Labor & Employment Law Daily Wrap Up, REMEDIES, DAMAGES—D.D.C.: Court preliminarily enjoins ‘hurried’ effort to ‘dismantle and disable’ CFPB; appeal filed, (Apr 1, 2025)
Law Firms Mentioned:Gupta Wessler LLP
Organizations Mentioned:CFPB Employee Association | Consumer Financial Protection Bureau | Gupta Wessler, PLLC | NAACP | National Association the Advancement of Colored People | National Consumer Law Center | National Treasury Employees Union | Public Citizen Litigation Group | U.S. Department of Justice | Virginia Poverty Law Center
By Justin Marcus Smith, J.D.
The court said the Trump administration’s actions to dismantle the CFPB were “taken in complete disregard for the decision Congress made 15 years ago” to create the agency in the wake of the 2008 Financial Crisis.
A federal district court in the nation’s capital has preliminarily enjoined the Trump administration’s effort to shut down the Consumer Financial Protection Bureau (CFPB), a creation of Congress. In the absence of an injunction freezing the status quo and thereby preserving the agency’s data, operational capacity, and workforce, the court found there would be substantial risk that CFPB Acting Director Russell Vought and the other CFPB defendants would “complete the destruction of the agency completely in violation of law well before the Court can rule on the merits.” The court also said the agency would be “impossible to rebuild.” The court said this was “precisely the sort of situation preliminary injunctions were designed to address.” The next day, March 29, 2025, Acting Director Vought and the CFPB filed a notice of appeal to the United States Court of Appeals for the District of Columbia Circuit (National Treasury Employees Union v. Vought, No. 1:25-cv-00381-ABJ (D.D.C. Mar. 28, 2025)).
Background. As previously reported, the National Treasury Employees Union (NTEU) has led a group of plaintiffs in challenging the Trump Administration’s attempt to dismantle the Consumer Financial Protection Bureau (see Banking and Finance Law Daily, Feb. 14, 2025). Other plaintiffs include the National Consumer Law Center, National Association for the Advancement of Colored People (NAACP), Virginia Poverty Law Center, CFPB Employee Association, and an individual plaintiff. The NTEU complaint named the Bureau and Acting Director Russell Vought as defendants.
The NTEU and other plaintiffs proposed a preliminary injunction order that largely tracked that of the original consent order entered at case inception, but, according to the NTEU, the Bureau defendants continued to oppose entry of a preliminary injunction. The meet-and-confer the court had urged at the conclusion of an evidentiary hearing on March 11 apparently broke down after some disagreement about Bureau stipulation to statutory functions and the Bureau’s list of contracts (see Banking and Finance Law Daily, Mar. 20, 2025).
Order. The preliminary injunction order broadly tracks the NTEU proposed order with a few additional practical amendments specifically pertaining to the Private Student Loan Ombudsman, providing office space for CFPB employees to carry out CFPB functions, and keeping Office of Consumer Response communication channels open to the public. As summarized here, the preliminary injunction requires Acting Director Vought and the CFPB:
to preserve all CFPB data or records;
to reinstate probationary and term employees terminated after Feb. 10, 2025, including, specifically, Private Student Loan Ombudsman Julia Barnard;
to stop terminating employees without employee cause and stop all RIF notices;
not to enforce or reinstitute a work stoppage by any means, administrative leave or otherwise;
to ensure employees can perform their statutorily mandated functions by either providing fully equipped office space or permission to work remotely using laptop computers with secure connections to the agency;
to ensure compliance with 12 U.S.C. §5492(b)(3) such that the Office of Consumer Response will continue 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[;]”
to rescind all notices of Bureau contract terminations issued on or after Feb. 11, 2025, and to stop “wholesale” contract cancellations; contract terminations, if any, must be based on individualized assessment that the contracts are not necessary to carrying out statutory functions, and such individual contract terminations must not be finalized; and
to file a compliance report with the court by Apr. 4, 2025 (i.e., seven calendar days lead time) confirming full compliance with the order.
Reactions. In a short press release, Sen. Elizabeth Warren (D-Mass.) expressed her approval that the court had found “DOGE operatives likely broke the law.” She said the “fight isn’t over” and emphasized that Congress created the CFPB to be what it has been, in her view, the “little agency that has returned more than $21 billion back to families who were cheated, tricked, and scammed by big banks and other financial companies.”
House Financial Services Committee Ranking Member Maxine Waters (D-Calif.) issued a press release featuring a joint statement with House Assistant Minority Leader Joe Neguse (D-Colo.) and House Judiciary Committee Ranking Member Jamie Raskin (D-Md.). The representatives called the preliminary injunction “a major victory for American consumers and for those targeted by predatory lenders and bad actors.” They characterized the court’s decision as a “powerful example of the good of the people prevailing over the interests of the wealthy and well-connected.” They said more than 200 House Democrats “got involved” to push back by filing the amicus brief the court cited multiple times in its 112-page ruling.
California Attorney General Rob Bonta issued a press release in which he described the CFPB as “vital” to federal consumer protections. He extolled the CFPB as the “top cop protecting American families who want to buy a home and people who want to borrow money to buy a car or attend college.”
In a Public Citizen Litigation Group press release, Wendy Liu, an attorney with the group, said, “Dismantling the CFPB would have devastating consequences for consumers across the country.” She called the Trump Administration’s attempt to shutter it “illegal.” Echoing the court and others, she noted how the 2008 Financial Crisis spurred Congress to create the agency. She said the agency “must exist” and “must perform specific functions to protect the borrowing public.”
The case is No. 1:25-cv-00381-ABJ.
Judge: Jackson, A.B.
Attorneys: Deepak Gupta (Gupta Wessler LLP) for National Treasury Employees Union, National Consumer Law Center, National Association for the Advancement of Colored People, Virginia Poverty Law Center, Eva Steege, and CFPB Employee Association. Brad P. Rosenberg, U.S. Department of Justice, for Russell Vought and the Consumer Financial Protection Bureau.
Companies: CFPB Employee Association; National Association the Advancement of Colored People; National Consumer Law Center; National Treasury Employees Union; Virginia Poverty Law Center
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