Court Opinion

ID: 4686996
Source: CourtListenerOpinion
Date Created: 2021-05-14 17:00:40.371065+00
Date Added: 2024-06-11T08:04:37.973982
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

 CONSUMER FINANCIAL                           No. 17-56324
 PROTECTION BUREAU,
        Petitioner-Appellee,                  D.C. No.
                                       8:17-cv-01081-JLS-JEM
                v.

 SEILA LAW LLC,                           ORDER AND
      Respondent-Appellant.             AMENDED OPINION

    On Remand From the United States Supreme Court

         Argued and Submitted November 19, 2020
                 San Francisco, California

                     Filed December 29, 2020
                     Amended May 14, 2021

   Before: Susan P. Graber and Paul J. Watford, Circuit
        Judges, and Jack Zouhary, * District Judge.

                           Order;
            Dissent from Order by Judge Bumatay;
                  Opinion by Judge Watford

    *
      The Honorable Jack Zouhary, United States District Judge for the
Northern District of Ohio, sitting by designation.
2                      CFPB V. SEILA LAW

                          SUMMARY **

          Consumer Financial Protection Bureau

    The panel filed an order (1) amending its December 29,
2020, opinion issued on remand from the United States
Supreme Court; and (2) denying on behalf of the court a sua
sponte request for rehearing en banc, in a case in which the
panel reaffirmed the district court’s order granting the
petition of the Consumer Financial Protection Bureau to
enforce Seila Law LLC’s compliance with the Bureau’s civil
investigative demand requiring the firm to produce
documents and answer interrogatories. The amendments
reflected that two of the panel’s citations were to the
plurality portion of the Supreme Court opinion.

    The Supreme Court held that the statute establishing the
Consumer Financial Protection Bureau (CFPB) violated the
Constitution’s separation of powers by placing leadership of
the agency in the hands of a single Director who could be
removed only for cause. Seila Law LLC v. CFPB, 140 S. Ct.
2183, 2197 (2020). The Court concluded, however, that the
for-cause removal provision could be severed from the rest
of the statute and thus did not require invalidation of the
agency itself. The Supreme Court vacated the panel’s prior
judgment, published at CFPB v. Seila Law LLC, 923 F.3d
680 (9th Cir. 2019), and remanded so that the panel could
consider in the first instance whether the civil investigative
demand (CID) was validly ratified by former Acting
Director Mick Mulvaney during his year-long stint in that
office.
    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                    CFPB V. SEILA LAW                        3

    In the amended opinion, the panel held that the CID was
validly ratified, but that there was no need to decide whether
the ratification occurred through the actions of Acting
Director Mulvaney. On July 9, 2020, after the Supreme
Court’s ruling, the CFPB’s current Director, Kathleen
Kraninger, expressly ratified the agency’s earlier decisions
“to issue the civil investigative demand to Seila Law, to deny
Seila Law’s request to modify or set aside the CID, and to
file a petition requesting that the district court enforce the
CID.” At the time that she ratified these decisions, Director
Kraninger knew that the President could remove her with or
without cause. She nonetheless ratified the agency’s
issuance of the CID and ongoing efforts to enforce it.

    Director Kraninger’s ratification remedied any
constitutional injury that Seila Law may have suffered due
to the manner in which the CFPB was originally structured.
Seila Law’s only cognizable injury arose from the fact that
the agency issued the CID and pursued its enforcement while
headed by a Director who was improperly insulated from the
President’s removal authority. Any concerns that Seila Law
might have had about being subjected to investigation
without adequate presidential oversight and control had now
been resolved. A Director well aware that she may be
removed by the President at will had ratified her
predecessors’ earlier decisions to issue and enforce the CID.

    The panel rejected Seila Law’s contention that Director
Kraninger could not validly ratify the CFPB’s earlier actions
because the agency lacked the authority to take those actions
back in 2017. The panel held that Seila Law’s argument was
largely foreclosed by this court’s decision in CFPB v.
Gordon, 819 F.3d 1179 (9th Cir. 2016). Just as in Gordon,
the constitutional infirmity related to the Director alone, not
to the legality of the agency itself.
4                   CFPB V. SEILA LAW

    The panel also rejected Seila Law’s remaining argument
that Director Kraninger’s July 2020 ratification was invalid
because it took place outside the limitations period for
bringing an enforcement action against Seila Law. The
panel held that Seila Law’s argument failed because this
statutory limitations period pertained solely to the bringing
of an enforcement action, which the CFPB had not yet
commenced against Seila Law. The only actions ratified by
Director Kraninger were the issuance and enforcement of the
CID. The very purpose of such a demand was to assist the
agency in determining whether Seila Law had engaged in
violations that could justify bringing an enforcement action;
it was impossible to know at this point whether such an
action would (or would not) be timely. Seila Law therefore
had raised its statute-of-limitations argument prematurely.

