Opposition Brief — National Collegiate Master Student Loan Trust, et al., Petitioners v. Consumer Financial Protection Bureau, et al.

No. 24-185

In the Supreme Court of the United States

NATIONAL COLLEGIATE MASTER STUDENT

LOAN TRUST, ET AL., PETITIONERS

v.

CONSUMER FINANCIAL PROTECTION BUREAU, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENT IN OPPOSITION

SETH FROTMAN

General Counsel

STEVEN Y. BRESSLER

Deputy General Counsel

CHRISTOPHER DEAL

Assistant General Counsel

LAUREN GORODETSKY

KEVIN E. FRIEDL

Attorneys

Consumer Financial

Protection Bureau

Washington, D.C. 20552

ELIZABETH B. PRELOGAR

Solicitor General

Counsel of Record

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217

QUESTIONS PRESENTED

1. Whether the constitutional defect in the statutory

provision restricting the President’s power to remove

the Director of the Consumer Financial Protection Bureau (CFPB) requires dismissal of a civil enforcement

action that was initially filed while the removal provision was in effect, where petitioners have not identified

any causal link between the removal provision and the

enforcement action, and where the CFPB has formally

continued the action under multiple Directors who are

fully removable by the President, including by filing the

operative complaint.

2. Whether trusts that contract with third parties to

service student loans as a necessary part of the trusts’

operation, and that arrange for third parties to file

thousands of debt-collection suits in the trusts’ name,

“engage[] in offering or providing a consumer financial

product or service,” 12 U.S.C. 5481(6)(A), and therefore

are “covered person[s]” under the Dodd-Frank Wall

Street Reform and Consumer Protection Act, 12 U.S.C.

5481(6)(A); see 12 U.S.C. 5531(a).

(I)

TABLE OF CONTENTS

Page

Opinions below .............................................................................. 1

Jurisdiction .................................................................................... 1

Statement ...................................................................................... 1

A. Legal background ............................................................ 1

B. Factual and procedural history ...................................... 3

Argument....................................................................................... 9

Conclusion ................................................................................... 23

TABLE OF AUTHORITIES

Cases:

Babb v. Wilkie, 589 U.S. 399 (2020) ............................... 12, 14

Bhatti v. FHFA:

15 F.4th 848 (8th Cir. 2021) ............................................ 15

97 F.4th 556 (8th Cir. 2024) ...................................... 14, 15

Board of Comm’rs of Leavenworth Cnty. v. Sellew,

99 U.S. 624 (1878) ............................................................... 18

CFPB v. Nationwide Biweekly Admin., Inc.,

No. 18-15431, 2023 WL 566112

(9th Cir. Jan. 27, 2023) ....................................................... 15

Calcutt v. FDIC, 37 F.4th 293 (6th Cir. 2022),

rev’d on other grounds, 598 U.S. 623 (2023) .................... 15

Collins v. Yellen, 594 U.S. 220 (2021) ..................... 5, 9-14, 16

Decker Coal Co. v. Pehringer,

8 F.4th 1123 (9th Cir. 2021) ............................................... 15

Hamilton-Brown Shoe Co. v. Wolf Bros. & Co.,

240 U.S. 251 (1916).............................................................. 22

Kaufmann v. Kijakazi, 32 F.4th 843 (9th Cir. 2022) ......... 14

Major League Baseball Players Ass’n v. Garvey,

532 U.S. 504 (2001).............................................................. 22

Milner v. Department of Navy, 562 U.S. 562 (2011) ......... 21

(III)

IV

Cases—Continued:

Page

National Collegiate Student Loan Trusts 2003-1,

2004-1, 2004-2, 2005-1, 2005-2, 2005-3, In re,

971 F.3d 433 (3d Cir. 2020) ................................................ 19

Office of U.S. Tr. v. John Q. Hammons Fall 2006,

LLC, 144 S. Ct. 1588 (2024)................................................ 13

Paroline v. United States, 572 U.S. 434 (2014) .................. 12

Rop v. FHFA, 50 F.4th 562 (6th Cir. 2022),

cert. denied, 143 S. Ct. 2608 (2023) ............................. 14, 15

Seila Law LLC v. CFPB, 591 U.S. 197 (2020) ............ 2, 4, 13

Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022) ... 8, 17

Transworld Systems, Inc., 2017-CFPB-18,

2017 WL 7520640 (C.F.P.B. Sept. 18, 2017) ....................... 4

Statutes and rule:

Dodd-Frank Wall Street Reform and Consumer

Protection Act, Pub. L. No. 111-203,

124 Stat. 1376 ........................................................................ 1

Federal Arbitration Act, ch. 213, 43 Stat. 883 .................... 17

Fair Debt Collection Practices Act,

15 U.S.C. 1692 et seq.:

15 U.S.C. 1692e ................................................................ 22

15 U.S.C. 1692f ................................................................ 22

Federal Trade Commission Act,

15 U.S.C. 41 et seq.:

15 U.S.C. 45(a)(1)............................................................. 22

12 U.S.C. 5481(5) ..................................................................... 2

12 U.S.C. 5481(6) ............................................................... 6, 17

12 U.S.C. 5481(6)(A) ................................................................ 2

12 U.S.C. 5481(15)(A)(i) .......................................................... 2

12 U.S.C. 5481(15)(A)(vii)(I) ................................................. 20

12 U.S.C. 5481(19) ................................................................. 19

12 U.S.C. 5481(x) ..................................................................... 2

V

Statutes and rule—Continued:

