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Law360 (May 11, 2021, 8:58 PM EDT ) The U.S. Consumer Financial Protection Bureau has urged a federal judge in Tennessee to deny a request for a temporary injunction of a CFPB rule requiring landlords to inform tenants about federal protections for tenants put in place amid the COVID-19 pandemic, saying the rule does not require false speech and therefore passes First Amendment muster.
In an opposition brief filed Monday, the CFPB told U.S. District Judge Eli J. Richardson not to grant a request made by a group of landlords that the judge temporarily enjoin a CFPB rule that would require debt collectors seeking to evict tenants to disclose that the tenants may be eligible for eviction protection under a Centers for Disease Control and Prevention order.
"Plaintiffs fail to demonstrate that they are entitled to the extraordinary relief they seek," the CFPB told Judge Richardson on Monday.
In the suit, which was filed on May 3, plaintiffs the Property Management Connection LLC, the National Association of Residential Property Managers and Gordon J. Schoeffler accused the CFPB of having "doubled down on an unlawful policy of its fellow agency," the CDC, by making the rule.
According to the landlord groups, who are represented by a legal team that includes counsel from the New Civil Liberties Alliance, the CFPB rule would force landlords to make "untrue statements to tenants who have been sued for unpaid rent, and are subject to eviction."
The suit accuses the CFPB of exceeding its statutory and regulatory authority and claims that the rule violates the First Amendment because it requires false speech.
On Monday, the CFPB pushed back against the latter contention in its opposition brief.
"Requiring debt collectors to provide routine, factual notification of rights or legal protections that consumers 'may' have, in jurisdictions where the CDC Order applies, does not compel false speech and plainly passes First Amendment muster," the regulator said. "Plaintiffs are therefore not likely to succeed on the merits of their claims."
On Tuesday, Caleb Kruckenberg, an attorney for the landlords, told Law360 that the CFPB's response "is telling because it essentially challenges the district court hearing our case to disregard binding precedent in the Sixth Circuit."
The suit states that the Sixth Circuit found that the CDC "lacked the statutory authority to issue the Eviction Moratorium," and Kruckenberg said Tuesday that as such, the CDC's eviction edict "has already been held to be unlawful, and it cannot apply to tenants in the Sixth Circuit."
"CFPB therefore expects our clients to mislead tenants about an eviction moratorium that has already been invalidated," Kruckenberg said.
Kruckenberg noted that he expected to file a reply to the CFPB brief Tuesday evening.
The CFPB did not immediately respond to a request for comment.
The CFPB is represented in-house by Karen S. Bloom and Kevin E. Fried.
The plaintiffs in the case are represented by John J. Vecchione and Caleb Kruckenberg of the New Civil Liberties Alliance and Ben M. Rose of RoseFirm PLLC.
The case is The Property Management Connection et al. v. The Consumer Financial Protection Bureau et al., case number 3:21-cv-00359, in the U.S. District Court for the Middle District of Tennessee.
--Additional reporting by Al Barbarino and Jon Hill. Editing by Steven Edelstone.
For a reprint of this article, please contact reprints@law360.com.
