Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-13-05342/USCOURTS-caDC-13-05342-0/pdf.json

Parties Involved:
Consumer Financial Protection Bureau
Appellee
Morgan Drexen, Inc.
Appellant
Kimberly A. Pisinski
Appellant

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 19, 2014 Decided May 1, 2015

No. 13-5342

MORGAN DREXEN, INC. AND KIMBERLY A. PISINSKI,

APPELLANTS

v.

CONSUMER FINANCIAL PROTECTION BUREAU,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:13-cv-01112)

Randall K. Miller argued the cause for appellants. With

him on the briefs were Nicholas M. DePalma and Randal M.

Shaheen. David D. Conway entered an appearance.

John R. Coleman, Senior Litigation Counsel, Consumer

Financial Protection Bureau, argued the cause for appellee. 

With him on the brief was Meredith Fuchs, General Counsel. 

Nandan M. Joshi, Counsel, entered an appearance.

USCA Case #13-5342 Document #1550119 Filed: 05/01/2015 Page 1 of 24
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Before: ROGERS, KAVANAUGH and PILLARD, Circuit

Judges.

Opinion for the Court filed by Circuit Judge ROGERS.

Dissenting opinion filed by Circuit Judge KAVANAUGH.

ROGERS, Circuit Judge: Title X of the Dodd-Frank Wall

Street Reform and Consumer Protection Act, 12 U.S.C. §§ 5481

et seq., established the Consumer Financial Protection Bureau

to “regulate the offering and provision of consumer financial

products or services under the Federal consumer financial laws.” 

Id. § 5491(a). The Bureau is to “implement and . . . enforce

Federal consumer financial law,” id. § 5511(a), including

eighteen pre-existing statutes and Title X itself, see id.

§§ 5481(12), (14). To carry out these duties, the Bureau has

rulemaking, supervisory, investigatory, adjudicatory, and

enforcement authority, id. §§ 5512(b), 5514–5516, 5562–5564,

including the authority to file civil enforcement actions against

regulated parties, id. § 5564; see also 15 U.S.C. § 6105(d).

The district court, without reaching the merits of appellants’

constitutional challenge to Title X as a violation of the

separation of powers, dismissed appellants’ complaint for

injunctive and declaratory relief. It ruled that Morgan Drexen,

Inc., had an adequate remedy at law in an enforcement action

filed by the Bureau in the Central District of California, where

Morgan Drexen could raise the constitutional challenge as a

defense. The district court ruled that the other plaintiff,

Kimberly Pisinski, an attorney who contracts with Morgan

Drexen for paralegal services, lacked standing under Article III

of the Constitution. They appeal, and we affirm. Pisinski has

failed to proffer evidence of an injury in fact at the time she filed

the complaint, and Morgan Drexen fails to show the district

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court abused its discretion in dismissing the complaint. 

Notwithstanding Morgan Drexen’s objection that it filed the

complaint before the Bureau filed its enforcement action, the

same issues involving the same parties were pending before two

federal district courts. The Bureau filed its enforcement action

fewer than thirty days after Morgan Drexen filed its complaint. 

Once the Bureau did so, Morgan Drexen no longer faced the

dilemma of whether to change its behavior or risk continued

violation of the law in order to get a hearing. Without prejudice

to its constitutional challenge, Morgan Drexen was also relieved,

as was the judicial system, of the burdens of litigating

overlapping claims in two federal district courts.

I.

Morgan Drexen, a Nevada corporation headquartered in

California, “is in the business of licensing its proprietary

software to law firms and providing these firms with live

paraprofessional and support services,” including support for

bankruptcy and debt-relief legal practices. Decl. of Walter

Ledda, Chief Exec. Offr., Morgan Drexen ¶¶ 2–3 (July 21,

2013). Pisinski, an attorney licensed to practice in the State of

Connecticut whose law practice includes bankruptcy matters,

contracts with Morgan Drexen for paralegal services. Decl. of

Kimberly A. Pisinski, Esq. ¶¶ 1–3 (July 21, 2013).

On April 22, 2013, after an investigation lasting more than

a year, the Bureau notified Morgan Drexen that its enforcement

office was “considering recommending that the Bureau take

legal action” against Morgan Drexen and its Chief Executive

Officer Walter Ledda for violations of the Consumer Financial

Protection Act, 12 U.S.C. § 5536, and the Telemarketing Sales

Rule, 16 C.F.R. § 310. See Ltr. from Wendy Weinberg,

Enforcement Att’y, Consumer Fin. Prot. Bureau, to Randal

Shaheen, Esq., Counsel for Morgan Drexen 1 (Apr. 22, 2013). 

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Morgan Drexen was offered an opportunity to explain why legal

action should not be taken. On May 8, 2013, Morgan Drexen

responded and proposed a settlement. See Ltr. from Randal M.

Shaheen, Esq., to Lucy Morris, Esq., Consumer Fin. Prot.

Bureau 6 (May 8, 2013). Following a May 29, 2013, meeting,

the enforcement office inquired about certain data and sought

further document production from Morgan Drexen by June 30,

in response to a March 13, 2012, civil investigative demand

(“CID”). See Ltr. from Gabriel O’Malley, Enforcement Att’y,

Consumer Fin. Prot. Bureau, to Randal M. Shaheen, Esq. (June

12, 2013). A further written communication indicates that

Morgan Drexen represented to the Bureau that it did not intend

to respond to all of the Bureau’s production requests until the

Bureau engaged in settlement discussions but that it would

produce certain documents over the course of the month of July. 

