I. INTRODUCTION
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Bureau of Consumer Financial Protection (CFPB) to prescribe rules establishing procedures for the conduct of adjudication proceedings. Section 1053 of the Dodd-Frank Act authorizes the CFPB to conduct administrative adjudications to ensure or enforce compliance with (a) the provisions of Title X of the Dodd-Frank Act, (b) the rules prescribed by the CFPB under Title X of the Dodd-Frank Act, and (c) any other Federal law or regulation that the CFPB is authorized to enforce 12 U.S.C. 5563(a). The Final Rule does not apply to proceedings governing the issuance of a temporary order to cease and desist pursuant to section 1053(c) of the Dodd-Frank Act. The CFPB issued a final rule that became effective on June 29, 2012.
II. FINAL RULE
In drafting the Final Rule, the Bureau endeavored to create an adjudicatory process that provides for the expeditious resolution of claims while ensuring that parties who appear before the Bureau receive a fair hearing.
The Final Rule implements a procedure, whereby a hearing officer will issue a recommended decision in each administrative adjudication. It provides any party the right to contest the recommended decision by filing a notice of appeal and perfecting the appeal by later filing an opening brief. In the event a party fails to timely file a notice of appeal or perfect an appeal, the Director may either adopt the recommended decision as the CFPB’s final decision or order further briefing with respect to any findings of fact or conclusions of law contained in the recommended decision. The CFPB believes this approach best balances the need for expeditious decision-making with the parties’ right to ultimate consideration of a matter by the Director.
The Final Rule also provides that the hearing officer will decide dispositive motions in the first instance, subject to the same right of review provided for recommended decisions in the event that the ruling upon such a motion disposes of the case.
The Final Rule sets deadlines for both the recommended decision of the hearing officer and the final decision of the Director, wherein the hearing officer is permitted a specified period of time—300 days from service of the notice of charges or 90 days after briefing is complete—to issue a recommended decision. The Final Rule also requires the hearing officer to convene a scheduling conference soon after the respondent files its answer to craft a schedule appropriate to the particular proceeding.
The Final Rule permits the hearing officer to request an extension of the 300-day deadline, but the CFPB’s intent is that such extensions will be requested by hearing officers and granted by the Director only in rare circumstances.
If a recommended decision is appealed to the Director, or the Director orders additional briefing regarding the recommended decision, the Final Rule provides that the Office of Administrative Adjudication must notify the parties that the case has been submitted for final CFPB decision at the expiration of the time permitted for filing reply briefs with the Director. The Director then must issue his or her final decision within 90 days.
The Final Rule provides that the Office of Enforcement will provide any party in an adjudication proceeding an opportunity to inspect and copy certain categories of documents obtained by the Office of Enforcement from persons not employed by the CFPB, as that term is defined in the Final Rule, in connection with the investigation leading to the institution of the proceedings, and certain categories of documents created by the CFPB, provided such material is not privileged or otherwise protected from disclosure. The Office of Enforcement’s obligation under the Final Rule relates only to documents obtained by the Office of Enforcement; documents located only in the files of other divisions or offices of the CFPB are beyond the scope of the affirmative disclosure obligation.
The Final Rule does not provide for certain other traditional forms of pre-trial discovery, such as interrogatories and discovery depositions, but does provide for the deposition of witnesses unavailable for trial, the use of subpoenas to compel the production of documentary or tangible evidence, and in appropriate cases, expert discovery, thus ensuring that respondents have an adequate opportunity to marshal evidence in support of their defense.