No. 16-

IN THE

Supreme Court of the United States

CHANCE E. GORDON,Petitioner,

v.

CONSUMER FINANCIAL PROTECTION BUREAU,Respondent.

On Writ of Certiorari to theUnited States Court of Appeals

for the Ninth Circuit

PETITION FOR A WRIT OF CERTIORARI

RICHARD A. SAMP (Counsel of Record)CORY L. ANDREWSMARK S. CHENOWETHWASHINGTON LEGAL FOUNDATION2009 Mass. Ave., NWWashington, DC 20036(202) 588-0302rsamp@wlf.org

November 17, 2016 Counsel for Petitioner

QUESTIONS PRESENTED

It is uncontested that Richard Cordray’s January4, 2012 recess appointment to head the ConsumerFinancial Protection Bureau (CFPB) was invalid. During the following 18 months, he purported toauthorize the filing and prosecution of a CFPBenforcement action against Petitioner Chance Gordon. After the district court’s entry of judgment againstGordon, the Senate in July 2013 confirmed Cordray asthe Director of CFPB. Cordray subsequently issued aperfunctory notice stating that he “ratif[ied] any andall actions” he took during the 18-month recess-appointment period. In June 2014, this Courtunanimously ruled in NLRB v. Noel Canning, 134 S.Ct. 2550 (2014), that the Senate was not in recess onJanuary 4, 2012, and thus that recess appointmentsmade on that day were not valid. The QuestionsPresented are as follows:

1. May a federal official retroactively ratify anultra vires government action when: (1) no federalofficial was authorized to perform the act at the time itwas initially undertaken; (2) the purported ratificationdoes not include an examination of any facts related tothe act performed; or (3) the ratification purports toencompass not only the initial act but also federal courtrulings entered in response to the act?

2. Do federal courts possess Article III subjectmatter jurisdiction to hear a case filed at the behest ofan individual who, from the time suit was filed untiljudgment was entered, lacked authority to vindicatethe Executive Branch’s interest in seeing that the lawis obeyed?

LEAVE BLANK

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TABLE OF CONTENTSPage

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . v

OPINIONS BELOW . . . . . . . . . . . . . . . . . . . . . . . . . 1

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

CONSTITUTIONAL PROVISIONS INVOLVED . . 1

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . 4

Congress Creates CFPB . . . . . . . . . . . . . . . . . 4

The President Nominates Cordray . . . . . . . . 6

CFPB Files Enforcement Action AgainstGordon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

District Court Proceedings . . . . . . . . . . . . . . . 8

The Ninth Circuit Decision . . . . . . . . . . . . . . 9

REASONS FOR GRANTING THE PETITION . . . 12

I. REVIEW IS WARRANTED TO DETERMINEWHETHER RETROACTIVE RATIFICATION OFTHE UNAUTHORIZED LAWSUIT AGAINSTPETITIONER IS CONSISTENT WITH ARTICLEII CONSTRAINTS ON THE APPOINTMENTPOWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

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Page

A. The Federal Appeals Courts AreDeeply Split Regarding WhenRatification of Ultra Vires ActionsIs Permissible . . . . . . . . . . . . . . . . . . . 15

B. The Decision Below Conflicts withthis Court’s Case Law byPermitting Ratification When anAgency Would Not Have Been Ableto Perform the Challenged Acts atthe Time They Were InitiallyUndertaken . . . . . . . . . . . . . . . . . . . . 19

C. The Decision Below IsUnprecedented in Purporting toRatify Not Only an Ultra ViresAdministrative Action but also aCourt Judgment Issued inResponse to that Action . . . . . . . . . . . 22

II. REVIEW IS WARRANTED BECAUSE THENINTH CIRCUIT’S STANDING DECISIONCIRCUMVENTS ARTICLE III’S CONSTRAINTSON THE FEDERAL COURTS’ JURISDICTIONAND IS CONTRARY TO THIS COURT’SPRECEDENTS . . . . . . . . . . . . . . . . . . . . . . . . . 24

A. The Ninth Circuit’s StandingDecision Conflicts with this Court’sOwn Decisions . . . . . . . . . . . . . . . . . . 25

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Page

B. None of the Authorities Cited bythe Panel Majority Support theErroneous Holding Below . . . . . . . . . 30

C. Because Permitting Federal Courtsto Adjudicate Suits Brought byPlaintiffs Who Lack Article IIIStanding Violates the Separationof Powers, Review Is Warranted . . . . 32

III. THE QUESTIONS PRESENTED AREIMPORTANT AND THIS CASE PROVIDES ANIDEAL VEHICLE TO ANSWER THEM . . . . . . . . 35

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

APPENDIX

APPENDIX A—Opinion of the U.S. Courtof Appeals for the Ninth Circuit (April 14,2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1aAPPENDIX B—Opinion of the U.S.District Court for the Central District ofCalifornia (June 26, 2013) . . . . . . . . . . . . . 43aAPPENDIX C—Opinion of the U.S.District Court for the Central District ofCalifornia (July 26, 2013) . . . . . . . . . . . . . . 58aAPPENDIX D—Order of the U.S. Court ofAppeals for the Ninth Circuit denyingrehearing en banc (July 20, 2016) . . . . . . . 73aAPPENDIX E—78 Fed. Reg. 53,734-02(August 30, 2013) . . . . . . . . . . . . . . . . . . . . 75aAPPENDIX F—Selected ConstitutionalProvisions . . . . . . . . . . . . . . . . . . . . . . . . . . 76a

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TABLE OF AUTHORITIESPage(s)

Cases:

Advance Disposal Services East, Inc. v. NLRB, 820 F.3d 592 (3d Cir. 2016) . . . . . . . . . . . . . . 17, 18Allen v. Wright, 468 U.S. 737 (1984) . . . . . . . . . . . . . . . . . 24, 32, 33Bowles v. Wheeler, 152 F.2d 34 (9th Cir. 1945) . . . . . . . . . . . . . . . . . 23Buckley v. Valeo, 424 U.S. 1 (1976) . . . . . . . . . . . . . . . . 12, 21, 26, 31Buckley v. Valeo, 519 F.2d 821 (D.C. Cir. 1975) . . . . . . . . . . . . . . . 31Cook v. Tullis, 85 U.S. 332 (1873) . . . . . . . . . . . . . . . . . . . . . . . . 19DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (2006) . . . . . . . . . . . . . . . . . . . . . . . 33Davis v. FEC, 554 U.S. 724 (2008) . . . . . . . . . . . . . . . . . . . . . . . 29Doolin Security Savings Bank, F.S.B. v. Office of Thrift Supervision, 139 F.3d 203 (D.C. Cir. 1998) . . . . . . . . . . . . . . . 16FEC v. Atkins, 524 U.S. 11 (1998) . . . . . . . . . . . . . . . . . . . . . . . . . 3FEC v. Legi-Tech, Inc., 75 F.3d 704 (D.C. Cir. 1996) . . . . . . . . . . . . . . . . 17FEC v. NRA Political Victory Fund, 513 U.S. 588 (1994) . . . . . . . . . . . . . . 13, 19, 20, 21Freytag v. Commissioner, 501 U.S. 868 (1991) . . . . . . . . . . . . . . . . . . . . 30, 31Frothingham v. Mellon, 262 U.S. 447 (1923) . . . . . . . . . . . . . . . . . . . . . . . 32Hollingsworth v. Perry, 133 S. Ct. 2652 (2013) . . . . . . . . . 20, 24, 25, 28, 29

