Labor & Employment Law Daily Wrap Up, CFPB NEWS—D.C. Circuit allows CFPB firings, (Apr 14, 2025)

By WK Editorial Staff

However, "particularized assessment" is needed.

On Friday, the D.C. Circuit issued an order in an emergency motion for a stay pending appeal brought by the Consumer Financial Protection Bureau (CFPB) and its Acting Director, Russell Vought, following a district court order that would have reinstated employees fired by the agency. The appeals court stayed certain injunctive provisions issued by the court below "insofar as" they prohibited termination or a RIF notice "to employees whom defendants have determined, after a particularized assessment, to be unnecessary to the performance of defendants' statutory duties."

Below, the district court had preliminarily enjoined the Trump administration's effort to shut down the CFPB, reasoning that in the absence of an injunction freezing the status quo and thereby preserving the agency's data, operational capacity, and workforce, there would be substantial risk that the defendants would "complete the destruction of the agency completely in violation of law" before the court could rule and that the agency would be "impossible to rebuild." The district court issued an order with nine provisions, with instructions that it would bind not only the CFPB but anyone else "in active concert or participation with them," such as DOGE.

Order provisions stayed, remaining. Now, the D.C. Circuit has issued an order staying, in part, the primary termination-related provisions of the lower court's order from March 28, 2025, staying completely one provision, and leaving in place a handful of others.

Provision 2. In this provision, the district court ordered: "2. Defendants shall reinstate all probationary and term employees terminated between February 10, 2025 and the date of this order, including but not limited to, Julia Barnard, the Private Student Loan Ombudsman." The D.C. Circuit has ordered that the provision is "stayed insofar as it requires defendants to reinstate employees whom defendants have determined, after an individualized assessment, to be unnecessary to the performance of defendants' statutory duties."

Provision 3. In this provision, the district court ordered: "3. Defendants shall not terminate any CFPB employee, except for cause related to the individual employee's performance or conduct; and defendants shall not issue any notice of reduction-in-force to any CFPB employee." The D.C. Circuit has ordered that the provision "is stayed insofar as it prohibits defendants from terminating or issuing a notice of reduction in force to employees whom defendants have determined, after a particularized assessment, to be unnecessary to the performance of defendants' statutory duties."

Provision 4 remains in effect, conditionally. In this provision, the district court ordered: "4. Defendants shall not enforce the February 10, 2025 stop-work order or require employees to take administrative leave in furtherance of that order, and defendants shall not reinstitute or seek to achieve the outcome of a work stoppage, whether through a stop-work order, an order directing employees to take administrative leave, or any other means." The D.C. Circuit conditionally allowed the fourth provision of the March 28 order to remain in effect, stating that it "understands" the provision "to allow work stoppages that defendants have determined, after a particularized assessment, would not interfere with the performance of defendants' statutory duties."

Order provisions remaining for now. Provisions remaining in "full effect pending further order of the [appeals] court" include ones relating to data preservation and contract cancellations. The remaining district court order provisions are:

"1. Defendants, shall maintain and shall not delete, destroy, remove, or impair any data or other CFPB records covered by the Federal Records Act (hereafter "agency data") except in accordance with the procedures described in 44 U.S.C. Chapter 33. This means that Defendants shall maintain and shall not delete, destroy, remove, or impair agency data from any database or information system controlled by, or stored on behalf of, the CFPB. The term "agency data" includes any data or CFPB records stored on the CFPB's premises, on physical media, on a cloud server, or otherwise. The defendants must take all necessary steps to ensure that its contractors do the same."

....

"5. To ensure that employees can perform their statutorily mandated functions, the defendants must provide them with either fully-equipped office space, or permission to work remotely and laptop computers that are enabled to connect securely to the agency server through the Citrix Virtual Desktop or another similar program.

"6. Defendants shall ensure that in accordance with 12 U.S.C. §5492(b)(3), the CFPB Office of Consumer Response continues to maintain a single, toll-free telephone number, a website, and a database for the centralized collection of consumer complaints regarding consumer financial products and services, and that it continues to monitor and respond to those complaints, including by providing Elevated Case Management.

"7. Defendants shall rescind all notices of contract termination issued on or after February 11, 2025, and they may not reinitiate the wholesale cancellation of contracts. This provision does not prohibit the defendants from ordering that work or services under specific contracts be halted based on an individualized assessment that the contract involved is unnecessary for the agency to fulfill its statutory functions. To ensure that this Court can award full relief at the end of the case, however, the defendants may not finalize the termination of any contract."

....

"9. The Court's temporary consent order issued on February 14, 2024 [Dkt. # 19] and the March 3, 2025 Minute Order issued in light of the parties' Notice of Agreement [Dkt. # 53] and Notice of Agreement (Corrected) [Dkt # 65], are hereby VACATED."

Order provisions stayed in their entirety. The only provision stayed in its entirety was this one: "8. Defendants shall file a report with the Court by April 4, 2025 confirming that all individuals and entities that fall within Fed. R. Civ. Proc. 65(d)(2)(A), (B), and (C) have received actual notice of this Order, and that the defendants are in compliance with this Order."

The district court case is No. 1:25-cv-00381-ABJ; the appeals court case is No. 25-5091.

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