See Email from Gabriel O’Malley, Enforcement Att’y,

Consumer Fin. Prot. Bureau, to Randal M. Shaheen, Esq. (July

8, 2013).

On July 22, 2013, Morgan Drexen and Pisinski sued the

Bureau in the U.S. District Court for the District of Columbia. 

Their complaint sought declaratory and injunctive relief,

alleging that the independent structure of the Bureau under Title

X of the Dodd-Frank Act is unconstitutional because the powers

delegated to the Bureau are overbroad, the Bureau is headed by

a single director removable only for cause, it is funded outside

the normal appropriations process, and judicial review of its

actions is limited, all in violation of the constitutional separation

of powers. Compl. ¶ 120. With the complaint, Morgan Drexen

and Pisinski filed a motion for a preliminary injunction. Three

days later the district court and the parties agreed to proceed

with expedited briefing; the motion for a preliminary injunction

was withdrawn and the parties filed cross motions for summary

judgment. 

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On August 20, 2013, the Bureau filed an enforcement action

against Morgan Drexen and CEO Ledda in the U.S. District

Court for the Central District of California, alleging violations

of the Telemarketing Sales Rule and the Consumer Financial

Protection Act. Specifically, the Bureau alleged that Morgan

Drexen had violated the Telemarketing Sales Rule by, among

other things, charging consumers illegal up-front fees for debtrelief services disguised as fees for bankruptcy services that

most consumers do not need and that are not performed. 

Complaint ¶¶ 74–83, Consumer Fin. Prot. Bureau v. Morgan

Drexen, Inc., ---F. Supp. 3d---, No. SACV 13-1267-JLS, 2014

WL 5785615 (C.D. Cal. Jan. 10, 2014). The Bureau also alleged

that Morgan Drexen’s representations to consumers are

misleading, in violation of the Telemarketing Sales Rule and the

Consumer Financial Protection Act, see id. ¶¶ 84–87, 91–97,

and that although Morgan Drexen claims only to support

attorneys in the provision of debt-relief and bankruptcy services,

in fact, “[i]n numerous instances, . . . Morgan Drexen . . .

performs virtually all of the debt resolution work,” id. ¶ 42. 

Neither Pisinski nor any other lawyer contracting with Morgan

Drexen was named in the enforcement action. On August 22,

2013, Morgan Drexen and Pisinski moved in the D.C. district

court for a temporary restraining order and a preliminary

injunction to enjoin the Bureau from prosecution.

On October 13, 2013, the D.C. district court granted the

Bureau’s motion to dismiss the complaint, or in the alternative

for summary judgment, without reaching the merits of the

constitutional challenge to Title X. The district court found that

Morgan Drexen had an adequate remedy at law in the

enforcement action and would suffer no irreparable injury from

the denial of relief. It found that Pisinski lacked standing under

Article III of the Constitution, and it dismissed as moot

plaintiffs’ requests for a temporary restraining order and

preliminary injunction. Morgan Drexen, Inc. v. Consumer Fin.

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Prot. Bureau, 979 F. Supp. 2d 104 (D.D.C. 2013).1

Morgan Drexen and Pisinski appeal. Our review of the

decision to deny permanent injunctive and declaratory relief is

for abuse of discretion. See eBay Inc. v. MercExchange, LLC,

547 U.S. 388, 391 (2006); Wilton v. Seven Falls Co., 515 U.S.

277, 289–90 (1995). Our review of the district court’s decision

on standing is de novo. Sierra Club v. Jewell, 764 F.3d 1, 4

(D.C. Cir. 2014). We first address whether Pisinski has

standing.

II.

“[T]he irreducible constitutional minimum of standing” is

“an injury in fact . . . which is (a) concrete and particularized

and (b) actual or imminent, not conjectural or hypothetical, . . .

a causal connection between the injury and the conduct

complained of . . . , [and] it must be likely, as opposed to merely

speculative, that the injury will be redressed by a favorable

decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61

(1992) (citations and internal quotation marks omitted). Pisinski

1

 On April 21, 2015, the California district court granted the

Bureau’s motion for sanction of default judgment against Morgan

Drexen, finding that “[d]efendants willfully and in bad faith engaged

in a coordinated and extensive effort to deceive the Court and

opposing counsel” and having “blatantly falsified evidence . . .

concealed this fact from the Court, opposing counsel, and even their

own counsel at every turn.” Consumer Fin. Prot. Bureau v. Morgan

Drexen, Inc., ---F. Supp. 3d---, No. SACV 13-1267-JLS, 2015 WL

1926223, at *13 (C.D. Cal. Apr. 21, 2015). The California case

remains pending against CEO Ledda. See id. at *17. In light of our

disposition, we need not address whether this development renders

appellants’ contentions prudentially moot or precluded under res

judicata.

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contends that she has standing under Article III of the

Constitution because the Bureau’s enforcement action against

Morgan Drexen is inherently an enforcement action against her,

causing her injury because her law practice may be enjoined and

the Bureau lacks authority to regulate lawyers. See Appellants’

Br. 20–21, 24, 27–28. Her injury, she maintains, includes

economic damage and a possible threat to her professional

standing. 

Because the issue of standing arises at the summary

judgment stage, Pisinski “can no longer rest on . . . mere

allegations, but must set forth by affidavit or other evidence

specific facts which for purposes of the summary judgment

motion will be taken to be true.” Lujan, 504 U.S. at 561

(citation and internal quotation marks omitted). Although the

court must assume that she will prevail on the merits of her

constitutional challenge to Title X of the Dodd-Frank Act, see

Muir v. Navy Fed. Credit Union, 529 F.3d 1100, 1105 (D.C. Cir.