    Judge Bumatay, joined by Judges Callahan, Ikuta, and
VanDyke, dissented from the denial of rehearing en banc.
He wrote that the court’s decision to deny rehearing en banc
effectively meant that Seila Law was entitled to no relief
from the harms inflicted by an unaccountable and unchecked
federal agency. With no agency empowered to enforce the
laws at the time of the CPFB’s prior actions, no ratification
was permissible.

                        COUNSEL

Anthony R. Bisconti (argued) and Thomas H. Bienert Jr.,
Bienert Katzman PC, Los Angeles, California; Kannon K.
Shanmugam, Paul Weiss Rifkind Wharton & Garrison LLP,
Washington, D.C.; for Respondent-Appellant.

Kevin E. Friedl (argued), Senior Counsel; Christopher J.
Deal, Attorney; Steven Y. Bressler, Assistant General
                     CFPB V. SEILA LAW                        5

Counsel; John R. Coleman, Deputy General Counsel; Mary
McLeod, General Counsel; Consumer Financial Protection
Bureau, Washington, D.C.; for Petitioner-Appellee.

                           ORDER

    The opinion filed on December 29, 2020, is amended as
follows:

    On page 5 of the slip opinion, add <(plurality opinion)>
after <Id. at 2208, 2211>.

   On page 7 of the slip opinion, replace  with .

   The amended version is filed concurrently with this
order.

    A judge of the court sua sponte requested a vote on
whether to rehear this case en banc. A vote was taken, and
the matter failed to receive a majority of the votes of the non-
recused active judges in favor of en banc consideration. See
Fed. R. App. P. 35(f). Rehearing en banc is DENIED.

    An opinion dissenting from the denial of rehearing en
banc prepared by Judge Bumatay is filed concurrently with
this order.
6                   CFPB V. SEILA LAW

BUMATAY, Circuit Judge, joined by CALLAHAN,
IKUTA, and VANDYKE, Circuit Judges, dissenting from
the denial of rehearing en banc:

    We all know the story of David and Goliath. Goliath, the
fearsome warrior who stood over nine feet tall, awaited a
challenger for forty days and forty nights. When no one
stepped forward, David—a young shepherd boy with no
experience at war—petitioned the king for the opportunity
to face Goliath. David stepped on the battlefield with just a
sling and a few stones from a nearby brook. Goliath was
indignant that such an unworthy opponent would stand
against him. But after a brief exchange of words, David
slung a single rock at Goliath, knocking him to the ground
and killing him. David, the underdog, had won a shocking
victory for his people.

    This case is a little like the story of David and Goliath;
except here, the Ninth Circuit resurrects Goliath on the
battlefield so that he can defeat David. Seila Law, a law firm
operated by a solo practitioner, challenged the
constitutionality of the Consumer Financial Protection
Bureau, an independent agency created in the wake of the
2008 financial crisis. The CFPB had issued a civil
investigative demand on Seila Law, but the firm argued that
the CFPB was unconstitutionally structured since the
President could not remove its Director without cause. The
CFPB took Seila Law to district court, filing a petition to
enforce the civil investigative demand, which the court
granted. CFPB v. Seila Law, LLC, No. 17-cv-1081, 2017
WL 6536586, at *1 (C.D. Cal. Aug. 25, 2017). Seila Law
appealed to our court, and the CFPB prevailed again. CFPB
v. Seila Law LLC, 923 F.3d 680 (9th Cir. 2019).

   But last year, the Supreme Court vindicated Seila Law
and held that the CFPB’s structure violated the Constitution.
                     CFPB V. SEILA LAW                         7

Seila Law LLC v. CFPB, 140 S. Ct. 2183, 2192 (2020). The
Court did so because Congress improperly shielded the
CFPB Director from at-will removal by the President, which
rendered the agency “accountable to no one.” Id. at 2203.
Thus, like David, the one-man firm seemingly defeated the
giant CFPB.

    But that is not the end of the story. Rather than dismiss
this action, the Court severed the CFPB Director’s tenure
protection and remanded the case to our court to determine
whether the action must be dismissed. Id. at 2211 (plurality
opinion). Shortly afterward, the CFPB’s then-Director,
Kathleen Kraninger, ratified both the civil investigative
demand and the petition to enforce the demand against Seila
Law. See CFPB v. Seila Law LLC, 984 F.3d 715, 717–18
(9th Cir. 2020) (Seila Law II).

