Labor & Employment Law Daily Wrap Up, LITIGATION NEWS, TRENDS—Fired NCUA Board members challenge their ‘unlawful’ terminations, (Apr 30, 2025)

By WK Editorial Staff

Following their “patently unlawful removal,” two NCUA Board members are seeking declaratory and injunctive relief to restore the Board’s lawful composition and preserve the independence Congress mandated.

Todd M. Harper and Tanya F. Otsuka, both former “Democratic” members of the National Credit Union Administration (NCUA) Board, have filed a complaint in the United States District Court for the District of Columbia. The lawsuit challenges their abrupt removal by President Donald J. Trump, alleging it was an unlawful act that undermines the independence of the NCUA. The plaintiffs argued that their removal without cause violates statutory protections designed to ensure the NCUA operates free from political interference.

The complaint outlined the plaintiffs' appointments and contributions to the NCUA. Harper was initially nominated by President Trump in 2019 and later reappointed by President Biden for a full term, which was set to expire in 2027. Otsuka was confirmed by the Senate in December 2023 for a term ending in 2029. Both members were removed via identical emails sent by Trent Morse, a White House official, without any explanation or assertion of cause. The complaint further alleged that the Harper’s and Otsuka’s terminations left the NCUA Board without a quorum, effectively stalling its regulatory functions.

Following the terminations, the NCUA Chairman, and sole Board member, Kyle Hauptman reassured credit unions that it can continue to operate with the Chair as the sole member of the Board. In a staff message, Hauptman cited the case of former Chair Dennis Dollar, who served as the sole Board member for a period from 2001-2002, during which time he “held a Board meeting, voted, and took several actions, both administrative and operational.”

The complaint raised several claims for relief, asserting that the removals were ultra vires, or beyond the President's statutory authority. It cites the Federal Credit Union Act, which mandates that Board members serve fixed terms and can only be removed for cause. The plaintiffs also invoked the Administrative Procedure Act, claiming the actions of the defendants were not in accordance with the law. Furthermore, they argued that the removals violate the separation of powers as outlined in the U.S. Constitution.

In their prayer for relief, Harper and Otsuka requested the court to declare their terminations unlawful and to reinstate them as members of the NCUA Board. They are also seeking an order preventing any obstruction to their duties and demand that all rights and privileges of their positions be restored, including wages and benefits. Additionally, the plaintiffs request attorney fees and any other relief deemed appropriate by the court.

Following the filing of the lawsuit, Rep. Maxine Waters (D-Calif.), the Ranking Member of the House Financial Service Committee, issued a statement that provided, “With today's lawsuit, Todd Harper and Tanya Otsuka are standing up for the Constitution and our democracy. Congress designed the National Credit Union Administration and its board to be bipartisan, independent, and free from political interference.” She added, “These principles have been adhered to for decades—under Republican and Democratic administrations.” Waters concluded, “The President’s unlawful firing of these two public servants undermines our nation’s credit unions and puts their members at risk. We need more dedicated individuals like Tanya and Todd leading our agencies, and we will have their back every step of the way.”

The case is No. 25-CV-1294.

News: LitigationNewsTrends AgencyNews WhiteHouseNews