2008), the court is not required to accept as true her assertion

that the Bureau is illegally regulating attorneys because that

question does not relate to the merits of her constitutional claim. 

Additionally, it would not be enough for Pisinski to demonstrate

past harm when she seeks only forward-looking relief; she

“must show [she] is suffering an ongoing injury or faces an

immediate threat of injury.” Dearth v. Holder, 641 F.3d 499,

501 (D.C. Cir. 2011) (citing Los Angeles v. Lyons, 461 U.S. 95,

105 (1983)). In Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138,

1150 n.5 (2013), the Supreme Court clarified that a plaintiff

must show that there is a “substantial risk” that the harm will

occur. The record evidence — including sworn declarations

from Pisinski, Morgan Drexen’s CEO Ledda, and Morgan

Drexen’s attorney Randal Shaheen — does not show a

substantial risk of injury to Pisinski.

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Because Pisinski was not “the object of the government

action or inaction [s]he challenges, standing is not precluded,

but it is ordinarily substantially more difficult to establish.” 

Lujan, 504 U.S. at 562 (citations and internal quotation marks

omitted). Pisinski’s only record evidence relating to the

Bureau’s intent to regulate attorneys is her attorney’s statement

that the Bureau “has informed me that their concern is that the

attorneys supported by Morgan Drexen are in violation of the

amended Telemarketing Sales Rule because the attorneys charge

their clients hourly fees for the preparation of bankruptcy

pleadings.” Decl. of Randal M. Shaheen ¶ 43 (July 21, 2013)

(emphasis added). The Bureau disavowed this characterization

of its communications with Pisinski’s attorney, pointing to its

April 22, 2013, notice of likely enforcement action, which

references only Morgan Drexen and its CEO. There is no record

evidence that the Bureau ever threatened an enforcement action

against Pisinski or any attorney contracting with Morgan Drexen

for paralegal services. The Bureau’s “concern” regarding

attorneys is expressed in its enforcement action based on

Morgan Drexen’s own allegedly illegal conduct rather than

Morgan Drexen’s “support[]” for allegedly illegal activity by

attorneys.

Nonetheless, Pisinski maintains that “the lawyer and her

paralegal engaged in the enterprise of law are inseparable,” so

that the Bureau cannot regulate Morgan Drexen without illegally

regulating her. See Appellants’ Br. 27–28. This assertion is

unsupported by the record evidence. Although CEO Ledda

states that “Morgan Drexen provides non-attorney paralegal

support services to attorneys” and that “Morgan Drexen has

contracted with Pisinski to provide such services to support her

law practice,” he does not describe what services Morgan

Drexen provides to Pisinski or how Pisinski directs Morgan

Drexen. See Ledda Decl. ¶¶ 3–4. Pisinski’s declaration does

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not fill the gap. She states: “I offer clients bankruptcy services,”

“I contract with Morgan Drexen to provide

non-attorney/paralegal services that support my law practice,”

and “I supervise Morgan Drexen and remain responsible for all

services delegated to Morgan Drexen.” Pisinski Decl. ¶¶ 2–3. 

She also states: “[M]y clients may elect for me to first amicably

resolve their debts with creditors prior to filing the bankruptcy

petition.” Id. ¶ 2. Pisinski has not shown that the debt

settlement and bankruptcy services for which she engages

Morgan Drexen are targeted in the enforcement action. The

record indicates that Morgan Drexen contracts with an unknown

number of attorneys who are not necessarily connected to each

other and that it provides an array of different services. See

Third Resp. CID 5–10 (Apr. 27, 2012). The record does not

indicate whether an attorney contracts for all or some of these

services. See id.; Sixteenth Resp. CID 2 (Aug. 7, 2012);

Shaheen Ltr. May 8, 2013, at 1–3. Rather, as Morgan Drexen

pointed out in responding to the Bureau’s April 22, 2013, notice,

“Morgan Drexen has different procedures for the attorneys it

supports,” and “[t]here are also differences among the attorneys

Morgan Drexen supports with respect to client engagement

terms.” Shaheen Ltr. May 8, 2013, at 3. Pisinski’s failure to

proffer evidence showing that the Bureau’s enforcement action

addresses a part of Morgan Drexen’s business that she engages

and supervises is fatal to her standing.2

2

 Appellants filed a motion to supplement the record with

three documents that they first brought to this court’s attention after

the parties’ briefs were filed. Appellants’ request comes too late. See

Summers v. Earth Island Inst., 555 U.S. 488, 495 n.*, 500 (2009);

Fair Emp’t Council of Greater Wash. v. BMC Mktg. Corp., 28 F.3d

1268, 1275 n.2 (D.C. Cir. 1994). Only one document contains

information relevant to Pisinski’s standing; excerpts from the Bureau’s

statement of uncontroverted facts and conclusions of law in support of

its motion for summary judgment in the California enforcement action

describe the Bureau’s understanding of Pisinski’s relationship with

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Morgan Drexen. In the D.C. district court, the Bureau challenged

Pisinski’s standing in its motion to dismiss the complaint, or in the

alternative for summary judgment, and the issue was fully litigated. 

Appellants do not claim that the factual statements relating to

Pisinski’s contractual relationship with Morgan Drexen involve facts

that were not within Pisinski’s personal knowledge and control when

appellants filed their complaint. Appellants offer no reason, much less

an extraordinary one, why they failed to proffer such evidence in the 

district court. They also appear not to have proffered such evidence

in the California district court when Pisinski moved to intervene

pursuant to Federal Rule of Civil Procedure 24; the California district

court denied the motion for failing, among other things, to provide

details concerning Pisinski’s contractual relationship with Morgan

Drexen. See Consumer Fin. Prot. Bureau v. Morgan Drexen, Inc., No.