    On remand, a panel of our court resuscitated the giant,
holding that the CFPB’s post-severance ratification cured
any defect in the agency’s prior actions. Id. at 719. In so
ruling, the panel held that the CFPB’s constitutional defect
was confined “to the Director alone,” leaving “the legality of
the agency itself” undisturbed. Id. That meant that the
Director could retroactively ratify decisions made while the
agency was answerable to neither the President nor the
people, therefore permitting the investigation of Seila Law
to continue.

     Our court’s decision to deny rehearing en banc
effectively means that Seila Law is entitled to no relief from
the harms inflicted by an unaccountable and unchecked
federal agency. Thus, while David slayed the giant, Goliath
still wins. But that is not the law. As the panel recognized,
Supreme Court precedent conditions effective ratification on
the principal having the power to do the act ratified at the
time of the act—not just at the time of ratification. Id. at 718.
8                   CFPB V. SEILA LAW

And as the Court held, the Director’s insulation from
presidential control rendered the whole agency
unconstitutional. With no agency empowered to enforce the
laws at the time of the CPFB’s prior actions, no ratification
is permissible.

    I therefore respectfully dissent from the denial of the
petition for rehearing en banc.

                              I.

                              A.

    The Constitution vests the Executive power—“all of
it”—in the President.           Seila Law, 140 S. Ct.
at 2191(emphasis added); U.S. Const. art. II, § 1, cl. 1. It is
the President alone who must “take Care that the Laws be
faithfully executed.” U.S. Const. art. II, § 3. Unlike the
bicameral Legislature with its intentional division of
authority, the Constitution purposefully consolidates the
Executive power in one person. That’s because the Founders
determined that the execution of the laws and protection of
the nation required the “[d]ecision, activity, secrecy, and
d[i]spatch” that “characterise the proceedings of one man.”
The Federalist No. 70, at 472 (Alexander Hamilton)
(J. Cooke ed., 1961). This unity of Executive power permits
the laws to be administered without the “habitual feebleness
and dilatoriness” that comes with a “diversity of views and
opinions.” Id. at 476.

    Concentrating the Executive power in one person also
enhances accountability. Rather than permit the “diffusion
of accountability” that comes with the “diffusion of power,”
Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S.
477, 497 (2010), the Constitution entrusted the Executive
power to a “single object” to be held responsible by the
                    CFPB V. SEILA LAW                        9

people, The Federalist No. 70, at 479. The Founders then
“made the President the most democratic and politically
accountable official in Government”—the only office, along
with the Vice President, elected by the entire Nation. Seila
Law, 140 S. Ct. at 2203. So the constitutional design of a
single-person Executive “ensure[s] both vigor and
accountability” to the people. Printz v. United States,
521 U.S. 898, 922 (1997).

    At the time of the Founding, and even more so today, the
President needed assistance in carrying out these unique
responsibilities. The President may therefore “select those
who [are] to act for him under his direction in the execution
of the laws.” Myers v. United States, 47 S. Ct. 21, 25 (1926).
Legions of federal officials accordingly assist in the
discharge of Executive duties. But delegation of authority is
not abdication of accountability. In all matters of Executive
action, “[t]he buck stops with the President.” Free
Enterprise Fund, 561 U.S. at 493. Thus, while individual
executive officials may wield “significant authority,” such
authority always remains under “the ongoing supervision
and control of the elected President.” Seila Law, 140 S. Ct.
at 2203. The President’s control over executive officials
preserves a chain of accountability, with the President
serving as the check on those federal officials and the people
a check on the President. Id.; see Free Enterprise Fund,
561 U.S. at 498 (“[E]xecutive power without the Executive’s
oversight . . . subverts the President’s ability to ensure that
the laws are faithfully executed—as well as the public’s
ability to pass judgment on his efforts.”).

    Necessarily concomitant with the President’s oversight
of the Executive branch is the power to remove federal
officers. Myers, 47 S. Ct. at 24 (holding that such power is
“vested in the President alone”). Although the President
10                    CFPB V. SEILA LAW

possesses various means to influence his subordinates’
actions, see Free Enterprise Fund, 561 U.S. at 499–500
(discussing budget requests, “purely political factors,” and
other tools), the Constitution’s design for accountability “did
not rest . . . on . . . bureaucratic minutiae,” id. at 500. Rather,
it is the ultimate consequence of being fired from one’s perch
atop an agency that officers “must fear and . . . obey.” Seila
Law, 140 S. Ct. at 2197 (quoting Bowsher v. Synar, 478 U.S.
714, 726 (1986)). And one who is not bound to the
President’s will in this way “may not be entrusted with
executive powers.” Bowsher, 478 U.S. at 732.

