D.C. Circuit Court to Rehear Case on CFPB Layoffs

The U.S. Court of Appeals for the District of Columbia Circuit has agreed to rehear a significant case concerning the Consumer Financial Protection Bureau (CFPB) and its employees. This decision follows a petition from the National Treasury Employees Union (NTEU) and vacates a previous ruling that permitted the Trump administration to proceed with mass layoffs at the agency. The rehearing is set to begin with oral arguments on February 24, 2026.

Appeals court agrees to rehear CFPB union's case

The NTEU filed a lawsuit in February 2025, alleging that Russell Vought, the acting director of the CFPB, unlawfully initiated a Reduction in Force (RIF) that could eliminate up to 90% of the agency's workforce. The union claimed that Vought's actions violated constitutional provisions and the Administrative Procedure Act (APA). In March 2025, U.S. District Judge Amy Berman Jackson issued a preliminary injunction to halt the layoffs, emphasizing the need to protect the CFPB's operational integrity.

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However, in August 2025, a three-judge panel of the D.C. Circuit ruled 2-1 in favor of Vought, asserting that the district court lacked jurisdiction over the claims related to employment loss. This ruling allowed the administration to continue with its plans for mass layoffs, prompting the NTEU to seek an en banc rehearing.

Appeals court agrees to rehear CFPB union's case

The full D.C. Circuit's decision to rehear the case marks a notable shift in the legal landscape surrounding the CFPB. The court's order vacated the previous panel's judgment, allowing the NTEU and other plaintiffs a second opportunity to present their case. The court's decision was influenced by numerous lawmakers and nonprofit organizations that submitted amicus briefs in support of the union, arguing against the legality of dismantling the CFPB without formal documentation.

Appeals court agrees to rehear CFPB union's case

The outcome of this rehearing could have significant implications for the CFPB and its employees, as well as for the broader question of executive authority in dismantling federal agencies. The court's ruling will address whether government officials can effectively shut down an agency without an explicit policy or memo outlining such actions.

Appeals court agrees to rehear CFPB union's case

The Department of Justice, representing Vought and the CFPB, opposed the NTEU's petition for rehearing, arguing that the union acted prematurely and that the courts lack authority over executive branch operations. The DOJ contended that Vought had not made any official announcements regarding layoffs, suggesting that the union should wait for a formal RIF before pursuing legal action.

Appeals court agrees to rehear CFPB union's case

Critics of the Trump administration's approach to the CFPB have raised concerns about the potential for executive overreach. They argue that the administration's actions could undermine the agency's ability to fulfill its statutory mandate and harm consumer protections. The NTEU's lawsuit reflects broader anxieties about the future of federal agencies under executive authority.

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The D.C. Circuit has established a tight briefing schedule for the rehearing, with deadlines set for January and February 2026. This timeline indicates that the court is prioritizing a swift resolution to the case, which is being closely monitored for its potential impact on the CFPB and federal employment law.

Appeals court agrees to rehear CFPB union's case

• “This case will be reheard by the court sitting en banc,” — U.S. Court of Appeals for the D.C. Circuit

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• “We hold that the district court lacked jurisdiction to consider the claims predicated on loss of employment, which must proceed through the specialized-review scheme established in the Civil Service Reform Act,” — Judge Gregory Katsas, U.S. Court of Appeals for the D.C. Circuit

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• “In response, plaintiffs highlight that the proposed RIF currently at issue, involving nearly 90 percent of agency employees, exceeds the scope of the RIF that prompted the district court's original preliminary injunction,” — D.C. Circuit Panel Ruling

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