8:13-cv-01267-JLS-JEM, slip op. at 4–6 (C.D. Cal. Mar. 10, 2014). 

Despite rulings from the district courts here and in California

indicating that evidence of Pisinski’s interest in the Bureau’s

enforcement action against Morgan Drexen was inadequate, appellants

waited seven months after the California district court denied

intervention before moving to supplement the record in this court. 

Supplementing the appellate record pursuant to Federal Rule of

Appellate Procedure 10(e) under these circumstances would be

inappropriate. See Colbert v. Potter, 471 F.3d 158, 165 (D.C. Cir.

2006); Boggs v. Rubin, 161 F.3d 37, 41 (D.C. Cir. 1998). In addition

to offering no explanation for their failure timely to proffer available

evidence to the D.C. district court, appellants have denied the Bureau

the opportunity to address that evidence in its responsive brief in this

court, cf. Gen. Elec. Co. v. Jackson, 610 F.3d 110, 123 (D.C. Cir.

2010), and granting this request would undermine the district court’s

factfinding role, see 16A Charles Alan Wright, et al., FEDERAL

PRACTICE AND PROCEDURE § 3956.1, at 632 (4th ed. 2008). For

similar reasons, appellants’ request that the court take judicial notice

of these documents comes too late; the plaintiff was on notice that the

evidence was relevant to her case and could timely have submitted it

to the district court. See, e.g., United States ex rel. Wilkins v. United

Health Grp., Inc., 659 F.3d 295, 303 (3d Cir. 2011) (citing Zell v.

Jacoby-Bender, Inc., 542 F.2d 34, 38 (7th Cir. 1976)); Melong v.

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Because Pisinski has not shown that the Bureau has

threatened imminent enforcement action against her, her burden

to show standing is heavier. See Lujan, 504 U.S. at 562;

Chamber of Commerce v. EPA, 642 F.3d 192, 201 (D.C. Cir.

2011). A review of the record demonstrates that she failed to

proffer evidence that her law practice likely will suffer an injury

as the result of the Bureau’s actions against Morgan Drexen. 

Pisinski asserts on brief that she might be forced to disgorge fees

if the Bureau succeeds in its enforcement action against Morgan

Drexen. See Appellants’ Br. 23. Nothing in the record indicates

there is a substantial risk that Morgan Drexen will seek

reimbursement from Pisinski for any penalties it may have to

pay, and it is her burden to put forth facts showing that the risk

of such harm is substantial, not speculative. See, e.g., Clapper,

133 S. Ct. at 1150 n.5. Pisinski similarly asserts that “[i]t cannot

be the case that a person lacks standing to challenge an agency

that seeks to terminate the person’s existing business and claw

back the profits,” Appellants’ Br. 24, and that the Bureau in its

enforcement action “seeks an injunction that would enjoin

Pisinski’s law practice,” Reply Br. 4. There is nothing in the

record to show that her law practice will be “terminated” or

“enjoin[ed].”

There is also no record evidence that Morgan Drexen will

be unable in the future to provide the paralegal services that

Pisinski requires for her law practice. Although CEO Ledda and

Attorney Shaheen state their understanding that the Bureau is

requiring Morgan Drexen to stop serving lawyers who offer debt

settlement together with bankruptcy services, see Ledda Decl.

¶ 11, Shaheen Decl. ¶ 43, the Bureau disavowed this

characterization of its demands, referencing its April 22, 2013,

notice. Aside from Ledda’s and Shaheen’s statements, which

Micronesian Claims Comm’n, 643 F.2d 10, 12 n.5 (D.C. Cir. 1980). 

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alone are “not significantly probative,” Anderson v. Liberty

Lobby, 477 U.S. 242, 249–50 (1986), there is no record evidence

supporting Ledda’s and Shaheen’s assertions that Morgan

Drexen will be enjoined or otherwise prevented from contracting

with lawyers like Pisinski. Their speculation about the outcome

of the enforcement action cannot support Pisinski’s standing. 

When parties “only aver that any significant adverse effects . .

. ‘may’ occur at some point in the future, they fail[] to show the

actual, imminent, or ‘certainly impending’ injury required to

establish standing.” Chamber of Commerce, 642 F.3d at 202

(citations and internal quotation marks omitted); see also

Deutsche Bank Nat’l Trust Co. v. FDIC, 717 F.3d 189, 193

(D.C. Cir. 2013).

At best, Pisinski states, albeit in a conclusory manner, that

the Bureau’s investigation — specifically its demand that

Morgan Drexen produce documents regarding her clients —

“has been disruptive to my practice and to my clients.” Pisinski

Decl. ¶ 4; see also id. ¶¶ 5–10. Pisinski recounts that her clients

have told her that they are concerned that the government may

access their financial information, that she worries that her

clients will withhold from her information she needs to provide

effective representation, and that she will lose clients. See id.

¶¶ 7, 9. The district court gave no weight to Pisinski’s client

concerns because it found the Bureau never sought, and

concluded it could not have obtained, her privileged client

communications, and the Bureau will not be issuing any more

demands. Morgan Drexen, Inc., 979 F. Supp. 2d at 120. 