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Page(s)In re Debs, 158 U.S. 564 (1895) . . . . . . . . . . . . . . . . . . . . . . . 26Intercollegiate Broadcasting Sys., Inc. v. Copyright Royalty Bd. [“Intercollegiate I”], 574 F.3d 748 (D.C. Cir. 2009) . . . . . . . . . . . . . . . 16Intercollegiate Broadcasting Sys., Inc. v. Copyright Royalty Bd. [“Intercollegiate II”], 796 F.3d 111 (D.C. Cir. 2015) . . . . . . . . . 15, 16, 17Lance v. Coffman, 549 U.S. 437 (2007) (per curiam) . . . . . . . . . . . . . 28Lujan v. Defs. of Wildlife, 504 U.S. 555 (1992) . . . . . . . . . . . . . . . . . . . . . . . 28Metro. Wash. Airports Auth. v. Citizens for Abatement of Airport Noise, Inc., 501 U.S. 252 (1991) . . . . . . . . . . . . . . . . . . . . . . . 32Mollan v. Torrance, 9 U.S. (1 Wheat) 537 (1824) . . . . . . . . . . . . . . . . . 29Myers v. United States, 272 U.S. 52 (1926) . . . . . . . . . . . . . . . . . . . . . . . . 26New York v. United States, 505 U.S. 144 (1992) . . . . . . . . . . . . . . . . . . . . . . . 34NLRB v. New Vista Nursing and Rehabilitation, 719 F.3d 203 (3d Cir. 2013) . . . . . . . . . . . . . . . . . . 6NLRB v. Noel Canning, 134 S. Ct. 2550 (2014) . . . . . . . . . . . . . . . . . . . . 7, 9Noel Canning v. NLRB, 705 F.3d 490 (D.C. Cir. 2013), aff’d, 134 S. Ct. 2550 (2014) . . . . . . . . . . . . . . . . 6, 7PHH Corp. v. CFPB, F.3d , 2016 WL 5898801 (D.C. Cir. Oct. 11, 2016) . . . . . . . . . . . . . . . 5, 35, 36Rafferty v. Smith Bell Co., 257 U.S. 226 (1921) . . . . . . . . . . . . . . . . . . . . . . . 23

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Page(s)Spokeo v. Robins, 136 S. Ct. 1540 (2016) . . . . . . . . . . . . . . . . . . . . . 28Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) . . . . . . . . . . . . . . . . . . 24, 26, 28Summers v. Earth Island Inst., 555 U.S. 488 (2009) . . . . . . . . . . . . . . . . . . . . . . . 34SW General, Inc. v. NLRB, 796 F.3d 67 (D.C. Cir. 2015), cert. granted, 136 S. Ct. 2489 (2016) . . . . . . . . . . 13United States v. Heinszen, 206 U.S. 370 (1907) . . . . . . . . . . . . . . . . . . . . 22, 23United States v. Providence Journal Co., 485 U.S. 693 (1988) . . . . . . . . . . . . . . . . . . . . . . . 30Warth v. Seldin, 422 U.S. 490 (1975) . . . . . . . . . . . . . . . . . . . . . . . 32

Constitutional Provisions:

U.S. Const., Art. II . . . . . . . . . . . . . . . . . . . . . passim

U.S. Const., Art. II, § 2 (Appointments Clause) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 13, 25

U.S. Const., Art. II, § 2 (Recess Appointments Clause) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

U.S. Const., Art. II, § 3 (Take Care Clause) . 3, 11, 26

U.S. Const., Art. III . . . . . . . . . . . . . . . . . . . . . passim

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Page(s)Statutes and Regulations:

Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), Pub. L. 11-203, 124 Stat. 2376 (2010) . . . . . . . . 4, 5

Consumer Financial Protection Act (CFPA), Title X of Dodd-Frank Act . . . . . . . . . . . . . . passim

12 U.S.C. § 5491(a) . . . . . . . . . . . . . . . . . . . . . 412 U.S.C. § 5491(b)(2) . . . . . . . . . . . . . 6, 25, 2712 U.S.C. § 5491(b)(5) . . . . . . . . . . . . . . . . . . 2712 U.S.C. § 5491(c)(3) . . . . . . . . . . . . . . . . . . . 512 U.S.C. § 5493(a)(1) . . . . . . . . . . . . . . . . . . 2712 U.S.C. § 5531 . . . . . . . . . . . . . . . . . . . . . . . 712 U.S.C. § 5536 . . . . . . . . . . . . . . . . . . . . . . . 712 U.S.C. § 5564(a) . . . . . . . . . . . . . . . . . . . . 2512 U.S.C. § 5564(a)-(b) . . . . . . . . . . . . . . 10, 1112 U.S.C. § 5564(g)(1) . . . . . . . . . . . . . . . . . . 21Title X, Subtitle F, 12 U.S.C. §§ 5581-87 . . . . 5 12 U.S.C. § 5586(a) . . . . . . . . . . . . . 5, 21, 25

Federal Vacancy Reform Act (FVRA) . . . . . . . . . . . 135 U.S.C. § 3348(d)(1) & (2) . . . . . . . . . . . . . . 13

2009 Omnibus Appropriations Act, Pub. L. 111-8, § 626 . . . . . . . . . . . . . . . . . . . . . . . . 8

28 U.S.C. § 1254(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Regulation O, 12 C.F.R. Part 1015 . . . 7, 8, 9, 11, 21

MARS Rule, 16 C.F.R. Part 322 (2010) . . . . . . . . . . 8

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Page(s)

Miscellaneous:

David H. Carpenter, Limitations on the Secretary of the Treasury’s Authority to Exercise the Powers of the Bureau of Consumer Financial Protection, Congressional Research Service (May 18, 2011) . 5

Tara Leigh Grove, Standing Outside of Article III, 162 U. Pa. L. Rev. 1311 (2014) . . . . . . . . . . . . . . 27

John G. Roberts, Jr., Article III Limits on Statutory Standing, 42 Duke L.J. 1219 (1993) . . . . . . . . . . 35

Antonin Scalia, The Doctrine of Standing as an Essential Element of the Separation of Powers, 17 Suffolk U. L. Rev. 881 (1983) . . . . . . . . . . . . . 33

THE FEDERALIST NO. 48, at 313 (James Madison) (Clinton Rossiter ed., 1961) . . . . . . . . . . 3

Restatement (Third) of Agency § 4.05 (2006) . . . . . 20

78 Fed. Reg. 53,734 (Aug. 30, 2013) . . . . . . . . . . . 2, 7

PETITION FOR A WRIT OF CERTIORARI

Chance E. Gordon respectfully petitions for awrit of certiorari to review the judgment of the U.S.Court of Appeals for the Ninth Circuit in this case.

OPINIONS BELOW

The Ninth Circuit’s opinion (Pet. App. 1a-42a) isreported at 819 F.3d 1179. The decision of the U.S.District Court for the Central District of Californiagranting summary judgment to the ConsumerFinancial Protection Bureau, including a grant ofmonetary relief against Gordon (Pet. App. 43a-57a), isreported at 2013 WL 12116365. The district court’sfinal judgment, which granted permanent injunctiverelief against Gordon (Pet. App. 58a-72a), isunreported. The Ninth Circuit’s order denyingGordon’s petition for rehearing en banc (Pet. App. 73a-74a) is unreported.

JURISDICTION

The Ninth Circuit denied Gordon’s petition forrehearing en banc on July 20, 2016. On September 20,2016, Justice Kennedy granted an extension of time forfiling the petition to and including November 17, 2016. This Court has jurisdiction under 28 U.S.C. § 1254(1).

CONSTITUTIONAL PROVISIONS INVOLVED

Relevant provisions of the U.S. Constitution areset forth in the Appendix.

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INTRODUCTION

This case arises in an uncontested factualsetting: Richard Cordray’s invalid recess appointmentin January 2012 as Director of the Consumer FinancialProtection Bureau (CFPB). During the following 18months, he lacked any authority to act on behalf of thefederal government. Among the actions he purportedto authorize were the filing and prosecution of afederal-court enforcement action against PetitionerGordon. When the district court granted CFPB’smotion for summary judgment and entered an $11.4million judgment against Gordon in June 2013, itremained true that no properly appointed federalofficer had authorized the lawsuit.

Despite Gordon’s repeated objections thatCordray had no power to authorize the suit, the NinthCircuit upheld the district court’s judgment insubstantial part. It held that Cordray, after the Senateconfirmed his nomination to head the CFPB,successfully “ratified” all the actions he took during the18 months preceding his confirmation. It upheld theratification of the Gordon lawsuit (including thedistrict-court judgment) based on a four-sentenceFederal Register notice in which Cordray stated thathe “affirm[ed] and ratif[ied] any and all actions” hetook during his 18-month recess appointment. 78 Fed.Reg. 53,734 (Aug. 30, 2013). Pet. App. 75a.

