Appellate court upholds order hindering Consumer Financial Protection Bureau from carrying out large-scale dismissals

The U.S. Court of Appeals for the District of Columbia has ruled in favour of the Trump administration, allowing the Consumer Financial Protection Bureau (CFPB) to proceed with widespread layoffs, overturning a previous lower court injunction that had blocked mass reductions in force since February 2021.

The decision, made in a 2-1 majority ruling, permits the administration to move forward with layoffs expected to affect approximately 90% of the agency’s workforce, or around 1,482 employees. The majority opinion held that challenges to these mass firings are not yet reviewable because the actions were not finalized and the plaintiffs must seek remedies through specific federal employee and union procedures rather than in this court.

Judge Neomi Rao, a Trump appointee, dissented from the majority’s decision. In her Monday writing, she criticized the plaintiffs for seeking immediate judicial intervention instead of waiting to see if any harm materialized. However, the majority opinion prevailed, granting the administration authority to continue its staffing reductions without immediate judicial interference.

The ruling means that the previous injunction barring the CFPB from mass firings has been overturned, and the agency can now proceed with its reductions in force. The appeals court's order is set to stay in effect until oral arguments challenging the injunction on May 16.

The CFPB had previously attempted a reduction in force encompassing roughly 90% of the bureau, which the district judge halted before it could take effect. The RIF that plaintiffs sought to stop in April exceeds the initial 1,175-person downsizing the CFPB attempted in February.

The appeals panel did not impose any immediate relief on the CFPB regarding the RIF. CFPB Chief Legal Officer Mark Paoletta had previously clarified that the employees subject to the RIF would remain employed for sixty days, and that the agency’s leadership would continuously assess the Bureau’s workforce needs and make appropriate changes to ensure compliance with statutory duties.

The ruling is part of broader litigation and administrative efforts regarding federal employee reductions ongoing in other federal agencies as well. During this transition, CFPB staff have mostly ceased performing investigations and enforcement work while remaining on payroll, and the agency’s budget was cut in half by recent legislation, further limiting its operational capacity.

In summary:

The federal appeals court has allowed the Trump administration to proceed with dismantling the CFPB and issuing widespread layoffs.
The U.S. Court of Appeals for the District of Columbia issued a 2-1 decision permitting the administration to move forward with layoffs expected to affect roughly 90% of the agency’s workforce.
The majority opinion held that challenges to these mass firings are not yet reviewable because the actions were not finalized and the plaintiffs must seek remedies through specific federal employee and union procedures rather than in this court.
Judge Neomi Rao dissented from the majority’s decision, likely expressing concerns about the legality or procedural aspects of the administration’s mass firings, which were overruled by the majority panel allowing the layoffs to proceed.
The previous injunction barring the CFPB from mass firings has been overturned, and the agency can now proceed with its reductions in force.
The ruling is part of broader litigation and administrative efforts regarding federal employee reductions ongoing in other federal agencies as well.
During this transition, CFPB staff have mostly ceased performing investigations and enforcement work while remaining on payroll, and the agency’s budget was cut in half by recent legislation, further limiting its operational capacity.

Appellate court upholds order hindering Consumer Financial Protection Bureau from carrying out large-scale dismissals