Without challenging these findings or the district court’s legal

analysis, Pisinski continues to assert that the Bureau’s

enforcement action threatens to invade her clients’

confidentiality. See Reply Br. 5. But her speculation that her

clients’ confidentiality and her client relations will be impaired

in the future is unsupported in light of her silence in the face of

the district court’s ruling. Furthermore, Pisinski does not

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indicate that the “disrupti[on]” to her law practice has been

ongoing now that the Bureau’s investigation is over, and

Pisinski cannot rely on any past disruption to obtain declaratory

and injunctive relief. See Dearth, 641 F.3d at 501. Pisinski has

not explained how an injury caused by the Bureau’s

discontinued conduct is redressable by the relief she seeks. See

Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 104–09

(1998). Vague, conclusory statements regarding “disrupti[on]”

to her practice are insufficient at the summary judgment stage to

show standing. See Ass’n of Flight Attendants-CWA v. U.S.

Dep’t of Transp., 564 F.3d 462, 465–66 (D.C. Cir. 2009); cf.

Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888–89 (1990).

Pisinski does maintain on appeal that her “professional

standing” and law practice may be in jeopardy because the

enforcement action against Morgan Drexen implies that she has

engaged in unethical behavior by failing to supervise Morgan

Drexen or by actively participating in the alleged illegal

conduct. See Appellants’ Br. 22, 25. Without evidence that she

engages the services of Morgan Drexen that the Bureau alleges

are illegal, this assertion, too, fails. Pisinski proffered no

specific facts tending to show reputational harm, such as loss of

clients or other business. Moreover, because the enforcement

action does not seek to enjoin Pisinski’s law practice, she would

need to proffer evidence that, as a result of the Bureau’s action,

her practice is threatened by other authorities, and she has not

done so. Instead, the record evidence shows that the

Connecticut State Bar and the State Banking Department have

reviewed, and approved, Pisinski’s use of Morgan Drexen’s

paralegal services. See Shaheen Ltr. May 8, 2013, at 4 (noting

approvals in 2009). “If the threat is imagined or wholly

speculative, the dispute does not present a justiciable case or

controversy.” Seegars v. Gonzales, 396 F.3d 1248, 1252 (D.C.

Cir. 2005). Additionally, any potential injury from Bar

disciplinary proceedings stemming from her association with

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Morgan Drexen would neither be caused by the Bureau’s

enforcement action nor be redressable by a declaration that Title

X of the Dodd-Frank Act is unconstitutional.

In sum, Pisinski has failed to proffer evidence in support of

any of her theories of standing: that she was responsible for

Morgan Drexen’s allegedly illegal conduct, that her practice is

or will be economically harmed by the Bureau’s enforcement

action against Morgan Drexen, or that implicit accusations by

the Bureau that she exercised too little control over Morgan

Drexen or engaged in illegal conduct herself could damage her

professional standing. The record evidence does not show that

she used Morgan Drexen’s allegedly illegal services or that there

is a substantial risk that the Bureau’s enforcement action will

cause the harms to her practice or professional reputation that

she has asserted. The record shows that Pisinski has a

consumer-service contractual relationship with Morgan Drexen;

without more, evidence of injury to her contractor does not

demonstrate Pisinski’s standing. See Morgan Drexen, Inc., 979

F. Supp. 2d at 121–22; cf., e.g., PDK Labs. Inc. v. U.S. Drug

Enforcement Agency, 362 F.3d 786, 790–91 (D.C. Cir. 2004);

Air Reduction Co. v. Hickel, 420 F.2d 592, 594 (D.C. Cir. 1969).

III.

Morgan Drexen contends that pre-enforcement review of

Title X is appropriate and that “[i]n evaluating whether to

exercise its injunctive and declaratory powers” the district court

erred by failing to “consider[] the strength of Morgan Drexen’s

showing on the merits of its constitutional challenge.” 

Appellants’ Br. 29. Title X confronts Morgan Drexen with what

it characterizes as “a unique kind of irreparable harm,” for if

Title X is unconstitutional, then Morgan Drexen is “harmed by

an entity whose very existence violates the Constitution.” Id.

Observing that this court has recognized the appropriateness of

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pre-enforcement review of a statute on constitutional grounds,

see id. at 45 (citing Gen. Elec. Co. v. EPA, 360 F.3d 188,

190–94 (D.C. Cir. 2004)), Morgan Drexen maintains that the

D.C. district court, “[a]s a matter of judicial authority,” should

not have required it to be “strong-armed” by the Bureau into

regulatory compliance or to wait until the Bureau decided to

bring its enforcement action before filing its “free[-standing]

threshold challenge to the constitutionality of [Title X].” See id.

It relies on Free Enterprise Fund v. Public Company Accounting

Oversight Board, 561 U.S. 477 (2010), in which the Supreme

Court held that a new federal agency’s structure was

unconstitutional after the target of an enforcement action sought

“an injunction preventing the Board from exercising its powers.” 

Appellants’ Br. 30 (quoting Free Enter. Fund, 561 U.S. at 487)

(internal quotation marks omitted).

Morgan Drexen’s reliance on Free Enterprise Fund is

misplaced. Although “federal courts lack the authority to

abstain from the exercise of jurisdiction that has been conferred

. . . [t]hat principle does not eliminate . . . the federal courts’

discretion in determining whether to grant certain types of

relief.” New Orleans Public Serv., Inc. v. Council of New

Orleans, 491 U.S. 350, 358–59 (1989). In Free Enterprise

Fund, the Supreme Court resolved its jurisdiction to hear a

constitutional challenge to a new federal agency but had no

occasion to address a federal court’s exercise of equitable

discretion to deny injunctive or declaratory relief. Here, the

D.C. district court’s subject-matter jurisdiction to decide the

constitutional challenge to Title X is undisputed.

