Last week's decision by U.S. Court of Appeals for the District of Columbia Circuit that the Consumer Financial Protection Bureau’s single-director structure is unconstitutional for an independent agency has already been raised as the basis for a motion to dismiss in another case involving the bureau. Intercept Corporation, a payment processing servicer located in Fargo, N.D., has argued that an action brought by the bureau against the processor should be dismissed because the bureau's claims under the Consumer Financial Protection Act are "analogous" to the Real Estate Settlement Procedures Act claims in PHH Corporation v. CFPB.
In PHH Corporation, the D.C. Circuit appellate court ruled that the bureau's single-director structure is unconstitutional and that the president must have the authority to discharge the CFPB’s director at will and without cause. The court also rejected the bureau’s claims that there is no statute of limitations that restricts its ability to enforce the Real Estate Settlement Procedures Act against a mortgage lender that was accused of taking illegal kickbacks.
The CFPB had brought an action against Intercept in the U.S. District Court for North Dakota, alleging that Intercept engaged in unfair acts or practices in violation of the CFPA. Intercept filed a Notice of Supplemental Authority in support of its motion to dismiss in order to bring the PHH ruling to the district court’s attention. In it's notice, Intercept contended that the appellate court rejected an analogous attempt by the bureau to extend its statutory authority under RESPA. Specifically, Intercept argued that the bureau's claims are time-barred under the CFPA’s three-year statute of limitations, which begins to run on the date of the discovery of the violation.
The bureau has responded that the D.C. Court’s decision does not control the outcome of Intercept’s motion to dismiss, since a district court in North Dakota is not bound by a decision outside the 8th Circuit. The CFPB further stated that the decision is not yet final until the bureau has had an opportunity to petition for rehearing en banc or a writ of certiorari. The bureau's response also stated that the ruling on the applicable statute of limitations under RESPA are irrelevant to the case, where the claims fall under the CFPA and the parties agree on the applicable statute of limitations provision.
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