Page

12 U.S.C. 5491(a) ..................................................................... 2

12 U.S.C. 5491(b)(1) ................................................................. 2

12 U.S.C. 5491(b)(2) ................................................................. 2

12 U.S.C. 5491(c)(3) ................................................................. 2

12 U.S.C. 5517(a)(2)(A)(i) ...................................................... 20

12 U.S.C. 5517(d)(2)(C) ......................................................... 20

12 U.S.C. 5536(a)(1)(B) ........................................................... 2

12 U.S.C. 5564(a) ..................................................................... 2

28 U.S.C. 1292(b) ..................................................................... 7

12 Del. C. Ann. tit. 12, § 3801 et seq. (West 2024) ................. 3

Sup. Ct. R. 10 ......................................................................... 21

Miscellaneous:

Black’s Law Dictionary (10th ed. 2009) ............................. 17

Elizabeth Dexheimer, Trump Said to Weigh

Political Consequences of Firing CFPB Chief,

BNA’s Bankr. L. Rep. (Mar. 16, 2017) ............................. 11

70 Fed. Reg. 1506 (Jan. 7, 2005) ........................................... 20

Stephen M. Shapiro et al., Supreme Court Practice

(10th ed. 2013) ..................................................................... 22

In the Supreme Court of the United States

No. 24-185

NATIONAL COLLEGIATE MASTER STUDENT

LOAN TRUST, ET AL., PETITIONERS

v.

CONSUMER FINANCIAL PROTECTION BUREAU, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENT IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-36a)

is reported at 96 F.4th 599. The opinion of the district

court (Pet. App. 37a-47a) is reported at 575 F. Supp. 3d

505.

JURISDICTION

The judgment of the court of appeals was entered on

March 19, 2024. A petition for rehearing was denied on

May 21, 2024 (Pet. App. 48a-50a). The petition for a writ

of certiorari was filed on August 16, 2024. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

A. Legal Background

1. In 2010, Congress enacted the Dodd-Frank Wall

Street Reform and Consumer Protection Act (DoddFrank Act or Act), Pub. L. No. 111-203, 124 Stat. 1376

(1)

2

(2010). As part of Congress’s effort to reform the

financial-services industry in the wake of the 2008 financial crisis, the Act established the CFPB, 12 U.S.C.

5491(a), as an agency headed by a Director who is appointed by the President with the advice and consent of

the Senate. 12 U.S.C. 5491(b)(1) and (2). The Act provided that, before the end of the Director’s five-year

term, the Director may be removed only for “inefficiency, neglect of duty, or malfeasance in office.” 12

U.S.C. 5491(c)(3).

As relevant here, the Act prohibits any “covered

person” or “service provider” from “engag[ing] in any

unfair, deceptive, or abusive act or practice.” 12 U.S.C.

5536(a)(1)(B). The “covered persons” subject to this

prohibition include “any person that engages in offering

or providing a consumer financial product or service,”

such as collecting debt or servicing loans. 12 U.S.C.

5481(5), (6)(A), (15)(A)(i) and (x). The Act authorizes

the CFPB to bring a civil action in court to enforce this

prohibition. 12 U.S.C. 5564(a).

2. In 2020, this Court held that the statutory limit on

the President’s authority to remove the CFPB Director

“violates the separation of powers,” and that the Director “must be removable by the President at will.” Seila

Law LLC v. CFPB, 591 U.S. 197, 205 (2020). That holding was consistent with the views of the Executive

Branch, which had argued in litigation that the forcause removal limitation was unconstitutional. The government first took that position in a brief filed in March

2017, months before the CFPB commenced this enforcement action. See U.S. Amicus Br. at 5-23, PHH

Corp. v. CFPB, No. 15-1177 (D.C. Cir.) (Mar. 17, 2017);

see also Gov’t Br. at 7-38, Seila Law, supra (No. 19-7)

(Dec. 9, 2019).

3

B. Factual And Procedural History

1. Petitioners are fifteen trusts established for the

purposes of acquiring a pool of student loans, issuing

securities backed by those loans, and servicing and collecting on those loans. See Pet. App. 3a-4a, 38a; see also

12 Del. C. Ann. tit. 12, § 3801 et seq. (West 2024). Over

several years, petitioners acquired more than 800,000

private student loans and later brought tens of thousands of debt-collection lawsuits against borrowers.

Pet. App. 38a-39a; see C.A. App. 388, 391. Because the

value of the securities sold by petitioners depends on

how many students default on their loan payments, petitioners “have a powerful incentive to ensure that students do not miss loan payments.” Pet. App. 39a; see

id. at 38a.

Petitioners’ governing documents state that the purpose of each petitioner “is to engage in” activities that

included “acquir[ing] a pool of Student Loans” and

providing the “servicing of the Student Loans.” Pet.

App. 24a-25a; C.A. App 107. Those documents also instruct petitioners to “engage in those activities * * *

that are necessary, suitable or convenient to accomplish

the foregoing.” Pet. App. 25a (emphasis omitted); C.A.

