Community Financial Services Ass’n v. Consumer Financial Protection Bureau

In the fall of 2017, after more than five years of outreach and research, the Consumer Financial Protection Bureau (CFPB) issued its “Payday Rule” to address consumer harms caused by payday loans, vehicle-title loans, and certain other loans with similar features. In late November 2017, the President named Mick Mulvaney to serve as the CFPB’s acting director. Nearly immediately, Mulvaney made clear his intention to change or eliminate the Payday Rule.

Two industry associations sued the CFPB to challenge the Payday Rule. On May 31, 2018, the CFPB and the plaintiffs filed a joint motion asking the Court to stay the case and to stay the principal compliance date of the Payday Rule. In support of their request for a stay of the Rule’s compliance date, the parties relied on section 705 of the Administrative Procedure Act (APA). Because section 705 does not authorize a stay in the circumstances of this case and because the Court lacked adversarial presentation on the issue, Public Citizen, along with Americans for Financial Reform Education Fund, the Center for Responsible Lending, and the National Consumer Law Center, submitted an amicus curiae memorandum to explain why a section 705 stay of the Payday Rule would be improper. In a June 12, 2018 order, the court then stayed the litigation but rejected the parties’ request for a stay of the rule.

After the court’s June 12 ruling on the parties’ joint motion, the plaintiffs filed a motion seeking reconsideration of the court’s denial of a section 705 stay of the Payday Rule. The CFPB filed a memorandum in support of the plaintiffs’ motion. Public Citizen, along with Americans for Financial Reform Education Fund, the Center for Responsible Lending, and the National Consumer Law Center, filed another amicus memorandum explaining why a section 705 stay would  be improper, and the court should deny the motion for reconsideration. In an order issued on August 7, 2018, the court denied the motion for reconsideration, noting that the the principal compliance date for the rule was a year away and the CFPB had granted waivers of an earlier deadline to all companies that requested one.

On September 14, 2018, the plaintiffs filed motions to lift the stay of the litigation and for a preliminary injunction. While those motions were pending, Cooperative Baptist Fellowship, represented by Public Citizen Litigation Group and Equal Justice Center, filed a motion to intervene as a defendant in the litigation.

On November 6, 2018, following a status report filed by the parties, the court reconsidered its June 12, 2018 order and stayed the rule’s compliance date. The court noted that the CFPB had publicly announced plans to reconsider portions of the rule and the compliance date, and concluded that the stay was appropriate to prevent irreparable injury. The court’s November 6 order also maintained the stay of the litigation, and, accordingly, did not rule on plaintiffs’ preliminary injunction motion or Cooperative Baptist Fellowship’s motion to intervene.

In February 2019, the CFPB issued proposals to delay and then rescind key aspects of the Payday Rule.  In a March 2019 filing, the CFPB acknowledged that the industry plaintiffs had not provided any basis for their request to continue the stay of the compliance date as applied to the portions of the Payday Rule that the CFPB was not seeking to rescind. However, neither the CFPB nor the industry plaintiffs have sought to lift the stay of the compliance date or the stay of the litigation, and the court has left both stays in place.