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On March 3, 2020, the Supreme Court heard argument in Seila Law v. CFPB, the biggest removal law case since Free Enterprise Fund v. PCAOB was decided a decade ago. The petitioner challenges the constitutionality of the Consumer Financial Protection Bureau, the independent agency established by the 2010 Dodd-Frank Act (DFA) to protect consumers from harmful financial products. Seila Law, a California firm under investigation by the CFPB for its debt-relief marketing practices, argues that statutory limits specifying that the president can fire the CFPB director only for “inefficiency, neglect of duty, or malfeasance in office” (INM) violate the separation of powers. The CFPB, now headed by a Trump appointee and represented by the Justice Department, agrees. To defend the statute, the Court appointed seasoned Supreme Court litigator Paul Clement.

The justices’ questions during oral argument suggest the Court is considering several ways to resolve the case. One possibility would be to avoid the merits by holding that because the challenged conduct — a CFPB demand for information and documents — was subsequently ratified by the Bureau’s acting director, who was removable at will, Seila’s alleged injury cannot be traced to the removal provisions in question. Another possibility would be to dismiss the case, accepting Clement’s argument that such a weighty constitutional question should not be decided in a case where both parties are “in violent agreement” regarding the statute’s unconstitutionality.


Administrative Law | Constitutional Law | Law


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