The federal district court in Washington heard oral argument this morning in the case of English v. Trump, the challenge brought by Consumer Financial Protection Bureau (CFPB) Deputy Director Leandra English to President Trump’s appointment of Mick Mulvaney as Acting Director of the CFPB. The case largely turns on whether the Federal Vacancies Reform Act (FVRA) authorized Mulvaney’s appointment, as the government claims, or whether the Dodd Frank Act instead directs that the Deputy Director of the agency – and only the Deputy Director – can serve as the Acting Director when the Director resigns.  The oral argument lasted nearly two hours and was lively and engaging.  Judge Timothy Kelly was extremely well-prepared and ran the argument along topical lines about which he had questions.  Judge Kelly did not rule from the bench, but most of his questions were for English’s counsel and based on the nature of the questions it seems quite likely that Judge Kelly will deny her request for a preliminary injunction.

Judge Kelly moved methodically through the questions on the merits as well as the standards for a preliminary injunction. He asked questions about: the nature of the relief requested (is this a mandatory injunction and if so does that change the applicable standard); the nature of the claims in plaintiff’s complaint (does she really have a separate constitutional claim or does that claim collapse into her statutory claim); how to apply certain cannons of statutory interpretation when comparing the FVRA’s use of the word “may” and the Dodd Frank Act’s use of the word “shall”; how other provisions of Dodd Frank impact the analysis; whether the Dodd Frank Act provision the plaintiff relies on applies to a Director’s resignation; possible constitutional concerns with plaintiff’s argument; what constitutes irreparable injury; and what the balance of the equities supports.  In the back-and-forth, plaintiff’s counsel got most of the questions and did most of the talking.  Plaintiff’s counsel pressed the point that the President’s appointment of OMB Director Mulvaney undermines the CFPB’s independence and closed by arguing that the case posed a threat to the tradition of independent financial regulators more generally.  The government’s lawyer (Chad Readler, the Acting Assistant Attorney General in charge of the Civil Division) – clearly sensing that the Judge was on the government’s side and facing fewer questions – tended to make more targeted arguments that raised two or three points in rebuttal to the plaintiff.  A more comprehensive summary of the argument follows.

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The first issue raised by Judge Kelly was whether the injunction being sought was a mandatory injunction (directing action) or a more traditional preliminary injunction freezing the status quo while the merits could be addressed. This led to a colloquy regarding what constitutes the status quo, with plaintiff arguing it refers to the moment at midnight November 24, when former CFPB Director Richard Cordray resigned, and the government arguing that at its earliest it refers to the time when plaintiff filed her Complaint in this case, at which point CFPB leadership had already recognized Mr. Mulvaney as the lawful Acting Director of the agency.

The hearing then turned to one of plaintiff’s key arguments: that because the Dodd Frank Act provision stating that the Deputy Director “shall” serve as the Acting Director in the Director’s absence or unavailability is more specific than the generally-applicable FVRA, principles of statutory construction support the notion that the Dodd Frank Act applies and the FVRA does not. This quickly devolved into a discussion of the key question in the case: whether the FVRA applies alongside the Dodd Frank Act or is supplanted by it.

Judge Kelly began the questioning by noting that caselaw indicates that the general/specific principle only applies in cases of irreconcilable conflict between statutes, which does not appear to be the case here. English’s counsel pushed back on this notion, arguing that this is a standard cannon of statutory construction and that the essential question in the case boils down to what Congress intended when it passed the Dodd Frank Act.  Defense counsel was typically brief in his arguments, likely sensing that he had little persuading to do.  On this particular issue, the government noted that (a) the FVRA envisions other agency-specific statutes working side-by-side with it; (b) the FVRA did not exempt other single-Director independent agencies from its purview when it was enacted; (c) the Dodd Frank Act has a provision stating that, except as otherwise expressly provided, all other federal law governing officers applies to the CFPB; and (d) the Dodd Frank expressly provides that the Dodd Frank Act trumps other federal law with respect to certain other employee-related matters, indicating that Congress knew how to make clear if it wanted Dodd Frank to be exclusive (as plaintiff was arguing here).

