3rd Circuit Holds States May Bring CFPA Suits Concurrently with CFPB

The Third Circuit recently held in a precedential opinion that loan servicers are subject to CFPA enforcement actions brought by state governments concurrently with CFPB enforcement actions, even when the CFPB brought its suit first.

The state of Pennsylvania filed suit against defendant loan servicers under § 5552 of the CFPA, alleging “repeated payment-processing errors.”  The defendants argued that because the CFPB had already brought an enforcement action against them under the same provision and for the same alleged conduct, the CFPA barred Pennsylvania from subsequently bringing a concurrent action.

The Third Circuit rejected the defendants’ claims because the “plain language” of § 5552 “permits state concurrent actions.”  And where other CFPA provisions prohibit concurrent claims in other contexts, they do so with explicit statutory language.  The court explained that when a textual restriction on state power is present in some provisions of a statute, but absent from another, it presumes that the absence was intentional.  Thus, both the CFPA’s text and common principles of statutory interpretation militated against the defendants’ position.

The court’s ruling upheld the denial of the defendants’ motion to dismiss Pennsylvania’s enforcement action, allowing the case to proceed in the district court.  The state plaintiff will proceed in the district court on its CFPA claim as well as claims under a Pennsylvania consumer protection statute, which the court also held was not preempted by federal law.