Morgan Drexen, Inc. v. Consumer Financial Protection Bureau

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 19, 2014 Decided May 1, 2015

No. 13-5342

MORGAN DREXEN, INC. AND KIMBERLY A. PISINSKI,
APPELLANTS

v.

CONSUMER FINANCIAL PROTECTION BUREAU,
APPELLEE

Appeal from the United States District Court
for the District of Columbia
(No. 1:13-cv-01112)

Randall K. Miller argued the cause for appellants. With
him on the briefs were Nicholas M. DePalma and Randal M.
Shaheen. David D. Conway entered an appearance.

John R. Coleman, Senior Litigation Counsel, Consumer
Financial Protection Bureau, argued the cause for appellee.
With him on the brief was Meredith Fuchs, General Counsel.
Nandan M. Joshi, Counsel, entered an appearance.
 2

Before: ROGERS, KAVANAUGH and PILLARD, Circuit
Judges.

Opinion for the Court filed by Circuit Judge ROGERS.

Dissenting opinion filed by Circuit Judge KAVANAUGH.

ROGERS, Circuit Judge: Title X of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, 12 U.S.C. §§ 5481
et seq., established the Consumer Financial Protection Bureau
to “regulate the offering and provision of consumer financial
products or services under the Federal consumer financial laws.”
Id. § 5491(a). The Bureau is to “implement and . . . enforce
Federal consumer financial law,” id. § 5511(a), including
eighteen pre-existing statutes and Title X itself, see id.
§§ 5481(12), (14). To carry out these duties, the Bureau has
rulemaking, supervisory, investigatory, adjudicatory, and
enforcement authority, id. §§ 5512(b), 5514–5516, 5562–5564,
including the authority to file civil enforcement actions against
regulated parties, id. § 5564; see also 15 U.S.C. § 6105(d).

The district court, without reaching the merits of appellants’
constitutional challenge to Title X as a violation of the
separation of powers, dismissed appellants’ complaint for
injunctive and declaratory relief. It ruled that Morgan Drexen,
Inc., had an adequate remedy at law in an enforcement action
filed by the Bureau in the Central District of California, where
Morgan Drexen could raise the constitutional challenge as a
defense. The district court ruled that the other plaintiff,
Kimberly Pisinski, an attorney who contracts with Morgan
Drexen for paralegal services, lacked standing under Article III
of the Constitution. They appeal, and we affirm. Pisinski has
failed to proffer evidence of an injury in fact at the time she filed
the complaint, and Morgan Drexen fails to show the district
 3

court abused its discretion in dismissing the complaint.
Notwithstanding Morgan Drexen’s objection that it filed the
complaint before the Bureau filed its enforcement action, the
same issues involving the same parties were pending before two
federal district courts. The Bureau filed its enforcement action
fewer than thirty days after Morgan Drexen filed its complaint.
Once the Bureau did so, Morgan Drexen no longer faced the
dilemma of whether to change its behavior or risk continued
violation of the law in order to get a hearing. Without prejudice
to its constitutional challenge, Morgan Drexen was also relieved,
as was the judicial system, of the burdens of litigating
overlapping claims in two federal district courts.

I.

Morgan Drexen, a Nevada corporation headquartered in
California, “is in the business of licensing its proprietary
software to law firms and providing these firms with live
paraprofessional and support services,” including support for
bankruptcy and debt-relief legal practices. Decl. of Walter
Ledda, Chief Exec. Offr., Morgan Drexen ¶¶ 2–3 (July 21,
2013). Pisinski, an attorney licensed to practice in the State of
Connecticut whose law practice includes bankruptcy matters,
contracts with Morgan Drexen for paralegal services. Decl. of
Kimberly A. Pisinski, Esq. ¶¶ 1–3 (July 21, 2013).

On April 22, 2013, after an investigation lasting more than
a year, the Bureau notified Morgan Drexen that its enforcement
office was “considering recommending that the Bureau take
legal action” against Morgan Drexen and its Chief Executive
Officer Walter Ledda for violations of the Consumer Financial
Protection Act, 12 U.S.C. § 5536, and the Telemarketing Sales
Rule, 16 C.F.R. § 310. See Ltr. from Wendy Weinberg,
Enforcement Att’y, Consumer Fin. Prot. Bureau, to Randal
Shaheen, Esq., Counsel for Morgan Drexen 1 (Apr. 22, 2013).
 4

Morgan Drexen was offered an opportunity to explain why legal
action should not be taken. On May 8, 2013, Morgan Drexen
responded and proposed a settlement. See Ltr. from Randal M.
Shaheen, Esq., to Lucy Morris, Esq., Consumer Fin. Prot.
Bureau 6 (May 8, 2013). Following a May 29, 2013, meeting,
the enforcement office inquired about certain data and sought
further document production from Morgan Drexen by June 30,
in response to a March 13, 2012, civil investigative demand
(“CID”). See Ltr. from Gabriel O’Malley, Enforcement Att’y,
Consumer Fin. Prot. Bureau, to Randal M. Shaheen, Esq. (June
12, 2013). A further written communication indicates that
Morgan Drexen represented to the Bureau that it did not intend
to respond to all of the Bureau’s production requests until the
Bureau engaged in settlement discussions but that it would
produce certain documents over the course of the month of July.
See Email from Gabriel O’Malley, Enforcement Att’y,
Consumer Fin. Prot. Bureau, to Randal M. Shaheen, Esq. (July
8, 2013).