App. 107. Petitioners have no employees and therefore

“collect debt and service the loans through third parties.” Pet. App. 39a. To bring debt-collection lawsuits

on past-due and defaulted student loans, petitioners

contracted with a “special servicer” who, “in turn, entered into agreements with subservicers.” Ibid. (citation and internal quotation marks omitted).

In September 2017—after the Executive Branch had

taken the position that the CFPB Director is removable

4

at will, but before this Court so held in Seila Law, supra, see p. 2, supra—the CFPB brought suit against petitioners. Then led by Director Richard Cordray, the

CFPB alleged that petitioners had engaged in unfair

and deceptive practices in connection with collecting

debts, including by filing debt-collection lawsuits while

lacking key evidence. Pet. App. 38a-39a. In November

2017, Acting Director Mick Mulvaney—who was appointed and removable at will by President Trump—

replaced Director Cordray. The CFPB continued to litigate this action.1

2. After this Court decided Seila Law, supra, petitioners moved to dismiss on various grounds. While

that motion was pending, the CFPB notified the district

court that then-serving Director Kathleen Kraninger—

who was appointed and removable at will by President

Trump—had considered and expressly ratified the enforcement action against petitioners. C.A. App. 318.

The district court granted petitioners’ motion to dismiss. Pet. App. 11a. The court held that Director Kraninger’s ratification of the CFPB’s original complaint

was not effective because that ratification had occurred

after the applicable statute of limitations had expired.

Ibid. The court took the view that equitable tolling did

not apply. Ibid. The court dismissed the action but allowed the CFPB to file an amended complaint. Ibid.

The CFPB also took action against one of petitioners’ servicers

for its role in the illegal collection practices. C.A. App. 80-81. In

2017, the CFPB issued a consent order against the servicer, requiring it to pay a civil penalty and to comply with certain conduct provisions. See Transworld Systems, Inc., 2017-CFPB-18, 2017 WL

7520640 (Sept. 18, 2017).

1

5

3. a. The CFPB filed an amended complaint in 2021

under Acting Director David Uejio, who was appointed

and removable at will by President Biden. Petitioners

again moved to dismiss. Pet. App. 11a.

This Court subsequently issued its decision in Collins v. Yellen, 594 U.S. 220 (2021), which addressed the

appropriate relief for parties who challenge an agency

action that was taken before an unconstitutional removal restriction has been invalidated. See id. at 257260. The Court rejected the argument that the action

“would be void unless lawfully ratified.” Id. at 259. So

long as the officer in question was “properly appointed,”

the Court explained, “there is no reason to regard” the

officer’s actions as “void ab initio.” Id. at 257-258 (emphasis omitted).

The Collins Court observed that “an unconstitutional provision is never really part of the body of governing law (because the Constitution automatically displaces any conflicting statutory provision from the moment of the provision’s enactment).” 594 U.S. at 259.

Nonetheless, the Court explained that “it is still possible for an unconstitutional provision to inflict compensable harm.” Ibid. The challengers in Collins asserted

that “[w]ere it not for that provision,” the President

“might have replaced one of the confirmed Directors

who supervised the [challenged agency action], or a confirmed Director might have altered his behavior in a

way that would have benefited the shareholders”; while

the government “dispute[d] the possibility that the unconstitutional removal restriction caused any such

harm.” Id. at 260. The Court left those arguments to

be “resolved in the first instance by the lower courts.”

Ibid.

6

b. This case was transferred to Judge Bibas, sitting

by designation in the district court. Judge Bibas requested supplemental briefing on the effect of the removal provision, and both parties submitted briefs that

addressed, among other things, the decision in Collins.

C.A. App. 423-443. At this point in the litigation, the

CFPB was headed by its fifth director, Director Rohit

Chopra, who was appointed and removable at will by

President Biden.

The district court denied petitioners’ motion to dismiss. Pet. App. 37a-47a. First, the court held that, under Collins, it was unnecessary for the CFPB to ratify

this action if petitioners could not show “that the removal provision harmed [them].” Id. at 42a. The court

determined that petitioners could not make the necessary showing since “[t]his suit would have been filed

even if the director had been under presidential control.” Ibid. The court viewed the fact that this case “has

been litigated by five directors of the CFPB, four of

whom were removable at will by the President,” and

that “the CFPB did not change its litigation strategy

once the removal protection was eliminated,” as “strong

evidence that this suit would have been brought regardless” of the removal provision. Ibid.

The district court also determined that petitioners

are “covered persons” under the Act because petitioners “engage[] in” the provision of consumer financial

products and services. Pet. App. 44a (quoting 12 U.S.C.

5481(6)); see id. at 44a-45a. The court observed that,

under the ordinary definition of “engage,” a person can

“engage” in an activity even “if he contracts with a third

party to do that activity on his behalf.” Id. at 45a. Applying that definition, the court explained that petitioners had engaged in the “business of collecting debt and

7

servicing loans” by contracting “with the servicers and

subservicers to collect their debt and service their

loans.” Ibid. (internal quotation marks omitted). The

court emphasized that the debt-collection lawsuits that

were the subject of the CFPB’s complaint were “brought

on behalf of the Trusts” and “could have proceeded only

with the Trusts’ involvement” and with “the Trusts’ sayso.” Id. at 45a-46a.

