5th Circuit Stays Appeal of Decision Which Struck Down New CFPB Exam Manual Which Treated Discrimination as a UDAAP Violation

The Fifth Circuit Court of Appeals stayed the CFPB’s appeal of a recent decision vacating a new agency exam manual which stated that discrimination is a UDAAP violation.

In the underlying action, a trade association challenged the CFPB’s 2022 promulgation of a new manual governing examinations into unfair, deceptive, and abusive acts and practices.  Among other things, the new manual included the novel pronouncement that discrimination against protected classes was a type of UDAAP violation since discrimination is unfair.  The district court found that under the major-questions doctrine—which provides that an agency must have clear congressional authorization to exercise regulatory authority in areas of major economic and political significance—the CFPB’s UDAAP authority did not extend to discrimination.  Additionally, the court found that the change was invalid under other recent Fifth Circuit authority which held that the CFPB’s funding structure was unconstitutional, making the agency’s actions to promulgate the exam manual pursuant to that funding unlawful.

The Fifth Circuit decision finding the CFPB’s funding structure unconstitutional is currently under review by the U.S. Supreme Court.  The Fifth Circuit stayed its review of the decision striking down the new UDAAP exam manual pending the Supreme Court’s decision in the funding constitutionality case.

WBK’s previous coverage of the case on the new UDAAP exam manual is available here and here, and its coverage of the CFPB funding constitutionality case is available here and here.  The Supreme Court heard oral arguments on the latter in October 2023, and a decision in that case is expected by June 2024.