On July 22, 2013, Morgan Drexen and Pisinski sued the
Bureau in the U.S. District Court for the District of Columbia.
Their complaint sought declaratory and injunctive relief,
alleging that the independent structure of the Bureau under Title
X of the Dodd-Frank Act is unconstitutional because the powers
delegated to the Bureau are overbroad, the Bureau is headed by
a single director removable only for cause, it is funded outside
the normal appropriations process, and judicial review of its
actions is limited, all in violation of the constitutional separation
of powers. Compl. ¶ 120. With the complaint, Morgan Drexen
and Pisinski filed a motion for a preliminary injunction. Three
days later the district court and the parties agreed to proceed
with expedited briefing; the motion for a preliminary injunction
was withdrawn and the parties filed cross motions for summary
judgment.
 5

On August 20, 2013, the Bureau filed an enforcement action
against Morgan Drexen and CEO Ledda in the U.S. District
Court for the Central District of California, alleging violations
of the Telemarketing Sales Rule and the Consumer Financial
Protection Act. Specifically, the Bureau alleged that Morgan
Drexen had violated the Telemarketing Sales Rule by, among
other things, charging consumers illegal up-front fees for debt-
relief services disguised as fees for bankruptcy services that
most consumers do not need and that are not performed.
Complaint ¶¶ 74–83, Consumer Fin. Prot. Bureau v. Morgan
Drexen, Inc., ---F. Supp. 3d---, No. SACV 13-1267-JLS, 2014
WL 5785615 (C.D. Cal. Jan. 10, 2014). The Bureau also alleged
that Morgan Drexen’s representations to consumers are
misleading, in violation of the Telemarketing Sales Rule and the
Consumer Financial Protection Act, see id. ¶¶ 84–87, 91–97,
and that although Morgan Drexen claims only to support
attorneys in the provision of debt-relief and bankruptcy services,
in fact, “[i]n numerous instances, . . . Morgan Drexen . . .
performs virtually all of the debt resolution work,” id. ¶ 42.
Neither Pisinski nor any other lawyer contracting with Morgan
Drexen was named in the enforcement action. On August 22,
2013, Morgan Drexen and Pisinski moved in the D.C. district
court for a temporary restraining order and a preliminary
injunction to enjoin the Bureau from prosecution.

On October 13, 2013, the D.C. district court granted the
Bureau’s motion to dismiss the complaint, or in the alternative
for summary judgment, without reaching the merits of the
constitutional challenge to Title X. The district court found that
Morgan Drexen had an adequate remedy at law in the
enforcement action and would suffer no irreparable injury from
the denial of relief. It found that Pisinski lacked standing under
Article III of the Constitution, and it dismissed as moot
plaintiffs’ requests for a temporary restraining order and
preliminary injunction. Morgan Drexen, Inc. v. Consumer Fin.
 6

Prot. Bureau, 979 F. Supp. 2d 104 (D.D.C. 2013).1

Morgan Drexen and Pisinski appeal. Our review of the
decision to deny permanent injunctive and declaratory relief is
for abuse of discretion. See eBay Inc. v. MercExchange, LLC,
547 U.S. 388, 391 (2006); Wilton v. Seven Falls Co., 515 U.S.
277, 289–90 (1995). Our review of the district court’s decision
on standing is de novo. Sierra Club v. Jewell, 764 F.3d 1, 4
(D.C. Cir. 2014). We first address whether Pisinski has
standing.

II.

“[T]he irreducible constitutional minimum of standing” is
“an injury in fact . . . which is (a) concrete and particularized
and (b) actual or imminent, not conjectural or hypothetical, . . .
a causal connection between the injury and the conduct
complained of . . . , [and] it must be likely, as opposed to merely
speculative, that the injury will be redressed by a favorable
decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61
(1992) (citations and internal quotation marks omitted). Pisinski

1
On April 21, 2015, the California district court granted the
Bureau’s motion for sanction of default judgment against Morgan
Drexen, finding that “[d]efendants willfully and in bad faith engaged
in a coordinated and extensive effort to deceive the Court and
opposing counsel” and having “blatantly falsified evidence . . .
concealed this fact from the Court, opposing counsel, and even their
own counsel at every turn.” Consumer Fin. Prot. Bureau v. Morgan
Drexen, Inc., ---F. Supp. 3d---, No. SACV 13-1267-JLS, 2015 WL
1926223, at *13 (C.D. Cal. Apr. 21, 2015). The California case
remains pending against CEO Ledda. See id. at *17. In light of our
disposition, we need not address whether this development renders
appellants’ contentions prudentially moot or precluded under res
judicata.
 7

contends that she has standing under Article III of the
Constitution because the Bureau’s enforcement action against
Morgan Drexen is inherently an enforcement action against her,
causing her injury because her law practice may be enjoined and
the Bureau lacks authority to regulate lawyers. See Appellants’
Br. 20–21, 24, 27–28. Her injury, she maintains, includes
economic damage and a possible threat to her professional
standing.

