The Property Management Connection, LLC, et al. v. Dave Uejio, Consumer Financial Protection Bureau, et al.

CASE SUMMARY

CFPB is requiring that anyone who seeks to collect unpaid residential rent, including property management companies, real estate attorneys, or housing providers, must now lie to tenants who have been sued for unpaid rent and are subject to eviction.

NCLA filed a lawsuit and motion for temporary restraining order against CFPB in the U.S. District Court for the Middle District of Tennessee for doubling down on the unlawful Halt Order issued by the Centers for Disease Control and Prevention (CDC) last September. NCLA represents The Property Management Connection, LLC, attorney Gordon Schoeffler, and the National Association of Residential Property Managers. Each Plaintiff suffered significant economic damages after CDC issued its Order, which forced property owners to provide habitable housing for tenants while continuing to pay maintenance, utilities, and other expenses, but prevented them from requiring tenants to pay their rent.

Undeterred by numerous challenges and court rejections across the country against the Halt Order, today CFPB implemented an Interim Final Rule, Debt Collection Practices in Connection With the Global COVID-19 Pandemic, without public comment. The CFPB rule is an unlawful agency action in violation of the Administrative Procedure Act (APA) because it requires disclosures that are not required under the Fair Debt Collection Practices Act. The FDCPA generally prohibits debt collectors from using “any false, deceptive, or misleading representations or means in connection with the collection of any debt.” The CFPB rule also violates the First Amendment of the Constitution by requiring false speech. The rule requires Plaintiffs to falsely inform tenants, in writing, that they are entitled to protection under the Halt Order, when, in fact, the Order has been deemed unenforceable by multiple judges.

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CASE STATUS: Active

CASE START DATE: May 3, 2021

DECIDING COURT: U.S. District Court for the Middle District of Tennessee, Nashville Division

ORIGINAL COURT: U.S. District Court for the Middle District of Tennessee, Nashville Division

CASE DOCUMENTS

May 14, 2021 | Memorandum Opinion Denying Plaintiffs’ Motion
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May 11, 2021 | Plaintiffs' Reply Brief in Support of Motion for Temporary Restraining Order
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May 10, 2021 | Response in Opposition to Plaintiffs' Motion for Temporary Injunction
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May 4, 2021 | Order for Status Conference
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May 3, 2021 | Plaintiffs’ Brief in Support of Motion for Temporary Restraining Order
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May 3, 2021 | Complaint in the U.S. District Court for the Middle District of Tennessee, Nashville Division
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PRESS RELEASES

May 17, 2021 | In Mixed Ruling for NCLA Clients, District Judge Says CFPB Rule Does Not Apply in Sixth Circuit

Washington, DC (May 17, 2021) – The New Civil Liberties Alliance is celebrating a partial win for housing providers in Kentucky, Michigan, Ohio, and Tennessee. The U.S. District Court for the Middle District of Tennessee indicated after hours on Friday that an Interim Final Rule issued by the Consumer Financial Protection Bureau (CFPB) does not apply in the Sixth Circuit according to its own terms. The decision effectively shields housing providers in these states who, under the CFPB Rule, otherwise would face liability if they failed to make false and misleading statements to delinquent tenants facing eviction.

NCLA, a nonpartisan, nonprofit civil rights group, represents The Property Management Connection, attorney Gordon Schoeffler, and the National Association of Residential Property Managers in a challenge against CFPB’s Interim Final RuleDebt Collection Practices in Connection With the Global COVID-19 Pandemic. The Rule, implemented May 3, 2021, without public comment, required that anyone who seeks to collect unpaid residential rent must falsely inform tenants subject to eviction, in writing, that they are entitled to protection under the unlawful nationwide Halt Orderon evictions issued by the Centers for Disease Control and Prevention (CDC).

On September 1, 2020, CDC issued its nationwide eviction moratorium. Since then, the Halt Order has been successfully challenged across the country, notably in the Sixth Circuit case Tiger Lily, LLC, et al. v. HUD, et al., in which NCLA filed an amicus brief. CFPB disclaimed the Sixth Circuit’s Tiger Lily decision as not being “a binding Circuit decision on the merits of the case.” But the Sixth Circuit did not equivocate; a panel of judges held in a published opinion that Congress did not “grant the CDC the power it claims” underlying the Halt Order. In its decision, the U.S. District Court for the Middle District of Tennessee said Tiger Lily is binding precedent. Hence, neither the CDC Halt Order nor the CFPB Rule applies to the Plaintiffs or to any other person in the four states that comprise the Sixth Circuit.

