On August 15, the U.S. Court of Appeals for the District of Columbia issued a decision in the case of National Treasury Employees Union (NTEU) v. Consumer Financial Protection Bureau (CFPB or Bureau). The appellate court vacated the district court’s preliminary injunction, which had previously restricted the CFPB’s actions to halt the Bureau’s operations and terminate its employees.
Background
As discussed here, the NTEU, representing CFPB employees, filed a lawsuit challenging Acting Director Russell Vought’s actions, alleging they were unconstitutional and violated the Dodd-Frank Act. The district court held that the CFPB’s shut down attempts were inconsistent with its statutory obligations under Title X of Dodd-Frank. As a result, the court granted a preliminary injunction requiring the CFPB to reverse its shutdown efforts, reinstate its workforce, and continue performing its statutory duties, but the CFPB appealed, leading to a partial stay of the injunction.
Court of Appeals Decision
The D.C. Circuit Court found that the district court lacked jurisdiction over claims related to employment loss, which must be addressed through the Civil Service Reform Act’s specialized review scheme. “These plaintiffs thus seek to redress injuries from agency decisions to fire employees. But a specialized-review scheme governs such claims and ousts the district courts of their arising-under jurisdiction.”
Furthermore, the court determined that the remaining claims did not target final agency action reviewable under the Administrative Procedure Act (APA) nor unconstitutional action reviewable in equity. “The plaintiffs seek to set aside an abstract decision, inferred from a constellation of discrete actions, to prophylactically ensure that the Bureau can fulfill its statutory mandate. This theory contravenes all the APA limits discussed above — agency action, finality, ripeness, and discreteness alike.”
Order on Mandate
On the same day, the court issued an order withholding the issuance of the mandate until seven days after the disposition of any timely petition for rehearing or petition for rehearing en banc. This order allows any party to move for expedited issuance of the mandate for good cause shown.
Dissent by Judge Pillard
Judge Pillard dissented, emphasizing the importance of the CFPB in safeguarding consumers and the financial system post-2008 crisis. She argued that while presidential administrations have discretion in adjusting agency priorities, they cannot unilaterally decide to abolish the CFPB, as Congress established it with specific mandates. Judge Pillard criticized the majority’s decision to vacate the preliminary injunction, asserting that it contravenes statutes, precedent, and constitutional principles. She underscored the strong presumption of judicial review for final agency actions and expressed concern over the notion that courts are powerless to prevent the President from abolishing federal agencies.
What’s Next
Although the panel decision represents a significant setback for the CFPB employees’ lawsuit, the litigation is not over, and we do not expect the reductions in force to occur immediately. Rather, because the Court of Appeals stayed the mandate, our expectation is that the plaintiffs will seek a rehearing en banc. It will take some time for that petition to be filed and decided, and we will continue to monitor developments in this litigation as they unfold.