Because the issue of standing arises at the summary
judgment stage, Pisinski “can no longer rest on . . . mere
allegations, but must set forth by affidavit or other evidence
specific facts which for purposes of the summary judgment
motion will be taken to be true.” Lujan, 504 U.S. at 561
(citation and internal quotation marks omitted). Although the
court must assume that she will prevail on the merits of her
constitutional challenge to Title X of the Dodd-Frank Act, see
Muir v. Navy Fed. Credit Union, 529 F.3d 1100, 1105 (D.C. Cir.
2008), the court is not required to accept as true her assertion
that the Bureau is illegally regulating attorneys because that
question does not relate to the merits of her constitutional claim.
Additionally, it would not be enough for Pisinski to demonstrate
past harm when she seeks only forward-looking relief; she
“must show [she] is suffering an ongoing injury or faces an
immediate threat of injury.” Dearth v. Holder, 641 F.3d 499,
501 (D.C. Cir. 2011) (citing Los Angeles v. Lyons, 461 U.S. 95,
105 (1983)). In Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138,
1150 n.5 (2013), the Supreme Court clarified that a plaintiff
must show that there is a “substantial risk” that the harm will
occur. The record evidence — including sworn declarations
from Pisinski, Morgan Drexen’s CEO Ledda, and Morgan
Drexen’s attorney Randal Shaheen — does not show a
substantial risk of injury to Pisinski.
 8

Because Pisinski was not “the object of the government
action or inaction [s]he challenges, standing is not precluded,
but it is ordinarily substantially more difficult to establish.”
Lujan, 504 U.S. at 562 (citations and internal quotation marks
omitted). Pisinski’s only record evidence relating to the
Bureau’s intent to regulate attorneys is her attorney’s statement
that the Bureau “has informed me that their concern is that the
attorneys supported by Morgan Drexen are in violation of the
amended Telemarketing Sales Rule because the attorneys charge
their clients hourly fees for the preparation of bankruptcy
pleadings.” Decl. of Randal M. Shaheen ¶ 43 (July 21, 2013)
(emphasis added). The Bureau disavowed this characterization
of its communications with Pisinski’s attorney, pointing to its
April 22, 2013, notice of likely enforcement action, which
references only Morgan Drexen and its CEO. There is no record
evidence that the Bureau ever threatened an enforcement action
against Pisinski or any attorney contracting with Morgan Drexen
for paralegal services. The Bureau’s “concern” regarding
attorneys is expressed in its enforcement action based on
Morgan Drexen’s own allegedly illegal conduct rather than
Morgan Drexen’s “support[]” for allegedly illegal activity by
attorneys.

Nonetheless, Pisinski maintains that “the lawyer and her
paralegal engaged in the enterprise of law are inseparable,” so
that the Bureau cannot regulate Morgan Drexen without illegally
regulating her. See Appellants’ Br. 27–28. This assertion is
unsupported by the record evidence. Although CEO Ledda
states that “Morgan Drexen provides non-attorney paralegal
support services to attorneys” and that “Morgan Drexen has
contracted with Pisinski to provide such services to support her
law practice,” he does not describe what services Morgan
Drexen provides to Pisinski or how Pisinski directs Morgan
Drexen. See Ledda Decl. ¶¶ 3–4. Pisinski’s declaration does
 9

not fill the gap. She states: “I offer clients bankruptcy services,”
“I contract with Morgan Drexen to provide
non-attorney/paralegal services that support my law practice,”
and “I supervise Morgan Drexen and remain responsible for all
services delegated to Morgan Drexen.” Pisinski Decl. ¶¶ 2–3.
She also states: “[M]y clients may elect for me to first amicably
resolve their debts with creditors prior to filing the bankruptcy
petition.” Id. ¶ 2. Pisinski has not shown that the debt
settlement and bankruptcy services for which she engages
Morgan Drexen are targeted in the enforcement action. The
record indicates that Morgan Drexen contracts with an unknown
number of attorneys who are not necessarily connected to each
other and that it provides an array of different services. See
Third Resp. CID 5–10 (Apr. 27, 2012). The record does not
indicate whether an attorney contracts for all or some of these
services. See id.; Sixteenth Resp. CID 2 (Aug. 7, 2012);
Shaheen Ltr. May 8, 2013, at 1–3. Rather, as Morgan Drexen
pointed out in responding to the Bureau’s April 22, 2013, notice,
“Morgan Drexen has different procedures for the attorneys it
supports,” and “[t]here are also differences among the attorneys
Morgan Drexen supports with respect to client engagement
terms.” Shaheen Ltr. May 8, 2013, at 3. Pisinski’s failure to
proffer evidence showing that the Bureau’s enforcement action
addresses a part of Morgan Drexen’s business that she engages
and supervises is fatal to her standing.2

2
Appellants filed a motion to supplement the record with
three documents that they first brought to this court’s attention after
the parties’ briefs were filed. Appellants’ request comes too late. See
Summers v. Earth Island Inst., 555 U.S. 488, 495 n.*, 500 (2009);
Fair Emp’t Council of Greater Wash. v. BMC Mktg. Corp., 28 F.3d
1268, 1275 n.2 (D.C. Cir. 1994). Only one document contains
information relevant to Pisinski’s standing; excerpts from the Bureau’s
statement of uncontroverted facts and conclusions of law in support of
its motion for summary judgment in the California enforcement action
describe the Bureau’s understanding of Pisinski’s relationship with
 10

