Consumer Financial Protection Bureau V Nationwide Biweekly Administration

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Key Facts

Nationwide Biweekly Administration, Inc., Loan Payment Administration LLC, and Daniel S. Lipskey appealed from a bench trial in which they were held liable and assessed penalties for deceptive and abusive practices under the Consumer Financial Protection Act of 2010 (CFPA). The district court had previously remanded the case to consider relevant Supreme Court and Ninth Circuit opinions issued while the first appeal was pending. The Ninth Circuit affirmed the district court's decision, rejecting Nationwide's arguments on appeal including challenges to factual findings, the CFPB director's removal protections, statute of limitations, district court findings specification, TCFAPA coverage, and counterclaims.

Issues

  • Whether Nationwide Biweekly Administration qualified as a 'seller' covered by the Telemarketing and Consumer Fraud and Abuse Prevention Act, given its mailer campaigns and call center operations that induced customers to sign up for financial services.
  • Whether the civil enforcement action was invalid because the CFPB director's unconstitutional for-cause removal protections between 2015 and 2020 rendered the action void ab initio, given binding precedent that such removal provisions were struck down in Seila Law.
  • Whether the district court properly rejected Nationwide's counterclaims alleging due process violations from CFPB's press release, given Nationwide failed to show wrongful conduct or a connection between the press release and banking partners terminating relationships.
  • Whether the three-year statute of limitations for CFPA enforcement actions had run before the CFPB filed suit on May 11, 2015, since violations should have been discovered by May 11, 2012 based on either actual discovery or what a reasonably diligent litigant would have discovered.
  • Whether the district court's factual findings supporting Consumer Financial Protection Act liability for deceptive and abusive practices were clearly erroneous under deferential appellate review, given the substantial evidence in the record and the district court's discretion as trier of fact.

Holdings

The Ninth Circuit Court of Appeals affirmed the district court's decision holding Nationwide Biweekly Administration, Inc., Loan Payment Administration LLC, and Daniel S. Lipskey liable for deceptive and abusive practices under the Consumer Financial Protection Act of 2010. The court rejected Nationwide's arguments on all grounds: factual findings were not clearly erroneous, the CFPB enforcement action was valid despite for-cause removal protections, the statute of limitations had not expired, Nationwide qualified as a 'seller' under TCFAPA, and counterclaims were properly denied.

Remedies

The appellate court affirmed the district court's judgment which held Nationwide Biweekly Administration, Inc., Loan Payment Administration LLC, and Daniel S. Lipskey liable for deceptive and abusive practices under the Consumer Financial Protection Act of 2010 (CFPA) and assessed penalties. The court reviewed the district court's factual findings, legal interpretations, and evidentiary rulings, and concluded substantial evidence supported each of the district court's findings. The appellate court rejected Nationwide's arguments regarding factual findings, CFPB director removal protections, statute of limitations, TCFAPA coverage, and counterclaims, ultimately affirming the lower court's decision.

Legal Principles

  • CFPA enforcement actions must be brought within three years of discovery of a violation. The discovery rule is triggered by actual discovery or when a reasonably diligent litigant would have discovered the facts. Generic evidence of agency culture is insufficient to prove constitutional harms.
  • The CFPB director's for-cause removal protections between 2015-2020 were held unconstitutional under Seila Law LLC v. Consumer Fin. Prot. Bureau, 591 U.S. 197 (2020). Enforcement actions from that period remain valid if ratified by a director subject to direct Presidential oversight.
  • Under the stigma-plus test for due process claims involving reputational harm, plaintiffs must show public disclosure of a stigmatizing statement plus denial of a tangible interest. Mere connection between government conduct and reputational harm is insufficient without evidence of causation.
  • The court applies clear error review for factual findings, de novo review for legal interpretations, and abuse of discretion review for evidentiary rulings. Factual findings will not be upset unless the record compels a definite and firm conviction that the district court was mistaken.

Precedent Name

  • Balla v. Idaho
  • Marsh v. J. Alexander's LLC
  • Wash. Mut., Inc. v. United States
  • Yu v. Idaho State Univ.
  • Kingman Reef Atoll Invs., L.L.C. v. United States
  • Husain v. Olympic Airways
  • Hollinger v. United States
  • Merck & Co., Inc. v. Reynolds
  • United States v. Liu
  • Andrus v. Glover Constr. Co.
  • Unicolors, Inc. v. H&M Hennes & Mauritz, L.P.
  • Ulrich v. City & Cnty. of San Francisco
  • Collins v. Yellen
  • Consumer Fin. Prot. Bureau v. Cashcall, Inc.
  • Seila Law LLC v. Consumer Fin. Prot. Bureau

Cited Statute

  • Consumer Financial Protection Act of 2010
  • Telemarketing and Consumer Fraud and Abuse Prevention Act

Judge Name

  • Vandyke
  • Callahan
  • Bumatay

Passage Text

  • We AFFIRM.
  • Nationwide claims that the CFPB exhibited a culture of 'recklessness,' caused by the CFPA's for-cause removal protections, which was contrary to then-President Barack Obama's wishes. It further argues that the CFPB would not have pursued the enforcement action here were it not for such a culture. But Nationwide merely relies on non-specific evidence from publicly available executive orders, Congressional testimony, speeches by agency heads, and news articles, along with an audio recording of a private-sector bank employee generally criticizing the CFPB. None of this evidence shows that President Obama would not have pursued the specific investigation of Nationwide at issue here.
  • Nationwide's arguments fail under the deferential standard of review applicable in this case. Factual findings will not be upset on clear-error review unless the record compels 'a definite and firm conviction' that the district court was mistaken. Wash. Mut., Inc. v. United States, 856 F.3d 711, 721 (9th Cir. 2017) (quoting Husain v. Olympic Airways, 316 F.3d 829, 835 (9th Cir. 2002)). Here, upon a careful review of the trial record, substantial evidence supports each of the district court's findings.