18-2743-cv (L)

Consumer Financial Protection Bureau, People of the State of New York v. RD Legal Funding, LLC, et al.

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A 

SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY 

FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. 

WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST 

CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION 

"SUMMARY ORDER"). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON 

ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second 

Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in 

the City of New York, on the 30th day of October, two thousand twenty.

PRESENT: BARRINGTON D. PARKER,

DENNY CHIN,

Circuit Judges,

JANE A. RESTANI,

Judge.*

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CONSUMER FINANCIAL PROTECTION 

BUREAU,

Plaintiff-Appellant-Cross Appellee,

PEOPLE OF THE STATE OF NEW YORK, by 

Letitia James, Attorney General for the State of 

New York,

Plaintiff-Appellant-Cross Appellee,

-v- 18-2743, 18-3033, 

18-2860, 18-3156

* Judge Jane A. Restani, of the United States Court of International Trade, sitting by 

designation.
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RD LEGAL FUNDING, LLC, RD LEGAL 

FUNDING PARTNERS, LP, RD LEGAL 

FINANCE, LLC, RONI DERSOVITZ,

Defendants-Third Party PlaintiffsThird Party Defendants-AppelleesCross Appellants.

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FOR PLAINTIFFS-APPELLANTS- CHRISTOPHER DEAL, Senior Counsel

CROSS APPELLEES: (John R. Coleman, Deputy General Counsel, 

Steven Y. Bressler, Assistant General Counsel, 

Kristin Bateman, Senior Counsel, David A. 

King Jr., Counsel, on the brief), for Mary 

McLeod, General Counsel for the Consumer 

Financial Protection Bureau, Washington, D.C.

CAROLINE A. OLSEN, Assistant Solicitor 

General (Barbara D. Underwood, Solicitor 

General, Steven C. Wu, Deputy Solicitor 

General, and Andrew W. Amend, Senior 

Assistant Solicitor General, on the brief), for 

LETITIA JAMES, Attorney General for the 

State of New York, New York, New York.

FOR DEFENDANTS-APPELLEES- MICHAEL D. ROTH (David K. Willingham,

CROSS APPELLANTS: Jeffrey M. Hammer, on the brief), King & 

Spalding, LLP, Los Angeles, CA, and Scott E. 

Gant, Boies, Schiller Flexner LLP, Washington, 

D.C.

Appeal from the United States District Court for the Southern District of 

New York (Preska, J.).
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UPON DUE CONSIDERATION, IT IS ORDERED, ADJUDGED, AND 

DECREED that the judgment of the district court is VACATED and the case is 

REMANDED for further proceedings consistent with this Order. 

Plaintiffs-appellants Consumer Financial Protection Bureau (the "CFPB")

and the State of New York (the "State") appeal from a judgment of the United States 

District Court for the Southern District of New York entered October 29, 2018 

dismissing their federal and state law claims against defendants-appellees RD Legal 

Funding, LLC; RD Legal Finance, LLC; RD Legal Funding Partners, LP (collectively, 

"RD"); and Roni Dersovitz (together with RD, "defendants"). By memorandum opinion 

and order entered June 21, 2018, as amended by its September 12, 2018 Order, the 

district court granted defendants' motion to dismiss. We assume the parties' familiarity 

with the underlying facts, the procedural history of the case, and the issues on appeal.

We review de novo a district court's grant of a motion to dismiss. See 

Hernandez v. United States, 939 F.3d 191, 198 (2d Cir. 2019). The CFPB is headed by a 

Director, who is appointed by the President with the advice and consent of the Senate 

for a five-year term, during which time "[t]he President may remove the Director for 

inefficiency, neglect of duty, or malfeasance in office." 12 U.S.C § 5491(b)-(c) (the "forcause removal provision"). The district court held that this for-cause removal provision 

is unconstitutional, and that the removal provision is not severable from the remainder 

of the Consumer Financial Protection Act (the "CFPA") or Title X of the Dodd-Frank 
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Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 

(2010). Accordingly, the district court struck the entirety of the CFPA. The district 

court also held that then-acting CFPB Director Mick Mulvaney's May 11, 2018 

ratification of the CFPB's enforcement action against defendants failed to cure the

constitutional deficiencies in the CFPB's structure or otherwise render defendants'

arguments moot. 

On June 29, 2020, the Supreme Court struck down the for-cause removal 

provision on the basis that it violates the separation of powers, but additionally held 

that the removal provision is severable from the remainder of the CFPA. See Seila L.

LLC v. Consumer Fin. Prot. Bureau, 140 S.Ct. 2183, 2192 (2020). Following Seila, nowacting CFPB Director Kathleen L. Kraninger ratified the enforcement action on July 8, 

2020. 

In light of these developments, we affirm the district court's holding that 

the for-cause removal provision is unconstitutional, we reverse the district court's 

holding that the for-cause removal provision is not severable from the remainder of the 

CFPA, and we remand for the district court to consider in the first instance the validity 

of Director Kraninger's ratification of this enforcement action. See Seila, 140 S. Ct. at

2208 n.12. 1

1 We do not reach defendants' other arguments, including, for example, that RD Legal 

does not qualify as a "covered person" under the Dodd-Frank Act.
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For the foregoing reasons, we VACATE the judgment of the district court

and REMAND the case for further proceedings.

FOR THE COURT:

Catherine O'Hagan Wolfe, Clerk