Morgan Drexen. In the D.C. district court, the Bureau challenged
Pisinski’s standing in its motion to dismiss the complaint, or in the
alternative for summary judgment, and the issue was fully litigated.
Appellants do not claim that the factual statements relating to
Pisinski’s contractual relationship with Morgan Drexen involve facts
that were not within Pisinski’s personal knowledge and control when
appellants filed their complaint. Appellants offer no reason, much less
an extraordinary one, why they failed to proffer such evidence in the
district court. They also appear not to have proffered such evidence
in the California district court when Pisinski moved to intervene
pursuant to Federal Rule of Civil Procedure 24; the California district
court denied the motion for failing, among other things, to provide
details concerning Pisinski’s contractual relationship with Morgan
Drexen. See Consumer Fin. Prot. Bureau v. Morgan Drexen, Inc., No.
8:13-cv-01267-JLS-JEM, slip op. at 4–6 (C.D. Cal. Mar. 10, 2014).
Despite rulings from the district courts here and in California
indicating that evidence of Pisinski’s interest in the Bureau’s
enforcement action against Morgan Drexen was inadequate, appellants
waited seven months after the California district court denied
intervention before moving to supplement the record in this court.
Supplementing the appellate record pursuant to Federal Rule of
Appellate Procedure 10(e) under these circumstances would be
inappropriate. See Colbert v. Potter, 471 F.3d 158, 165 (D.C. Cir.
2006); Boggs v. Rubin, 161 F.3d 37, 41 (D.C. Cir. 1998). In addition
to offering no explanation for their failure timely to proffer available
evidence to the D.C. district court, appellants have denied the Bureau
the opportunity to address that evidence in its responsive brief in this
court, cf. Gen. Elec. Co. v. Jackson, 610 F.3d 110, 123 (D.C. Cir.
2010), and granting this request would undermine the district court’s
factfinding role, see 16A Charles Alan Wright, et al., FEDERAL
PRACTICE AND PROCEDURE § 3956.1, at 632 (4th ed. 2008). For
similar reasons, appellants’ request that the court take judicial notice
of these documents comes too late; the plaintiff was on notice that the
evidence was relevant to her case and could timely have submitted it
to the district court. See, e.g., United States ex rel. Wilkins v. United
Health Grp., Inc., 659 F.3d 295, 303 (3d Cir. 2011) (citing Zell v.
Jacoby-Bender, Inc., 542 F.2d 34, 38 (7th Cir. 1976)); Melong v.
 11

Because Pisinski has not shown that the Bureau has
threatened imminent enforcement action against her, her burden
to show standing is heavier. See Lujan, 504 U.S. at 562;
Chamber of Commerce v. EPA, 642 F.3d 192, 201 (D.C. Cir.
2011). A review of the record demonstrates that she failed to
proffer evidence that her law practice likely will suffer an injury
as the result of the Bureau’s actions against Morgan Drexen.
Pisinski asserts on brief that she might be forced to disgorge fees
if the Bureau succeeds in its enforcement action against Morgan
Drexen. See Appellants’ Br. 23. Nothing in the record indicates
there is a substantial risk that Morgan Drexen will seek
reimbursement from Pisinski for any penalties it may have to
pay, and it is her burden to put forth facts showing that the risk
of such harm is substantial, not speculative. See, e.g., Clapper,
133 S. Ct. at 1150 n.5. Pisinski similarly asserts that “[i]t cannot
be the case that a person lacks standing to challenge an agency
that seeks to terminate the person’s existing business and claw
back the profits,” Appellants’ Br. 24, and that the Bureau in its
enforcement action “seeks an injunction that would enjoin
Pisinski’s law practice,” Reply Br. 4. There is nothing in the
record to show that her law practice will be “terminated” or
“enjoin[ed].”

There is also no record evidence that Morgan Drexen will
be unable in the future to provide the paralegal services that
Pisinski requires for her law practice. Although CEO Ledda and
Attorney Shaheen state their understanding that the Bureau is
requiring Morgan Drexen to stop serving lawyers who offer debt
settlement together with bankruptcy services, see Ledda Decl.
¶ 11, Shaheen Decl. ¶ 43, the Bureau disavowed this
characterization of its demands, referencing its April 22, 2013,
notice. Aside from Ledda’s and Shaheen’s statements, which

Micronesian Claims Comm’n, 643 F.2d 10, 12 n.5 (D.C. Cir. 1980).
 12

alone are “not significantly probative,” Anderson v. Liberty
Lobby, 477 U.S. 242, 249–50 (1986), there is no record evidence
supporting Ledda’s and Shaheen’s assertions that Morgan
Drexen will be enjoined or otherwise prevented from contracting
with lawyers like Pisinski. Their speculation about the outcome
of the enforcement action cannot support Pisinski’s standing.
When parties “only aver that any significant adverse effects . .
. ‘may’ occur at some point in the future, they fail[] to show the
actual, imminent, or ‘certainly impending’ injury required to
establish standing.” Chamber of Commerce, 642 F.3d at 202
(citations and internal quotation marks omitted); see also
Deutsche Bank Nat’l Trust Co. v. FDIC, 717 F.3d 189, 193
(D.C. Cir. 2013).

At best, Pisinski states, albeit in a conclusory manner, that
the Bureau’s investigation — specifically its demand that
Morgan Drexen produce documents regarding her clients —
“has been disruptive to my practice and to my clients.” Pisinski
Decl. ¶ 4; see also id. ¶¶ 5–10. Pisinski recounts that her clients
have told her that they are concerned that the government may
access their financial information, that she worries that her
clients will withhold from her information she needs to provide
effective representation, and that she will lose clients. See id.
¶¶ 7, 9. The district court gave no weight to Pisinski’s client
concerns because it found the Bureau never sought, and
concluded it could not have obtained, her privileged client
communications, and the Bureau will not be issuing any more
demands. Morgan Drexen, Inc., 979 F. Supp. 2d at 120.
Without challenging these findings or the district court’s legal
analysis, Pisinski continues to assert that the Bureau’s
enforcement action threatens to invade her clients’
confidentiality. See Reply Br. 5. But her speculation that her
clients’ confidentiality and her client relations will be impaired
in the future is unsupported in light of her silence in the face of
the district court’s ruling. Furthermore, Pisinski does not
 13

indicate that the “disrupti[on]” to her law practice has been
ongoing now that the Bureau’s investigation is over, and
Pisinski cannot rely on any past disruption to obtain declaratory
and injunctive relief. See Dearth, 641 F.3d at 501. Pisinski has
not explained how an injury caused by the Bureau’s
discontinued conduct is redressable by the relief she seeks. See
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 104–09
(1998). Vague, conclusory statements regarding “disrupti[on]”
to her practice are insufficient at the summary judgment stage to
show standing. See Ass’n of Flight Attendants-CWA v. U.S.
Dep’t of Transp., 564 F.3d 462, 465–66 (D.C. Cir. 2009); cf.
Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888–89 (1990).

