Overview
In an opinion yesterday, Judge Failla largely denied UBS’s motion to dismiss a lawsuit brought by a plaintiff who claims he was fired, in violation of anti-retaliation laws, for complaining about UBS’s practices relating to commercial mortgage-backed securities (CMBS). Judge Failla did dismiss, however, the plaintiffs’ claims under the Consumer Financial Protection Act. This portion of the motion raised a novel question of whether the anti-retaliation provisions of the CFPA pertained to products that the CFPB had the authority to regulate by statute, or whether the provisions related only to those products actually regulated. Judge Failla agreed with the latter view and dismissed that claim:
The viability of Plaintiff’s CFPA claim depends on whether the products evaluated for UBS Securities were consumer financial products or services within the meaning of the CFPA, which in turn depends on the meaning of the phrase “as may be defined by the [CFPB], by regulation, for the purposes of this title.” 12 U.S.C. § 5481(15)(A)(xi). Plaintiff interprets this phrase as defining a consumer financial product or service as any product or service that the CFPB has the statutory authority to regulate, while Defendants argue that the phrase defines a consumer financial product or service more narrowly as the products or services that the CFPB has actually chosen to regulate. The distinction is critical, because the parties do not contest that, as of the filing of Plaintiff’s suit, the CFPB had not actually promulgated any regulation covering the CMBS products that Plaintiff evaluated for UBS Securities. Because the Court agrees with Defendants’ interpretation, it dismisses Plaintiff’s CFPA retaliation claim. This question of statutory interpretation appears to be a matter of first impression within the federal judiciary. The Court thus turns to the “familiar canon of statutory construction that the starting point for interpreting a statute is the language of the statute itself.” Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980). The Court “examine[s] the statute’s text in light of context, structure, and related statutory provisions.” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 558 (2005). Here, Plaintiff’s interpretation is clearly foreclosed by the logic of the statutory text. The full phrase at issue is “such other financial product or service as may be defined by the [CFPB], by regulation, for purposes of this title, if the [CFPB] finds that ….” 12 U.S.C. § 5481(15)(xi). Plaintiff’s interpretation of this provision as covering any product that could fall under the CFPB’s regulatory authority would require this Court to undertake an elaborate series of hypothetical inquiries without having the benefit of any actual regulation or rulemaking process to review. The Court would have to decide whether the CFPB could have found that that the product or service was “entered into or conducted as a subterfuge or with a purpose to evade any Federal consumer financial law,” or whether the CFPB could have found that the product or service had, or likely could have had, “a material impact on consumers.” Id. The use of the word “may” is thus best read as leaving open the possibility of future CFPB regulations not in effect at the time of the CFPA’s passage, rather than as an invitation to define the potential breadth of the CFPB’s authority.
