on the cusp of her federal court hearing challenging it, and then promptly issued a new CID practically identical to the original one as soon as the case was dismissed as moot. The complaint asks the Court to redress this fundamental denial of Crystal Moroney’s right to due process.

Finally, the case also preserves the objection that Congress may not vest executive authority in CFPB, an independent agency led by a single director, while also shielding that agency’s director from Presidential oversight and removal. Such a regime clearly violates the President’s constitutional duty to “take Care” that the laws are faithfully executed. That objection to CFPB’s structure is pending at the U.S. Supreme Court in Seila Law, LLC v. CFPB. NCLA filed an amicus curia brief in that case this week too, arguing that the President must have the power to remove any federal officer who exercises executive power. 

CASE DOCUMENTS

February 27, 2020 | Plaintiff's Reply in Support of Motion for Preliminary Injunction

Plaintiff Law Offices of Crystal Moroney, P.C., comes before the Court to challenge a civil investigative demand (CID) that itself imposes no binding obligations on Plaintiff. And the CID will not impose any such obligations unless and until Defendant Consumer Financial Protection Bureau files a petition to enforce it in district court. When and if that happens, Plaintiff will have a chance to raise any legal objections it may have to the CID. Until then, Plaintiff faces no risk of fine or penalty if it simply does nothing.

Nonetheless, Plaintiff claims that the Court must immediately resolve its various constitutional objections to the CID. At the same time, it claims that the Court must enjoin the Bureau from filing the sort of CID-enforcement proceeding that could resolve Plaintiff’s objections in the context of an actual case or controversy between the parties. And Plaintiff makes these requests after having previously asked another judge of this Court to delay resolving its constitutional claims and then, after Plaintiff effectively prevailed in that action on other grounds, asking the court to re-open the case.

The law that established the Bureau and authorizes it to issue CIDs also put in place a comprehensive scheme of administrative and judicial review meant to avoid this sort of maneuvering by serving as the exclusive means to resolve disputes over CIDs. Plaintiff seeks to circumvent that scheme by pursuing this unripe collateral attack on the CID. The Court thus lacks jurisdiction over Plaintiff’s claims. For this reason, among others set out in this brief, Plaintiff cannot show the likelihood of success on the merits that it needs to justify a preliminary injunction. Plaintiff also cannot show that it will suffer irreparable injury if the Bureau seeks to enforce the CID in court or issues any additional non-self-enforcing CIDs.

The Court should deny Plaintiff’s motion for extraordinary emergency relief.

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February 03, 2020 | Defendants’ Opposition to Motion for Preliminary Injunction

Plaintiff Law Offices of Crystal Moroney, P.C. (“Ms. Moroney’s Law Firm”) submits this Complaint for Permanent Injunctive and Declaratory Relief to prohibit Defendant Bureau of Consumer Financial Protection, also known as the Consumer Financial Protection Bureau (“the Bureau” or “CFPB”), and Defendant Director Kathy Kraninger, from perpetuating a lawless and retaliatory Civil Investigative Demand against Ms. Moroney’s Law Firm, and alleges as follows:

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January 22, 2020 | Order to Show Cause
January 21, 2020 | Memorandum of Law in Support of Plaintiff’s Motion for Preliminary Injunction

The Law Offices of Crystal Moroney, P.C. (“Ms. Moroney’s Law Firm” or “she” or “her”) urgently needs judicial intervention to preserve the status quo and forestall the irreparable harm being caused by the Bureau of Consumer Financial Protection’s (the “Bureau” or “CFPB”) and CFPB Director Kathy Kraninger’s continuing and systematic violation of the Plaintiff’s fundamental right to due process. If the Defendants’ unconstitutional abuses of process persist unabated, Ms. Moroney’s Law Firm is likely to become insolvent, and she will not be able to seek redress of her grievances in the future, exacerbating the irreparable constitutional harms she continues to suffer. Thus, the Plaintiff respectfully requests that this Court temporarily enjoin the Defendants from conducting investigations into Ms. Moroney’s Law Firm—including issuing Civil Investigative Demands (CIDs) to third parties—and to prohibit issuance of future CIDs that target the Plaintiff, while this case is pending.

