Court Addresses Director Cordray’s Recess Appointment in Enforcement Action

April 14, 2016

On Thursday, April 14, 2016, the Ninth Circuit Court of Appeals affirmed, in part, a lower court’s decision in favor of a CFPB enforcement action against Gordon Law Firm in CFPB v. Gordon. The CFPB brought an enforcement action against the firm for violating Dodd-Frank’s ban on unfair, deceptive, and abusive acts and practices, Regulation O for deceiving consumers into believing it was affiliated with the government, and for charging advance fees for mortgage debt relief. The more relevant part of the court’s decision dealt with CFPB Director Richard Cordray’s recess appointment, where the firm argued the Bureau lacked the authority to bring an enforcement action prior to Director Cordray’s Senate-confirmed appointment in July of 2013. In its opinion, the Ninth Circuit Court of Appeals stated the Bureau had standing to bring the enforcement action in July of 2012 because of the Bureau’s inherent enforcement authority and because Director Cordray later ratified all of the decisions he made during his recess appointment. In contrast, Judge Ikuta states in a dissenting opinion that because Director Cordray was illegally appointed at the time of the enforcement action, the Bureau lacked standing to take action against the firm.