Labor & Employment Law Daily Wrap Up, LITIGATION NEWS, TRENDS—Ousted Fed member files suit against Trump, (Aug 28, 2025)

By Brandi O. Brown, J.D.

The lawsuit followed swiftly on the heels of the President’s announcement of the removal of Dr. Lisa D. Cook from her position on the Federal Reserve’s Board of Governors.

Today, Federal Reserve System Board of Governors member Lisa D. Cook, the first Black woman to serve as a Fed governor, has filed a lawsuit naming President Trump, the Fed, and Jerome Powell seeking declaratory and injunctive relief and alleging violations of the Federal Reserve Act and the Fifth Amendment stemming from the “unprecedented and illegal attempt to remove Governor Cook from her position which, if allowed to occur, would be the first of its kind in the Board’s history.” The President’s actions, Governor Cook alleges, violate her Fifth Amendment due process rights and her statutory right to notice and a hearing under the Federal Reserve Act.

“It would subvert the Federal Reserve Act (“FRA”), which explicitly requires a showing of “cause” for a Governor’s removal,” the complaint states, “which an unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not.”

Indeed, the complaint contends that the President’s actions are part and parcel of his “public frustration” with the Fed and his obvious “desire to impede the independence of the Federal Reserve since he assumed office in January 2025.”

“Even if the President had been more careful in obscuring his real justification for targeting Governor Cook,” the complaint states, “the President’s concocted basis for removal—the unsubstantiated and unproven allegation that Governor Cook “potentially” erred in filling out a mortgage form prior to her Senate confirmation—does not amount to “cause” within the meaning of the FRA and is unsupported by caselaw.”

Background: the purported termination. On Monday evening, President Trump posted on social media a letter stating that, pursuant to Article II of the Constitution and the Federal Reserve Act of 1913, he was removing Dr. Cook from her position as a member of the Board of Governors of the Federal Reserve, “effective immediately.” According to Cook’s lawsuit, that post followed his August 20, 2025, call for her to resign, which in turn she alleges was “based on nothing more than another social media posting, this one by Federal Housing Finance Agency (“FHFA”) Director William Pulte, who has been using his office to allege mortgage wrongdoing against other public officials, now turning his sights to Governor Cook.”

In the letter, Trump claimed that the Act allows him to remove Cook, at his “discretion, for cause” and that he has “determined that there is sufficient cause” to remove her based on a criminal referral providing “reason to believe” she “may have made false statements on one or more mortgage agreements.” He accuses her of “deceitful and potentially criminal conduct,” also claiming that “[a]t a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question [her] competence and trustworthiness as a financial regulator.” The conduct in question relates to documents allegedly signed by Cook, two weeks apart, as part of mortgage paperwork.

Trump v. Wilcox. His actions will test the stated roadblock to any actions against members of the Federal Reserve Board mentioned by the U.S. Supreme Court majority in Trump v. Wilcox. There, the U.S. Supreme Court stayed preliminary injunctions against Trump’s removal of NLRB member Gwynne Wilcox and MSPB member Cathy Harris, both of which were without cause and in violation of their respective agencies’ organic statutes. The Court said the decision “reflects our judgment that the Government is likely to show that both the NLRB and MSPB exercise considerable executive power,” and “that the Government faces greater risk of harm from an order allowing a removed officer to continue exercising the executive power than a wrongfully removed officer faces from being unable to perform her statutory duty.”

In Wilcox, the majority specifically addressed the prospect of removal of members of the Federal Reserve’s Board of Governors, which Wilcox and Harris had raised as a concern. This language was specifically noted by Cook in her complaint:

“Since its establishment in 1913, Congress intended for the Federal Reserve System to function independent of political interference. As articulated by the Supreme Court in Wilcox v. Trump, “[t]he Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.” 145 S. Ct. 1415, 1415 (May 22, 2025) (citing Seila Law LLC v. Consumer Financial Protection Bureau, 591 U.S. 197, 222 n.8 (2020)). The intent that the Federal Reserve retain independence has been reinforced by statutory amendments to the FRA in 1935, 1977, and 2010.” [Complaint, para. 7]

Later in the complaint, Cook adds that “[t]his is not the first time the Supreme Court has distinguished the Federal Reserve from other government agencies” and states that the “recent analysis” instead “builds on what the Court previously signaled about the unique nature of the Federal Reserve and how it is differently situated from other agencies in Seila Law.”

But Justice Kagan’s dissent should be kept in mind. Justice Kagan, in a separately written dissent in Wilcox, however, discussed this attempt to carve out the Federal Reserve Board and laid out arguments that will likely appear in the upcoming litigation. “The majority closes today’s order by stating, out of the blue, that it has no bearing on “the constitutionality of for-cause removal protections” for members of the Federal Reserve Board....”

Kagan presciently added:

“I am glad to hear it, and do not doubt the majority’s intention to avoid imperiling the Fed. But then, today’s order poses a puzzle. For the Federal Reserve’s independence rests on the same constitutional and analytic foundations as that of the NLRB, MSPB, FTC, FCC, and so on—which is to say it rests largely on Humphrey’s. So the majority has to offer a different story: The Federal Reserve, it submits, is a “uniquely structured” entity with a “distinct historical tradition”—and it cites for that proposition footnote 8 of this Court’s opinion in Seila Law. Ante, at 2 (citing 591 U. S., at 222, n. 8).

But—sorry—footnote 8 provides no support. Its only relevant sentence rejects an argument made in the dissenting opinion “even assuming [that] financial institutions like the Second Bank and Federal Reserve can claim a special historical status.” And so an assumption made to humor a dissent gets turned into some kind of holding. Because one way of making new law on the emergency docket (the deprecation of Humphrey’s) turns out to require yet another (the creation of a bespoke Federal Reserve exception). If the idea is to reassure the markets, a simpler—and more judicial— approach would have been to deny the President’s application for a stay on the continued authority of Humphrey’s.”

The lawsuit was filed in federal district court in D.C.; the case is No. 1:25-cv-02903.

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