Judge denies restraining order to halt Mulvaney’s appointment as acting CFPB director

The first round in the legal battle over interim leadership of the Consumer Financial Protection Bureau went to President Trump on Tuesday when a federal judge denied a request for a temporary restraining order to keep his choice for the job, Mick Mulvaney, from serving as acting director.

But the attorney for the agency’s deputy director, Leandra English, who is supported by consumer advocates, maintained she is the lawful acting director, indicating the fight was not over in a case that raises constitutional questions and may be headed to the Supreme Court.

“I think everyone understands this court is not the final stop, this judge does not have the final word on what happens in this controversy,” said her attorney, Deepak Gupta.

The denial of the restraining order cannot be appealed, but Gupta said that he was considering other legal options, including seeking a preliminary injunction that could be appealed if not granted.

The ruling came as protesters Tuesday again demonstrated against Mulvaney, the White House budget chief, outside the bureau’s headquarters.

Consumer advocates complained that the appointment of Mulvaney puts an outspoken critic in charge of the bureau potentially for months without the need for Senate confirmation. Mulvaney could serve for at least 210 days as acting director, according to the law by which Trump installed him.

Inside the bureau, Mulvaney occupied the director’s office and clashed with English, who also was at work in the building performing “bureau business,” according to Gupta.

Mulvaney sent English emails Tuesday “reprimanding her for the way she has held herself out” as the acting director, Gupta told Judge Timothy J. Kelly of the U.S. District Court for the District of Columbia during the restraining order hearing.

Mulvaney also directed employees to report any communications from English to the bureau’s counsel, Gupta said.

Neither Gupta nor English in a written statement Tuesday indicated that she was still asserting she was acting director, as she was on Monday. But Gupta said Mulvaney’s emails put a “chill on her ability to do her job,” including some tasks required of the deputy director.

“She may be set up for a claim that she was not performing her duties in some way,” Gupta said.

A spokesman for Mulvaney did not respond to an email request for comment. On Monday, Mulvaney had said English did not show up for work at bureau headquarters, but Gupta said she did before heading to meetings on Capitol Hill.

Part of English’s request for a temporary restraining order rested on her claim that she would “suffer irreparable injury” if she were not able to serve as acting director.

But Kelly, who was nominated this year by President Trump and took his seat on the court in September, sided with Justice Department attorneys in rejecting the request.

He said there was nothing to suggest she was about to be fired from her job, although Brett Shumate, an assistant attorney general arguing the case, could not assure Kelly on Monday that English would not be fired.

Kelly did not rule on the merits of English’s legal argument about which of two statutes governed who should be acting director — though he said he declined the restraining order request in part because English did not demonstrate a “substantial likelihood” she would ultimately win on the merits.

Kelly said the case “raises significant constitutional questions” about the president’s ability to fill executive branch positions.

The dispute was precipitated by last week’s resignation of Richard Cordray, a Democrat who has been the agency’s only director since it was established in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Cordray announced Friday that he had appointed English as the agency’s deputy director, which made her the acting chief under Dodd-Frank. But within hours President Trump appointed Mulvaneyto fill the post under a different statute.

English filed for the restraining order Sunday, saying she was the lawful acting director under a provision in the Dodd-Frank act that details who serves as acting director “in the absence or unavailability of the director.”

Her assertion was supported in court filings this week by more than two dozen current and former Democratic lawmakers, including House Minority Leader Nancy Pelosi of San Francisco and Senate Democratic Leader Charles E. Schumer of New York. Also among the group was former Rep. Barney Frank (D-Mass.), the coauthor of the Dodd-Frank act.

The Trump administration has argued that the Federal Vacancies Act of 1998 allowed Trump instead to appoint an official who already had been confirmed by the Senate in another capacity to serve as acting director.

Trump selected Mulvaney, who had been confirmed by the Senate for his job as director of the White House Office of Management and Budget. He said he would serve in both roles until Trump nominated a permanent director and that person was confirmed by the Senate.

The Trump administration applauded Tuesday’s court decision.

“It’s time for the Democrats to stop enabling this brazen political stunt by a rogue employee and allow Acting Director Mulvaney to continue the bureau’s smooth transition into an agency that truly serves to help consumers,” said Raj Shah, principal deputy White House press secretary.

But Democratic supporters of English have vowed to keep fighting in a saga that was played out publicly on Monday, when Mulvaney and English both asserted that they were the bureau’s acting director.

Mulvaney occupied the director’s office and held a news conference at the CFPB on Monday afternoon announcing a 30-day freeze on hiring and new regulations. He sent out a memo telling the staff to “disregard” any emails or instructions from English. The agency’s website lists him as acting director. Mulvaney also established a Twitter account called @CFPBDirector and tweeted a picture Tuesday of himself at work at the bureau.

On Monday, English sent an email to the staff that was signed “acting director” and went to Capitol Hill to meet with Democratic senators in that capacity. English said in a statement tweeted by her lawyer Tuesday that she planned on spending the day at bureau headquarters “taking calls and meeting with external stakeholders and bureau staff.”

jim.puzzanghera@latimes.com

Twitter: @JimPuzzanghera

UPDATES:

4:40 p.m.: This article was updated with additional details throughout.

2:15: This article was updated with comment from the attorney for Leandra English.

This article was originally published at 1:55 p.m.