The Ninth Circuit’s endorsement of Cordray’sratification effectively nullifies the AppointmentsClause, which rendered this enforcement action ultravires. Article II of the U.S. Constitution makes explicitthe qualifications that anyone purporting to act on

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behalf of the Executive Branch must possess. RichardCordray lacked those qualifications throughout allrelevant stages of the district court proceedings, andthe actions he took were ultra vires. Yet, if federalofficials are permitted to retroactively affirm ultra viresacts without giving more than a momentary thought totheir propriety, Article II’s limitations on thePresident’s appointment powers will be reduced to “amere demarcation on parchment.” THE FEDERALISTNO. 48, at 313 (James Madison) (Clinton Rossiter ed.,1961).

Moreover, the jurisdiction of the federal courtswas never properly invoked in this matter. ThePresident has a duty to “take Care that the Laws befaithfully executed,” U.S. CONST. art. II, § 3, and thushis duly authorized subordinates possess federal courtstanding to vindicate the Executive’s abstract “interestin seeing that the law is obeyed.” FEC v. Atkins, 524U.S. 11, 24 (1998). But that standing does not extendto those, such as Cordray, whose status throughoutdistrict court proceedings was that of a private citizen. Because no properly constituted federal officialauthorized this lawsuit, the federal district courtlacked Article III subject-matter jurisdiction over theseproceedings.

Review is urgently needed to correct thisundisguised assault on the Constitution’s structuralprinciples. The Ninth Circuit’s ratification holdingdirectly conflicts with the holdings of this Court and atleast two other federal appeals courts. Its decisionupholding Article III standing drew a strong dissentfrom Judge Ikuta for good reason: it cannot plausiblybe reconciled with this Court’s standing case law. If

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Article II limitations on the President’s appointmentpowers and Article III limitations on judicial power areto matter, then violations of those limitations musthave consequences.

STATEMENT OF THE CASE

CFPB is a new federal agency, and Cordray is itsfirst Director. Not surprisingly, the scope of itsauthority, and even its constitutional legitimacy, isbeing actively litigated in the federal courts.

Congress Creates CFPB. On July 21, 2010,President Obama signed into law the Dodd-Frank WallStreet Reform and Consumer Protection Act (the“Dodd-Frank Act”), Pub. L. 11-203, 124 Stat. 2376(2010). Among other things, the Act created CFPB, afederal agency with expansive powers. Located withinthe Federal Reserve System, CFPB is charged withregulating “the offering and provision of consumerfinancial products and services under federal consumerfinancial laws.” 12 U.S.C. § 5491(a). The Act providedfor the transfer to CFPB of enforcement authority over18 consumer protection laws that previously had beenenforced by a variety of agencies.

Congress recognized that it would take a whilefor CFPB to get up and running. The Dodd-Frank Actprovided that, beginning on a prescribed “transferdate” in July 2011 and continuing until “the Director ofthe Bureau is confirmed by the Senate,” CFPB wouldoperate as a branch of the Treasury Department, andthe Secretary of Treasury would have ultimateauthority to exercise many of CFPB’s powers. 12

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U.S.C. § 5586(a).1

Title X of the Dodd-Frank Act (also known as theConsumer Financial Protection Act or CFPA)established CFPB as an independent agency headed bya single Director. The statute provided that theDirector was removable by the President only forcause—that is, for “inefficiency, neglect of duty, ormalfeasance in office”—during the Director’s fixed five-year term. 12 U.S.C. § 5491(c)(3). The D.C. Circuitrecently ruled that CFPB was “unconstitutionallystructured because it is an independent agency headedby a single Director.” PHH Corp. v. CFPB, F.3d ,2016 WL 5898801 at *26 (D.C. Cir. Oct. 11, 2016). Asa remedy, the appeals court restructured the agencygoing forward by severing the “for cause” removalprovision from the CFPA, thereby transforming CFPBfrom an independent agency into an executive agencywhose Director is immediately answerable to thePresident. Id. at *28.2

1 The Treasury Secretary’s enforcement powers did not,however, include authority to file legal claims of the sortultimately pursued against Gordon. Section 5586(a) granted theSecretary authority to undertake activities set forth in Subtitle Fof Title X of the Act (§§ 5581-87), but those activities did notinclude assertion of the legal claims at issue here. See David H.Carpenter, Limitations on the Secretary of the Treasury’s Authorityto Exercise the Powers of the Bureau of Consumer FinancialProtection, Congressional Research Service (May 18, 2011).

2 Because the facts of the PHH case did not require it, theD.C. Circuit did not address what impact its “unconstitutionallystructured” holding would have on the validity of CFPB actsundertaken prior to the CFPB’s October 11, 2016 restructuring. See id. at *28 n.19.

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The President Nominates Cordray. On July18, 2011, just prior to the “transfer date,” PresidentObama nominated Richard Cordray to serve asDirector of CFPB. However, a Senate vote on hisnomination stalled.3

On January 4, 2012, President Obama purportedto invoke his recess appointment power to installCordray as Director without the advice and consent ofthe Senate. The President contended (erroneously, itturned out) that the Senate was in recess on that day.

In January 2013, President Obama renominatedCordray to head CFPB, and the Senate confirmed thatappointment on July 16, 2013. In the meantime, boththe D.C. Circuit and the Third Circuit had issueddecisions that called into question the legality ofCordray’s recess appointment, by holding that thePresident exceeded his Article II appointment powerswhen, also on January 4, 2012, he gave recessappointments to three members of the National LaborRelations Board. Noel Canning v. NLRB, 705 F.3d 490(D.C. Cir. 2013); NLRB v. New Vista Nursing andRehabilitation, 719 F.3d 203 (3d Cir. 2013). On August30, 2013, Cordray published a four-sentence notice inthe Federal Register that purported to “ratify” allactions taken by CFPB during the 18-month period ofhis recess appointment. He stated:

3 All parties agree that CFPB’s Director is an “Officer ofthe United States” whose appointment must conform to therequirements of Article II of the Constitution. See also 12 U.S.C.§ 5491(b)(2) (“[T]he Director shall be appointed by the President,by and with the advice and consent of the Senate.”).

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I believe that the actions I took during theperiod I was serving as a recess appointeewere legally authorized and entirelyproper. To avoid any possibleuncertainty, however, I hereby affirm andratify any and all actions I took duringthat period.

Pet. App. 75a.

In June 2014, this Court unanimously affirmedthe D.C. Circuit’s Noel Canning decision, ruling thatthe Senate was not in recess on January 4, 2012 andthus that President Obama was not entitled to makerecess appointments on that day. NLRB v. NoelCanning, 134 S. Ct. 2550 (2014). Given that decision,CFPB has ceased to contest the invalidity of Cordray’srecess appointment and that all actions taken by theBureau during the next 18 months were ultra vireswhen undertaken. Indeed, the Ninth Circuitrepeatedly stated in its decision below that the recessappointment was “invalid.” Pet. App. 4a, 14a.

CFPB Files Enforcement Action AgainstGordon. Cordray purported to authorize the filing ofan enforcement action against Gordon on July 18, 2012. The seven-count complaint alleged that Gordon, alicensed attorney in California, engaged in deceptivepractices in connection with his provision of mortgage-relief services. The first three counts alleged thatGordon’s actions violated Sections 1031 and 1036 of thenewly adopted CFPA, 12 U.S.C. §§ 5531, 5536. Complaint, ¶¶ 56-66. The other four counts allegedviolations of Regulation O, a regulation initiallyadopted by the Federal Trade Commission in December

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2010 and reenacted by the Treasury Secretary inDecember 2011 for the purpose of prohibiting unfair ordeceptive acts with respect to mortgage loans. Complaint ¶¶ 67-77.4 The complaint sought bothinjunctive and monetary relief. The district courtgranted CFPB’s Ex Parte Application for TemporaryRestraining Order, which resulted in appointment of areceiver and the seizure of many of Gordon’s assets.

Gordon’s answer denied CFPB’s claims, and hemounted a vigorous defense. In particular, he movedfor summary judgment, asserting that Cordray’s recessappointment was invalid and thus that CFPB lackedauthority to file an enforcement action against him.

District Court Proceedings. On June 26,2013, the district court denied Gordon’s motion forsummary judgment, granted CFPB’s motion forsummary judgment on both its CFPA claims and itsRegulation O claims, and entered a judgment directingGordon to disgorge $11.4 million allegedly collectedfrom customers between January 2010 and July 2012. Pet. App. 43a-57a. The court deferred a ruling onpermanent injunctive relief. Id. at 56a-57a.

