Federal judge denies DOJ’s appeal of CFPB injunction

UPDATE: This article reflects the latest development in the legal saga.

A federal judge denied an appeal by the Department of Justice of a preliminary injunction that blocked the Trump administration from dismantling the Consumer Financial Protection Bureau.

On Wednesday, Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia denied the appeal. A preliminary injunction that prohibited the Trump administration from firing employees through a reduction in force at the beleaguered CFPB has been stayed until noon on April 7, unless the government files a motion to stay in the U.S. Court of Appeals for the D.C. Circuit.

“During the pendency of the administrative stay, the defendants shall comply with the personnel termination and data deletion provisions” of a previously agreed-upon order, Berman Jackson wrote. She also said the government is prohibited from “finalizing the cancellation of any contracts.”

The Justice Department had disputed evidence presented in a two-day evidentiary hearing last month and said the preliminary injunction had “sweeping and intrusive requirements” with “no plausible basis in the CFPB’s organic statute or any other identified statute.”

In its motion appealing the injunction, the DOJ claimed that the CFPB should operate with fewer employees, based on the agency’s funding cap from the Federal Reserve Board. 

“When it was founded, the agency was ‘never supposed to’ employ ‘above 1,000 people,’ ” the DOJ stated. “The statutory cap is structured in a manner to provide funding for approximately 1,000 people, not the approximately 1,700 people that the CFPB currently employs. This court’s injunction instead blocks standard workforce decision-making discretion, resource allocation decision-making discretion, and discretion to issue administrative directives retained by agencies that are not closing.”  

The National Treasury Employees Union sued acting CFPB Director Russell Vought in February and, in a motion filed Tuesday, argued that the government filed its appeal in the wrong court, which the government corrected with Tuesday’s filing. 

Deepak Gupta, who represents the NTEU, responded Wednesday by opposing the defendant’s motion for a stay, which he said “relies on a fictional account of the facts that is entirely at odds with the findings of this Court.”

At the evidentiary hearings in March, Gupta presented evidence showing that Vought and Mark Paoletta, the CFPB’s chief legal officer, planned to fire 1,175 CFPB employees in a first round of layoffs. President Trump, Elon Musk and Vought have stated that the CFPB should be gutted, which Berman Jackson noted in her injunction.  

She said CFPB leaders had engaged in “a charade for the court’s benefit” by authorizing a resumption of some work at the CFPB while laying plans behind the scenes to fire most of the bureau’s employees and shut down the agency.

In the appeal, the DOJ repeated its now-debunked claims about a stop-work order instituted by Vought in February. 

“Agency leadership has repeatedly made clear that the intent of this pause was not to stop work in furtherance of statutory obligations, but rather to ‘ensure that new leadership could establish operational control over the agency while ensuring that it would continue to fulfill its statutory duties,'” the motion stated.