The Senate Judiciary Committee wrapped up its hearings last week on the Supreme Court nomination of Judge Brett Kavanaugh—and many of the legal issues that were touched on will continue to percolate in the lower courts. We take a look at one agency—the Consumer Financial Protection Bureau—that was central to some of the Kavanaugh questioning on the scope of presidential power. Plus: When the late and widely respected tax lawyer and Supreme Court devotee Sheldon Cohen spoke, important people listened. Thanks for reading. Feedback is welcomed at [email protected] and [email protected].

 

Destination SCOTUS: Kavanaugh and the CFPB?

 

U.S. Supreme Court nominee Brett Kavanaugh's dissent from a decision upholding the constitutionality of the Consumer Financial Protection Bureau's single director structure became a central focus of Senate questions probing his views on executive power. Kavanaugh in 2016 lambasted the “massive, unchecked” power—insulated from the White House—of the single director of the CFPB.

The issue is likely to follow him to the high court if, as expected, he is confirmed. The Senate has set a vote for Sept. 13, but Democrats will likely hold over the nominee until Sept. 20.

The majority in the consumer case Kavanaugh ruled in—PHH Corp. v. CFPB—said the “for cause” removal of the CFPB director didn't violate separation of powers. Critics of the agency—there are many—have argued the president should have the power to remove the director at will. Neither side in the PHH case took the dispute to SCOTUS.

But the issue survives and could soon be before a Kavanaugh-seated high court courtesy of Theodore Olson of Gibson, Dunn & Crutcher, Gregory Jacob of O'Melveny & Myers, and others.

Olson's client, PHH Corp, chose not to appeal to the Supreme Court, but the former George W. Bush solicitor general has another case in the hopper—All-American Check Cashing v. CFPB. In April, a Fifth Circuit panel approved Olson's motion for an interlocutory appeal on the constitutional question. And last month, Olson, who testified on behalf of Kavanaugh's nomination, upped the ante by filing an unopposed petition for initial en banc hearing.

If the Fifth Circuit agrees to en banc review, Olson has asked it to set arguments for its January sitting. But that's not the only circuit being drawn into this legal battle.

>> Heading to the Second Circuit is CFPB v. RD Legal Funding. Michael Roth of Boies Schiller & Flexner, counsel to RD Legal, won a June district court ruling that the CFPB structure is unconstitutional—disagreeing with the D.C. Circuit. Decisions by either circuit would push any potential Supreme Court review into the 2019 term.

>> But not as far off is State National Bank of Big Spring v. Mnuchin—cousin to PHH Corp. This case was put on hold in Washington federal district court while the D.C. Circuit was considering PHH. After the ruling in PHH, the district court entered judgment against State National Bank and the D.C. Circuit summarily affirmed.

On Sept. 6, Kavanaugh's last day of testimony, O'Melveny's Jacob, along with the Competitive Enterprise Institute, filed a petition in the high court on behalf of State National Bank. C. Boyden Gray of Gray & Associates is also on the petition. Kavanaugh gets name-dropped in the petition for his dissent in the PHH case.

Jacob not only raises the separation-of-powers issue involving the CFPB director, but also asks the justices to overrule the 1935 decision, Humphrey's Executor v. United States—another often mentioned precedent during the Kavanaugh hearings.

“The case has come up repeatedly in Judge Kavanaugh's writings as a misguided dilution of the president's power over the executive branch,” the Wall Street Journal reported last month.

>> Now, one more case to watch: Running on nearly parallel tracks in the Fifth Circuit to Olson's consumer bureau case is Collins v. Mnuchin. In July, Charles Cooper of D.C.'s Cooper & Kirk successfully attacked the constitutionality of the structure of the Federal Housing Finance Agency, a single director, independent agency like the CFPB, before a three-judge panel. That ruling is now being appealed.

 

Remembering Sheldon Cohen, SCOTUS Devotee

 

Sheldon Cohen, who died September 4, was old enough to remember seeing the Supreme Court building under construction. (It was completed in 1935.)

A tax lawyer who served as the IRS Commissioner in the Lyndon B. Johnson administration, Cohen loved the Supreme Court as an institution and was a familiar figure in the court community for decades. Also, a very nice guy. His death at age 91 recalled numerous interactions with the court and justices:

➤➤ Cohen counseled both Justices Abe Fortas and William O. Douglas on financial matters. On the day John F. Kennedy was shot, Fortas, a longtime adviser to Lyndon Johnson, recruited Cohen to create a blind trust to avoid conflicts of interest with Johnson's financial holdings as he assumed the presidency.

➤➤ Cohen was a founding member and longtime treasurer of the Supreme Court Historical Society who also helped raise funds for the society from the many political and financial figures he and his wife Faye knew in Washington. “His contributions to the society are too numerous to list,” said Ralph Lancaster Jr. chairman emeritus of the society.

➤➤ In his autobiography, Douglas called Cohen “a man of impeccable honesty.” Douglas recounted the time when Cohen, as IRS commissioner, adhered to the privacy of tax documents and refused to view Spiro Agnew's tax returns after a tipster told him Agnew had received kickbacks while vice president. Grand juries later caught up with Agnew.

➤➤ Court historian Mel Urofsky recalled that Cohen, Douglas's executor, “always had a story to tell about LBJ, Douglas, or some other political figure, and he seemed to know a lot of them.” Thanks to Cohen, Urofsky was given permission to view and publish Douglas's correspondence after Douglas died in 1980.

➤➤ Cohen, along with his IRS predecessor Mortimer Caplin, joined in an amicus brief in a 2011 case testing the Affordable Care Act. They lent their expertise on the knotty question whether the Federal Tax Injunction Act stripped away the court's jurisdiction to rule in the case.

 

ICYMI: Brett Kavanaugh Edition

 

We published quite a few reports last week about Brett Kavanaugh. Here are some of the most-read:

>> Kavanaugh, unlike Neil Gorsuch, refused to say anything critical about Trump's bashing of federal judges.

>> Yale Law's Akhil Amar asks: If not Kavanaugh, who else?

>> Kavanaugh was mum on the role the Federalist Society played in helping Trump pick judges.

>> Sen. Dick Durbin asked Kavanaugh to read this book, and the nominee spent a weekend doing just that.

>> “Team of nine.” We heard that over and over. Shouldn't that be “nine scorpions?”

>> The sexual harassment claims against Kavanaugh's old boss—Alex Kozinski—were a “gut punch.”

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