4. The court of appeals accepted the case for interlocutory review and affirmed. Pet. App. 1a-36a; see 28

U.S.C. 1292(b).

a. The court of appeals determined that “the CFPB

did not need to ratify this action before the statute of

limitations had run.” Pet. App. 36a. The court explained

that, under this Court’s decision in Collins, “the heart

of the issue is whether the insulation provision * * *

caused harm.” Id. at 30a. Consistent with “the approaches [its] sister circuits have taken in interpreting

Collins,” ibid., the court of appeals reasoned that petitioners must provide “something more” than “a mere

allegation that the unconstitutional provision inherently

caused harm,” id. at 32a-33a. The court recognized that

petitioners might “be entitled to some type of relief ” if

they could show “any link whatsoever between the removal provision and [c]laimant’s case.” Id. at 33a (citation omitted). But the court held that it “cannot find

such a link.” Ibid.

To the contrary, the court of appeals agreed with the

district court that “there is strong evidence that this

suit would have been brought regardless of a president’s authority to remove because the CFPB’s litigation strategy has been consistent across five directors,

four of whom were removable at will.” Pet. App. 33a

(citation and internal quotation marks omitted). The

8

court declined to adopt petitioners’ view that “an impermissible insulation provision * * * on its own, cause[s]

harm,” finding that argument to be “directly counter to

the Supreme Court’s holding in Collins” and to “guidance provided by * * * sister circuits.” Id. at 34a-35a.

The court further explained that a remand was unnecessary because “[t]he record is * * * clear here”—i.e.,

“[t]here is no indication that the unconstitutional limitation on the President’s authority harmed the Trusts.”

Id. at 36a.

b. The court of appeals also held that petitioners are

“covered persons subject to the CFPA’s enforcement

authority because they ‘engage’ in the requisite activities.” Pet. App. 36a. Based on dictionary definitions

and on this Court’s interpretation of the same term in

Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022),

the court determined that the phrase “engage in” means

to be “ ‘occupied, employed, or involved in something’ ”

or to “embark on” or “take part in” an enterprise or activity. Pet. App. 23a-24a (brackets and internal quotation marks omitted) (quoting Saxon, 596 U.S. at 463);

see id. at 21a-24a. Under that definition, the court determined that petitioners “engage in both student loan

servicing and debt collection.” Id. at 28a. The court

emphasized that petitioners’ own governing documents

state that each petitioner’s purpose is to “engage in

both student loan servicing and debt collection.” Id. at

28a; see id. at 24a-25a. The court further observed that

petitioners were involved in the relevant activities because petitioners had entered into agreements with

third parties to service the loans as a “necessary part of

[petitioners’] business,” and to pursue collection suits

brought in petitioners’ own names to collect on debts

9

petitioners claimed to hold. Id. at 27a; see id. at 23a28a.

5. The court of appeals denied a petition for rehearing. Pet. App. 48a-50a.

ARGUMENT

Petitioners contend that (1) this action must be dismissed because the CFPB initiated it under a Director

who was purportedly insulated from removal, and (2)

petitioners did not “engage in” the offering of consumer

financial products or services because petitioners contracted with third parties to litigate petitioners’ debtcollection suits. The courts below correctly rejected petitioners’ arguments, and the court of appeals’ holdings

on those issues do not conflict with any decision of another court of appeals or otherwise satisfy this Court’s

traditional criteria for review. The petition for a writ of

certiorari should be denied.

1. a. Petitioners argue (Pet. 12-21) that this suit

should be dismissed because the suit was initiated at a

time when the statutory restriction on the President’s

ability to remove Director Cordray had not yet been declared invalid. The court of appeals correctly rejected

that argument. Pet. App. 29a-36a. This Court held in

Collins v. Yellen, 594 U.S. 220 (2021), that, if an officer

was “properly appointed,” “there is no reason to regard” the officer’s actions as “void ab initio.” Id. at 257258 (emphasis omitted). Instead, a plaintiff who seeks

relief from a past agency action, based on a court’s invalidation of an improper removal restriction, must

show that the unconstitutional provision “inflict[ed] compensable harm”—that is, that the President’s inability

to remove the relevant officers caused the agency to do

something to the plaintiff that it would not otherwise

10

have done. Id. at 259; see id. at 260 (asking whether the

statutory provision “cause[d] harm”); see also id. at 275

(Kagan, J., concurring in part and concurring in the

judgment).

The court of appeals correctly applied that standard.

The court explained that, under Collins, there “must be

something more” than “a mere allegation that the unconstitutional provision inherently caused [petitioners]

harm.” Pet. App. 32a-33a. The court determined that

petitioners had failed to establish “any link whatsoever

between the removal provision and [this] case.” Id. at

33a (citation omitted). The court further observed that

there was “strong evidence that this suit would have

been brought regardless of a president’s authority to

remove because the CFPB’s litigation strategy has been

consistent across five directors, four of whom were removable at will.” Ibid. (citation omitted). In these circumstances, the court concluded, “[t]here is no indication that the unconstitutional limitation on the President’s authority harmed the Trusts.” Id. at 36a.

