The DOJ has filed its opposition to Leandra English’s motion for a preliminary injunction in her action seeking a declaration that she, rather than Mick Mulvaney, has the legal right to serve as CFPB Acting Director.

Ms. English’s preliminary injunction motion relies primarily on the same argument she made in support of her unsuccessful motion for a temporary restraining order(TRO)—namely, the provision of the Federal Vacancies Reform Act (FVRA) that authorizes the President to temporarily fill a vacancy in an executive agency position requiring confirmation is superseded by the provision in the Consumer Financial Protection Act (CFPA) that provides the CFPB Deputy Director “shall…serve as acting Director in the absence or unavailability of the Director.”  In its opposition to Ms. English’s preliminary injunction motion, the DOJ, as it did in opposition to Ms. English’s TRO request, argues that Ms. English is unlikely to succeed on the merits of her claim and has not satisfied the other requirements for injunctive relief.  It also adds two new arguments that it did not previously make.

First, the DOJ argues that Ms. English has no cause of action because her action “appears to be an attempted end-run around the requirements and restrictions for bringing a quo warranto action.”  According to the DOJ, the federal quo warranto statute was codified by Congress in the D.C. Code for historical reasons and provides for a civil action against any person who, within the District of Columbia, unlawfully holds or exercises a civil or military federal office.  The DOJ cites D.C. Circuit authority indicating that the quo warranto statute “is the sole means by which an interested party may make a direct attack on the authority of another person to perform the duties of a public office (as opposed to an indirect attack on his or her official actions).”

Second, the DOJ argues that even if the President’s designation of Mr. Mulvaney as Acting Director was not authorized by the FVRA, the court should not grant the relief Ms. English seeks “to the extent she seeks injunctive and declaratory relief against the President himself.”  The DOJ cites U.S. Supreme Court authority questioning a court’s authority to grant injunctive relief against the President.

The DOJ argues that Ms. English is unlikely to succeed on the merits of her claim for the following primary reasons:

• On its face, the FVRA authorizes the President to appoint a CFPB Acting Director when a vacancy exists. The DOJ notes that in her preliminary injunction motion (but not her TRO motion), Ms. English argues that even if the CFPA provision does not supersede the FVRA, the FVRA does not apply to the appointment of a CFPB Acting Director. The FVRA provides that the President’s authority to use the FVRA to fill vacancies does not apply to positions held by “any member who is appointed by the President, by and with the advice and consent of the Senate to any board, commission, or similar entity that… (A) is composed of multiple members; and (B) governs an independent establishment or Government corporation.” 5 U.S.C. § 3349c(1).  The Dodd-Frank Act amended the Federal Deposit Insurance Act (FDIA) to provide that the CFPB Director, or the Acting CFPB Director in the event of a vacancy in the Director’s position, shall serve as a member of the FDIC Board.  According to Ms. English, because this provision would make the CFPB Acting Director a member of the FDIC Board, the President cannot use his FVRA authority to appoint a CFPB Acting Director.  The DOJ asserts that this argument is based on a “misreading” of the FVRA exclusion because it ignores the fact that neither the CFPB Director nor the Acting Director “are appointed by the President, by and with the advice and consent of the Senate to any board….”  Rather, the FDIA designates the CFPB Director or Acting Director members of the FDIC Board by virtue of their CFPB positions.  (The same argument was made in the lawsuit filed in U.S. District Court for the Southern District of New York by the Lower East Side People’s Federal Credit Union seeking a declaration that Ms. English has the legal right to serve as Acting Director.)

• In the absence of any “clear and manifest” evidence of Congressional intent to override the FVRA, the CFPA provision is best read to supplement the FVRA rather than displace the President’s FVRA appointment authority.  Among the DOJ’s arguments for why such evidence is lacking is that the phrase “absence or unavailability of the Director” in the CFPA provision does not clearly cover a vacancy created by the CFPB Director’s resignation.  (In its opposition to Ms. English’s TRO motion, the DOJ reserved the right to contest the meaning of the phrase “absence or unavailability of the Director.”  Last week, the Credit Union National Association, whose membership consists of more than 6,000 credit unions throughout the country, filed an amicus brief authored by Ballard Spahr in support of Mr. Mulvaney’s argument that he is the lawful CFPB Acting Director.  In its amicus brief, the CUNA advanced compelling arguments for why the phrase “absence or unavailability of the Director” should not be construed to cover a vacancy created by a resignation.  The DOJ has adopted several of the arguments advanced by the CUNA in its opposition to Ms. English’s preliminary injunction motion.)

• Mr. Mulvaney’s appointment does not conflict with the CFPB’s status as an “independent agency” because (1) the FVRA does not include an exception for the CFPB Director as it does for certain independent agencies and commissions, and (2) Presidential designations of acting officers are not fundamentally at odds with the nature of independent agencies.  (The DOJ observes that the CFPB itself “was previously overseen by the President’s senior staff and Treasury officials.”)

• Ms. English’s interpretation of the CFPA provision would raise serious constitutional issues because it assumes the Senate could keep an Acting Director in place indefinitely when he or she assumed that position by operation of statute without the President’s authorization.

• Mr. Mulvaney is eligible to serve as CFPB Acting Director since nothing in the FVRA makes him ineligible because he also serves as OMB Director and nothing in the CFPA gives for-cause removal protection to an Acting Director.

• The President’s appointment of Mr. Mulvaney does not violate the Appointments Clause of the U.S. Constitution.  (This argument also was not previously made by Ms. English in support of her TRO motion.)  Among the arguments made by the DOJ is that it is not clear that, as Acting Director, Mr. Mulvaney has been appointed to an “office” within the meaning of the Appointments Clause.

The DOJ argues that Ms. English has also failed to show that a preliminary injunction is necessary to prevent irreparable harm to her or that the public interest and balance of the equities favor the relief she seeks.  With regard to irreparable harm, the DOJ asserts that “her claimed injury, distilled to its essence, is the alleged loss or denial of a position to which she (incorrectly) believes she is entitled.”  The DOJ argues that “innumerable courts have held [that] the loss or denial of a position by itself does not constitute irreparable harm as a matter of law.”

In response to Ms. English’s assertion that this authority is inapt because it consists of “run of the mill” employment cases, the DOJ argues the fact that the case involves a “high level position” is not sufficient to make it other than “a textbook employment case.”  It observes that, unlike most employment cases, Ms. English has suffered no loss of position resulting in a loss of salary or other financial benefits because her reassignment to Deputy Director by former Director Cordray remains in effect.  The DOJ also argues that Ms. English’s claim that she has suffered irreparable harm in the form of a loss of a “statutory right to function” should be rejected.  According to the DOJ, because “in the nearly three weeks since Acting Director Mulvaney’s designation, the CFPB continues to function and to so without any evidence of substantial disruption,” Ms. English’s alleged loss of Acting Director status “does not inhibit the CFPB’s activities whatsoever.”

With regard to the public interest and balance of the equities, the DOJ argues that because “the disruptive effect of a preliminary injunction is considerable,” these factors tip in favor of the defendants.  According to the DOJ, since Mr. Mulvaney has been in the position of Acting Director for nearly three weeks and is already directing CFPB policy, “[t]o intervene at this point with another management reshuffle would further delay agency business and upend some of the decisions that Mr. Mulvaney, in consultation with the executive team, has made.”

A hearing on Ms. English’s preliminary injunction motion is scheduled for this Friday, December 22.