Further investigation has revealed the CFPB demand for records from the Crystal Moroney law firm drove the small, woman owned law firm out of business.
The attorney representing Crystal Moroney stated, "Ms. Moroney closed her law firm because: (1) CFPB document demands were so persistent that the hundreds of hours she was required to devote to responding to those demands left her with not enough hours to keep the business afloat," according to Richard A. Samp, Senior Litigation Counsel, New Civil Liberties Alliance in Washington, DC 20036. In response to our email Samp stated further, "and (2) the fact that CFPB was investigating her made it exceedingly difficult for her to attract new clients. Her clients were creditors seeking to collect on debts they were owed, but creditors were (unsurprisingly) reluctant to turn to Moroney’s law firm for assistance, given that they knew that CFPB would immediately demand to see all the documents they shared with Moroney."
The investigation into Moroney spanned the tenures of five CFPB Directors appointed by three different Presidents. Since the CID was issued, there have been three different CFPB Directors appointed by two different presidents, each of whom has been subject to at-will removal at some point in their tenure. "But despite four years of investigation, the CFPB has never alleged that Moroney ever violated any debt-collection laws or did anything else wrong," Samp stated.
The bureau demanded the records in June 2017, “as part of a nonpublic investigation,” the petition states, to determine whether debt collectors or others are “engaging in unfair, deceptive or abusive acts or practices.” The petition did not specifically identify the Moroney firm, or clients, as the target of an investigation. In June 2017, the CFPB issued a CID to Moroney. In compliance with the 2017 CID, Moroney produced thousands of pages of documents and other data but withheld a subset of documents, claiming that producing those documents would compromise its ethical obligations to its clients. In November 2019, after the meet-and-confer process proved futile, the CFPB sought to enforce the 2017 CID in district court. Just four days before the scheduled hearing, however, the CFPB withdrew the CID, and the district court denied the petition to enforce as moot. Shortly thereafter, the CFPB issued a second CID, demanding substantially similar documents and information as the 2017 CID.
In April 2020, the CFPB moved to enforce the 2019 CID in district court. While the petition was pending, the Supreme Court issued its opinion in Seila Law. Apparently concerned about the validity of its enforcement actions in the wake of Seila Law, the CFPB filed a Notice of Ratification purporting to ratify the 2019 CID and the enforcement action. In August 2020, the district court granted the CFPB’s petition to enforce the 2019 CID. Moroney filed a timely notice of appeal. On appeal, Moroney argues that the CID cannot be enforced because (1) the CID was void ab initio under Seila Law, as the CFPB Director was shielded from presidential oversight by an unconstitutional removal protection at the time the CID was issued; (2) the funding structure of the CFPB violates the Appropriations Clause of Article I of the Constitution; (3) Congress violated the nondelegation doctrine when it created the CFPB’s funding structure; and (4) the CID is an unduly burdensome administrative subpoena.