The attorneys general from 16 states and the District of Columbia filed a motion to intervene in PHH Corp. v. CFPB, arguing that they had a “legally protected interest” in maintaining an independent Consumer Financial Protection Bureau. They argued that they had standing to defend the status quo of the current regulatory scheme to carry out their duties for enforcing consumer protection laws.

Now, counsel for PHH Corp. (petitioners) have filed a response to that motion to intervene.

“The motion to intervene filed by certain state attorneys general should be denied,” petitioners argue. “The motion is egregiously untimely, there is no good cause for the delay in seeking to intervene, and there is no standing to intervene.”

PHH Corp. points to the fact that it filed its petition for review on June 19, 2015 (“more than 19 months ago”) and emphasizes that the language within Federal Rule of Appellate Procedure (FRAP) 15(d) states that motions to intervene “must be filed within 30 days after the petition for review is filed.”

“Since then, this case has been briefed, argued, and decided; the Consumer Financial Protection Bureau (“CFPB”) has sought rehearing; and petitioners and the United States have filed responses. The state AGs’ motion thus comes more than a year-and-a-half after the deadline for intervention. To permit such a late intervention would ‘sanction[] an undisputed failure to comply with applicable … rules.’ Alabama Power Co. v. ICC, 852 F.2d 1361, 1366–68 (D.C. Cir. 1988). The motion should be denied on this basis alone,” counsel for PHH Corp. argue.

PHH Corp. also called the argument that the filing timeline should be extended “specious.”

“The state AGs do not contend that they were unaware of this much-publicized litigation or the law’s deadlines,” PHH Corp. argues. “Both cases that the state AGs cite in support of their motion involved district court intervention under Federal Rule of Civil Procedure 24, which lacks FRAP 15(d)’s 30-day deadline, and are therefore utterly inapposite.”

Counsel add that the separation-of-powers concerns regarding the CFPB had been apparent since the Dodd-Frank Act was enacted in 2010; it was also public knowledge since the beginning of this case that PHH Corp. intended to challenge the CFPB’s constitutionality, they add.

“There has always been the potential that the Executive Branch might be disinclined to defend a statute that severely impairs the president’s authority over a ‘powerful, centralized’ federal agency. Indeed, the Executive Branch is generally reluctant to approve of limitations on the president’s removal authority,” the brief states.

Counsel further point out that since President Donald Trump’s election in November, the CFPB sought rehearing and petitioners and the United States filed responses — “and the state AGs remained silent.”

“In Amador County, on which the state AGs rely, this court affirmed a district court’s rejection of a motion to intervene as untimely because, as here, the intervenor should have known ‘from the outset of [the] litigation’ that the case could affect its asserted interest, and that they may have had reason to ‘question[] the adequacy of the United States’ representation.’ 772 F.3d at 904. Thus, even if the supposed ‘potential inadequacy of representation came into existence’ only on Election Day — and it did not — the state AGs’ motion would still be untimely.” 

It was also reasonably foreseeable that the CFPB’s structure would be found to be unconstitutional, they argue.

“The state AGs did not need to read newspaper articles speculating on what ‘the Trump administration is planning’ to realize that, if the CFPB director were like every other cabinet secretary, then the CFPB would be accountable to the president like every other Executive Branch agency,” counsel argue. “The panel’s questions about the constitutionality of the agency at oral argument last year were a matter of public record. The state AGs’ decision to wait until after not just the presidential election but the inauguration to seek to intervene, long after the case was brought, is the opposite of ‘good cause.’ ”

Counsel turned to Amalgamated Transit Union Int’l, AFL-CIO v. Donovan, 771 F.2d 1551 (D.C. Cir. 1985), in which the D.C. Circuit held “as a general rule” that it would “deny motions to intervene” filed after a panel decision.

“In Amalgamated Transit, a municipal transit authority waited until this court had issued judgment before seeking to intervene in order to defend a decision of the Secretary of Labor and ‘to secure a right to petition for a writ of certiorari from the Supreme Court.’ This court denied the motion for the ‘obvious reason’ that ‘it is unduly disruptive’ and ‘places an unfair burden’ on the parties. As the court recognized, ‘[i]t would be entirely unfair, and an inexcusable waste of judicial resources, to allow a potential intervenor to l[ie] in wait until after the parties and the trial and appellate courts have incurred the full  burden of litigation before deciding whether to participate in the judicial proceedings,’ ” counsel wrote.

Next, counsel turned on whether the AGs had a “legally protected interest” in the case.

