The US Constitution imposes important checks on the exercise of executive power by the federal government. In particular, Article II specifies that executive power may be exercised only at the behest of properly appointed “officers” of the United States, and it sets forth detailed requirements for the appointment and Senate confirmation of such officers. However, a recent decision from the US Court of Appeals for the Ninth Circuit threatens to undermine those checks on federal power by permitting the Executive Branch to retroactively ratify actions taken by officials not properly appointed as “officers.” The Supreme Court should review and overturn the appeals court decision, which is the subject of a pending certiorari petition. Gordon v. Consumer Financial Protection Bureau, Case No. 16-673. Washington Legal Foundation represents Mr. Gordon in the Supreme Court.
The case arises from President Obama’s unauthorized January 4, 2012 recess appointment of Richard Cordray as Director of the newly created Consumer Financial Protection Bureau (CFPB). The appointment was unauthorized because (as the Supreme Court determined in its Noel Canning decision) the Senate was not in recess on January 4, 2012. President Obama later re-nominated Cordray, and the Senate confirmed his appointment in July 2013.
But during the 18-month period when Cordray erroneously claimed to be CFPB Director, he authorized CFPB to file and prosecute a federal-court enforcement action against Chance Gordon. Gordon is a California attorney whom CFPB has accused of violating the Consumer Financial Protection Act (CFPA) in connection with his representation of homeowners in financial distress. CFPB attorneys acting at Cordray’s direction persuaded the district court to grant summary judgment against Gordon in June 2013, a month prior to Cordray’s Senate confirmation.
CFPB now concedes the invalidity of Cordray’s recess appointment. But Cordray concocted what he deemed an easy fix. Following his confirmation, he published a four-sentence notice in the Federal Register, purporting to ratify any and all actions undertaken by CFPB during the recess-appointment period. The Ninth Circuit accepted this rubber-stamping as sufficient to uphold a multi-million dollar judgment entered against Gordon at the behest of individuals who were not authorized to file and prosecute the enforcement action.
Gordon’s certiorari petition raises serious separation-of-powers concerns. CFPB’s retroactive ratification efforts amount to nothing less than an end-run around Article II limitations on the President’s authority to appoint federal officers without the Senate’s approval. This infringement on congressional prerogatives is particularly disturbing because Congress explicitly provided, when it adopted the CFPA in 2010, that CFPB was not to file enforcement actions until a confirmed Director was in place. Furthermore, a 1998 statute that permits the President to act unilaterally under limited circumstances to temporarily fill vacancies, states that states that, with rare exceptions, actions taken by officials improperly appointed to federal vacancies “shall have no force and effect” and “may not be ratified.”
The Supreme Court has never upheld an effort by Executive Branch officials to ratify actions taken by predecessors who lacked authority to act. In the only case in which it considered the issue, FEC v. NRA Political Victory Fund, the Court decisively rejected the Executive Branch’s ratification efforts. Failing to heed that ruling, federal agencies in recent years have repeatedly sought to ratify actions that courts later determined were unauthorized when initially undertaken by the agency. The Supreme Court should grant review to address this important issue of federal constitutional law.
The separation-of-powers concerns raised by CFPB’s ratification efforts are magnified by the fact that the government action at issue here is a federal court lawsuit. Such lawsuits are subject to limitations imposed by Article III of the Constitution, which provides that a federal court lacks jurisdiction to hear a case unless at all times throughout the lawsuit the plaintiff possesses the requisite “standing” to maintain the suit. “Standing” requires the plaintiff to demonstrate either that he has suffered a concrete injury as a result of the defendant’s alleged misconduct or that he is authorized to exercise the Executive Branch’s law-enforcement functions. CFPB does not contest that it met neither of those conditions when it filed suit against Gordon in May 2012.
Accordingly, CFPB lacked the requisite Article III standing, and the federal courts should have dismissed this lawsuit at the outset. There is absolutely no case-law support for an assertion that CFPB can retroactively manufacture standing by purporting to ratify a lawsuit that it lacked standing to file in 2012. Even if there were a valid constitutional basis for Executive Branch ratification of non-litigation activity such as adoption of regulations (and there is not), it is particularly problematic when federal officials seek to employ ratification doctrine to evade normal Article III standing requirements.
The Supreme Court is scheduled to announce in late May or early June whether it will review Mr. Gordon’s case. By granting review and reversing the Ninth Circuit’s decision, the Court can go a long way toward restoring the proper balance of powers among the three branches of government.
Also published by Forbes.com on WLF’s contributor page.