The district court rejected Gordon’s challenge to CFPB’s authority to file an enforcement action againsthim. Pet. App. 52a-54a. The court declined to consider

4 FTC adopted the regulation, 16 C.F.R. Part 322 (thenknown as the MARS Rule), pursuant to authority granted it by the2009 Omnibus Appropriations Act, Pub. L. 111-8, § 626. Actingpursuant to his interim authority over CFPB, the TreasurySecretary recodified the MARS Rule as 12 C.F.R. Part 1015 anddesignated it Regulation O.

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Gordon’s recess-appointment-based argument,concluding that the citations provided by Gordon insupport of his argument lacked “precedential value”and were not sufficiently compelling. Ibid.5

The court’s final judgment, issued July 26, 2013,inter alia: (1) permanently enjoined Gordon fromviolating the CFPA and Regulation O; and (2) enjoinedGordon for a three-year period from offering anymortgage-relief product or service or any debt-reliefproduct or service. Pet. App. 58a-72a.

The Ninth Circuit Decision. A sharplydivided Ninth Circuit affirmed in substantial part. Pet.App. 1a-42a. First, the appeals court majority rejectedGordon’s contention that the federal courts lackedsubject-matter jurisdiction to hear CFPB’s enforcementaction. Id. 7a-14a. Gordon asserted: (1) this Court’s2014 Noel Canning decision conclusively establishedthat Cordray’s recess appointment was invalid; (2) asa private citizen, Cordray lacked standing to authorizean enforcement action seeking to vindicate an interestin seeing that the law is obeyed; and (3) federal courtslack Article III case-or-controversy jurisdiction unlessthe plaintiff maintains standing throughout districtcourt proceedings. While conceding the invalidity ofCordray’s recess appointment, the court concluded that“Appointments Clause problems [do not] divest federalcourts of jurisdiction.” Id. at 14a. It concluded thatsubject-matter jurisdiction analysis should focus on the

5 Notably, CFPB did not assert in its summary judgmentpapers that the enforcement action would have been authorizedeven if Cordray’s recess appointment were invalid. Rather, its soleresponse was that the recess appointment was valid.

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standing of the federal agency, not on the standing ofindividuals purporting to act on behalf of the agency:

Here, Congress authorized the CFPB tobring actions in federal court to enforcecertain consumer protection statutes andregulations. See 12 U.S.C. § 5564(a)-(b). ... And with this authorization, theExecutive Branch, through the CFPB,need not suffer a “particularizedinjury”—it is charged under Article II toenforce federal law. ... That its directorwas improperly appointed does not alterthe Executive Branch’s interest or powerin having federal law enforced.

Id. at 10a (citations omitted).

The appeals court also concluded that the ArticleII violation did not bar affirmance of the district courtjudgment. It accepted CFPB’s argument (raised for thefirst time in its Ninth Circuit response brief) that “[t]hesubsequent valid appointment, coupled with Cordray’sAugust 30, 2013 ratification, cures any initial Article IIdeficiencies.” Pet. App. 15a.6 The Court reasoned: (1)CFPB itself had authority to bring the enforcementaction in 2012 by virtue of Congress’s adoption of the

6 The appeals court rejected CFPB’s assertion that Gordonshould not be permitted to raise the Article II issue in light of thedistrict court’s refusal to resolve it. Pet. App. 15a n.5. The appealscourt concluded that Gordon had “undoubtedly” “properly raised”the issue by arguing in the district court that “Cordray wasinvalidly appointed under the Appointments Clause and, as aresult, the enforcement action against Cordray was invalid.” Ibid.

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CFPA (citing 12 U.S.C. § 5564(a)-(b)); and (2) byAugust 2013, Cordray was “an agent authorized” to acton behalf of CFPB and thus was authorized toretroactively ratify an action that CFPB wasempowered to undertake in 2012. Id. at 17a.7

Addressing the merits, the court affirmed thedistrict court’s grant of summary judgment on the issueof liability and the award of injunctive relief. Pet. App.17a-23a; 28a-29a. The court also rejected most ofGordon’s challenges to monetary relief. Id. at 23a-26a. The court vacated and remanded the monetary awardfor consideration of one issue: whether the award wasexcessive because it required disgorgement of fundsobtained before enactment of the CFPA. Id. at 27a.8

Judge Ikuta dissented, concluding that thefederal courts lacked subject-matter jurisdiction. Pet.App. 30a-42a. She asserted, “[N]o one had theexecutive power necessary to prosecute this civilenforcement action in the district court. And withoutthe Executive’s power to ‘take Care that the Laws befaithfully executed,’ U.S. Const. Art. II, § 3, no onecould claim the Executive’s unique Article IIIstanding.” Id. at 30a.

7 The court stated that it was not addressing whether thejudgment could be upheld under either harmless-error review orthe de facto officer doctrine. Pet. App. 17a n.5.

8 The court noted that while the disgorgement remedy wasbased on gross income allegedly received by Gordon and relatedentities between January 2010 and July 2012, the CFPA did nottake effect until July 2010, and Regulation O was not adopted untilDecember 2010. Ibid.

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Judge Ikuta rejected the majority’s assertionthat mere adoption of the CFPA by Congress wassufficient to provide CFPB itself with “executiveauthority that would allow it to enforce public rights.” Pet. App. 35a. She explained:

Congress cannot by itself confer executiveauthority to bring a civil enforcementaction on an entity created by statute. ...Only the President and persons who are“Officers of the United States” [may] doso.

Ibid (citing Buckley v. Valeo, 424 U.S. 1, 139-40 (1976)). She concluded, “Because the Bureau lacked standingwhen it brought this enforcement action, we lackjurisdiction.” Id. at 41a.

The Ninth Circuit denied Gordon’s petition forrehearing en banc on July 20, 2016. Id. at 73a-74a. Judge Ikuta voted to grant the petition. Id. at 74a.

REASONS FOR GRANTING THE PETITION

The petition raises issues of exceptionalimportance. It is undisputed that the individual whopurported to sanction the filing and prosecution of anenforcement action against Petitioner Gordon lackedauthority to do so—because he had not been validlyappointed as an Officer of the United States. TheFramers of the Constitution sought to prevent abuse ofExecutive Branch power by carefully circumscribingthe category of individuals authorized to exercise that

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power.9 This petition raises the issue of whether, andunder what circumstances, the federal governmentmay retroactively “ratify” actions taken in the name ofthe federal government by those who have not, in fact,been delegated the requisite power.

The federal courts of appeals are sharply split onthat issue; the Ninth Circuit’s position on whenratification is permissible directly conflicts with theposition adopted by the D.C. and Third Circuits. AndCongress has disapproved after-the-fact ratifications,concluding that prohibiting ratification providesExecutive Branch officials with increased incentives tofully comply with Article II limitations on theappointment power.10 This Court has imposed strictlimits on retroactive ratifications, and the decisionbelow directly conflicts with the Court’s most recentpronouncement on the issue. See FEC v. NRA PoliticalVictory Fund, 513 U.S. 588 (1994). Review iswarranted to resolve the conflict among the federal

9 The Appointments Clause and the Recess AppointmentsClause of Art. II, § 2 of the U.S. Constitution prescribe the mannerin which “Officers” of the United States are to be chosen. The textof those clauses is set out at Pet. App. 76a.

10 Congress adopted the Federal Vacancy Reform Act(FVRA) in 1998 to prevent the Executive Branch from allowingindividuals named as “temporary” office holders (to fill unexpectedvacancies) to remain in office for extended periods, thereby evadingAppointments Clause requirements. See SW General, Inc. v.NLRB, 796 F.3d 67 (D.C. Cir. 2015), cert. granted, 136 S. Ct. 2489(2016). The FVRA states that an action taken by “any person” whohas not been selected for federal office in accordance with thestatute “shall have no force or effect” and “shall not be ratified.” 5 U.S.C. § 3348(d)(1) & (2).

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appeals courts and to determine whether the decisionbelow—which effectively nullifies Article II limitationson the appointment power—properly adheres to theFramers’ intent.