“PHH petitioned for review of an enforcement proceeding brought by the CFPB alone. The CFPA provides that such proceedings are limited to the CFPB and the covered person or service provider who is the subject of the enforcement action. See 12 U.S.C. § 5563(b). Those proceedings are not open to other regulators or officious intermeddlers,” they argue.

They further argue that the state AGs did not assert any interests in RESPA enforcement.

“Nor is the involvement of the state AGs necessary or appropriate to protect the Executive Branch’s interests in the interpretation and enforcement of RESPA,” they add, further asserting that the AGs “seek intervention for the express purpose of countermanding what they fear will be the Executive Branch’s interests in this case.”

Counsel called the state AGs’ argument that they had a “legally cognizable interest in the ‘independence’ of the CFPB” as a “bridge too far.”

“The state AGs are state officers authorized only to represent ‘the interests of their states and their states’ citizens,’ whose interests are ‘undifferentiated and common to all members of the public.’ Lujan v. Defs. of Wildlife, 504 U.S. 555, 575 (1992),” PHH Corp. argues. “They plainly have no standing to defend the constitutionality of a federal statutory provision that applies to only one federal officer – the director of the CFPB.”

According to PHH Corp., the state AGs are arguing that the panel’s opinion “effectively giv[es] the president veto power over” their attempts to enforce the Consumer Financial Protection Act.

“But the panel’s opinion does no such thing. The CFPB cannot unilaterally ‘veto’ states’ attempts to enforce the CFPA. State AGs are merely required to notify the CFPB of the intended enforcement action before filing, 12 U.S.C. § 5552(b)(1)(A), and the CFPB may then ‘intervene in the action as a party,’ id. § 5552(b)(2)(A),” counsel argue. “The state AGs would remain free to pursue their own enforcement actions, and the courts would remain the ultimate arbiters of any disagreements. Regardless, it is well established in this circuit that the mere ‘possible precedential impact’ of a decision is insufficient to confer standing.

“The state AGs also never explain their illogical and ultimately speculative contention that a constitutionally accountable CFPB would somehow ‘undermine’ regulatory coordination. To the contrary, states routinely coordinate with constitutionally accountable federal agencies, such as the Department of Justice,” counsel continue. “Moreover, if a presidential administration favored coordination with states while a CFPB director opposed it, then the CFPB’s constitutional accountability would enhance such coordination.”

At bottom, they argue, the state AGs’ motion is simply an effort to intervene in to file a petition for certiorari. Counsel further argue that granting intervention for the state AGs would give them the ability to circumvent one of the only means Congress provided for the president to supervise litigation involving the CFPB.

“Moreover, giving the state AGs the ability to commandeer this case at the Supreme Court would be a massive and impermissible intrusion into the executive’s responsibility and constitutional prerogative to control the defense of litigation against the United States. That outcome cannot be squared with either the CFPA or constitutional principles,” they add.

Lastly, counsel argue that the state AGs failed to meet the standard for permissive intervention.

“Because the state AGs’ motion to intervene is so far out of time with no good cause for the delay, and they have no Article III standing in this matter, the motion is doomed as a procedural and jurisdictional matter. Thus, this court need not even address the merits of the intervention request. In any event, the motion plainly fails to meet the standard for either mandatory or permissive intervention,” they state.

The state AGs are giving a policy opinion “about the need for an independent CFPB,” they add – one that “does not rise to the level of a legally protected interest in this lawsuit.”

“Finally, allowing intervention so late in the day would greatly prejudice PHH. [I]f the motion is granted, PHH would face a whole new set of party-opponents in any further judicial proceedings. Moreover, these would-be intervenors have made clear that they plan to drag the case out by petitioning for certiorari if the United States does not, thus unilaterally further delaying the award of relief that PHH successfully obtained before the panel months ago. … Allowing intervention would threaten to transform the current rehearing proceeding into a political platform for 17 state attorneys general, and would incentivize countless other would-be intervenors to join the fray at this exceedingly late stage of the appeal.

“That prospect,” they conclude, “is entirely unhelpful to the judicial process, unfair to PHH, and vividly illustrates why the court should move expeditiously to deny the rehearing petition and issue the mandate so that PHH may enjoy the relief to which it is entitled.”

The state AGs listed on the motion to intervene include Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Mississippi, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont and Washington, and the District of Columbia.

Want to see the motions to intervene for yourself? Check out RESPA News’ Library for the Brown/Waters motion, Attorneys General motion and the Consumer Groups motion.

Have questions about this article? Contact RESPA News Editor Katherine Bercik. You can also submit a comment in the Comments section below.