Pisinski does maintain on appeal that her “professional
standing” and law practice may be in jeopardy because the
enforcement action against Morgan Drexen implies that she has
engaged in unethical behavior by failing to supervise Morgan
Drexen or by actively participating in the alleged illegal
conduct. See Appellants’ Br. 22, 25. Without evidence that she
engages the services of Morgan Drexen that the Bureau alleges
are illegal, this assertion, too, fails. Pisinski proffered no
specific facts tending to show reputational harm, such as loss of
clients or other business. Moreover, because the enforcement
action does not seek to enjoin Pisinski’s law practice, she would
need to proffer evidence that, as a result of the Bureau’s action,
her practice is threatened by other authorities, and she has not
done so. Instead, the record evidence shows that the
Connecticut State Bar and the State Banking Department have
reviewed, and approved, Pisinski’s use of Morgan Drexen’s
paralegal services. See Shaheen Ltr. May 8, 2013, at 4 (noting
approvals in 2009). “If the threat is imagined or wholly
speculative, the dispute does not present a justiciable case or
controversy.” Seegars v. Gonzales, 396 F.3d 1248, 1252 (D.C.
Cir. 2005). Additionally, any potential injury from Bar
disciplinary proceedings stemming from her association with
 14

Morgan Drexen would neither be caused by the Bureau’s
enforcement action nor be redressable by a declaration that Title
X of the Dodd-Frank Act is unconstitutional.

In sum, Pisinski has failed to proffer evidence in support of
any of her theories of standing: that she was responsible for
Morgan Drexen’s allegedly illegal conduct, that her practice is
or will be economically harmed by the Bureau’s enforcement
action against Morgan Drexen, or that implicit accusations by
the Bureau that she exercised too little control over Morgan
Drexen or engaged in illegal conduct herself could damage her
professional standing. The record evidence does not show that
she used Morgan Drexen’s allegedly illegal services or that there
is a substantial risk that the Bureau’s enforcement action will
cause the harms to her practice or professional reputation that
she has asserted. The record shows that Pisinski has a
consumer-service contractual relationship with Morgan Drexen;
without more, evidence of injury to her contractor does not
demonstrate Pisinski’s standing. See Morgan Drexen, Inc., 979
F. Supp. 2d at 121–22; cf., e.g., PDK Labs. Inc. v. U.S. Drug
Enforcement Agency, 362 F.3d 786, 790–91 (D.C. Cir. 2004);
Air Reduction Co. v. Hickel, 420 F.2d 592, 594 (D.C. Cir. 1969).

III.

Morgan Drexen contends that pre-enforcement review of
Title X is appropriate and that “[i]n evaluating whether to
exercise its injunctive and declaratory powers” the district court
erred by failing to “consider[] the strength of Morgan Drexen’s
showing on the merits of its constitutional challenge.”
Appellants’ Br. 29. Title X confronts Morgan Drexen with what
it characterizes as “a unique kind of irreparable harm,” for if
Title X is unconstitutional, then Morgan Drexen is “harmed by
an entity whose very existence violates the Constitution.” Id.
Observing that this court has recognized the appropriateness of
 15

pre-enforcement review of a statute on constitutional grounds,
see id. at 45 (citing Gen. Elec. Co. v. EPA, 360 F.3d 188,
190–94 (D.C. Cir. 2004)), Morgan Drexen maintains that the
D.C. district court, “[a]s a matter of judicial authority,” should
not have required it to be “strong-armed” by the Bureau into
regulatory compliance or to wait until the Bureau decided to
bring its enforcement action before filing its “free[-standing]
threshold challenge to the constitutionality of [Title X].” See id.
It relies on Free Enterprise Fund v. Public Company Accounting
Oversight Board, 561 U.S. 477 (2010), in which the Supreme
Court held that a new federal agency’s structure was
unconstitutional after the target of an enforcement action sought
“an injunction preventing the Board from exercising its powers.”
Appellants’ Br. 30 (quoting Free Enter. Fund, 561 U.S. at 487)
(internal quotation marks omitted).

Morgan Drexen’s reliance on Free Enterprise Fund is
misplaced. Although “federal courts lack the authority to
abstain from the exercise of jurisdiction that has been conferred
. . . [t]hat principle does not eliminate . . . the federal courts’
discretion in determining whether to grant certain types of
relief.” New Orleans Public Serv., Inc. v. Council of New
Orleans, 491 U.S. 350, 358–59 (1989). In Free Enterprise
Fund, the Supreme Court resolved its jurisdiction to hear a
constitutional challenge to a new federal agency but had no
occasion to address a federal court’s exercise of equitable
discretion to deny injunctive or declaratory relief. Here, the
D.C. district court’s subject-matter jurisdiction to decide the
constitutional challenge to Title X is undisputed.