                                B.

    It was this “carefully calibrated” and historically
venerated design that Congress contravened in creating the
CFPB. Seila Law, 140 S. Ct. at 2203. As part of the Dodd-
Frank Act of 2010, Congress established the CFPB as an
independent agency to implement and enforce 19 consumer
protection statutes. Id. at 2193. True to that independence,
Congress conceived that the agency would be helmed by a
solo Director, serving for a five-year term, who would be
removable by the President only for “inefficiency, neglect of
duty, or malfeasance in office.” 12 U.S.C. § 5491(c)(1), (3).
This tenure protection meant the CFPB Director was
effectively unanswerable to the President. See, e.g., Seila
Law, 140 S. Ct. at 2204 (raising the concern that some
Presidents may have no “influence [over CFPB’s] activities”
and be “saddled with a holdover Director from a competing
political party who is dead set against [the President’s]
agenda” (emphasis omitted)).

    The CFPB’s authority is also no little matter. Congress
granted the agency “vast rulemaking, enforcement, and
adjudicatory authority,” including the authority to conduct
investigations, issue subpoenas, carry out in-house
                    CFPB V. SEILA LAW                      11

adjudications, and prosecute civil actions in federal court.
Id. at 2191; see 12 U.S.C. §§ 5562, 5564(a), (f). Remedies
at the CFPB’s disposal are similarly broad. They include
“any appropriate legal or equitable relief,” reformation of
contracts, and civil penalties up to one million dollars per
day. 12 U.S.C. § 5565(a)(1)–(2), (c). And the agency
exercises these powers free from Congress’s appropriations
decisions. The CFPB is statutorily entitled to a stream of
revenue directly from the Federal Reserve. Seila Law,
140 S. Ct. at 2194. The CFPB thus “acts as a mini
legislature, prosecutor, and court, responsible for creating
substantive rules for a wide swath of industries, prosecuting
violations, and levying knee-buckling penalties against
private citizens.” Id. at 2202 n.8.

    From its inception, the CFPB wielded enormous power
but was led by a Director who was “neither elected by the
people nor meaningfully controlled . . . by someone who is.”
Id. at 2203. In no uncertain terms, the Supreme Court
described this arrangement as having “no basis in history and
no place in our constitutional structure.” Id. at 2201. The
CFPB Director’s “insulation from removal by an
accountable President” offended the separation of powers
and was thus “enough to render the agency’s structure
unconstitutional.” Id. at 2204.

     Moreover, the President’s ability to oversee the CFPB
Director was so fundamental, and the defect so severe, that
if the removal protection were not severable, it may mean
that “the entire agency is unconstitutional and powerless to
act.” Id. at 2208 (plurality opinion). There would then be
“no agency left with statutory authority to maintain this suit
or otherwise enforce the demand.” Id. Thus, the severance
issue presented a binary choice: either (1) the Director’s
tenure protection could be removed and the CFBP “may
12                       CFPB V. SEILA LAW

continue to exist and operate,” id. at 2207 (emphasis added),
or (2) there would be “no agency at all,” id. at 2210. But
because the Court determined “Congress would have
preferred a dependent CFPB to no agency at all,” id., the
Court severed the Director’s tenure protection. 1

                                    C.

    With these background principles in mind, I turn to the
CFPB’s ratification of its past actions against Seila Law.
After determining the CFPB’s structure was unconstitutional
and severing the offending tenure provision, the Supreme
Court remanded to this court to determine whether Acting
Director Mick Mulvaney had effectively ratified the
agency’s actions. 2 Before we decided that issue, however,
Director Kraninger (now removable by the President without
cause) again ratified the CFPB’s demand and petition. Seila
Law II, 984 F.3d at 718. Our court then held that Director
Kraninger’s actions validly ratified the CFPB’s pursuit of
Seila Law. Id. I disagree with this conclusion. 3

     1
       Three Justices joined this severance analysis, while four other
Justices joined its judgment. Two other Justices would have denied
severance and granted Seila Law relief then and there. Seila Law, 140 S.
Ct. at 2224 (Thomas, J., concurring in part and dissenting in part).
     2
       The Court declined to opine on the ratification debate, which
“turn[ed] on case-specific factual and legal questions not addressed
below and not briefed” before the Court. Seila Law, 140 S. Ct. at 2208
(plurality opinion). Instead, it left the issue for lower courts to consider
in the first instance. Id.