Ratification issues frequently arise in thecontext of an internal decision of a federal agency—e.g.,an agency regulation challenged on the ground thatthose responsible for its adoption were not authorizedto do so. Under those circumstances, the question of anagency’s standing to appear in federal court to defendits regulation does not arise. But in this instance, theultra vires federal actions at issue are an agency’s filingand prosecuting a federal-court enforcement action. Asis true of any plaintiff, a federal agency that files aclaim in federal court must maintain its standingthroughout the proceedings. Although the UnitedStates possesses unique standing to file lawsuits toenforce federal law, only properly vested “Officers ofthe United States” are permitted to exercise thatauthority. Yet the Ninth Circuit authorized this suit toproceed in federal court even though none of theindividuals who made the decision to file and prosecutean enforcement action against Gordon were Officers ofthe United States or properly appointed by an Officer. As Judge Ikuta cogently explained in dissent, theNinth Circuit’s decision conflicts sharply with well-established standing case law. In light of that conflict,review of the standing issue is warranted as well.

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I. REVIEW IS WARRANTED TO DETERMINEWHETHER RETROACTIVE RATIFICATION OF THEUNAUTHORIZED LAWSUIT AGAINST PETITIONERIS CONSISTENT WITH ARTICLE II CONSTRAINTSON THE APPOINTMENT POWER

A. The Federal Appeals Courts AreDeeply Split Regarding WhenRatification of Ultra Vires Actions IsPermissible

The Ninth Circuit held that Cordray’s four-sentence August 30, 2013 Federal Register noticesufficed to “ratify” the filing and prosecution of thefederal-court enforcement action againstGordon—conduct that the appeals court conceded wasnot properly authorized when undertaken. Pet. App.15a. The court expressed no concern that the notice didnot focus on the Gordon proceeding but rather was ablanket ratification of the thousands of actions thatCordray had undertaken in the prior 18 months. Indeed, the court concluded that ratification by an authorized federal officer “satisfies the AppointmentsClause” even though the ratification does not involve areview of the facts of a case at issue and is “nothingmore than a rubberstamp” of the initial decision. Ibid.

The Ninth Circuit’s endorsement of“rubberstamp” ratifications conflicts sharply withdecisions from the D.C. and Third Circuits. Review iswarranted to resolve that conflict.

The D.C. Circuit held in IntercollegiateBroadcasting System, Inc. v. Copyright Royalty Bd.[“Intercollegiate II”], 796 F.3d 111, 117 (D.C. Cir. 2015),

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that ratification of a prior, invalid action requires “asubsequent determination” by “a properly appointedofficial” who “has the power to conduct an independentevaluation of the merits and does so.” Intercollegiate IIinvolved a challenge to a decision by a federaladministrative body (the Copyright Royalty Board)setting royalty rates in webcasting. The D.C. Circuithad previously held that the board’s initial royalty-ratedecision was invalid because the appointment of boardmembers violated the Appointments Clause. Intercollegiate Broadcasting System, Inc. v. CopyrightRoyalty Bd. [“Intercollegiate I”], 574 F.3d 748 (D.C. Cir.2009). The D.C. Circuit upheld the new ratedetermination only after an entirely new board wasappointed in compliance with the Appointments Clauseand the new board conducted a de novo review beforereaching a new decision. Intercollegiate II, 796 F.3d at118-121.

Intercollegiate II reaffirmed an earlier D.C.Circuit decision that ratification of a prior, ultra viresadministrative action requires the subsequent,properly appointed decisionmaker to “‘make a detachedand considered judgment’ in ratifying the previous[official’s] decision.” Id. at 118 (quoting Doolin SecuritySavings Bank, F.S.B. v. Office of Thrift Supervision,139 F.3d 203, 213-14 (D.C. Cir. 1998)). The D.C.Circuit’s limits on ratifications cannot be reconciledwith the Ninth Circuit’s position. Had Gordon’s casearisen in the District of Columbia, the D.C. Circuitwould have invalidated Cordray’s purportedratification of the enforcement action because Cordraydid not engage in any sort of “independent evaluation

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of the merits” of (or even think about) Gordon’s case.11

The decision below also sharply conflicts with aThird Circuit decision, Advance Disposal Services East,Inc. v. NLRB, 820 F.3d 592 (3d Cir. 2016). That caseinvolved the NLRB’s efforts to ratify the ultra viresactions of an improperly appointed NLRB RegionalDirector, who had overseen a disputed union election. The NLRB had properly re-appointed the RegionalDirector by the time of his purported ratification. TheThird Circuit identified three “requirements” for avalid ratification:

First, the ratifier must, at the time ofratification, still have the authority totake the action to be ratified. Second, the

11 The Ninth Circuit cited a separate D.C. Circuit decision,FEC v. Legi-Tech, Inc., 75 F.3d 704 (D.C. Cir. 1996), in support ofits view that ratification of a prior, invalid government action doesnot require actual reconsideration of the merits of the action. Pet.App. 15a. The Ninth Circuit has mischaracterized Legi-Tech; itnever stated that “nothing more than a rubberstamp,” ibid, issufficient to effect a ratification. Indeed, the previous action atissue in Legi-Tech (an administrative decision to initiateenforcement action) was ratified by a properly reconstitutedFederal Election Commission (FEC) only after the FEC conducteda three-day hearing on whether to ratify. In its citation to Legi-Tech, Intercollegiate II explicitly referenced the three-day hearingin explaining why Legi-Tech had concluded that the ratificationprocess “was sufficient to cure the constitutional violation.” Intercollegiate II, 796 F.3d at 118. While the D.C. Circuit, inconducting a ratification review, does not examine the ratifier’sstate of mind to determine whether he was open to changing theinitial decision, it does require the ratifier at least to “conduct anindependent evaluation of the merits” of the initial decision. Id. at117.

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ratifier must have full knowledge of thedecision to be ratified. Third, the ratifiermust make a detached and consideredaffirmation of the earlier decision. Theselast two requirements are intended toensure that the ratifier does not blindlyaffirm the earlier decision without dueconsideration.

Advanced Disposal, 820 F.3d at 602-03 (emphasisadded).

The Third Circuit upheld the ratification onlyafter determining that the Regional Director hadundertaken the requisite “detached and consideredaffirmation” of his previous action. In contrast, CFPBhas never suggested that Cordray—when he issued hisblanket ratification of all actions taken betweenJanuary 2012 and July 2013—undertook any analysisof the enforcement action filed against Gordon in July2013, let alone a “detached and considered” one. Indeed, Cordray made plain in his August 2013ratification that he did not believe that any analysiswas required, stating that he still “believe[d] that theactions I took during the period I was serving as arecess appointee were legally authorized and entirelyproper,” Pet. App. 75a, even though we now know they were not. The Ninth Circuit nonetheless upheld theratification under its nothing-more-than-a-rubberstamp-required standard. Id. at 15a.

Review is warranted to resolve the irreconcilableconflict between the Ninth Circuit, on the one hand,and the D.C. and Third Circuits, on the other hand,about the procedures a federal agency must employ if

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it seeks to ratify a previous ultra vires action.

B. The Decision Below Conflicts withthis Court’s Case Law by PermittingRatification When an Agency WouldNot Have Been Able to Perform theChallenged Acts at the Time TheyWere Initially Undertaken

While government actors can in somecircumstances ratify actions taken in their namewithout their prior authorization, this Court has heldthat such ratification is limited by the longstandingagency-law limitation that “the party ratifying shouldbe able not merely to do the act ratified at the time theact was done, but also at the time the ratification wasmade.” FEC v. NRA Political Victory Fund, 513 U.S.88, 98 (1873) (emphasis omitted) (quoting Cook v.Tullis, 85 U.S. 332, 338 (1873)). Because neitherCordray nor anyone else associated with CFPBpossessed legal capacity to authorize this enforcementproceeding at the time it was filed and litigated, NRAPolitical Victory Fund bars him from ratifying it later. The Ninth Circuit’s efforts to distinguish NRA PoliticalVictory Fund, 15a-17a, are unavailing. Accordingly,review is also warranted because of the clear conflictbetween that decision and the decision below.