By now it is well settled that “[a] court may . . . in its
discretion dismiss a declaratory judgment or injunctive suit if
the same issue is pending in litigation elsewhere.” Abbott Labs.
v. Gardner, 387 U.S. 136, 155 (1967), abrogated on other
grounds by Califano v. Sanders, 430 U.S. 99 (1977); see 11A
 16

Charles Alan Wright, et al., FEDERAL PRACTICE AND
PROCEDURE § 2944, at 84–85 (3d ed. 2013) (“Wright, et al.”); cf.
Nat’l Automatic Laundry & Cleaning Council v. Shultz, 443
F.2d 689, 704 (D.C. Cir. 1971). For the following reasons,
Morgan Drexen fails to show that the district court abused its
discretion in concluding that Morgan Drexen had an adequate
remedy at law in the California enforcement action and that it
suffered no irreparable injury from the denial of the requested
relief.

A.
Entitlement to a permanent injunction rests upon Morgan
Drexen showing:

(1) that it has suffered an irreparable injury; (2) that
remedies available at law, such as monetary damages,
are inadequate to compensate for that injury; (3) that,
considering the balance of hardships between the
plaintiff and defendant, a remedy in equity is
warranted; and (4) that the public interest would not be
disserved by a permanent injunction.

eBay Inc., 547 U.S. at 391. Failing to satisfy any factor is
grounds for denying relief. See Weinberger v. Romero-Barcelo,
456 U.S. 305, 312–13 (1982). “If a less drastic remedy . . . [is]
sufficient to redress [the] injury, no recourse to the additional
and extraordinary relief of an injunction [is] warranted.”
Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 165–66
(2010).

Morgan Drexen could, and did, assert its constitutional
challenge to Title X of the Dodd-Frank Act as a defense in a
motion filed in the California district court to dismiss the
Bureau’s enforcement action. It is true that at the time Morgan
Drexen sued the Bureau in the D.C. district court, the
 17

availability of this alternative remedy was uncertain. An
enforcement action by the Bureau appeared likely, but in the
meantime Morgan Drexen’s potential penalties under the Dodd-
Frank Act were accumulating daily, see 12 U.S.C. § 5565(c).
“When enforcement actions are imminent — and at least when
repetitive penalties attach to continuing or repeated violations
and the moving party lacks the realistic option of violating the
law once and raising its federal defenses — there is no adequate
remedy at law.” Morales v. Trans World Airlines, Inc., 504 U.S.
374, 381 (1992). Hence, courts will avoid subjecting regulated
parties to the “Hobson’s choice” between “continually
violat[ing] the . . . law and expos[ing] themselves to potentially
huge liability” pending agency action “or violat[ing] the law
once as a test case and suffer[ing] the injury of obeying the law
during the pendency of the proceedings and any further review.”
Id.; cf. Sackett v. EPA, 132 S. Ct. 1367, 1372 (2012). Morgan
Drexen, however, was relieved of the Hobson’s choice once the
Bureau filed the enforcement action, fewer than thirty days after
Morgan Drexen filed its complaint. See Hastings v. Judicial
Conference of the United States, 770 F.2d 1093, 1102 (D.C. Cir.
1985). At that point, it no longer “faced the . . . troubling
question of whether it was willing to risk serious penalties in
order to obtain . . . a hearing at all.” See CSI Aviation Services,
Inc. v. U.S. Dep’t of Transp., 637 F.3d 408, 413–14 (D.C. Cir.
2011). The D.C. district court dismissed the complaint eight
weeks after the Bureau filed its enforcement action.

Morgan Drexen does not maintain that waiting for a
decision from the district court in California caused it
irreparable injury. Rather, it maintains that “‘[i]n determining
whether prosecution of a suit in another forum should be
preliminarily enjoined . . ., [the preliminary injunction factors]
are of secondary significance,’” and “‘[t]he primary factor to be
weighed is the convenience of the parties and the courts.’”
Appellants’ Br. 48 (second alteration in original) (quoting
 18

Columbia Plaza Corp. v. Security Nat’l Bank, 525 F.2d 620, 622
n.3 (D.C. Cir. 1975)). Taken on those terms, Morgan Drexen
has pointed to no inconvenience in litigating its constitutional
challenge in the California district court. The D.C. district
court’s decision relieved it of litigating overlapping issues in
two federal forums without prejudice to its challenge, and
judicial economy was fostered.3

3
Other attempts by Morgan Drexen in its reply brief to show
irreparable injury fail procedurally and substantively. The Bureau had
no opportunity to respond in its brief to Morgan Drexen’s arguments
in its reply brief, and Morgan Drexen offers no reason, much less an
extraordinary one, for its failure to raise these arguments in its opening
brief. Under these circumstances, the court will not consider
arguments first raised in a reply brief. See, e.g., CTS Corp. v. EPA,
759 F.3d 52, 60 (D.C. Cir. 2014); United States v. Whren, 111 F.3d
956, 958 (D.C. Cir. 1997). Even assuming Morgan Drexen’s
arguments are properly before the court, they are unpersuasive.
Morgan Drexen maintains that being forced to litigate in California
irreparably injures it, but once the Bureau filed its enforcement action,
Morgan Drexen was constrained to litigate in either the D.C. or
California federal forum and suffers no greater injury in California
than here. Precedent supporting interlocutory review under the
collateral order doctrine, upon which Morgan Drexen relies, is
inapposite; this court lacks jurisdiction to review appeals from the
Central District of California. See 28 U.S.C. § 1294. Morgan
Drexen’s bare assertion that the unavailability of immediate appeal
renders a remedy inadequate is contrary to precedent. As this court
noted in a related context, “irreparable harm must be ‘greater than the
harm suffered by any litigant forced to wait until the termination of the
[proceedings] before challenging interlocutory orders it considers
erroneous.’” I.A.M. Nat’l Pension Fund Benefit Plan A v. Cooper
Indus., Inc., 789 F.2d 21, 25 (D.C. Cir. 1986) (alteration in original)
(quoting Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 379
n.13 (1981)); see Sibley v. Lando, 437 F.3d 1067, 1071 & n.5, 1074
(11th Cir. 2005). Morgan Drexen has not elaborated on its claimed
entitlement to immediate appellate review beyond reference to its
 19

