In a recent long-standing decision issued by the United States District Court for the Eastern District of Pennsylvania, Shapiro v. Mariner Finn, Pennsylvania., LLC, No. CV 22-3253, 2024 WL 169654 (ED Pa. Jan. 12, 2024) (Hodge, J.), filed by state regulator in federal court under the Consumer Financial Protection Act (CFPA). may further encourage them to advocate for it. ), 12 USC § 3501 onwards As stated by the Pennsylvania Attorney General's Office via press release shortly after the decision was announced, this decision is “one of the only cases to date in which the court has considered these issues, and this well-founded… We expect that comment will have a positive impact on future efforts by state attorneys general and banking regulators to protect consumers through enforcement actions.'' ”1 This decision reinforces the growing need for financial institutions to ensure that their compliance policies, procedures, and procedures reflect the requirements imposed by state law.
judgment
in Mariner, Judge Kelly Brisbon Hodge ruled that regulators in four states and the District of Columbia lacked authority to assert claims under the CFPA. Rejected. All five regulators have filed charges on behalf of their respective citizens relating to Mariner's charging of excessively high interest rates, its use of “live checks” in connection with loan closings, and its sales of “add-on” products and practices. sought to enforce CFPA remedies; The problem of “loan flips,” where lenders persuade borrowers to refinance their debts without making any real profit.
Mariner filed a motion to dismiss, saying the lawsuit represents an “extreme example of government lobbying” by state and local governments attempting to enforce the CFPA “as if collectively they were federal agencies.” he claimed. [the Bureau] Created by law with the sole authority to engage in such nationwide enforcement. ” Same as above. At *3. Mr. Marriner argues that 1) Plaintiff states' authority to enforce the CFPA is unconstitutional under the Tenth Amendment because the Consumer Financial Protection Bureau (Bureau) receives unconstitutional funds; It also raised various jurisdictional and venue claims that it was also unconstitutional. Enforcement authorities are also unconstitutional; 2) state regulators fail to comply with their legal obligations to provide the necessary notice to bring such claims; Because the agency is receiving unconstitutional funding and therefore should not be there to receive notice. 3) By law, state regulators cannot jointly pursue a single action in the Eastern District of Pennsylvania. Each claim was rejected.
First, the court rejected Mariner's view that the CFPA's granting of enforcement powers to the states violated the Tenth Amendment, stating:[a]”Like many other federal consumer protection laws, Congress gave state attorneys general, including plaintiffs, the power to enforce the CFPA,” and “Plaintiffs' amended complaint is a legitimate exercise of that power.” Ta. Same as above. *At 14. Marriner argued that states acting jointly exceeded the limits of their authority because only the department, with presidential oversight, can enforce the CFPA nationally. The court disagreed, stating that the CFPA's legislative history shows that Congress “has strengthened the state's role in consumer protection, recognizing that states have historically been much closer to abuses and able to act more quickly if necessary.” He emphasized that it has become clear that the number of people living in Japan has been expanding. Please talk to them. ” Same as above. *5 (quoting A. Rep. No. 111-176, 174). Among the rights granted to states was the right for state attorneys general to bring suit to “enforce the provisions of this title or the regulations issued under this title.” Same as above., citing 12 USC § 5552(a)(1). However, the court noted that this power includes the following powers: do not have This is because Congress further clarified that concurrent powers granted to states do not apply to federally regulated institutions, including national banks and federal savings associations.
Second, the court held that because the CFPB's funding is unconstitutional, it is impossible for state regulators to properly notify the CFPB of their intent to sue, thereby making any notification “retroactive.” It rejected the claim that it would be invalid. Same as above., At six o'clock. The question of whether such funding is unconstitutional is currently before the U.S. Supreme Court; CFPB v. Com Fin. Service Ass'n, No. 22-cv-448, 2022 WL 16951308, *1 (November 14, 2022), the U.S. Court of Appeals for the Fifth Circuit ruled that such funding is unconstitutional. , the court rejected Mr. Mariner's claims, stating that: “I could not cite a single instance to support the idea that the entire CFPB would be unenforceable by anyone, including states, if the Bureau received unconstitutional funds…” Same as above. In this case, the court also rejected the argument that the notice requirement is jurisdictional and precludes the possibility of non-notification as a defense in future litigation.
Finally, the court chose to elect to elect to sue plaintiff states together in one court rather than separately, and that each state's concurrent enforcement authority is expressly limited by 12 USC § 5552(a)(1). Therefore, it rejected Mariner's argument that venue was inappropriate. Each state can sue under its CFPA only in its own state. Marriner argues that “12 USC § 5552(a)(1) is not a grant of permissive authority that supplements the general venue provision under 28 USC § 1391; They argued that it was an exclusive provision that limited the area. Same as above. At 7 o'clock. However, the court agreed with state regulators that 12 USC § 5552(a)(1) is “unequivocally permissive and, consistent with precedent in this and other circuits, supplements rather than preempts.” (28 USC § 1391.8). . Same as above.
conclusion
This decision reaffirms the authority of state attorneys general to work together to bring federal claims against state-chartered banks, credit unions, and nonbank lenders under the CFPA in addition to claims under each state's consumer protection laws. It is. As a result, state regulators will be more aggressive in asserting claims under the CFPA in federal court.
Note
1 Press release: “Court denies Mariner Finance’s motion to dismiss; multi-state lawsuit against installment lender goes to trial” pennsylvania records (January 26, 2024).
