From: Mayer Brown
On November 25, 2014, US Securities and Exchange Commission Administrative Law Judge (ALJ) Cameron Elliot issued the first-ever “recommended decision” in a contested Consumer Financial Protection Bureau (CFPB) adjudication.
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Although the PHH case ultimately turned on contested questions of fact, the case may offer a preview of what to expect in future CFPB adjudications. A few things stand out:
- The CFPB runs a “rocket docket” and disposes of cases quickly, compared to the federal courts. By regulation, CFPB ALJs are required to issue recommended decisions no later than 300 days after charges are filed, while it might take years to resolve a comparable case in federal court. Charges in this case were filed on January 29, and the hearing began on March 24. Prior to and during the course of the hearing, Judge Elliot conducted multiple rounds of dispositive briefing.
- The CFPB is not directing smaller matters to administrative adjudication. As noted, the CFPB sought damages of $430 million. The decision in this case exceeded 100 pages even through previous rulings on dispositive motions had significantly narrowed the issues and Judge Elliot took judicial notice of many relevant facts.
- Although PHH was ultimately held liable for only a fraction of the damages that the CFPB sought, it would be a mistake to underestimate the potential for huge liability in CFPB adjudications. Civil penalties can run up to $1 million per day for knowing violations. The reason that Judge Elliot did not assess civil penalties was that he considered the violations to have occurred on the day each loan closed, which in this case was before the CFPB had been granted the authority to issue penalties.