    3
      As a threshold matter, I have concerns about whether the CFPB
has Article III standing to bring this action. As we held in CFPB v.
Gordon, a party must be “part of the Executive Branch” to be exempt
from the traditional standing requirement of an individualized injury.
                        CFPB V. SEILA LAW                              13

    To begin, ratification does not seem to be a proper
remedy for separation-of-powers violations such as we face
here. The Court has made clear that parties injured by
actions of a constitutionally deficient executive official are
“entitled to relief.” Lucia v. SEC, 138 S. Ct. 2044, 2055
(2018). Indeed, when a party raises a constitutional
challenge as a defense to a federal enforcement action, “no
theory . . . would permit [a court] to declare the [agency’s]
structure unconstitutional without providing relief to the
[injured party.]” Fed. Election Comm’n v. NRA Pol. Victory
Fund, 6 F.3d 821, 828 (D.C. Cir. 1993). In the criminal
context, for example, the Court usually regards structural
violations as “so intrinsically harmful as to require automatic
reversal” of the defective decision. Neder v. United States,
527 U.S. 1, 7 (1999). Since ratification purports to cure
defects in an agency’s prior actions, the result is that a party
injured by a separation-of-powers violation is left with no
relief at all. But the Court has told us to provide remedies
that “create incentives to raise” separation-of-powers
challenges. See Lucia, 138 S. Ct. at 2055 n.5 (simplified)
(ordering a new hearing before a properly appointed SEC
administrative law judge, even though the SEC had ratified
the appointment of the then-unconstitutionally serving ALJ
who had ruled against Lucia). Ratification then seems
inconsistent with the Court’s teachings.

    Even if ratification could cure structural constitutional
errors, the CFPB’s ratification here was ineffective because

819 F.3d 1179, 1189 (9th Cir. 2016). Seila Law raises the concern that
the CFPB was not duly constituted as “part of the Executive Branch” for
Article III standing purposes. Nevertheless, since no party raised or
briefed this issue, I do not discuss it here. On en banc review, we should
have directed the parties to address this court’s jurisdiction to hear this
case.
14                   CFPB V. SEILA LAW

it lacked Executive authority at the time it initiated its actions
against Seila Law. The ratification inquiry is “governed by
principles of agency law.” Fed. Election Comm’n v. NRA
Pol. Victory Fund, 513 U.S. 88, 98 (1994) (discussing
Restatement (Second) of Agency § 90 (1958)); see Seila
Law II, 984 F.3d at 718; Gordon, 819 F.3d at 1191. And
under those common law principles, it is essential that the
party ratifying should be able “to do the act ratified at the
time the act was done” as well as “at the time the ratification
was made.” NRA Political Victory Fund, 513 U.S. at 98
(emphasis omitted).

     This is so because ratification “affects the relations
between the principal, agent, and third persons” and thus
“the same limitations apply to the ratification of acts” that
apply to the acts themselves. Restatement (Second) of
Agency § 84 cmt. a (1958). Since “[t]o ratify is to give
validity to the act of another, [it] implies that the person or
body ratifying has at the time power to do the act ratified,”
Norton v. Shelby Cnty., 118 U.S. 425, 451 (1886), and “a
ratification can have no greater effect than a previous
authority,” Dist. Twp. of Doon v. Cummins, 142 U.S. 366,
376 (1892).

     We applied these principles in Gordon. In that case, the
CFPB brought an action against Gordon during Richard
Cordray’s tenure as Director after an unconstitutional recess
appointment. Gordon, 819 F.3d at 1186. Later, however,
Cordray was properly nominated and confirmed, and he
ratified his earlier action against Gordon. Id. at 1185–86.
Gordon argued that, even after Senate confirmation, Director
Cordray could not have ratified his own prior acts as a recess
appointee because he lacked the power to do those acts at
that time.
                       CFPB V. SEILA LAW                           15

     Applying the Second Restatement, we held that “if the
principal (here, CFPB) had authority to bring the action in
question, then the subsequent . . . ratification of the decision
to bring the case against Gordon is sufficient.” Id. at 1191
(citing Restatement (Second) of Agency § 84(1)). Thus, we
construed the “principal” to be the CFPB as an agency,
which could possess the power to act on behalf of the
Executive branch separately from any individual Director. 4
Next, because we understood that “the CFPB had the
authority to bring the action at the time Gordon was
charged,” we ruled that a properly appointed Director was
empowered to ratify the action after the fact. Id. at 1192. In
the end, we held that Director Cordray—acting as the
CFPB’s agent after being properly nominated and
confirmed—could ratify his own prior acts as a recess
appointee. Id.