Under the CDC Order, housing providers cannot obtain evictions, but if they default on their mortgages and lose their properties, the banks can evict! CFPB put these housing providers in a further impossible position when the agency violated their First Amendment rights by ordering them to make false and inaccurate disclosures about the invalid Halt Order. CFPB chose to ignore the dilemma facing housing providers, but NCLA commends the District Court for righting this wrong in the Sixth Circuit. NCLA will move for summary judgment and seek a final declaratory ruling, to protect all housing providers from the CFPB Rule.

NCLA released the following statements:

“While CFPB has insisted that housing providers within the Sixth Circuit are bound to make false statements to tenants about an invalid eviction moratorium, the District Court resoundingly rejected that idea and declared the Rule inapplicable within this jurisdiction. The District Court also encouraged other courts to follow its lead in rejecting CFPB’s lawless power grab.”
— Caleb Kruckenberg, Litigation Counsel, NCLA

“CFPB cannot make people lie about the unlawful actions of the CDC in the Sixth Circuit. Soon, if agencies are held to their lawful scope, it won’t be able to do so in the other circuits either.”
— John Vecchione, Senior Litigation Counsel, NCLA

For more information visit the case page here.

ABOUT NCLA

NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.

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May 3, 2021 | NCLA Cries Foul on CFPB Final Rule that Doubles Down on Unlawful Eviction Moratorium Policy

Washington, DC (May 3, 2021) – The Consumer Financial Protection Bureau (CFPB) is requiring that anyone who seeks to collect unpaid residential rent, including property management companies, real estate attorneys, or housing providers, must now lie to tenants who have been sued for unpaid rent and are subject to eviction.

Today the New Civil Liberties Alliance filed a lawsuit and motion for temporary restraining order against CFPB in the U.S. District Court for the Middle District of Tennessee for doubling down on the unlawful Halt Order issued by the Centers for Disease Control and Prevention (CDC) last September. NCLA represents The Property Management Connection LLC, attorney Gordon Schoeffler, and the National Association of Residential Property Managers. Each Plaintiff suffered significant economic damages after CDC issued its Order, which forced property owners to provide habitable housing for tenants while continuing to pay maintenance, utilities, and other expenses, but prevented them from requiring tenants to pay their rent.

Undeterred by numerous challenges and court rejections across the country against the Halt Order, today CFPB implemented an Interim Final Rule, Debt Collection Practices in Connection With the Global COVID-19 Pandemic, without public comment. The CFPB rule is an unlawful agency action in violation of the Administrative Procedure Act (APA) because it requires disclosures that are not required under the Fair Debt Collection Practices Act. The FDCPA generally prohibits debt collectors from using “any false, deceptive, or misleading representations or means in connection with the collection of any debt.” The CFPB rule also violates the First Amendment of the Constitution by requiring false speech. The rule requires Plaintiffs to falsely inform tenants, in writing, that they are entitled to protection under the Halt Order, when, in fact, the Order has been deemed unenforceable by multiple judges.

In March 2021, the Halt Order was successfully challenged twice in the Sixth Circuit. In Skyworks, Ltd. v. Centers for Disease Control & Prevention, the District Court for the Northern District of Ohio “determine[d] that the [CDC’s Halt Order] exceeded the agency’s statutory authority” and was, therefore, invalid. Two days later, the District Court for the Western District of Tennessee likewise held in Tiger Lily, LLC, et al. v. HUD, et al. that the Halt Order was beyond the scope of CDC’s power and unenforceable in the Western District of Tennessee. NCLA had successfully filed amicus briefs in both cases.

The Plaintiffs in this case seek a declaratory judgment setting aside and invalidating the CFPB rule and an emergency temporary restraining order preventing CFPB from enforcing its rule pending further action in the case.

NCLA released the following statements:

“CFPB is supposed to protect consumers against false and misleading statements, not force housing providers to falsely inform tenants that they don’t have any obligation to pay their rent. This rushed and sloppy rule is just a political statement masquerading as the law.”
Caleb Kruckenberg, Litigation Counsel, NCLA

“It’s bad enough that the CDC decided to exceed its statutory powers to deny access to courts. To have another agency, the CFPB, chime in and purport to force others to tell people the CDC Order is legal and available takes the lawlessness on display here to another level.”
John Vecchione, Senior Litigation Counsel, NCLA

For more information visit the case page here.

ABOUT NCLA

NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.

Download the full document

OPINION