The dispute over the CFPB acting director designation has moved into federal court.

In yesterday’s post, we explained why the President’s designation of Mick Mulvaney as acting CFPB director complies with the law, and why Mr. Mulvaney—rather than CFPB deputy director Leandra English—qualifies as the lawful acting director.

On the evening of November 26, Ms. English filed a lawsuit against President Trump and Mr. Mulvaney seeking a declaration that she is the lawful acting director.  (Note that Ms. English is represented by private counsel, not by CFPB lawyers.)

Meanwhile, the Justice Department’s Office of Legal Counsel on November 25 issued an opinion supporting the President’s designation of Mr. Mulvaney as acting director.  Among other things, the opinion points out that the Federal Vacancies Reform Act—the statute invoked by President Trump—expressly does not apply to a number of specified positions (in 5 U.S.C. § 3349c), but that the CFPB director is not included in that list.

Finally, the CFPB’s general counsel agrees with the Justice Department’s analysis: she issued a memorandum on November 25—directed to “The Senior Leadership Team, CFPB”— concluding that “as General Counsel for the Bureau, it is my legal opinion that the President possesses the authority to designate an Acting Director for the Bureau under the [Federal Vacancies Reform Act], notwithstanding” the provision of the Dodd-Frank Act designating the deputy director as acting director in the event of the director’s resignation. That opinion appears to undermine Ms. English’s legal position.

Legal jousting to one side, what is going to happen at the CFPB on the morning of November 27?

Will Mr. Mulvaney and Ms. English each purport to direct the Bureau’s activities? Whose directives will be treated as binding by the Bureau’s staff?

No one knows for sure.

And it is likely to take some time for the situation to resolve itself.

Ms. English’s lawsuit seems to suffer from a fatal flaw: it does not reference a cause of action—a statute or common law principle conferring the right to seek relief in court. Without a cause of action, the lawsuit is likely to be dismissed.

The Justice Department appears to have the right to institute a quo warranto action in court to resolve the dispute, but it is not clear when or even whether the Department will take that step.

The bottom line: until this legal dispute is resolved, any action taken by the Bureau might be subject to challenge.

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