As foreshadowed by our July 13, 2017 Alert Memorandum, on November 1, 2017, President Donald J. Trump signed into law Joint Resolution 111 (“H.J. Res. 111”), which overturns a rule issued by the Consumer Financial Protection Bureau (“CFPB”) governing arbitration agreements in consumer finance contracts.
As we reported in the Alert Memorandum, the CFPB rule would have prohibited providers of certain consumer financial products and services from including in their contracts arbitration clauses waiving the right to bring class-action lawsuits. H.J. Res. 111 overturned the CFPB rule under the Congressional Review Act (“CRA”), 5 U.S.C. §§ 801 et seq., a statute that had been successfully invoked only once before 2017 to invalidate a regulation promulgated by a federal government agency. Under the CRA, the CFPB may not issue a substantially similar rule prohibiting class-action waivers in arbitration agreements unless specifically authorized to do so by new legislation. H.J. Res. 111 passed in the House of Representatives on July 25, 2017 by a vote of 231-190 and passed in the Senate on October 25, 2017 by a vote of 51-50, with Vice President Mike Pence casting the tie-breaking vote.