    But based on the Court’s intervening decision in Seila
Law, that ratification inquiry must now come out differently.
Contrary to our assumption in Gordon, the CFPB was not a
“principal” empowered to act on behalf of the Executive
branch at the time of its actions against Seila Law. Until the
Supreme Court severed the Director’s tenure protection, the
CFPB was operating beyond the control of the President.
When an agency has “slip[ped] from the Executive’s control,
and thus from that of the people,” Free Enterprise Fund,
561 U.S. at 499, the chain of accountability breaks. And
when that happens, the chain of delegated power also breaks.

    4
        Judge Ikuta forcefully argued that this analytical move was
incorrect because only individual officials—and not abstract agencies—
can possess Executive power. See Gordon, 819 F.3d at 1200 (Ikuta, J.,
dissenting). Whether the Gordon majority or Judge Ikuta is correct on
this point is beyond the scope of this dissent. Under either view,
ratification was improper here.
16                     CFPB V. SEILA LAW

See Bowsher, 478 U.S. at 732 (holding that officers not
controlled by the President are not “entrusted with executive
powers”). That is because the Executive power is not
Congress’s to dispense to such individuals and agencies as it
pleases; it is vested solely in the President, who may be
assisted by those he controls—including through the
“powerful tool” of removal. Free Enterprise Fund, 561 U.S.
at 510 (simplified).

    Indeed, the Court’s determination that severance was
necessary confirms that the CFPB lacked Executive
authority pre-severance. The Court was explicit that, if it
failed to sever the Director’s tenure protection, there would
be “no agency . . . with statutory authority to maintain this
suit.” Seila Law, 140 S. Ct. at 2208 (plurality opinion). And
contrary to the panel’s belief that the constitutional violation
did not affect “the legality of the agency itself,” Seila Law II,
984 F.3d at 719, the Supreme Court held that the Director’s
separation-of-powers violation was “enough to render the
agency’s structure unconstitutional.” Seila Law, 140 S. Ct.
at 2204 (majority opinion). Given this defect, there would
be “no agency at all” in the absence of severance, and the
Court severed because it believed Congress would have
preferred a “dependent CFPB” to “no CFPB.” Id. at 2210
(plurality opinion). Thus, so long as the CFPB was not
accountable to the President and, through him, to the people,
the agency did not “ha[ve] the authority to bring the action”
on behalf of the Executive branch. Gordon, 819 F.3d at
1192. In other words, the agency was not a “principal” under
agency law and could not have ratified Executive-branch
actions after the fact. 5 By holding the ratification to be

     5
      A “principal” is “[s]omeone who authorizes another to act on his
or her behalf as an agent.” Black’s Law Dictionary (11th ed. 2019).
Since the CFPB lacked the authority to “act” as a principal on behalf of
                       CFPB V. SEILA LAW                            17

effective, we allowed the CFPB to retroactively curtail Seila
Law’s rights, even though it lacked the power to do so at the
time.

    Consider the converse: if, as the panel maintained, the
pre-severance CFPB did possess lawful authority to act
against Seila Law, the Court’s decision to sever the
Director’s removal protection would be inexplicable and
irrelevant. If “the legality of the agency” were untouched by
the Director’s defect, Seila Law II, 984 F.3d at 719, Seila
Law would have suffered no constitutional injury and would
have been entitled to no relief. That cannot be the case. As
the Court stated, “violat[ing] the separation of powers . . .
inflicts a here-and-now injury on affected third parties that
can be remedied by a court.” Seila Law, 140 S. Ct. at 2196
(simplified).     Thus, the Court recognized that the
unconstitutional structure of the CFPB injured Seila Law.
But our court today pronounces that this harm is no big deal
and allows the CFPB to continue its pursuit of Seila Law—
effectively rendering the firm’s “here-and-now injury”
without remedy.

                                 II.

    Under our constitutional structure, an agency untethered
from the President’s control may not wield his power. Such
unchecked power would be unaccountable to the people and
subvert the constitutional design. Before severance, the
CFPB Director was free from Presidential oversight—and
thus free of Executive authority. The doctrine of ratification
does not permit the CFPB to retroactively gift itself power
that it lacked. The panel’s decision to condone this power

the Executive branch, it could not bestow that authorization on others,
including its Director.
18                  CFPB V. SEILA LAW

grab was erroneous. Just as bad, our failure to correct this
decision en banc declares Goliath the victor and makes
hollow the promise of judicial relief for separation-of-
powers violations. I respectfully dissent.