By now it is well settled that “[a] court may . . . in its

discretion dismiss a declaratory judgment or injunctive suit if

the same issue is pending in litigation elsewhere.” Abbott Labs.

v. Gardner, 387 U.S. 136, 155 (1967), abrogated on other

grounds by Califano v. Sanders, 430 U.S. 99 (1977); see 11A

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16

Charles Alan Wright, et al., FEDERAL PRACTICE AND

PROCEDURE § 2944, at 84–85 (3d ed. 2013) (“Wright, et al.”); cf.

Nat’l Automatic Laundry & Cleaning Council v. Shultz, 443

F.2d 689, 704 (D.C. Cir. 1971). For the following reasons,

Morgan Drexen fails to show that the district court abused its

discretion in concluding that Morgan Drexen had an adequate

remedy at law in the California enforcement action and that it

suffered no irreparable injury from the denial of the requested

relief.

A.

Entitlement to a permanent injunction rests upon Morgan

Drexen showing:

(1) that it has suffered an irreparable injury; (2) that

remedies available at law, such as monetary damages,

are inadequate to compensate for that injury; (3) that,

considering the balance of hardships between the

plaintiff and defendant, a remedy in equity is

warranted; and (4) that the public interest would not be

disserved by a permanent injunction. 

eBay Inc., 547 U.S. at 391. Failing to satisfy any factor is

grounds for denying relief. See Weinberger v. Romero-Barcelo,

456 U.S. 305, 312–13 (1982). “If a less drastic remedy . . . [is]

sufficient to redress [the] injury, no recourse to the additional

and extraordinary relief of an injunction [is] warranted.” 

Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 165–66

(2010).

Morgan Drexen could, and did, assert its constitutional

challenge to Title X of the Dodd-Frank Act as a defense in a

motion filed in the California district court to dismiss the

Bureau’s enforcement action. It is true that at the time Morgan

Drexen sued the Bureau in the D.C. district court, the

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availability of this alternative remedy was uncertain. An

enforcement action by the Bureau appeared likely, but in the

meantime Morgan Drexen’s potential penalties under the DoddFrank Act were accumulating daily, see 12 U.S.C. § 5565(c). 

“When enforcement actions are imminent — and at least when

repetitive penalties attach to continuing or repeated violations

and the moving party lacks the realistic option of violating the

law once and raising its federal defenses — there is no adequate

remedy at law.” Morales v. Trans World Airlines, Inc., 504 U.S.

374, 381 (1992). Hence, courts will avoid subjecting regulated

parties to the “Hobson’s choice” between “continually

violat[ing] the . . . law and expos[ing] themselves to potentially

huge liability” pending agency action “or violat[ing] the law

once as a test case and suffer[ing] the injury of obeying the law

during the pendency of the proceedings and any further review.” 

Id.; cf. Sackett v. EPA, 132 S. Ct. 1367, 1372 (2012). Morgan

Drexen, however, was relieved of the Hobson’s choice once the

Bureau filed the enforcement action, fewer than thirty days after

Morgan Drexen filed its complaint. See Hastings v. Judicial

Conference of the United States, 770 F.2d 1093, 1102 (D.C. Cir.

1985). At that point, it no longer “faced the . . . troubling

question of whether it was willing to risk serious penalties in

order to obtain . . . a hearing at all.” See CSI Aviation Services,

Inc. v. U.S. Dep’t of Transp., 637 F.3d 408, 413–14 (D.C. Cir.

2011). The D.C. district court dismissed the complaint eight

weeks after the Bureau filed its enforcement action. 

Morgan Drexen does not maintain that waiting for a

decision from the district court in California caused it

irreparable injury. Rather, it maintains that “‘[i]n determining

whether prosecution of a suit in another forum should be

preliminarily enjoined . . ., [the preliminary injunction factors]

are of secondary significance,’” and “‘[t]he primary factor to be

weighed is the convenience of the parties and the courts.’” 

Appellants’ Br. 48 (second alteration in original) (quoting

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Columbia PlazaCorp. v. Security Nat’l Bank, 525 F.2d 620, 622

n.3 (D.C. Cir. 1975)). Taken on those terms, Morgan Drexen

has pointed to no inconvenience in litigating its constitutional

challenge in the California district court. The D.C. district

court’s decision relieved it of litigating overlapping issues in

two federal forums without prejudice to its challenge, and

judicial economy was fostered.3

3

 Other attempts by Morgan Drexen in its reply brief to show

irreparable injury fail procedurally and substantively. The Bureau had

no opportunity to respond in its brief to Morgan Drexen’s arguments

in its reply brief, and Morgan Drexen offers no reason, much less an

extraordinary one, for its failure to raise these arguments in its opening

brief. Under these circumstances, the court will not consider

arguments first raised in a reply brief. See, e.g., CTS Corp. v. EPA,

759 F.3d 52, 60 (D.C. Cir. 2014); United States v. Whren, 111 F.3d

956, 958 (D.C. Cir. 1997). Even assuming Morgan Drexen’s

arguments are properly before the court, they are unpersuasive. 