NRA Political Victory Fund held that the U.S.Solicitor General could not ratify a Supreme Courtcertiorari petition filed by the FEC (which lacked legalcapacity to file such petitions on its own) because, bythe time the Solicitor General sought to ratify thefiling, he no longer had the right to file a petition—the90-day petitioning period had expired. Id. at 99. The

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Court explained the rationale behind that rule asfollows: “The intervening rights of third persons cannotbe defeated by the ratification.” Id. at 98. Thus, thequestion facing the court below was whether anyone atCFPB had authority in July 2012 to initiateenforcement proceedings against Gordon (in thisinstance, the third party with “intervening rights.”). Neither CFPB nor the Ninth Circuit has been able toidentify such an individual, and there was none. Upholding ratification under those circumstances isinconsistent with NRA Political Victory Fund’sadmonitions that ratification is impermissible if theratifier would not have been “able to do the act ratifiedat the time the act was done” or if ratification woulddefeat “[t]he intervening rights of third persons.”12

The panel majority held that even thoughCordray himself lacked authority to initiate andprosecute this action, CFPB should be deemed to havepossessed such authority by virtue of Congress’sadoption of the CFPA. Pet. App. 17a. That contentionlacks merit. While CFPB existed on paper in 2012, itcould litigate only through “designate[d] agents”constitutionally appointed “to represent it in federalcourt.” Hollingsworth v. Perry, 133 S. Ct. 2652, 2664

12 This Court’s ratification rule is consistent with theRestatement (Third) of Agency § 4.05 (2006), which provides: “Aratification of a transaction is not effective unless it precedes theoccurrence of circumstances that would cause the ratification tohave adverse and inequitable effects on the rights of third parties.” (Emphasis added.) Gordon will suffer serious adverse effects ifratification is upheld here: he will be subject to a ruinous courtjudgment that was the direct result of the ultra vires acts initiatedby Cordray.

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(2013). CFPB is a new federal agency that lacked anyduly appointed Officers until after Cordray was validlyinstalled as its Director in July 2013.13 Moreover,congressional legislation can never by itself constitutethe necessary authority to initiate Executive action. AsJudge Ikuta explained in dissent, “Congress cannot byitself confer executive authority to bring civilenforcement action on an entity created by statute. ...Only the President and persons who are ‘Officers of theUnited States’ could do so.” Pet. App. 35a (citingBuckley, 424 U.S. at 139-40).

The decision below conflicts with NRA PoliticalVictory Fund for the additional reason that Cordraylacked authority at the time of ratification to initiate atleast a portion of the enforcement action he purportedto ratify. The enforcement action focused on Gordon’salleged activities between January 2010 and July 2012. The limitations period applicable to that action is threeyears. 12 U.S.C. § 5564(g)(1). Thus, as of August 30,2013, Cordray lacked authority to initiate anenforcement action based on activities that occurredbefore August 30, 2010. Just as the Solicitor Generalwas not permitted to ratify the FEC’s ultra virescertiorari petition because the 90-day period for filingcertiorari petitions had expired by the time of hispurported ratification, so too is Cordray barred fromseeking to ratify an enforcement action covering events

13 As noted supra at Note 1, the CFPA granted theTreasury Secretary authority, until the Senate confirmation of aCFPB Director, to keep the CFPB running and to exercise some ofCFPB’s powers. See 12 U.S.C. § 5586(a). But those powers did notinclude the authority to file federal-court actions to enforce theCFPA and Regulation O.

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occurring more than three years before his attemptedratification.

C. T h e D e c i s i o n B e l o w I sUnprecedented in Purporting toRatify Not Only an Ultra ViresAdministrative Action but also aCourt Judgment Issued in Responseto that Action

At the time that Cordray sought to ratify CFPB’sfederal-court enforcement proceeding against Gordon,the district court had already entered final judgmentagainst Gordon—including an $11.4 million monetaryaward. The panel held that the ratification applied notonly to CFPB’s decision to file suit but also to thedistrict court’s judgment. This expansiveinterpretation of the ratification doctrine isunprecedented and provides an additional reason togrant review.

In several cases, the Court has permitted thefederal government (usually Congress) to ratify anExecutive Branch act previously undertaken byofficials not authorized to act, where the ratifier was soauthorized at the time of the initial act. See, e.g.,United States v. Heinszen, 206 U.S. 370 (1907)(although a Presidential order imposing a duty ongoods imported into the Philippines was unauthorizedwhen initially issued, legislation enacted by Congressin 1902—which it could have enacted at the time of theinitial Presidential order—served to ratify the order). But in none of those cases did the Court upholdratification of court decisions that were by-products ofthe previously unauthorized federal action. Indeed,

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Heinszen explicitly limited ratification to eventspreceding a substantive court ruling in legalproceedings arising out of the prior Executive Branchaction. 206 U.S. at 387-88.

In the court below, CFPB cited two cases tosupport its view that ratification of a governmentdecision to file a lawsuit can also encompassratification of the court’s rulings in that lawsuit. CFPBBr. at 50 (citing Bowles v. Wheeler, 152 F.2d 34 (9thCir. 1945), and Rafferty v. Smith Bell Co., 257 U.S. 226(1921)). Neither case supports CFPB’s position. Indeed, in both cases lower courts had ruled againstthe United States; far from seeking to ratify thoselower-court rulings, the United States sought to invokeratification doctrine to overturn those decisions.

There is no way to accurately predict whether afederal district court would enter the same, severejudgment if CFPB were to proceed against Gordon asecond time. Yet, by ruling that Cordray was entitledto ratify not only the filing of the enforcement actionbut also the district court judgment that flowed fromthat ultra vires filing, the Ninth Circuit deprivedGordon of an opportunity to have his defensesevaluated in a proceeding untainted by CFPB’sconstitutional violations. Review is warranted toexamine this unprecedented expansion of ratificationdoctrine.

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II. REVIEW IS WARRANTED BECAUSE THE NINTHCIRCUIT’S STANDING DECISION CIRCUMVENTSARTICLE III’S CONSTRAINTS ON THE FEDERALCOURTS’ JURISDICTION AND IS CONTRARY TOTHIS COURT’S PRECEDENTS

Article III’s bedrock requirement that a plaintiffmust have standing—both at the time an action is filedand “throughout all stages of litigation,” Hollingsworth,133 S. Ct. at 2661, is “inflexible and without exception.”Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 95(1998). This case-or-controversy requirement appliesjust as surely to litigation conducted by the UnitedStates as to private lawsuits. Yet from July 18, 2012,when this civil enforcement action against Gordoncommenced, until June 26, 2013, when the districtcourt granted summary judgment against him, no onebefore the court was properly vested by the ExecutiveBranch with the necessary power and authority toenforce the CFPA—an absolute prerequisite forexecutive officers to enjoy unique standing underArticle III.

Although no one below was authorized tofile—much less prosecute—an enforcement actionagainst Gordon on behalf of the United States, theNinth Circuit nonetheless ruled that the “inflexible”constitutional threshold of standing was satisfied. Yetbecause “the law of Article III standing is built on asingle basic idea—the idea of separation of powers,”Allen v. Wright, 468 U.S. 737, 752 (1984), those whopurported to prosecute this litigation on behalf of theUnited States without constitutional authority to do solacked standing to invoke the subject-matterjurisdiction of the federal courts. The panel majority’s

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radical departure from Article III’s case-or-controversyrequirement, as repeatedly manifested in this Court’sown precedents, ignores the vital role standing plays inpreventing “the judicial process from being used tousurp the powers of the political branches,”Hollingsworth, 133 S. Ct. at 2661, and thus meritsfurther review by this Court.

A. The Ninth Circuit’s StandingDecision Conflicts with this Court’sOwn Decisions

When Congress granted CFPB authority to“commence a civil action against” anyone who “violatesa Federal consumer financial law,” 12 U.S.C. § 5564(a),it did so on the condition that everyone representingCFPB in federal court would be constitutionally vestedwith the authority to do so.14 Yet the panel majorityconcluded that “[w]hile the [Bureau’s] failure to have aproperly confirmed director may raise Article IIAppointments Clause issues, it does not implicate ourArticle III jurisdiction to hear this case.” Pet. App.10a-11a. The Ninth Circuit went on toexplain—without citing any authority for theproposition—that “it is the Executive Branch, not anyparticular individual, that has Article III standing.”Pet. App. 8a. But that distinction has no basis in thelaw and is belied by this Court’s own precedents.

14 Here the Legislative Branch enacted statutes thatexpressly conditioned the CFPB Director’s authority to bring civilenforcement actions on his or her confirmation by the Senate. See12 U.S.C. §§ 5491(b)(2), 5586(a). It is therefore not for the federaljudiciary to nullify that important legislative check on executivepower.

