On April 28, the U.S. Court of Appeals for the D.C. Circuit reinstated a district court order blocking the CFPB from conducting a large-scale reduction in force (previously discussed here). The decision reversed an earlier partial stay that had permitted limited layoffs based on a “particularized assessment.”
The underlying lawsuit, brought by the Bureau’s trade union, challenged the legality of the proposed reduction-in-force that would have cut nearly 90% of the CFPB staff. Plaintiffs alleged the plan is an attempt to disable the agency in violation of the Dodd-Frank Act, among other federal statutory mandates.
In reinstating the full injunction, the appellate panel clarified what it meant by a “particularized assessment”—a determination that each CFPB division could still fulfill its statutory duties without the employees selected for termination. The CFPB argued that judicial review would improperly entangle the judiciary in executive decision-making, while plaintiffs contended the layoffs lacked a genuine individualized analysis and would disable core agency functions. The judges acknowledged that both sides remain sharply divided over whether the particularized assessments can be reviewed in court, and concluded that restoring the injunction was the best way to avoid ongoing litigation on that question.
Putting It Into Practice: The administration’s plan to reduce the CFPB to a skeletal staff remains on hold following the D.C. Circuit’s decision to reinstate the injunction. While the court has yet to decide whether the mass layoffs are lawful, its order underscores the stakes—namely, that a downsized CFPB would significantly curtail federal consumer financial enforcement. We will continue to monitor this closely as the case moves to oral argument on May 16.