Morgan Drexen maintains that being forced to litigate in California

irreparably injures it, but once the Bureau filed its enforcement action,

Morgan Drexen was constrained to litigate in either the D.C. or

California federal forum and suffers no greater injury in California

than here. Precedent supporting interlocutory review under the

collateral order doctrine, upon which Morgan Drexen relies, is

inapposite; this court lacks jurisdiction to review appeals from the

Central District of California. See 28 U.S.C. § 1294. Morgan

Drexen’s bare assertion that the unavailability of immediate appeal

renders a remedy inadequate is contrary to precedent. As this court

noted in a related context, “irreparable harm must be ‘greater than the

harm suffered by any litigant forced to wait until the termination of the

[proceedings] before challenging interlocutory orders it considers

erroneous.’” I.A.M. Nat’l Pension Fund Benefit Plan A v. Cooper

Indus., Inc., 789 F.2d 21, 25 (D.C. Cir. 1986) (alteration in original)

(quoting Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 379

n.13 (1981)); see Sibley v. Lando, 437 F.3d 1067, 1071 & n.5, 1074

(11th Cir. 2005). Morgan Drexen has not elaborated on its claimed

entitlement to immediate appellate review beyond reference to its

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Morgan Drexen also maintains that the district court erred

in relying on Deaver v. Seymour, 822 F.2d 66 (D.C. Cir. 1987). 

See Appellants’ Br. 46–47. In Deaver, this court refused to hear

a separation-of-powers challenge to provisions of the Ethics in

Government Act in a suit for declaratory and injunctive relief to

enjoin the independent counsel from filing an indictment. Id. at

66–67. Deaver is not controlling as to all pre-emptive

challenges to likely civil enforcement. See Morales, 504 U.S.

at 381; cf. CSI Aviation Servs., Inc., 637 F.3d at 412–14. Still,

the district court could properly view Deaver as a “parallel

case,” Morgan Drexen, Inc., 979 F. Supp. 2d at 112, insofar as

respect for the final judgment rule and principles of

constitutional avoidance apply in the civil as well as the criminal

context, see id. at 113–14. The district court noted that Morgan

Drexen, like the plaintiff in Deaver, had an opportunity to raise

its constitutional challenge as “a preliminary defense,” id. at 114

(citing FED.R.CRIM. P. 12(b) and FED.R.CIV. P. 12(b)(6)), and

it rejected Morgan Drexen’s “attempt to create a special

category of review for facial constitutional challenges,” id. at

115. The district court’s reliance on Deaver’s reasoning with

respect to applicable equitable principles did not render its

decision to dismiss Morgan Drexen’s request for injunctive

relief an abuse of discretion.

litigation costs, see Reply Br. 23, which cannot constitute irreparable

injury, cf. Renegotiation Bd. v. Bannercraft Clothing Co., 415 U.S. 1,

23–24 (1974). To the extent Morgan Drexen maintains it was unable

to argue the equities in its motion to dismiss, it misunderstands the

posture of its case. Equitable factors come into play when parties

dispute relief. The district court in California, having rejected the

constitutional challenge to Title X, had no occasion to examine the

appropriate remedy. That Morgan Drexen’s motion to dismiss was

denied does not demonstrate that the motion to dismiss procedure was

inadequate as a matter of law. Cf. id. at 25. 

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B.

The Declaratory Judgment Act provides that a federal court,

“[i]n a case of actual controversy within its jurisdiction, . . .

upon the filing of an appropriate pleading, may declare the rights

and other legal relations of any interested party seeking such

declaration, whether or not further relief is or could be sought.” 

28 U.S.C. § 2201(a) (emphasis added); see MedImmune, Inc. v.

Genentech, Inc., 549 U.S. 118, 136 (2007); see also Wilton, 515

U.S. at 286. “Since its inception, the Declaratory Judgment Act

has been understood to confer on federal courts unique and

substantial discretion in deciding whether to declare the rights

of litigants.” Wilton, 515 U.S. at 286. “The statute’s textual

commitment to discretion, and the breadth of leeway we have

always understood it to suggest, distinguish the declaratory

judgment context from other areas of the law in which concepts

of discretion surface.” Id. at 286–87. A court’s exercise of

discretion in granting declaratory relief is guided by “a

circumspect sense of its fitness informed by the teachings and

experience concerning the functions and extent of federal

judicial power,” or in other words, informed by the court’s sense

of “practicality and wise judicial administration.” Id. at 287–88

(citation and internal quotation marks omitted); see also

MedImmune, Inc., 549 U.S. at 136. 

In Hanes Corp. v. Millard, 531 F.2d 585 (D.C. Cir. 1976),

this court adopted a non-exclusive list of “factors relevant to the

propriety of granting a declaratory judgment”:

whether it would finally settle the controversy between

the parties; whether other remedies are available or

other proceedings pending; the convenience of the

parties; the equity of the conduct of the declaratory

judgment plaintiff; prevention of procedural fencing;

the state of the record; the degree of adverseness

between the parties; and the public importance of the

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question to be decided.

Id. at 591 n.4 (internal quotation marks omitted). Although

every factor need not be considered and others may be, see, e.g.,

Patton Boggs LLP v. Chevron Corp., 683 F.3d 397, 401–02

(D.C. Cir. 2012), these factors focus on the usefulness of a

declaratory judgment, the role of such relief in ending the

dispute between the parties, and the incentives for parties’

behavior. See, e.g., President v. Vance, 627 F.2d 353, 364 n.76

(D.C. Cir. 1980).

Applying the Hanes factors, the district court reasonably

concluded that declaratory relief was inappropriate. First, an

adjudication in the District of Columbia would not “finally settle

the controversy” and could result in “piecemeal litigation” if the

D.C. district court ruled in the Bureau’s favor, allowing the

enforcement action in California to continue. Morgan Drexen,

Inc., 979 F. Supp. 2d at 117 (citations and internal quotation

marks omitted). Second, the enforcement action in California

could resolve all of the issues in the case. Id. Third, Morgan

Drexen filed its complaint in the D.C. district court on the eve

of enforcement. See id. at 118–19 & n.5. And finally, declining

to exercise jurisdiction would serve the public interest by

avoiding a potentially unnecessary decision on constitutional

issues because Morgan Drexen might prevail in the California

enforcement action on the basis of one of its non-constitutional

defenses. See id. at 119 n.6. The district court concluded that

the only factor favoring Morgan Drexen was that the state of the

record was more advanced in the D.C. case but decided this

counted for little because declining to issue a declaratory

judgment would not “severe[ly]” delay adjudication of Morgan

Drexen’s claims. Id. at 119. All of the other factors were in

equipoise. See id. at 117–18, 119 n.6.

