A federal judge on Friday granted a preliminary injunction, halting the Consumer Financial Protection Bureau from issuing any reductions in force and requiring the agency to reinstate all probationary and term employees fired since Feb. 10.
The court also forbids the agency from enforcing Acting Director Russ Vought’s stop-work order, and allows CFPB employees subsequently placed on administrative leave to resume work.
The CFPB, further, must not “delete, destroy, remove or impair” agency data and must restore contracts terminated under Vought.
The judge’s order also prevents the CFPB from terminating any employee except for cause related to their performance or conduct, and forces the agency to provide a workspace for employees to conduct statutorily mandated work, or allow them to work remotely. The bureau also must maintain a toll-free telephone number, website and complaint database for the Office of Consumer Response.
And Vought must file a report by April 4 confirming compliance with the order – particularly, an update on the status of the CFPB’s Washington headquarters. Vought moved to cancel the lease on the building and had the bureau’s name removed from it.
The injunction stands as a massive victory for the National Treasury Employees Union, which brought the case against the CFPB’s Trump-era leadership.
"Today's ruling is an undeniable win-win for working people," Cat Farman, president of the union, said in a statement. "CFPB workers are eager to get back to work serving the American people and protecting their hard-earned paychecks from Wall Street greed."
The CFPB did not respond to a request for comment. However, in court, attorneys representing the bureau equated a preliminary injunction with putting the agency in judicial receivership. The CFPB filed a motion to appeal the case Saturday.
Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia questioned why the NTEU didn’t aim higher – asking the union to tell her by Monday why it is no longer seeking to block CFPB leaders from transferring the bureau’s unappropriated funding to the Federal Reserve or the Treasury Department.
That was one facet of the union’s case when Berman Jackson first issued a temporary restraining order in the case Feb. 14. A federal judge in Maryland this month denied the city of Baltimore’s request for a preliminary injunction to keep the CFPB from returning its reserve funding.
"This is precisely the sort of situation preliminary injunctions were designed to address,” Berman Jackson wrote Friday in a 112-page opinion. “If the defendants are not enjoined, they will eliminate the agency before the Court has the opportunity to decide whether the law permits them to do it, and as the defendants' own witness warned, the harm will be irreparable."
That witness was Adam Martinez, the CFPB’s chief operating officer, who submitted two declarations to the court and testified on the stand.
“At times, he appeared anguished by both the demise of the agency and by his being cast in the role of agency spokesman,” Berman Jackson wrote. “There were multiple painful pauses when you could see the battle between his conflicting loyalties to his new employers and to the truth playing out on his face.”
“He had the demeanor of an abused wife brought to court by her husband to drop the charges,” she wrote.
Berman Jackson found some of the defense’s narratives less than believable. She took issue with an apparent tonal shift by the CFPB’s chief legal officer, Mark Paoletta, who wrote in a March 2 memo: “It has come to my attention … that some employees have not been performing statutorily required work. Let me be clear: Employees should be performing work that is required by law and do not need to seek prior approval to do so.”
Berman Jackson noted the timing of the memo – a Sunday afternoon and the day before a hearing at which the judge’s temporary restraining order was set to expire.
“Paoletta insults the reader’s intelligence when he feigns surprise that few employees were working,” Berman Jackson wrote. “The defendants’ eleventh-hour attempt to suggest immediately before the hearing that the stop-work order was not really a stop-work order at all was so disingenuous that the Court is left with little confidence that the defense can be trusted to tell the truth about anything.”
Berman Jackson appeared to indicate she showed the CFPB the benefit of the doubt.
“It may be that defendants decided to authorize the resumption of some work and the reactivation of some contracts in light of a belated, but genuine recognition that there were certain duties that had to be performed to comply with the law while the agency was still open,” she wrote. “The material in the record and the chronology suggest, though, that the change of heart was more likely a charade for the Court’s benefit.”
Berman Jackson’s order Friday began by quoting billionaire Elon Musk’s infamous tombstone emoji social-media post, referring to the Department of Government Efficiency’s Feb. 6 incursion of the bureau. Notably, the judge named DOGE among entities enjoined by her order because the organization has been “in active concert or participation” with CFPB leaders’ plan to put the agency in “wind-down mode.”
Now it appears the injunction may outlast Vought’s tenure with the bureau. The Senate seems on track to confirm former Federal Deposit Insurance Corp. board member Jonathan McKernan to lead the CFPB by the end of April. McKernan, though, assured senators during his nomination hearing that he intended to “right-size” the agency.
Workforce reductions at the CFPB have been on hold since Berman Jackson issued a temporary restraining order Feb. 14. CFPB leaders, according to testimony, raced that day to enact a mass firing that would have cut the bureau by 1,175 employees.
Berman Jackson noted Friday that CFPB leadership continued to plan for the reduction in force even after the Feb. 14 order “as if nothing had changed.”
“The Court cannot look away or the CFPB will be dissolved and dismantled completely in approximately thirty days, well before this lawsuit has come to its conclusion,” the judge wrote Friday.