Petitioners contend that the court of appeals ignored

the “obvious parallel” between this case and the examples the Collins Court gave of ways to demonstrate

harm. Pet. 17; see Pet. 16-17. In Collins, this Court

explained that a party could demonstrate harm from an

unconstitutional removal restriction if “the President

had made a public statement expressing displeasure

with actions taken by a Director and had asserted that

he would remove the Director if the statute did not

stand in the way.” 594 U.S. at 260. But petitioners have

not identified any instance in which a President stated

that he would remove the CFPB’s Director if the statute made the Director removable at will. To the contrary, the materials petitioners cite (Pet. 17) suggest

11

that considerations other than the perceived legality of

the for-cause removal restriction were at play. See, e.g.,

Elizabeth Dexheimer, Trump Said to Weigh Political

Consequences of Firing CFPB Chief, BNA’s Bankr. L.

Rep. (Mar. 16, 2017).

Indeed, at the time the CFPB filed the original complaint in this case, the Executive Branch had already

taken the position that the purported restriction on the

President’s removal power was unconstitutional. See p.

2, supra. And petitioners have not identified any presidential statement expressing displeasure with this lawsuit. To the contrary, after Director Cordray left office,

President Trump’s appointees to replace him—Acting

Director Mulvaney and Director Kraninger—continued

to purse this litigation and expressly ratified the decision to continue. See p. 4, supra. Accordingly, there is

simply no basis to think that, absent the statutory removal restriction, Director Cordray “might have altered his behavior in a way that would have benefited”

petitioners or that the President would have replaced

him with a Director who would have desisted from this

case. Collins, 594 U.S. at 260.

Petitioners next argue that the court of appeals created a “but-for standard” not found in the Collins Court’s

opinion. Pet. 18. That is incorrect. In Collins this

Court held that an unconstitutional removal restriction

will provide grounds for vacating agency action only if

the restriction actually “inflict[s] compensable harm.”

594 U.S. at 259; see id. at 260 (describing circumstances

in which “the statutory provision would * * * cause

harm”). Accordingly, a causal link to a challenger’s harm

is required, and “[t]he traditional way to prove that one

event was a factual cause of another is to show that the

latter would not have occurred ‘but for’ the former.”

12

Paroline v. United States, 572 U.S. 434, 449-450 (2014).

Moreover, “but-for causation” is particularly “important in determining the appropriate remedy.” Babb v.

Wilkie, 589 U.S. 399, 413 (2020). For those reasons, asking whether the removal provision was the but-for cause

of this lawsuit is an appropriate way to determine whether the provision inflicted harm under Collins.

In any event, the court of appeals did not unambiguously require but-for causation. The court explained

that petitioners “may be entitled to some type of relief ”

if they could show “any link whatsoever” between the

removal provision and petitioners’ claim. Pet. App. 33a

(citation omitted). It further explained that petitioners

had not demonstrated such a link, either by establishing

that the CFPB would not have “taken this action but for

the President’s inability to remove the Director,” or by

linking the removal provision to their harm in another

manner. Ibid. The court of appeals therefore found “no

indication” at all that the unconstitutional limitation had

“harmed [petitioners].” Id. at 36a.2

Petitioners also fault the court of appeals for citing Justice Kagan’s concurring opinion in Collins, which stated that a party is entitled to relief based on an unconstitutional removal restriction

“only when the President’s inability to fire an agency head affected

the complained-of decision.” Pet. App. 14a (quoting Collins, 594

U.S. at 274 (Kagan, J., concurring in part and concurring in the

judgment)). But that opinion was describing the remedial approach

adopted by the Court, while expressing the concurring Justices’

“agree[ment]” with that approach. Collins, 594 U.S. at 274 (Kagan,

J., concurring in part and concurring in the judgment). In all events,

petitioners have not explained how any daylight between Justice

Kagan’s description and the Court’s formulation of “inflict[ing] com2

13

Finally, petitioners express concern that, given the

difficulty of showing “that the agency would not have

initiated the particular action at issue if the officer had

been properly removable,” the court of appeals’ approach provides “only an illusory promise of relief.”

Pet. 18-19. But petitioners ignore the significant relief

that the Court’s ruling in Seila Law LLC v. CFPB, 591

U.S. 197 (2020), has already provided. As a result of

that decision, the CFPB’s pursuit of this case “remains

subject to the ongoing supervision and control of the

elected President.” Id. at 224; see Office of U.S. Tr. v.

John Q. Hammons Fall 2006, LLC, 144 S. Ct. 1588, 1600

(2024) (explaining that a prospective remedy “cures the

constitutional violation,” and declining to provide challengers retrospective relief).

Under Collins, moreover, additional remedies remain available to parties who actually experience harm

caused by an unconstitutional provision—e.g., because

a Director who was removable at will “might have altered his behavior in a way that would have benefited

[them].” 594 U.S. at 260. But where (as here) a party

does not allege—let alone demonstrate—any causal link

between an invalid removal provision and the complained-of agency action, there is no harm to remedy.

See, e.g., id. at 261, 271 (Thomas, J., concurring) (explaining that “[t]he Government does not necessarily

act unlawfully even if a removal restriction is unlawful

in the abstract” and that, “absent an unlawful act, [parties] are not entitled to a remedy”). Awarding remedies

to a party (like petitioners) who was not harmed by a

pensable harm,” id. at 259, could matter given their failure to establish “any link” between the removal restriction and the CFPB action

in this case. Pet. App. 33a (citation omitted).