In one of the few issues directed at the defendants, Judge Kelly then asked whether the government concedes that the Dodd Frank provision at issue – which speaks to the Director’s absence or unavailability – also applies to the Director’s resignation and, if so, whether the fact that the issue is a close one has any bearing on the rest of the case. The government avoided the first part of the question, noting only that the Office of Legal Counsel determined that the provision at issue covers resignation.  But it then argued that even if the provision applies to render the Deputy Director the Acting Director by default upon the Director’s resignation, it was not clear enough a provision to supplant the FVRA’s parallel authority authorizing the President to appoint a Senate-confirmed individual to that role.

Plaintiff’s counsel then raised the separate argument that even were President Trump authorized to name an Acting Director, he could not name a sitting White House official – like OMB Director Mulvaney – to the position because of the CFPB’s independence. In response, the government noted that the CFPB was originally run by the Treasury Secretary and Elizabeth Warren, serving as an advisor to both the President and the Secretary.  The government also noted that the Dodd Frank Act does contain limitations on who can serve as CFPB Director – for example, the Director cannot be an employee of a Federal Reserve bank or a Federal home loan bank – but does not prohibit the OMB Director or other White House officials from filling the role.

Judge Kelly then raised the doctrine of constitutional avoidance and asked whether that doesn’t suggest that defendants have the better argument. First, Judge Kelly established that plaintiff’s position is that the Deputy Director cannot be removed from her position as Acting Director other than “for cause” (a protection that the statute provides to the Director).  In light of that, Judge Kelly noted that the implications of plaintiff’s argument are that an individual who has not been appointed to her role by any President and has never been confirmed by the Senate for any role can serve indefinitely against the President’s wishes as the head of an agency with substantial authority so long as the Senate refuses to confirm the President’s nominee.  That, Judge Kelly suggested, raises concerns with respect to the clause of the Constitution that provides that the President shall “Take Care” that the laws are faithfully executed.  Judge Kelly pressed plaintiff’s counsel for any other example where this could happen; plaintiff’s counsel only identified the Federal Housing Finance Agency.

Judge Kelly then moved on to questions concerning irreparable harm. In a rare comment disagreeing with the defendants’ arguments, Judge Kelly noted that he did not view this as a run-of-the-mill employment case.  But he still questioned what the nature of plaintiff’s allegedly irreparable harm was.  After a lengthy discussion, plaintiff conceded that her irreparable harm argument was based at least in part on the different actions the CFPB would likely take under her leadership.  At core, plaintiff’s argument was that if the court agreed with her on the merits, then that merits determination would also support a finding of irreparable injury and that the balance of the equities would tip in her favor.

In closing arguments, plaintiff’s counsel asked the court to issue an order expeditiously to enable a quick appeal, even if a more fulsome opinion would follow at a later date. He then emphasized plaintiff’s independence arguments, asserting that the question for the court is how to be faithful to Congress’ statutory design, which clearly envisioned an independent CFPB. He concluded by noting that the questions at issue relate not just to this case but that the government’s position represents a threat to the norm of independence that governs the regulation of finance in this country.

The government in closing noted that plaintiff’s independence argument is not grounded in the statutory text and that the FVRA represented a compromise among the branches of government and imposes strict time limits on how long an Acting Director can serve. The government also noted that arguments in its brief that plaintiff’s claim should fail for the separate reasons that she did not follow quo warranto procedures and that issuing an injunction against the President is an extraordinary remedy.

As the above summary suggests, most of the discussion was between Judge Kelly and plaintiff’s counsel. The government provided short succinct rebuttals to plaintiff’s arguments in most cases and Judge Kelly had substantially more questions for plaintiff than for the defense.  While taking cues from an oral argument is risky, it seemed fairly clear that Leandra English is unlikely to succeed at this stage of the litigation.  Once Judge Kelly rules, his order will be appealable and will presumably be appealed by the losing party to the D.C. Circuit, where the fun will start again.