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The federal courts “must stay within theirconstitutionally prescribed sphere of action, whether ornot exceeding that sphere will harm one of the othertwo branches.” Steel Co., 523 U.S. at 102 n.4. ThisCourt’s standing jurisprudence “derives from Article IIIand not Article II,” ibid, and it is well settled that “thePresident alone and unaided could not execute thelaws. He must execute them by the assistance ofsubordinates.” Buckley, 424 U.S. at 135 (quoting Myersv. United States, 272 U.S. 52, 117 (1926)). Contrary tothe Ninth Circuit, the “primary responsibility forconducting civil litigation in the courts of the UnitedStates for vindicating public rights * * * may bedischarged only by persons who are ‘Officers of theUnited States’ within the language of [theAppointments Clause].” Id. at 140 (emphasis added).

As the panel majority conceded, “duly appointedofficers are excepted from the generalized grievanceprohibition that private parties face under Article III.” Pet. App. 8a (emphasis added). This relaxation ofArticle III’s standing requirement derives from ArticleII, which requires the Executive Branch to “take Carethat the Laws be faithfully executed.” U.S. Const. art.II, § 3; see In re Debs, 158 U.S. 564, 586 (1895) (holdingthat when the United States sues to enforce publicrights, “the mere fact that the government has nopecuniary interest in the controversy is not sufficient toexclude it from the courts”). But where, as here, theplaintiff is nothing more than a nascent, faceless entitywhose director and subordinate attorneys were notappointed by a body with proper appointment authorityand therefore could not be considered “Officers of theUnited States,” the Constitution’s structuralprotections cannot be swept aside. In other words,

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“Article III cannot confer on the executive a power thatArticle II denies.” Tara Leigh Grove, Standing Outsideof Article III, 162 U. Pa. L. Rev. 1311, 1334 (2014).

Indeed, before Mr. Cordray’s valid appointment,nobody in the Executive Branch possessed authority toenforce the Dodd-Frank Act’s new consumer protectionlaws. CFPB’s Director had not been appointed by thePresident with the advice and consent of the Senate, asrequired by Congress. 12 U.S.C. § 5491(b)(2). Andnone of CFPB’s inferior officers had, in turn, beenappointed by a validly confirmed Director. Id.§§ 5491(b)(5) (deputy director), 5493(a)(1) (“allemployees” including “attorneys”).

A plaintiff with no lawful executive authority tobring suit whatsoever obviously lacks the uniqueattributes of executive standing. As Judge Ikutaexplained in dissent:

In most cases, an executive agency hasArticle III standing because it has adirector properly vested with executiveauthority under Article II, but it isundisputed that the Bureau cannot claimstanding on this basis. So the realquestion is: what is the alternative basisfor the Bureau’s standing? Instead ofproviding one, the majority merelyreiterates that Congress enacted a statutestating that the Bureau is part of theExecutive Branch.

Pet. App. 39a. Without a properly vested Officer of theUnited States, CFPB could not lawfully invoke the

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jurisdiction of the federal courts.

Absent any executive authority to enforce federallaw, Cordray’s ultra vires agents were essentiallyprivate litigants, who “[i]n the ordinary course ... mustassert [their] own legal rights and interests, and cannotrest a claim to relief on the legal rights or interests ofthird parties.” Hollingsworth, 133 S. Ct. at 2663. YetCordray and his staff attorneys could not possiblysatisfy Article III’s traditional standing requirementsfor private plaintiffs bringing suit in federal court. SeeSpokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016)(“The plaintiff must have (1) suffered an injury in fact,(2) that is fairly traceable to the challenged conduct ofthe defendant, and (3) that is likely to be redressed bya favorable judicial decision.”).

Even the Bureau did not contend—nor couldit—that Cordray and his Bureau attorneys sought “aremedy for a personal and tangible harm,”Hollingsworth, 133 S. Ct. at 2661. Shorn of executiveauthorization, they lacked standing to seek the mere“vindication of the rule of law.” Steel Co., 523 U.S. at106; see also Lance v. Coffman, 549 U.S. 437, 439(2007) (per curiam) (“Our refusal to serve as a forumfor generalized grievances has a lengthy pedigree.”);Lujan v. Defs. of Wildlife, 504 U.S. 555, 573-74 (1992)(a plaintiff “seeking relief that no more directly andtangibly benefits him than it does the public at large—does not state an Article III case or controversy”). Nonetheless, without even addressing how a Bureauwith no valid executive power has standing to bring acivil enforcement action in federal court, the NinthCircuit sidestepped Petitioner’s Article III standing

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challenge, perfunctorily observing that CFPB is “partof the Executive Branch.” Pet. App. 11a.

It is true that when Cordray was ultimatelyconfirmed by the Senate as CFPB’s Director in July2013, he constitutionally could have brought anenforcement action against petitioner at that time. Rather than do so, however, he opted to “ratify” allactions he took during the 18 months preceding hisconfirmation. But because Article III standing ismeasured at the time “when the suit is filed,” Davis v.FEC, 554 U.S. 724, 734 (2008), such a jurisdictionaldefect cannot be cured by a change in circumstancesafter the fact. See also Mollan v. Torrance, 9 U.S. (1Wheat) 537, 539 (1824) (“[T]he jurisdiction of the courtdepends upon the state of things at the time of theaction brought.”).

By resolving the standing issue in a manner thatconflicts with these principles, the Ninth Circuit’sholding affirmatively frustrates and erodes this Court’sprecedents. The decision is clearly and directly at oddswith the myriad decisions discussed above that hold,without exception, that a plaintiff seeking to invoke thejurisdiction of the federal courts must have standingboth at the time an action is filed and “throughout allstages of litigation.” Hollingsworth, 133 S. Ct. at 2661. Review is therefore warranted to vindicate theConstitution’s case-or-controversy requirement underArticle III and this Court’s standing precedents.

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B. None of the Authorities Cited by thePanel Majority Support theErroneous Holding Below

In rejecting Petitioner’s Article III standingchallenge, the panel majority relied on precedents itclaimed demonstrate that all Article II defects are“nonjurisdictional.” Pet App. 12a. But not one of thecases cited by the Ninth Circuit supports that tenuousproposition. The panel’s principal authority, UnitedStates v. Providence Journal Co., 485 U.S. 693 (1988),actually undermines that very contention. In that case,a special prosecutor filed a petition for certiorari“without the authorization of the Solicitor General, andwithout authorization to appear on behalf of the UnitedStates.” 485 U.S. at 708. Although the “United States”was named as the petitioner in the suit, this Court didnot embrace the novel rule the panel majorityannounced in this case, i.e., that “it is the ExecutiveBranch, not any particular individual” that justifies theexercise of federal court jurisdiction. Pet. App. 8a. Instead, the Court dismissed the petition, concludingthat “[a]bsent a proper representative of theGovernment” as a litigant in the suit, “jurisdiction islacking.” 485 U.S. at 708. So too here, becauseCordray and his designees engaged in litigation“without authorization to appear on behalf of theUnited States,” the district court lacked jurisdiction.

In fact, none of the cases cited by the panelexplain how a Bureau with no lawful executive powerhas Article III standing to bring a civil enforcementaction. Freytag v. Commissioner, 501 U.S. 868 (1991),for example, merely held that a statute authorizing theChief Judge of the U.S. Tax Court to assign any

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proceeding to a special trial judge did not violate theAppointments Clause. There was no dispute in Freytagthat the petitioners challenging the constitutionality ofthe judicial officer who ordered them to pay additionaltaxes to the federal government had sufficient standingto do so. More fundamentally, as Freytag makes clear,the U.S. Tax Court is wholly a creation of Congressunder Article I, id. at 870, and so is not even subject tothe stringent “case-or-controversy” requirement ofArticle III at issue in this case.

Nor did Buckley, also cited by the panel majority,hold that an Article III court has jurisdiction over acivil enforcement action brought by someone who lackslawful executive authority. To the contrary, Buckleyheld that the FEC’s Appointments Clause defect didnot “affect the validity of the Commission’sadministrative actions and determinations,” which thisCourt accorded “de facto validity.” 424 U.S. at 142(emphasis added). Most relevant here, at the time theCourt decided Buckley, the FEC had never exercised itsenforcement authority. Ibid. at 115 n.157; see alsoBuckley v. Valeo, 519 F.2d 821, 893 (D.C. Cir. 1975)(“No party has been joined in a civil enforcement actioninitiated by the Commission.”). Buckley thus offers nosupport for the Ninth Circuit’s conclusion that ArticleIII standing was satisfied during CFPB’s unauthorizedenforcement proceeding in the district court below.