14

statutory removal restriction would put that party “in a

more favorable position than he or she would have enjoyed absent” the constitutional violation. Babb, 589

U.S. at 413; see Collins, 594 U.S. at 274 (Kagan, J., concurring in part and concurring in the judgment). The

court of appeals rightly rejected such an approach.

b. Contrary to petitioners’ contention (Pet. 13-15),

the decision below does not conflict with any decision of

another court of appeals.

Petitioners assert a conflict with decisions of the

Sixth, Eighth, and Ninth Circuits, which have “ensured

that parties challenging actions by unconstitutionally

insulated officers have at least an opportunity to

demonstrate harm.” Pet. 13. In fact, the decisions that

petitioners invoke hold—consistent with the decision

below—that a party can show harm from an unconstitutional removal restriction only by establishing some

connection between that restriction and the challenged

agency action. Rop v. FHFA, 50 F.4th 562, 576 (6th Cir.

2022) (holding that the determinative question is

“whether the restriction [on the President’s removal authority] actually affected any actions * * * that allegedly harmed shareholders”), cert. denied, 143 S. Ct.

2608 (2023); Bhatti v. FHFA, 97 F.4th 556, 560-562 (8th

Cir. 2024) (holding that the harm claimed “must be connected in some way, or share some nexus with, the president’s inability to remove” the officer); Kaufmann v.

Kijakazi, 32 F.4th 843, 849 (9th Cir. 2022) (explaining

that “[a] party challenging an agency’s past actions

must instead show how the unconstitutional removal

provision actually harmed the party”). Indeed, petitioners acknowledge (Pet. 18 n.1) that the Ninth Circuit

employs the same “substantive standard” for assessing

harm as did the decision below.

15

Petitioners emphasize that the Sixth, Eighth, and

Ninth Circuits have remanded cases to district courts

for further consideration of the harm question, while

the decision below determined that remand was unnecessary. See Pet. 13-14. But those other courts deemed

remand appropriate because Collins had been decided

while each of the cases was pending on appeal, so that

“the district court did not have the benefit of Collins to

guide its analysis.” Rop, 50 F.4th at 576; see CFPB v.

Nationwide Biweekly Admin., Inc., No. 18-15431, 2023

WL 566112, at *1-*2 (9th Cir. Jan. 27, 2023); Bhatti v.

FHFA, 15 F.4th 848, 852 (2021). Here, by contrast, the

district court issued its decision after this Court decided

Collins, and both parties had an opportunity to brief the

issue of harm before both the district court and the

court of appeals.

Subsequent developments in each circuit further illustrate the absence of any conflict on this issue. In determining the proper disposition of Bhatti after the remand proceedings were completed, the Eighth Circuit

ruled that the plaintiff was not entitled to relief because

he had “failed to plausibly plead the requisite connection or causation,” namely that “the harm claimed by

the shareholders” was “connected in some way, or

share[d] some nexus with, the president’s inability to

remove [the official].” 97 F.4th at 561. The Sixth and

Ninth Circuits have similarly declined to remand

where, as here, “[t]he record is sufficiently clear that

the removal protections did not cause harm.” Calcutt v.

FDIC, 37 F.4th 293, 316-317 (6th Cir. 2022), rev’d on

other grounds, 598 U.S. 623 (2023); accord Decker Coal

Co. v. Pehringer, 8 F.4th 1123, 1137-1138 (9th Cir. 2021)

(declining to remand “as the record is clear” that there

was no harm).

16

c. This case is an especially poor vehicle for clarifying the circumstances in which an invalid removal provision “inflict[s] compensable harm” under Collins, 594

U.S. at 259, because petitioners have never identified

any link between the removal provision here and the

CFPB’s pursuit of this case. See Pet. App. 33a. Petitioners assert that their argument is “no hail mary.”

Pet. 21. But they seek dismissal of a civil enforcement

suit that the Bureau has now pursued under the leadership of five successive Directors or Acting Directors appointed by three different Presidents. Four of those officials were removable at will by the President. Pet.

App. 33a; accord id. at 15a, 42a.3

Petitioners do not appear to contend that Director

Cordray would have declined to authorize the September 2017 original complaint if it had been clear at that

time that the Director was removable at will. Rather,

petitioners suggest (e.g., Pet. 17) that the President

might have removed Director Cordray before that date

if the President’s authority to do so had been settled.

But even leaving aside the highly speculative character

of that suggestion (see pp. 10-11, supra), the behavior

of Director Cordray’s successors—under whose leadership the agency continued this suit, ratified the original

complaint in July 2020, and filed an amended complaint

As petitioners recognize, the amended complaint filed in April

2021 is now the “operative complaint” (Pet. 9) and the one that petitioners presently seek to have dismissed. Petitioners do not contend

that the amended complaint, which was filed nearly a year after this

Court decided Seila Law, was itself tainted by the prior uncertainty

about the Director’s removability. Rather, they suggest (Pet. 21)

that, if the original pre-Seila Law complaint is treated as a nullity,

the agency’s subsequent ratification of that complaint and filing of

an amended complaint are barred by the statute of limitations.

