Cases & Deals

Community Financial Services Association of America secures Fifth Circuit stay pending appeal in constitutional and APA challenge to CFPB rule on payday lending

Clients Community Financial Services Association of America (CFSA)

Jones Day is representing the Community Financial Services Association of America in a federal lawsuit seeking to set aside the 2017 Consumer Financial Protection Bureau (CFPB) rule concerning payday, vehicle title, and certain high-cost installment loans. The rule would significantly interfere with loans that provide a financial lifeline for millions of cash-strapped consumers. Plaintiffs sought to set aside the Rule on the grounds that, inter alia, the director who promulgated it had been unconstitutionally insulated from presidential removal and control. Seila Law LLC v. CFPB subsequently vindicated this view. 140 S. Ct. 2183, 2207 (2020). The district court, however, held that it could offer no remedy for this constitutional violation.

Jones Day secured a stay of the rule pending appeal in the Fifth Circuit after successfully persuading the court that plaintiffs have a substantial case on the merits. Plaintiffs argued that Collins v. Yellen, 141 S. Ct. 1761 (2021), does not limit prospective relief remedying injuries caused by a rulemaking undertaken by an unconstitutionally structured agency. Thus plaintiffs are entitled to relief from the rule, which violates the Constitution, the Administrative Procedure Act, and the consumer-protection provisions of the Dodd-Frank Act.

Community Financial Services Association of America, Ltd. et al. v. Consumer Financial Protection Bureau et al., No. 1-18-cv-295 (W.D. Tex.); Community Financial Services Association of America, Ltd. et al. v. Consumer Financial Protection Bureau et al., No. 21-50826 (5th Cir.)