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December 18, 2019 | Verified Complaint for Permanent Injunctive and Declaratory Relief

Plaintiff Law Offices of Crystal Moroney, P.C. (“Ms. Moroney’s Law Firm”) submits this Complaint for Permanent Injunctive and Declaratory Relief to prohibit Defendant Bureau of Consumer Financial Protection, also known as the Consumer Financial Protection Bureau (“the Bureau” or “CFPB”), and Defendant Director Kathy Kraninger, from perpetuating a lawless and retaliatory Civil Investigative Demand against Ms. Moroney’s Law Firm, and alleges as follows:

Click here to read full legal document.

PRESS RELEASE

December 19, 2019 |NCLA Lawsuit Says CFPB Is Funded Unconstitutionally—Congress Cannot Divest Legislative Power

Washington, DC (December 19, 2019)​ – The New Civil Liberties Alliance has filed a ​lawsuit​ in the U.S.District Court for the Southern District of New York challenging the funding mechanism for the Consumer Financial Protection Bureau (CFPB) as unconstitutional. Specifically, NCLA alleges that Congress unlawfully divested its legislative appropriations power when it gave CFPB the ability to draw funding directly from the Federal Reserve, without annual appropriations from Congress and without oversight from the appropriations committees of Congress. By giving the power of the purse—a core legislative power—over to an executive branch agency, Congress violated Article I of the Constitution, which vests ALL legislative power in Congress, including appropriations power.

This case, entitled ​Law Offices of Crystal Moroney v. Bureau of Consumer Financial Protection​, may ultimately provide the U.S. Supreme Court the opportunity to revive the Nondelegation Doctrine that five justices expressed interest in revisiting earlier this year in the wake of last June’s ​Gundy v. United States decision.

NCLA also contends that CFPB acted beyond its constitutional authority when it targeted Ms. Maroney’s Law Firm with a Civil Investigative Demand, withdrew that CID on the cusp of her federal court hearing challenging it, and then promptly issued a new CID practically identical to the original one as soon as the case was dismissed as moot. The complaint asks the Court to redress this fundamental denial of Crystal Moroney’s right to due process.

Finally, the case also preserves the objection that ​Congress may not vest executive authority in CFPB, an independent agency led by a single director, while also shielding that agency’s director from Presidential oversight and removal. Such a regime clearly violates the President’s constitutional duty to “take Care” that the laws are faithfully executed. That objection to CFPB’s structure is pending at the U.S. Supreme Court in ​Seila Law, LLC v. CFPB​. NCLA filed an ​amicus curia​​ brief​ in that case this week too, arguing that the President must have the power to remove any federal officer who exercises executive power.

NCLA released the following statements: “Crystal Moroney and the law firm she has built are victims of the Administrative State. Her plight is all too familiar to those of us fighting to restore constitutional constraints on federal agencies. On the bright side, her case will afford an excellent opportunity to call into question the highly irregular—and almost certainly unconstitutional—way in which Congress has funded CFPB.”— ​Mark Chenoweth, NCLA Executive Director and General Counsel

“This case illustrates what happens to civil liberties when an administrative agency lacking anysemblance of control or oversight from the executive or legislative branches turns on the citizens it purportedly exists to serve. Only the judicial branch can vindicate Ms. Maroney’s civil liberties by restoring accountable,constitutional government.” — ​Michael P. DeGrandis, NCLA Senior Litigation Counsel

“The serial investigations of the Plaintiff expose the CFPB’s cynical investigatory practices andreprehensible litigation tactics for what they truly are—brazenly unconstitutional abuses of process. It is longpast time for CFPB to face the judicial scrutiny that it has so contemptuously circumvented over the last twoand a half years.” — ​Jessica Thompson, NCLA Litigation Counsel

ABOUT NCLA – NCLA is a nonprofit civil rights organization founded by prominent legal scholar ​Philip Hamburger​ to protectconstitutional freedoms from violations by the Administrative State. NCLA’s​​public-interest litigation andother ​pro bono​ advocacy strive to tame the unlawful power of state and federal agencies and to foster a newcivil liberties movement that will help restore Americans’ fundamental rights.For more information, visit us online: ​NCLAlegal.org​.

 

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OPINION