Morgan Drexen also maintains that the district court erred
in relying on Deaver v. Seymour, 822 F.2d 66 (D.C. Cir. 1987).
See Appellants’ Br. 46–47. In Deaver, this court refused to hear
a separation-of-powers challenge to provisions of the Ethics in
Government Act in a suit for declaratory and injunctive relief to
enjoin the independent counsel from filing an indictment. Id. at
66–67. Deaver is not controlling as to all pre-emptive
challenges to likely civil enforcement. See Morales, 504 U.S.
at 381; cf. CSI Aviation Servs., Inc., 637 F.3d at 412–14. Still,
the district court could properly view Deaver as a “parallel
case,” Morgan Drexen, Inc., 979 F. Supp. 2d at 112, insofar as
respect for the final judgment rule and principles of
constitutional avoidance apply in the civil as well as the criminal
context, see id. at 113–14. The district court noted that Morgan
Drexen, like the plaintiff in Deaver, had an opportunity to raise
its constitutional challenge as “a preliminary defense,” id. at 114
(citing FED. R. CRIM. P. 12(b) and FED. R. CIV. P. 12(b)(6)), and
it rejected Morgan Drexen’s “attempt to create a special
category of review for facial constitutional challenges,” id. at
115. The district court’s reliance on Deaver’s reasoning with
respect to applicable equitable principles did not render its
decision to dismiss Morgan Drexen’s request for injunctive
relief an abuse of discretion.

litigation costs, see Reply Br. 23, which cannot constitute irreparable
injury, cf. Renegotiation Bd. v. Bannercraft Clothing Co., 415 U.S. 1,
23–24 (1974). To the extent Morgan Drexen maintains it was unable
to argue the equities in its motion to dismiss, it misunderstands the
posture of its case. Equitable factors come into play when parties
dispute relief. The district court in California, having rejected the
constitutional challenge to Title X, had no occasion to examine the
appropriate remedy. That Morgan Drexen’s motion to dismiss was
denied does not demonstrate that the motion to dismiss procedure was
inadequate as a matter of law. Cf. id. at 25.
 20

B.
The Declaratory Judgment Act provides that a federal court,
“[i]n a case of actual controversy within its jurisdiction, . . .
upon the filing of an appropriate pleading, may declare the rights
and other legal relations of any interested party seeking such
declaration, whether or not further relief is or could be sought.”
28 U.S.C. § 2201(a) (emphasis added); see MedImmune, Inc. v.
Genentech, Inc., 549 U.S. 118, 136 (2007); see also Wilton, 515
U.S. at 286. “Since its inception, the Declaratory Judgment Act
has been understood to confer on federal courts unique and
substantial discretion in deciding whether to declare the rights
of litigants.” Wilton, 515 U.S. at 286. “The statute’s textual
commitment to discretion, and the breadth of leeway we have
always understood it to suggest, distinguish the declaratory
judgment context from other areas of the law in which concepts
of discretion surface.” Id. at 286–87. A court’s exercise of
discretion in granting declaratory relief is guided by “a
circumspect sense of its fitness informed by the teachings and
experience concerning the functions and extent of federal
judicial power,” or in other words, informed by the court’s sense
of “practicality and wise judicial administration.” Id. at 287–88
(citation and internal quotation marks omitted); see also
MedImmune, Inc., 549 U.S. at 136.

In Hanes Corp. v. Millard, 531 F.2d 585 (D.C. Cir. 1976),
this court adopted a non-exclusive list of “factors relevant to the
propriety of granting a declaratory judgment”:

whether it would finally settle the controversy between
the parties; whether other remedies are available or
other proceedings pending; the convenience of the
parties; the equity of the conduct of the declaratory
judgment plaintiff; prevention of procedural fencing;
the state of the record; the degree of adverseness
between the parties; and the public importance of the
 21

question to be decided.

Id. at 591 n.4 (internal quotation marks omitted). Although
every factor need not be considered and others may be, see, e.g.,
Patton Boggs LLP v. Chevron Corp., 683 F.3d 397, 401–02
(D.C. Cir. 2012), these factors focus on the usefulness of a
declaratory judgment, the role of such relief in ending the
dispute between the parties, and the incentives for parties’
behavior. See, e.g., President v. Vance, 627 F.2d 353, 364 n.76
(D.C. Cir. 1980).

