Labor & Employment Law Daily Wrap Up, LITIGATION NEWS, TRENDS—Court defines ‘particularized assessment’ necessary for CFPB layoffs to continue, (Apr 30, 2025)
Organizations Mentioned:Consumer Financial Protection Bureau | National Treasury Employees Union
After the CFPB acting director filed an emergency motion to clarify the court’s April 11 order, the appellate court clarified the injunction. The district court then reinstated the March 28 ban on any RIF.
New developments have taken place in ongoing litigation stemming from the National Treasury Employees Union (NTEU) and other plaintiffs obtaining a preliminary injunction from the U.S. District Court for the District of Columbia enjoining the Consumer Financial Protection Bureau and its acting director Russell T. Vought from reductions in force (RIFs) which would completely shut down the CFPB. Upon consideration of the CFPB’s emergency motion to enforce or clarify the court’s Apr. 11, 2025, order, the U.S. Court of Appeals for the District of Columbia Circuit has ordered that the emergency motion be granted in part. The court’s original partial stay order permitted defendants to conduct RIFs of employees “whom defendants have determined, after a particularized assessment, to be unnecessary to the performance of defendants’ statutory duties.” In addition, the court states that paragraph (3) of the preliminary injunction under review “is now effective pending further order of this court.” The court’s order was per curiam. (National Treasury Employees Union v. Vought, No. 1:25-cv-00381 (D.C. Cir. Apr. 28, 2025)).
On the same day, April 28, 2025, the D.C. District Court judge ruled on the motion to enforce the preliminary injunction. The district court noted that, with this appellate court order to lift the partial stay of paragraph (3) of the preliminary injunction, this means that “the March 28 ban on any reduction-in-force has been reinstated as originally issued.” Therefore, the RIF which was the subject of the April 18 injunction, “can no longer go forward at all.” (National Treasury Employees Union v. Vought, No. 25-5091 (D.D.C. Apr. 28, 2025)).
Defendants CFPB and Vought were seeking clarification of what constitutes a “particularized assessment”—as required by the court—that employees subject to a proposed RIF are unnecessary to the performance of defendants’ statutory duties, as that term is used in the appellate court’s Apr. 11, 2025, order partially granting the defendants’ motion for a stay pending appeal. The term “particularized assessment” was not clearly defined in the stay order, so the appellate court has now defined it as involving a determination, conducted by the decisionmaker responsible for the RIF, that each division or office within the CFPB will be able to perform any statutorily required duties of that division or office without the employees subject to the RIF.
To support the CFPB’s claims that it did not violate the court’s order and did in fact conduct particularized assessments as required, a declaration was provided by Mark Paoletta, the Chief Legal Officer of the CFPB. Paoletta attested to undertaking a comprehensive particularized assessment with two other CFPB attorneys before the RIF. Paoletta’s declaration indicated that he and the other attorneys went line by line through each competitive area to determine how many employees were necessary.
The appellate court also modified the stay in part to lift the partial stay of paragraph (3) of the preliminary injunction. The parties “vigorously” disputed whether this language permits judicial review of the questions whether the assessment at issue was “particularized” and whether the employees subject to the RIF are “unnecessary to the performance of defendants’ statutory duties.”
Preliminary injunction. The district court’s original order was a preliminary injunction, preventing the CFPB from terminating any employee without cause (see Banking and Finance Law Daily, Mar. 31, 2025). On April 11, the appellate court partially granted the motion to stay the injunction but allowed provision 3 to stay in force, permitting the Bureau defendants to conduct RIFs of employees; however, the CFPB must conduct “particularized assessments” to determine if employees are no longer necessary for carrying out CFPB statutory duties. In the wake of that order, defendants promptly took steps to complete a reduction-in-force affecting 90 percent of the agency's employees (see Banking and Finance Law Daily, Apr. 14, 2025).
The district court noted that, with the appellate court order to lift the partial stay of paragraph (3) of the preliminary injunction, this means that “the March 28 ban on any reduction-in-force has been reinstated as originally issued.” Therefore, the RIF which was the subject of the April 18 injunction (see Banking and Finance Law Daily, Apr. 18, 2025), “can no longer go forward at all.”
The district court ordered that the plaintiffs' motion to enforce the preliminary injunction was denied without prejudice as moot, and vacated a scheduled hearing that had been set for April 29 and 30. The motion to compel the production of records "will be held in abeyance until after the Court of Appeals rules on the validity of the preliminary injunction," and defendants' motion to stay proceedings pending final resolution of the appeal is granted insofar as the obligation to respond to the complaint was deferred.
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