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Morgan Drexen’s objections fall wide of the mark. It

maintains that its challenge to the constitutionality of Title X is

a matter of sufficient public importance to warrant declaratory

relief and that the district court failed to accord proper weight to

the fact that it filed its suit “before [the Bureau], by its own

admission, had even determined whether it would bring an

enforcement action.” Appellants’ Br. 45. Parties have no

inviolable right to a declaratory judgment on facial

constitutional claims. See Flynt v. Rumsfeld, 355 F.3d 697, 705

(D.C. Cir. 2004). Nor is the public importance of the lawsuit

dispositive. See Wilderness Soc’y v. Morton, 479 F.2d 842, 887

(D.C. Cir. 1973). The district court reasonably could conclude

that the importance of the constitutional challenge was

counterbalanced by the importance of avoiding unnecessary

constitutional decision-making. Morgan Drexen, Inc., 979 F.

Supp. 2d at 119 n.6; cf. Wallace v. Lynn, 507 F.2d 1186,

1190–91 (D.C. Cir. 1974).

Nor was it an abuse of discretion for the district court to

deny declaratory relief when Morgan Drexen was the first to

file. The timing of the declaratory plaintiff’s suit is only one

consideration bearing on “practicality and wise judicial

administration.” See Wilton, 515 U.S. at 288. As one wellrecognized authority has suggested, “the real question for the

court is not which action was commenced first but which will

most fully serve the needs and convenience of the parties and

provide a comprehensive solution of the general conflict.” 10B

Wright, et al., supra, § 2758, at 530–31 (3d ed. 1998). “The

anticipation of defenses is not ordinarily a proper use of the

declaratory judgment procedure. It deprives the plaintiff of his

traditional choice of forum and timing, and it provokes a

disorderly race to the courthouse.” Hanes, 531 F.2d at 592–93;

see Am. Auto. Ins. Co. v. Freundt, 103 F.2d 613, 617 (7th Cir.

1939). Because the Bureau has filed an enforcement action that

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promises to resolve the legality of Morgan Drexen’s conduct,

“[t]his is not a situation in which a declaratory plaintiff will

suffer injury unless legal relations are clarified; [Morgan

Drexen] do[es] not currently ‘act at [its] peril,’” AmSouth Bank

v. Dale, 386 F.3d 763, 786 (6th Cir. 2004) (citation omitted); see

also Tempco Elec. Heater Corp. v. Omega Eng’g, Inc., 819 F.2d

746, 749–50 (7th Cir. 1987); Amerada Petroleum Corp. v.

Marshall, 381 F.2d 661, 663 (5th Cir. 1967). 

Further, the district court’s findings that “Morgan Drexen

was aware of the likelihood of a Bureau enforcement action”

when it filed the complaint and that it had engaged in procedural

fencing are supported by the record and not clearly erroneous. 

The Bureau notified Morgan Drexen on April 22, 2013, that it

was considering an enforcement action. Morgan Drexen

indicated its amenability to settlement discussions on May 8,

2013, and the parties continued their discussions until mid-July

2013. According to an undisputed statement by the Bureau in

a July 8, 2013, email, Morgan Drexen indicated to the Bureau

that it would continue to produce certain documents throughout

the month. Yet, on July 22, Morgan Drexen sued the Bureau in

the D.C. district court. The district court’s finding that Morgan

Drexen engaged in procedural fencing was not clearly

erroneous. See AmSouth Bank, 386 F.3d at 788, 790 (collecting

cases); Freundt, 103 F.2d at 617.

Accordingly, we affirm the dismissal of the complaint,

because Pisinski lacks Article III standing to pursue the

constitutional challenge to Title X of the Dodd-Frank Act and

because Morgan Drexen failed to show the district court abused

its discretion in concluding that Morgan Drexen had an adequate

remedy at law in the enforcement action filed by the Bureau.

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KAVANAUGH, Circuit Judge, dissenting: Kimberly 

Pisinski is an attorney. She has brought a lawsuit challenging 

the constitutionality of the Consumer Financial Protection 

Bureau. The majority opinion holds that she lacks standing. I 

respectfully disagree. In my view, Pisinski has standing. She 

contracts with a company known as Morgan Drexen and 

works together with Morgan Drexen employees to provide 

debt settlement and bankruptcy services to consumers who are 

in debt. These services are intended to help people in debt 

negotiate better terms with their creditors. Consumers are 

charged a fee for some of these services. The Bureau claims 

that the kind of services in which Pisinski and Morgan Drexen 

engage – with an up-front fee paid by consumers – is illegal. 

The Bureau therefore is regulating a business that Pisinski 

engages in. That is enough for standing. We have a tendency 

to make standing law more complicated than it needs to be. 

When a regulated party such as Pisinski challenges the 

legality of the regulating agency or of a regulation issued by 

that agency, “there is ordinarily little question” that the party 

has standing, as the Supreme Court has indicated. Lujan v. 

Defenders of Wildlife, 504 U.S. 555, 561-62 (1992). So it is 

here.

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