Applying the Hanes factors, the district court reasonably
concluded that declaratory relief was inappropriate. First, an
adjudication in the District of Columbia would not “finally settle
the controversy” and could result in “piecemeal litigation” if the
D.C. district court ruled in the Bureau’s favor, allowing the
enforcement action in California to continue. Morgan Drexen,
Inc., 979 F. Supp. 2d at 117 (citations and internal quotation
marks omitted). Second, the enforcement action in California
could resolve all of the issues in the case. Id. Third, Morgan
Drexen filed its complaint in the D.C. district court on the eve
of enforcement. See id. at 118–19 & n.5. And finally, declining
to exercise jurisdiction would serve the public interest by
avoiding a potentially unnecessary decision on constitutional
issues because Morgan Drexen might prevail in the California
enforcement action on the basis of one of its non-constitutional
defenses. See id. at 119 n.6. The district court concluded that
the only factor favoring Morgan Drexen was that the state of the
record was more advanced in the D.C. case but decided this
counted for little because declining to issue a declaratory
judgment would not “severe[ly]” delay adjudication of Morgan
Drexen’s claims. Id. at 119. All of the other factors were in
equipoise. See id. at 117–18, 119 n.6.
 22

Morgan Drexen’s objections fall wide of the mark. It
maintains that its challenge to the constitutionality of Title X is
a matter of sufficient public importance to warrant declaratory
relief and that the district court failed to accord proper weight to
the fact that it filed its suit “before [the Bureau], by its own
admission, had even determined whether it would bring an
enforcement action.” Appellants’ Br. 45. Parties have no
inviolable right to a declaratory judgment on facial
constitutional claims. See Flynt v. Rumsfeld, 355 F.3d 697, 705
(D.C. Cir. 2004). Nor is the public importance of the lawsuit
dispositive. See Wilderness Soc’y v. Morton, 479 F.2d 842, 887
(D.C. Cir. 1973). The district court reasonably could conclude
that the importance of the constitutional challenge was
counterbalanced by the importance of avoiding unnecessary
constitutional decision-making. Morgan Drexen, Inc., 979 F.
Supp. 2d at 119 n.6; cf. Wallace v. Lynn, 507 F.2d 1186,
1190–91 (D.C. Cir. 1974).

Nor was it an abuse of discretion for the district court to
deny declaratory relief when Morgan Drexen was the first to
file. The timing of the declaratory plaintiff’s suit is only one
consideration bearing on “practicality and wise judicial
administration.” See Wilton, 515 U.S. at 288. As one well-
recognized authority has suggested, “the real question for the
court is not which action was commenced first but which will
most fully serve the needs and convenience of the parties and
provide a comprehensive solution of the general conflict.” 10B
Wright, et al., supra, § 2758, at 530–31 (3d ed. 1998). “The
anticipation of defenses is not ordinarily a proper use of the
declaratory judgment procedure. It deprives the plaintiff of his
traditional choice of forum and timing, and it provokes a
disorderly race to the courthouse.” Hanes, 531 F.2d at 592–93;
see Am. Auto. Ins. Co. v. Freundt, 103 F.2d 613, 617 (7th Cir.
1939). Because the Bureau has filed an enforcement action that
 23

promises to resolve the legality of Morgan Drexen’s conduct,
“[t]his is not a situation in which a declaratory plaintiff will
suffer injury unless legal relations are clarified; [Morgan
Drexen] do[es] not currently ‘act at [its] peril,’” AmSouth Bank
v. Dale, 386 F.3d 763, 786 (6th Cir. 2004) (citation omitted); see
also Tempco Elec. Heater Corp. v. Omega Eng’g, Inc., 819 F.2d
746, 749–50 (7th Cir. 1987); Amerada Petroleum Corp. v.
Marshall, 381 F.2d 661, 663 (5th Cir. 1967).

Further, the district court’s findings that “Morgan Drexen
was aware of the likelihood of a Bureau enforcement action”
when it filed the complaint and that it had engaged in procedural
fencing are supported by the record and not clearly erroneous.
The Bureau notified Morgan Drexen on April 22, 2013, that it
was considering an enforcement action. Morgan Drexen
indicated its amenability to settlement discussions on May 8,
2013, and the parties continued their discussions until mid-July
2013. According to an undisputed statement by the Bureau in
a July 8, 2013, email, Morgan Drexen indicated to the Bureau
that it would continue to produce certain documents throughout
the month. Yet, on July 22, Morgan Drexen sued the Bureau in
the D.C. district court. The district court’s finding that Morgan
Drexen engaged in procedural fencing was not clearly
erroneous. See AmSouth Bank, 386 F.3d at 788, 790 (collecting
cases); Freundt, 103 F.2d at 617.

Accordingly, we affirm the dismissal of the complaint,
because Pisinski lacks Article III standing to pursue the
constitutional challenge to Title X of the Dodd-Frank Act and
because Morgan Drexen failed to show the district court abused
its discretion in concluding that Morgan Drexen had an adequate
remedy at law in the enforcement action filed by the Bureau.
 KAVANAUGH, Circuit Judge, dissenting: Kimberly
Pisinski is an attorney. She has brought a lawsuit challenging
the constitutionality of the Consumer Financial Protection
Bureau. The majority opinion holds that she lacks standing. I
respectfully disagree. In my view, Pisinski has standing. She
contracts with a company known as Morgan Drexen and
works together with Morgan Drexen employees to provide
debt settlement and bankruptcy services to consumers who are
in debt. These services are intended to help people in debt
negotiate better terms with their creditors. Consumers are
charged a fee for some of these services. The Bureau claims
that the kind of services in which Pisinski and Morgan Drexen
engage – with an up-front fee paid by consumers – is illegal.
The Bureau therefore is regulating a business that Pisinski
engages in. That is enough for standing. We have a tendency
to make standing law more complicated than it needs to be.
When a regulated party such as Pisinski challenges the
legality of the regulating agency or of a regulation issued by
that agency, “there is ordinarily little question” that the party
has standing, as the Supreme Court has indicated. Lujan v.
Defenders of Wildlife, 504 U.S. 555, 561-62 (1992). So it is
here.