A deep dive into Judge Jackson’s preliminary injunction order against CFPB Acting Director Vought

On Friday, March 28, Judge Amy Berman Jackson issued a 112-page opinionand 3-page order in National Treasury Employees Union, et al. v. Russell Vought, in his official capacity as Acting Director of the Consumer Financial Protection Bureau, et al, Civil Action No. 25-0381 (D.D.C.). Judge Jackson granted a motion for Preliminary Injunction which, in broad terms, enjoined the defendants from continuing to dismantle the CFPB without Congressional authorization to do so. Specifically, the order states:

1. Defendants, shall maintain and shall not delete, destroy, remove, or impair any data or other CFPB records covered by the Federal Records Act (hereafter “agency data”) except in accordance with the procedures described in 44 U.S.C. Chapter 33. This means that Defendants shall maintain and shall not delete, destroy, remove, or impair agency data from any database or information system controlled by, or stored on behalf of, the CFPB. The term “agency data” includes any data or CFPB records stored on the CFPB’s premises, on physical media, on a cloud server, or otherwise. The defendants must take all necessary steps to ensure that its contractors do the same.
2. Defendants shall reinstate all probationary and term employees terminated between February 10, 2025 and the date of this order, including but not limited to, Julia Barnard, the Private Student Loan Ombudsman.
3. Defendants shall not terminate any CFPB employee, except for cause related to the individual employee’s performance or conduct; and defendants shall not issue any notice of reduction-in-force to any CFPB employee.
4. Defendants shall not enforce the February 10, 2025 stop-work order or require employees to take administrative leave in furtherance of that order, and defendants shall not reinstitute or seek to achieve the outcome of a work stoppage, whether through a stop-work order, an order directing employees to take administrative leave, or any other means.
5. To ensure that employees can perform their statutorily mandated functions, the defendants must provide them with either fully-equipped office space, or permission to work remotely and laptop computers that are enabled to connect securely to the agency server through the Citrix Virtual Desktop or another similar program.
6. Defendants shall ensure that in accordance with 12 U.S.C. §5492(b)(3), the CFPB Office of Consumer Response continues 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.
7. Defendants shall rescind all notices of contract termination issued on or after February 11, 2025, and they may not reinitiate the wholesale cancellation of contracts. This provision does not prohibit the defendants from ordering that work or services under specific contracts be halted based on an individualized assessment that the contract involved is unnecessary for the agency to fulfill its statutory functions. To ensure that this Court can award full relief at the end of the case, however, the defendants may not finalize the termination of any contract.
8. Defendants shall file a report with the Court by April 4, 2025 confirming that all individuals and entities that fall within Fed. R. Civ. Proc. 65(d)(2)(A), (B), and (C) have received actual notice of this Order, and that the defendants are in compliance with this Order.
9. The Court’s temporary consent order issued on February 14, 2024 [Dkt. #19] and the March 3, 2025 Minute Order issued in light of the parties’ Notice of Agreement [Dkt. #53] and Notice of Agreement (Corrected) [Dkt #65], are hereby vacated.

The Defendants filed a Notice of Appeal to the D.C. Court of Appeals on Saturday, March 29. On March 31, the Defendants filed in the Court of Appeals a motion to stay Judge Jackson’s order on the alleged basis that the terms of the injunction bear no relationship to the gravamen of the complaint which was to prevent Acting Director from shutting down the CFPB. The introductory paragraph of the stay motion states:

The district court in this case believed that judicial intervention was necessary to preserve the existence and minimum statutory functions of the Consumer Financial Protection Bureau (CFPB) pending the resolution of plaintiffs’ claims. Yet instead of prohibiting defendants from eliminating the agency or falling below any statutory minimum baseline, the district court entered an extraordinary eight-part injunction whose requirements sweep far beyond the putative problem it identified. In effect, the district court has indefinitely frozen CFPB as it stood before President Trump’s inauguration. There is no legal basis for that relief, which stymies lawful reforms and imposes restrictions on an Executive Branch agency akin to judicial receivership. Defendants therefore respectfully request an emergency stay pending appeal, and an immediate administrative stay.

While the Order is clearly very important for CFPB employees who have already been terminated and those that were on the cusp of being terminated but for the intervention of the Court, the Order is more important for what it does not say. It does not require the CFPB to continue to function in the way it functioned under former Director Rohit Chopra. It does not preclude the CFPB from ceasing to perform functions that are not statutorily required even though they were performed by the CFPB prior to the time that Chopra was terminated by President Trump. Indeed, the Order does not expressly require the CFPB to perform functions that are statutorily required such as supervision of large banks and certain non-banks, although it does require that employees have the ability to work in their offices or to work remotely to perform statutorily mandated functions. (To our knowledge, the CFPB has not yet resumed conduction examinations of supervised institutions even though supervision is a statutorily required function.) It does not preclude the CFPB from continuing to voluntarily dismiss enforcement lawsuits or ceasing enforcement investigations. It does not preclude the CFPB from seeking to void prior consent orders, even if the CFPB refunds to the defendants civil money penalties that it previously collected. It does not preclude the CFPB from taking otherwise lawful steps to invalidate final regulations or other written guidance issued during Chopra’s tenure.

When you boil it all down, the main thing the order requires is that the CFPB re-hire probationary and term employees and not terminate any employees going forward except for cause related to such employee’s performance. In light of the fact that the activities of the CFPB have already diminished and are likely to continue to diminish under Trump 2.0, it seems likely that many of the CFPB’s employees will have very little, if any, work to perform. However, at least as things stand now, the CFPB will not be able to terminate such employees or put them on administrative leave. Thus, this Order, if upheld on appeal, will preclude the Administration from unilaterally shutting down or dismantling the CFPB. We seriously doubt, however, whether it will ultimately preclude the Administration from re-shaping the focus and direction of the CFPB for the next four years.

It will be very interesting to see how many terminated employees will elect to return to work. We are sure that some of them, as well as other employees, have already taken or are looking for new jobs because of the chaos that exists at the CFPB and their opposition to the new Administration’s vision for the CFPB.

We can’t help but think that the initiative of Trump 2.0 to “right-size” the CFPB could have been accomplished if the Administration had used a scalpel rather than a meat cleaver to achieve its objective of changing the direction of the CFPB. That is what former Acting Director Mulvaney and Director Kraninger did during Trump 1.0. The Administration still has in its arsenal the possible ability to use the Budget Reconciliation Bill to subject the CFPB to Congressional appropriations. The use of such a bill would require just a majority vote in the House and Senate.

CFPB reform is necessary because of the disruption, anti-innovation, and restriction of credit products that were the hallmarks of Chopra’s term in office and that were contrary to the best interests of all stakeholders. But the court order makes clear that reform cannot be achieved unilaterally by the Administration. Congress must play a role.

We would be remiss also if we did not identify that the Administration could also have raised as an argument that the funds the CFPB has received from the Federal Reserve Board since September 2022 may have been unlawfully obtained because of the requirement under the Dodd-Frank Act that the CFPB may be funded only out of “combined earnings of the Federal Reserve Banks.” (There have been no “combined earnings” since September 2022 and that situation is likely to continue for the foreseeable future.) If the Administration is able to convince a court and ultimately the Supreme Court of the argument that the CFPB has been and is unlawfully funded, that could be an impetus for the Democrats to agree that CFPB reform makes sense.

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