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Consumer Financial Protection Bureau v. Harbour Portfolio Advisors, LLC

United States District Court, E.D. Michigan, Southern Division

March 14, 2017

CONSUMER FINANCIAL PROTECTION BUREAU, Petitioner,
v.
HARBOUR PORTFOLIO ADVISORS, LLC; NATIONAL ASSET ADVISORS, LLC; and NATIONAL ASSET MORTGAGE, LLC; Respondents.

          OPINION AND ORDER DENYING RESPONDENTS' MOTION TO STAY [21]

          Nancy G. Edmunds United States District Judge

         On February 16, 2017, the Court entered an Order requiring Respondents to comply with Civil Investigative Demands ("CIDs") issued by Petitioner Consumer Financial Protection Bureau (the "Bureau"). (Dkt. 19.) Now Respondents move to stay that Order pending appeal. (Dkt. 21.) For the reasons below, their motion is DENIED.

         I. Background

         The Court reviewed the relevant facts in its February 16 Order, and it incorporates that background here. (Dkt. 19, at 1-4.) To summarize, Respondents are targets of a Bureau investigation into potential violations of the federal consumer financial laws. On September 8, 2016, the Bureau issued CIDs to each Respondent. The CIDs required the production of documents, interrogatories, and written reports by October 7, 2016.

         Arguing, inter alia, that the Bureau lacked the authority to issue their respective CIDs, Respondents petitioned the Bureau to set aside them aside. On November 1, 2016, the Bureau Director denied Respondents' petitions. Respondents then continued to oppose enforcement, so the Bureau petitioned this Court to enforce the CIDs on November 29, 2016. After ordering briefing and holding a hearing on the matter, the Court issued its February 16, 2017 Order requiring Respondents to comply with the CIDs within 30 days.

         Now Respondents move to stay enforcement of that Order pending appeal. Respondents have asked the Court to consider their motion an expedited basis, and it has obliged, ordering expedited briefing and declining to hold a hearing. Respondents also request that, if the Court denies their motion, the time spent obtaining a decision on their motion not be counted against the 30-day deadline for complying with the CIDs.

         II. Applicable Standard

         The party seeking a stay bears the burden of showing that a stay is warranted. Ohio St. Conference of NAACP v. Husted, 769 F.3d 385, 387 (6th Cir. 2014). In deciding whether to grant a stay, the Court must consider the following: (1) whether the stay applicant has made a strong showing that it is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies. Nken v. Holder, 556 U.S. 418, 434 (2009) (citation omitted). "These four factors are not prerequisites that must be met, but interrelated considerations that must be balanced." Concerned Pastors for Soc. Action v. Khouri, 844 F.3d 546, 548-549 (6th Cir. 2016) (internal quotation marks and citation omitted). However, the "first two factors of the [] standard are the most critical." Nken, 556 U.S. at 434. And where the Government is the party opposing the stay, the final two factors merge. Id. at 435.

         III. Analysis

         Respondents contend that they have carried their burden of establishing that a stay is warranted. For the reasons that follow, the Court disagrees.

         A. Likelihood of Success on the Merits

         "To demonstrate a likelihood of success on the merits, the movant must show, 'at a minimum, serious questions going to the merits.'" Dodds v. United States Dep't of Educ., 845 F.3d 217, 221 (6th Cir. 2016) (quoting Mich. Coal. of Radioactive Mat. Users, Inc. v. Griepentrog, 945 F.2d 150, 154 (6th Cir. 1991)). "It is not enough that the chance of success on the merits be better than negligible." Nken, 556 U.S. at 434 (citation omitted). "[M]ore than a mere 'possibility' of relief is required." Id. (citation omitted).

         Here, Respondents argue that they "easily meet that standard" because judges and lawyers could reasonably contest the Court's conclusion that the Bureau has the authority to issue the CIDs. (Dkt. 21, at 8.) In support, Respondents emphasize a variety of sources related to their argument that the financial products they offer do not constitute "credit" under the federal consumer financial laws. (Id.) The problem with Respondents' argument, which the Court addressed in its February 16 Order, is that whether Respondents' transactions constitute "credit" is not dispositive of whether the Bureau has authority to issue the CIDs. See EEOC v. Karuk Tribe Hous. Auth., 260 F.3d 1071, 1076 (9th Cir. 2001) (noting that the Supreme Court has "consistently reaffirmed" that "courts should not refuse to enforce an administrative subpoena when confronted by a fact-based claim regarding coverage or compliance with the law"); FTC v. Texaco, Inc., 555 F.2d 862, 872 (D.C. Cir. 1977). The issue is whether the Bureau's investigative jurisdiction is "plainly lacking, " i.e., whether there are plausible grounds to believe that Respondents may have information related to a violation of the federal consumer financial laws. See 12 U.S.C. § 5562(c)(1); Karuk Tribe Hous. Auth., 260 F.3d at 1077; FTC v. Ken Roberts Co., 276 F.3d 583, 587 (D.C. Cir. 2001). And Respondents have not raised a meaningful challenge to the Court's application of that standard, [1] nor have they argued that the Court applied the incorrect standard. Accordingly, the Court finds that Respondents have not raised serious questions going to the merits, let alone that they are likely to succeed on appeal.

         B. Irreparable ...


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