                         OPINION

WATFORD, Circuit Judge:

    In February 2017, the Consumer Financial Protection
Bureau (CFPB) issued a civil investigative demand (CID) to
Seila Law LLC, requiring the firm to produce documents and
answer interrogatories. Seila Law refused to comply. In
June 2017, the CFPB filed a petition to enforce the CID. The
district court granted the petition and we affirmed. CFPB v.
Seila Law LLC, 923 F.3d 680 (9th Cir. 2019). Upon review
of our court’s decision, the Supreme Court held that the
statute establishing the CFPB violated the Constitution’s
separation of powers by placing leadership of the agency in
the hands of a single Director who could be removed only
for cause. Seila Law LLC v. CFPB, 140 S. Ct. 2183, 2197
(2020). The Court concluded, however, that the for-cause
removal provision could be severed from the rest of the
statute and thus did not require invalidation of the agency
itself, as Seila Law had urged. Id. at 2209–11 (plurality
opinion); id. at 2245 (Kagan, J., concurring in judgment with
respect to severability and dissenting in part). The Court
vacated our judgment and remanded so that we could
consider in the first instance “whether the civil investigative
demand was validly ratified” by former Acting Director
Mick Mulvaney during his year-long stint in that office. Id.
at 2208, 2211 (plurality opinion).
                    CFPB V. SEILA LAW                       19

    We conclude that the CID was validly ratified, but we
need not decide whether that occurred through the actions of
Acting Director Mulvaney. On July 9, 2020, after the
Supreme Court’s ruling, the CFPB’s current Director,
Kathleen Kraninger, expressly ratified the agency’s earlier
decisions “to issue the civil investigative demand to Seila
Law, to deny Seila Law’s request to modify or set aside the
CID, and to file a petition requesting that the district court
enforce the CID.” At the time that she ratified these
decisions, Director Kraninger knew that the President could
remove her with or without cause. She nonetheless ratified
the agency’s issuance of the CID and ongoing efforts to
enforce it.

    Director Kraninger’s ratification remedies any
constitutional injury that Seila Law may have suffered due
to the manner in which the CFPB was originally structured.
Seila Law’s only cognizable injury arose from the fact that
the agency issued the CID and pursued its enforcement while
headed by a Director who was improperly insulated from the
President’s removal authority. Any concerns that Seila Law
might have had about being subjected to investigation
without adequate presidential oversight and control have
now been resolved. A Director well aware that she may be
removed by the President at will has ratified her
predecessors’ earlier decisions to issue and enforce the CID.

    Seila Law advances two arguments challenging the
validity of Director Kraninger’s ratification, neither of which
we find persuasive.

    As a threshold matter, Seila Law contends that Director
Kraninger could not validly ratify the CFPB’s earlier actions
because the agency lacked the authority to take those actions
back in 2017. Seila Law bases this argument on the
statement in Federal Election Commission v. NRA Political
20                  CFPB V. SEILA LAW

Victory Fund, 513 U.S. 88 (1994), that “it is essential that
the party ratifying should be able not merely to do the act
ratified at the time the act was done, but also at the time the
ratification was made.” Id. at 98 (emphasis omitted). In
Seila Law’s view, until the Supreme Court invalidated the
for-cause removal provision, the CFPB was exercising
executive power unlawfully, which in turn rendered all of
the agency’s prior actions void at the time they were taken
and hence incapable of being ratified.

     Seila Law’s argument is largely foreclosed by our court’s
decision in CFPB v. Gordon, 819 F.3d 1179 (9th Cir. 2016).
In that case, the CFPB initiated an enforcement action after
Richard Cordray had been appointed as the agency’s
Director pursuant to President Obama’s recess appointment
power. Id. at 1185–86. Shortly thereafter, the Supreme
Court’s decision in NLRB v. Noel Canning, 573 U.S. 513
(2014), called into question the validity of Director
Cordray’s appointment. After he was renominated and
confirmed by the Senate, Director Cordray issued a blanket
ratification of all actions he had taken while serving as a
recess appointee. Gordon, 819 F.3d at 1185–86. We held
that Director Cordray’s ratification cured any Appointments
Clause defect in the initiation of the enforcement action
against the defendant. Id. at 1192. Addressing the same
passage from NRA Political Victory Fund quoted above, we
reasoned that the constitutional defect was limited to
Director Cordray and did not infect the agency as a whole.
Thus, the CFPB as an agency had the authority to bring the
enforcement action both at “the time the act was done” and
at “the time the ratification was made.” Id. at 1191–92.