3

17

in April 2021—strongly indicates that the CFPB ultimately would have filed a timely complaint against petitioners even if Director Cordray had been removed

before the actual complaint was filed.

2. The court of appeals correctly held that petitioners are “covered persons” under the Act. That holding

is supported by the plain meaning of the phrase “engage

in,” petitioners’ own governing documents, and petitioners’ role in pursuing debt-collection suits against

borrowers and in servicing loans. Petitioners’ contrary

arguments lack merit, and the court of appeals’ resolution of the issue does not warrant this Court’s review.

a. i. The CFPA term “covered person” encompasses

“any person that engages in offering or providing a consumer financial product or service.” 12 U.S.C. 5481(6).

The Bureau’s amended complaint sufficiently alleged

that petitioners “engage” in covered activity and thus

fall within the purview of the Act. See Pet. App. 28a. In

Southwest Airlines Company v. Saxon, 596 U.S. 450

(2022), this Court considered the Federal Arbitration

Act term “engaged in,” explaining that “to be ‘engaged’

in something means to be ‘occupied,’ ‘employed,’ or ‘involved’ in it.” Id. at 457; see id. at 456. That definition

has remained consistent over time. See Black’s Law

Dictionary 646 (10th ed. 2009) (defining “engage” to

mean “take part in”); Pet. App. 23a-24a.

The court of appeals correctly applied that definition

to petitioners’ conduct as alleged in the amended complaint. See Pet. App. 24a-29a. Petitioners’ own Trust

Agreements, executed at petitioners’ formation, state

that the purpose of each petitioner “is to engage in” the

activities of “acquir[ing] a pool of Student Loans,”

providing for the “servicing of the Student Loans,” and

“engag[ing] in those activities * * * that are necessary,

18

suitable or convenient to accomplish the foregoing.” Id.

at 24a-25a. Petitioners were “involved in” the provision

of consumer financial products or services because petitioners entered into agreements that required third

parties to carry out debt-collection activities, including

lawsuits, in order to “perform the duties of the [petitioners].” Id. at 26a (citation and internal quotation marks

omitted); see id. at 26a-27a. Petitioners were also involved in the servicing of loans because petitioners’ administrator entered into servicing agreements that

were a necessary part of petitioners’ business. Id. at

27a. Finally, petitioners were involved in the debt-collection lawsuits because those lawsuits were brought by

parties acting on behalf of and for the benefit of the

trusts, which retain the legal right to the student loans.

Id. at 28a.

ii. Petitioners’ contrary arguments (see Pet. 22-26)

are unavailing.

Petitioners primarily contend that they do not “engage in” the specified activities because that term requires active involvement and petitioners are passive

conduits with no employees or directors. See Pet. 2223. That argument lacks merit. As an initial matter, it

is an elementary principle that artificial persons can

and do act through others. Board of Comm’rs of Leavenworth Cnty. v. Sellew, 99 U.S. 624, 627 (1879) (“As the

corporation can only act through its agents, the courts

will operate upon the agents through the corporation.”).

The CFPA defines “person” to include many types of

artificial persons that necessarily act through their

agents, including both “trust[s]” and “unincorporated”

“association[s],” 12 U.S.C. 5481(19), and petitioners

were required to enter agreements with third parties in

19

order to collect the debt and service the loans as “a necessary part of their business,” Pet. App. 27a. Given the

practical necessity of acting through others, petitioners

cannot explain why contracting with third parties to

carry out petitioners’ core purpose as set out in their

governing documents—including to file and prosecute

debt-collection lawsuits in the trusts’ name and for their

benefit—is insufficiently direct to constitute being “involved in” or “taking part in” those activities.

Petitioners are also wrong to contend that they “do

not do anything.” Pet. App. 22. In seeking this Court’s

review, petitioners have retained counsel and petitioned

for certiorari. Petitioners have also brought thousands

of debt-collection suits against consumers in petitioners’ own names, and they have arranged for others to

assist them in bringing collection suits on their behalf.

C.A. App. 382, 387-388, 391. And petitioners themselves

have long insisted upon their ability to act and to collect

debt in their own name. See, e.g., Trusts’ Opp. to Mot.

to Dismiss at 5, National Collegiate Student Loan

Trust 2004-2 v. Martin, No. 2015-cv-10002 (Ohio Com.

Pl. Mar. 12, 2015), 2015 WL 13285077 (arguing that

“NCSLT * * * has the capacity and standing to file suit

in its own name, and routinely does so throughout the

United States”); In re National Collegiate Student

Loan Trusts 2003-1, 2004-1, 2004-2, 2005-1, 2005-2,

2005-3, 971 F.3d 433, 446 (3d Cir. 2020) (noting NCSLT’s

argument that petitioners “retain the obligation to take

various actions to protect their interests and enforce

the obligations of persons doing business with them”).

20

Petitioners thus can and do take action to engage in the

collection and servicing of debt.4

Petitioners also emphasize that, in drafting the statutory definition of “covered person,” Congress removed

the phrase “directly or indirectly” from an earlier version of the bill that became the CFPA. Pet. 25. But as

the district court noted, “if Congress wanted to allow

enforcement against only those who directly engage in

offering or providing consumer financial services, it

could have said so.” Pet. App. 46a (citing 12 U.S.C.

