Supreme Court Rules Against President Obama's Recess Appointments

In a unanimous decision Thursday, the U.S. Supreme Court ruled that President Obama’s recess appointments of three members of the National Labor Relations Board (NLRB) were unconstitutional and that the Congress needed to be on a break of at least 10 days before the President’s recess appointment authority kicks in.

Although the case is seen as a major victory for those opposed to the appointments, it will not impact any current appointees, including CFPB Director Richard Cordray who was appointed at the same time as the NRLB members.

The Supreme Court’s decision also stopped short of what many activists had hoped: limiting the power of any president to make recess appointments. In a dissent written by Justice Antonin Scalia, and joined by the three other conservative justices, it was argued that the majority’s decision in the NRLB case, while correct, did not go far enough in limiting recess appointment power.

But none of the appointees in question are in danger of losing their spots. Two were later confirmed, along with Richard Cordray, in full votes in the Senate. A third was removed from consideration. Furthermore, President Obama has not exercised his recess appointment authority since the actions in question.

Still, the decision could fuel challenges to any actions the CFPB took between January 2012 and Cordray’s confirmation in the Senate in July 2013. The Bureau filed only two contested civil enforcement actions in that period.  All of the other 17 enforcement actions brought by the agency, including eight civil actions filed in federal court and nine administrative actions within the CFPB, consisted of stipulated resolutions where the parties agreed in advance to the financial and other terms of the settlements.

The Bureau filed the first of the two disputed actions, which also happened to be the first civil enforcement action brought by the CFPB against any defendant, in July 2012 against a Southern California attorney, his law firm and other defendants that offered loan modification services to consumers.  Although the defendants challenged the CFPB’s authority to bring enforcement actions, including questioning the validity of Director Cordray’s recess appointment, the court denied their motion without reaching the merits, holding that the defendants’ argument was inadequately articulated and waived as a result.