    The same is true here. Just as in Gordon, the
constitutional infirmity relates to the Director alone, not to
the legality of the agency itself. Although the Supreme
                    CFPB V. SEILA LAW                     21

Court held in Seila Law that the CFPB’s “structure” violated
the separation of powers, 140 S. Ct. at 2192, the plurality
opinion explained that “[t]he only constitutional defect we
have identified in the CFPB’s structure is the Director’s
insulation from removal.” Id. at 2209. Nothing in the
Court’s decision suggests that it believed this defect
rendered all of the agency’s prior actions void. Indeed, had
that been the Court’s view, it presumably would have
ordered the dismissal of this proceeding rather than
remanding for us to consider whether the agency’s actions
relating to the CID had been validly ratified.

    We find strong support for our holding in Federal
Election Commission v. Legi-Tech, Inc., 75 F.3d 704 (D.C.
Cir. 1996), a case cited with approval in Gordon. 819 F.3d
at 1191. In Legi-Tech, the Federal Election Commission
brought a civil enforcement action while two congressional
officers were impermissibly serving as ex officio members
of the Commission. 75 F.3d at 706. After the presence of
those members was held to violate the separation of powers,
the Commission reconstituted itself and ratified its earlier
decision to bring the enforcement action. Id. at 706, 708.
The D.C. Circuit held that the ratification was valid and, in
doing so, rejected the same argument Seila Law advances
here—namely, that a “structural” constitutional defect in an
agency’s composition renders all of the agency’s prior
actions void. Id. at 708–09. Taken together, Legi-Tech and
Gordon confirm that ratification is available to cure both
Appointments Clause defects and structural, separation-of-
powers defects.

    Seila Law’s remaining argument is that Director
Kraninger’s July 2020 ratification is invalid because it took
place outside the limitations period for bringing an
enforcement action against Seila Law. In support of its
22                  CFPB V. SEILA LAW

position, Seila Law again relies on the Supreme Court’s
decision in NRA Political Victory Fund—in particular, its
holding that the Solicitor General could not validly ratify the
filing of an unauthorized petition for certiorari when the
attempted ratification occurred after the time for filing the
petition had already run. 513 U.S. at 98.

    The statute of limitations relevant here states that,
“[e]xcept as otherwise permitted by law or equity, no action
may be brought under this title more than 3 years after the
date of discovery of the violation to which an action relates.”
12 U.S.C. § 5564(g)(1). According to Seila Law, the “date
of discovery of the violation” was February 18, 2016, when
the CFPB filed an application (in a proceeding brought
against a different entity) that accused Seila Law of
wrongdoing. Alternatively, Seila Law contends that the
limitations period began to run at the very latest on
February 27, 2017, when the CFPB issued the CID at issue.

    Seila Law’s argument fails because this statutory
limitations period pertains solely to the bringing of an
enforcement action, which the CFPB has not yet commenced
against Seila Law. The only actions ratified by Director
Kraninger are the issuance and enforcement of the CID. The
very purpose of such a demand is to assist the agency in
determining whether Seila Law has engaged in violations
that could justify bringing an enforcement action; it is
impossible to know at this point whether such an action
would (or would not) be timely.

     Whether Seila Law would be able to mount a successful
statute-of-limitations defense in a future enforcement action
has no bearing on the validity of Director Kraninger’s
ratification. “[A] party may not defeat agency authority to
investigate with a claim that could be a defense if the agency
subsequently decides to bring an action against it.” EEOC
                    CFPB V. SEILA LAW                      23

v. Children’s Hospital Medical Center, 719 F.2d 1426, 1429
(9th Cir. 1983) (en banc). We have applied that principle
specifically in the statute-of-limitations context. In Pacific
Maritime Association v. Quinn, 491 F.2d 1294 (9th Cir.
1974), the employer resisted a demand for documents from
the Equal Employment Opportunity Commission on the
ground that the employee’s underlying discrimination
complaint was untimely. Id. at 1295. We stated that the
“statute of limitations issue has been raised prematurely” and
held that the demand should be enforced so that the agency
could investigate whether there was a continuing violation
that would render the complaint timely. Id. at 1296. Seila
Law has similarly raised its statute-of-limitations argument
prematurely.

    For the reasons given in our earlier decision, we reject
Seila Law’s arguments challenging the CFPB’s statutory
authority to issue the CID. 923 F.3d at 684–85.
Accordingly, we reaffirm the district court’s order granting
the CFPB’s petition to enforce the CID.

   AFFIRMED.