Labor & Employment Law Daily Wrap Up, LITIGATION NEWS, TRENDS—CFPB leaders performed particularized assessments in firing 1,400-plus workers, court filing argues, (Apr 24, 2025)

By Jonathan Anderson

The assertion comes as a court evaluates whether the Trump administration complied with a preliminary injunction.

Justice Department attorneys representing Russell Vought, acting director of the Consumer Financial Protection Bureau, argued in a new court filing that efforts by agency leadership to terminate more than 80 percent of its workforce earlier this month did not violate a preliminary injunction. The federal district court for the District of Columbia had issued the order as part of a lawsuit brought by employees’ unions seeking to block what the plaintiffs’ allege is an effort to dismantle the federal agency. At issue in the most recent filing is whether CFPB leadership complied with a court requirement that they conduct particularized assessments to determine if employees are no longer needed to carry out CFPB statutory duties (National Treasury Employees Union v. Vought, No. 1:25-cv-00381-ABJ (D.D.C. Apr. 22, 2025)).

Background. The litigation in this matter was filed by the National Treasury Employees Union and others in February and sought to restrain Vought, who is also director of the White House’s Office of Management and Budget, and fellow Trump administration employees from “dismantling” the CFPB. In late March, the court granted a preliminary injunction, finding a substantial risk that in the absence of injunctive relief, Vought and other defendants would complete destruction of the CFPB before the court could rule. Accordingly, a broad preliminary injunction was issued, that, among other provisions, directed that the CFPB preserve all records and data, that the CFPB reinstate probationary and term employees terminated after February 10, 2025, and that the CFPB not terminate further employees without cause and not issue RIF notices (see Banking and Finance Law Daily, Mar. 31, 2025).

The CFPB and Vought immediately appealed from the issuance of the preliminary injunction. The appellate court entered an order staying provisions such as the requirement of reinstatement, while the mandate against further termination was amended to allow terminations but required that the CFPB conduct particularized assessments to determine if employees are no longer needed to carry out CFPB statutory duties (see Banking and Finance Law Daily, Apr. 14, 2025).

Reduction in force. Within days of the appellate ruling, the CFPB issued reduction-in-force (RIF) notices to more than 1,400 employees, representing more than 80 percent of the agency’s workforce. On April 17, plaintiffs’ attorneys filed a motion to show cause why defendants had not violated the preliminary injunction. The court scheduled a hearing for the following day and called for the production of certain materials. In response, defendants provided the court with several documents, including a declaration from CFPB Chief Legal Officer Mark R. Paoletta averring that he and two unnamed CFPB attorneys had “conducted a particularized assessment to determine which employees are unnecessary for the Bureau to perform its statutory duties.” Plaintiffs subsequently filed six declarations of their own describing what lead up to the issuance of the RIF notices and which differed from Paoletta’s version of events.

At the April 18 hearing, plaintiffs’ counsel made an oral motion that the court enforce the preliminary injunction; the court then deemed the motion for an order to show cause as a motion to enforce. The court placed the RIF on hold and called for a full hearing on the issue. The judge stated that it “became clear to the Court that given the starkly different pictures being presented by declarations alone, it is necessary to conduct an evidentiary hearing before the Court can determine whether the agency is complying with or flouting the Order” (see Banking and Finance Law Daily, April 18, 2025).

Vought, CFPB argument. On April 22, Justice Department attorneys, representing Vought and the CFPB, filed a response to plaintiffs’ motion to enforce. The filing argued that CFPB leaders conducted the requisite particularized assessments required by the preliminary injunction and therefore the motion to enforce should be denied. Defendants advanced several arguments in support of this claim.

Defendants argued that plaintiffs have not shown that defendants failed to take good faith and substantial efforts to comply with the court’s directives. Defendants said the stay order expressly committed to defendants, and not plaintiffs or the court, the task of determining “how many and which employees were necessary to carry out the Bureau’s statutory duties.”

Further, although plaintiffs submitted declarations from some CFPB managers that they had not been consulted about the RIF plans, defendants argued that the particularized assessment standard did not require such consultation to make RIF determinations. “Such a requirement would amount to improper judicial usurpation of control over internal agency deliberations,” defendants said.

Defendants also argued that the stay order did not require an individualized assessment as to whether particular employees were involved in the day-to-day tasks of fulfilling the agency’s statutory obligations. Even though the agency notified affected personnel of the RIF within days of the appeals court imposing the particularized assessment requirement, defendants argued that the decisions were informed by months of previous work.

“Given that Defendants made the determinations that the D.C. Circuit specified, upon the assessments the D.C. Circuit specified, they were entitled under the Stay Order to engage in a RIF in line with those determinations. Thus, Plaintiffs’ motion to enforce should be denied,” defendants wrote.

Next steps. Plaintiffs’ reply was due April 24. The hearing is scheduled for April 28.

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