5481(15)(A)(vii)(I) (carving out certain payment processing by merchants for goods “sold directly by such

person to the consumer”)); see 12 U.S.C. 5517(a)(2)(A)(i)

(limiting CFPB’s authority with respect to certain merchants that “extend[] credit directly to a consumer”); 12

U.S.C. 5517(d)(2)(C) (same with respect to certain accountants that “only extend [] credit directly to a consumer”). Congress could have achieved the result that

petitioners advocate by deleting from the earlier version of the bill only the words “or indirectly”; but Congress deleted the word “directly” as well.

Petitioners also invoke a Securities and Exchange Commission

(SEC) definition of the term “asset-backed securities” to suggest

that petitioners are purely “passive entit[ies]” that cannot act on

their own. Pet. 6-7 (citations omitted). But the SEC’s definition for

purposes of a regulation that governs reporting requirements does

not address whether passive entities are “covered persons” that

“engage in” financial activities for purposes of the CFPA. In any

event, the SEC regulations further underscore that the agreements

with third parties to engage in consumer financial activities are necessary aspects of petitioners’ business. See 70 Fed. Reg. 1506, 1511

(Jan. 7, 2005) (noting that third-party servicers “are generally necessary to collect payments” and to “carry out the other important

functions involved in administering the assets”).

4

21

Congress’s removal of the entire phrase more likely

illustrates that the statute’s final language—“engages

in”—is broad enough to capture both direct and indirect

activity. In any event, petitioners cannot use “ambiguous legislative history to muddy clear statutory language.” Milner v. Department of Navy, 562 U.S. 562,

572 (2011). And the ordinary meaning of “engage in”

easily covers activities that an artificial entity contracts

with third parties to pursue on its behalf in carrying out

the entity’s core mission. See pp. 17-18, supra.

b. Petitioners’ second question presented does not

warrant this Court’s review. Petitioners do not argue

that the courts of appeals’ reading of the disputed CFPA

language conflicts with any decision of another court of

appeals, or that the interpretive issue otherwise satisfies this Court’s traditional certiorari standards. See

Pet. 21-30; see also Sup. Ct. R. 10.

Petitioners instead assert that the court of appeals’

interpretation is too broad and will have significant

practical consequences. Pet. 25-29. But the court of appeals simply adopted and applied a dictionary definition

that this Court has invoked and that has “remained remarkably consistent over time.” Pet. App. 24a. That

decision, tied to petitioners’ own governing documents

and core business function, does not address the Act’s

application to third parties that are involved in ancillary

activities “in some distant sense.” Pet. 26.

Petitioners also contend that the decision below

shifts the regulatory landscape and could lead to unintended consequences. Pet. 26-27. But seven years have

passed since the CFPB filed this suit alleging that petitioners are covered persons, and nearly three years

have passed since the district court ruled that they

22

were. The CFPB has consistently adhered to this position across the leadership of multiple Directors. In all

that time, the only negative impact that petitioners can

identify is that, shortly after the CFPB brought suit, a

credit rating agency considered downgrading petitioners’ transactions. See Pet. 27. But a negative effect on

a party that is alleged to have violated the law has no

bearing on the activities of other market participants.

Indeed, it is unsurprising that this litigation has had no

noticeable market effect to date given that petitioners

(and others who act similarly) are already subject to

other legal prohibitions on unfair and deceptive practices. See, e.g., 15 U.S.C. 45(a)(1) (Federal Trade Commission Act); 15 U.S.C. 1692e, 1692f (Fair Debt Collection Practices Act).

3. Finally, the interlocutory posture of this case

weighs against the Court’s review. The court of appeals

answered the two questions on interlocutory appeal and

remanded the case back to the district court to continue

proceedings. Under this Court’s usual practice, that

fact “alone furnishe[s] sufficient ground for the denial

of the application.” Hamilton-Brown Shoe Co. v. Wolf

Bros. & Co., 240 U.S. 251, 258 (1916). If petitioners prevail on remand, there may be no need for the Court to

consider the questions raised here. And if they do not,

they may raise their current contentions, together with

any additional issues that arise out of proceedings on

remand, in a single petition after the court of appeals

renders a final decision. See Major League Baseball

Players Ass’n v. Garvey, 532 U.S. 504, 508 n.1 (2001)

(per curiam) (stating that this Court “ha[s] authority to

consider questions determined in earlier stages of the

litigation where certiorari is sought from the most recent” judgment”); see also Stephen M. Shapiro et al.,

23

Supreme Court Practice 250 (10th ed. 2013) (“It is often

most efficient for the Supreme Court to await a final

judgment and a petition for certiorari that presents all

issues at a single time rather than reviewing issues on a

piecemeal basis.”).

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

SETH FROTMAN

General Counsel

STEVEN Y. BRESSLER

Deputy General Counsel

CHRISTOPHER DEAL

Assistant General Counsel

LAUREN GORODETSKY

KEVIN E. FRIEDL

Attorneys

Consumer Financial

Protection Bureau

NOVEMBER 2024

ELIZABETH B. PRELOGAR

Solicitor General