In sum, because CFPB had no executiveauthority to vindicate the public interest in federalcourt, it lacked standing to bring an enforcement actionagainst petitioner. Rather than squarely addressCFPB’s standing deficiency, the Ninth Circuit’s opinionelides the question of standing by citing authorities

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that do not even address the standing requirements ofArticle III.

C. Because Permitting Federal Courtsto Adjudicate Suits Brought byPlaintiffs Who Lack Article IIIStanding Violates the Separation ofPowers, Review Is Warranted

The Framers’ reliance on Article III standing tolimit judicial review reflects their view that “neitherdepartment may invade the province of the other andneither may control, direct, or restrain the action of theother.” Frothingham v. Mellon, 262 U.S. 447, 488(1923). Article III’s narrow limits on federaljurisdiction are “founded in concern about theproper—and properly limited—role of the courts in ademocratic society.” Warth v. Seldin, 422 U.S. 490, 498(1975). Accordingly, “federal courts may exercise poweronly ‘in the last resort’ ... and only when adjudicationis ‘consistent with a system of separated powers and[the dispute is one] traditionally thought to be capableof resolution through the judicial process.’” Allen, 468U.S. at 752 (citations omitted).

Because the standing requirements of Article IIIlimit the accumulation of power by the Judicial Branch,this Court has consistently rejected assertions thatfederal courts may entertain suits under circumstanceswhere those requirements are not satisfied. Although“[v]iolations of the separation-of- powers principle havebeen uncommon because each branch has traditionallyrespected the prerogatives of the other two,” Metro.Wash. Airports Auth. v. Citizens for Abatement ofAircraft Noise, Inc., 501 U.S. 252, 272 (1991), this

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Court has not hesitated to enforce adherence to thatprinciple when necessary. See, e.g., Morrison v. Olson,487 U.S. 654, 693 (1988) (“Time and again we havereaffirmed the importance in our constitutional schemeof the separation of governmental powers into the threecoordinate branches.”).

Article III’s case-or-controversy requirement is“a crucial and inseparable element” of separation-of-powers principles embedded in the Constitution,“which successively describes where the legislative,executive and judicial powers, respectively, shallreside.” Antonin Scalia, The Doctrine of Standing asan Essential Element of the Separation of Powers, 17Suffolk U. L. Rev. 881, 881 (1983). It is the standingrequirement that “makes possible the gradualclarification of the law through judicial application.”Allen, 468 U.S. at 752; DaimlerChrysler Corp. v. Cuno,547 U.S. 332, 341 (2006) (“This Court has recognizedthat the case-or-controversy limitation is crucial inmaintaining the tripartite allocation of power set forthin the Constitution.”) (internal quotations omitted).

The Ninth Circuit’s holding is thus sharply atodds with this Court’s historic understanding of ArticleIII. Failure to enforce Article III’s core standingrequirements invariably leads to “an over-judicialization of the processes of self-governance.”Scalia, supra, at 881. Unfortunately, the NinthCircuit’s decision in this case, left unchecked, willseverely erode the Constitution’s carefully balancedseparation of powers.

Further, it is well settled that one branch ofgovernment cannot consent to another branch’s

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encroachment on its constitutional role. Indeed, theConstitution’s division of powers among the threebranches of government is violated any time onebranch invades the territory of another, “whether ornot the encroached-upon branch approves theencroachment.” New York v. United States, 505 U.S.144, 182 (1992) (“The constitutional authority ofCongress cannot be expanded by the ‘consent’ of thegovernmental unit whose domain is therebynarrowed.”).

Ultimately, the federal courts’ arrogation ofpower comes at the expense of the people and theirelected representatives. By preventing an unelected,life-tenured judiciary from exercising executive orlegislative powers—which are the exclusive province ofthe politically accountable branches ofgovernment—Article III’s case-or-controversyrequirement cabins the federal judiciary to its historicadjudicatory role:

In limiting the judicial power to “Cases”and “Controversies,” Article III of theConstitution restricts it to the traditionalrole of Anglo-American courts, which is toredress or prevent actual or imminentlythreatened injury to persons caused byprivate or official violation of law. Exceptwhen necessary in the execution of thatfunction, courts have no charter to reviewand revise legislative and executiveaction.

Summers v. Earth Island Inst., 555 U.S. 488, 492(2009). Article III standing thus “ensures that the

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courts will more properly remain concerned with tasksthat are, in Madison’s words, ‘of a Judiciary nature.’” John G. Roberts, Jr., Article III Limits on StatutoryStanding, 42 Duke L.J. 1219, 1232 (1993) (citationomitted).

By authorizing federal courts to entertain suitsunder federal statutes at the behest of individuals whohave no authority to enforce them and who suffered noconcrete injury caused by any alleged statutoryviolation, the decision below constitutes a significantrelaxation of Article III’s standing requirements andthus erodes the separation of powers.

III. THE QUESTIONS PRESENTED ARE IMPORTANTAND THIS CASE PROVIDES AN IDEAL VEHICLETO ANSWER THEM

The Ninth Circuit’s decision does more thansimply contravene this Court’s ratification andstanding precedents and thereby underminelimitations that Article II imposes on the President’sappointment powers and that Article III imposes onfederal courts. It also raises important questionsabout the appropriate judicial response whengovernment officials are shown to have violatedseparation-of-powers principles.

The importance of the separation-of-powersissues raised by this case is highlighted by the D.C.Circuit’s recent PHH decision. The appeals court heldthat CFPB was “unconstitutionally structured becauseit is an independent agency headed by a singleDirector.” PHH, 2016 WL 5898801 at *26. It remediedthe constitutional deficiency going forward by severing

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the “for cause” removal provision from the CFPA,thereby transforming CFPB from an independentagency into an executive agency whose Director isimmediately answerable to the President. Id. at *28. But the appeals court left unanswered a crucialquestion that is bound to arise in scores if not hundredsof cases: what impact will the PHH decision have onthe validity of the innumerable CFPB actionsundertaken in the years prior to the Bureau’s October2016 restructuring?

CFPB apparently argues that it should bepermitted to retroactively ratify all such actions, just asit argued in this case that Cordray (after his Senateconfirmation) effectively ratified all CFPB actionstaken during the 18 months in which he (mistakenly)asserted authority pursuant to his recess appointment. By granting review in this case, the Court can providedesperately needed guidance to the many courts thatalready face challenges to such ratification claims.

This petition provides an exceptionally goodvehicle for resolving the ratification issues over whichthe federal appeals courts are divided. The case turnssolely on questions of law. While Gordon disputes theaccuracy of the charges raised against him by CFPB, heraises none of those factual issues in this petition. CFPB does not dispute the essential premise givingrise to the petition: Cordray’s January 4, 2012 recessappointment was invalid because the Senate was not inrecess on that day. The only issues in dispute are legal:whether and under what circumstances may CFPBratify actions rendered ultra vires by the invalidity ofthe recess appointment, as well as court decisionsobtained as a result of those actions? Accordingly,

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there is no danger that a disputed factual record couldmuddle efforts by the Court to announce clear rulesgoverning ratification and standing doctrine.

It is undisputed that Gordon raised hisconstitutional challenge to the CFPB enforcementaction at all stages of the proceedings and that theNinth Circuit directly ruled on the issue. Any disputeregarding whether Gordon adequately raised hischallenge in the district court was resolved in his favorby the Ninth Circuit, which held that Gordon had“undoubtedly” “properly raised” the issue by arguing inthe district court that “Cordray was invalidly appointedunder the Appointments Clause and, as a result, theenforcement action against Cordray was invalid.” Pet.App. 15a n.5. Although Gordon did not raise achallenge to subject-matter jurisdiction until his appealreached the appeals court, jurisdictional issues are notsubject to waiver. Moreover, the lengthy majority anddissenting opinions focused to a significant degree onthe jurisdictional issue, thereby providing this Courtwith a fully developed record on which to address theissue.

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CONCLUSION

The petition for a writ of certiorari should begranted.

Respectfully submitted,

Richard A. Samp (Counsel of Record)Cory L. AndrewsMark S. ChenowethWashington Legal Foundation2009 Massachusetts Avenue, NWWashington, DC 20036(202) 588-0302rsamp@wlf.org

Dated: November 17, 2016