[00:00:01] Speaker 02:
Case number 25-5091, National Treasury Employees Union et al.

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versus Russell Poff in his official capacity as Acting Director of the Consumer Financial Protection Bureau and Consumer Financial Protection Bureau.

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Mr. McArthur for the balance, Ms.

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Bennett for the appellees.

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So before we get started, I just wanted to thank counsel for both sides for the tremendous amount of work that you've been doing on a very tight schedule.

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I know that the case only arose in the district court a few days ago and that people have really been working extremely hard.

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And we all know that a quick resolution of these matters is important to prevent any irreparable harm and to minimize

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the extent to which the court is involved in any kind of restrictions on what the executive branch can do.

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So I just want to appreciate that.

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I know you're all tired, and I'm grateful that you are here and ready to help us out this morning.

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Mr. MacArthur, you may proceed when you're ready.

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Thank you, Judge Pillard, and may it please the court, Eric MacArthur, for the defendants.

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We are here on an emergency stay motion

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for one basic reason.

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The district court's sweeping programmatic injunction goes far beyond any relief that can be justified based upon the purported violations the court identified.

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And it improperly intrudes on the executive's Article II authority to manage its own internal affairs by preventing the Bureau from using lawful tools that agencies possess

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in order to manage their workforces, to set their priorities, and to shepherd their resources.

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I want to start out by focusing on what I think are the two key principles that the district court lost sight of here and that should guide this court's inquiry.

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The first is the basic principle of equity under the law of remedies.

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And that is that an injunction must be tailored to fit the nature and extent of the violation

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and to redress the resulting harm to the plaintiffs.

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The second is a principle of constitutional dimension, and that is that when a court orders relief affecting the internal operations of a coordinate branch of government, it must ensure that it stays in its constitutional lane and does not usurp the lawful discretion the Constitution vests in the president to decide how to execute the laws.

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The injunction here

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runs rough shod over both principles.

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Before you get into the details, can I just ask a couple threshold questions?

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Sure.

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We're here on a stay, and you're limited by the way you've presented stay arguments in the brief.

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So you haven't challenged the district court's framing

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of the case, which is that this is fundamentally, the agency action under review is the alleged attempted plan to just shut down the agency.

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And you have Lujan and Suwa arguments about that framing, but we take that as a given, right?

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And you haven't, on the merits, you haven't challenged the proposition that

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closing the agency would be unlawful or would cause legal violations, right?

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And you haven't challenged the findings of fact that there was a plan to close the agency which persists and would be implemented but for judicial intervention.

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So if all of that is right, how could we give you

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How can we possibly give you a full stay pending appeal?

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Right, which means you're free to do what the district court said you would do.

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As opposed to, you know, let's just debate the scope of the injunction and try to pare it back so that

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You can't close the agency, but you can do things you can legitimately do, like layoffs.

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You can do lots of layoffs without closing the agency.

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We're just talking about scope, not full stay or not.

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Whether it's full stay or a partial stay, I think, Judge Katz, you are correct.

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We do dispute all of those things, and there will be time enough to lay out our arguments when we have merits briefing on the preliminary injunction.

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But our primary submission today is that even if you accept all of that arguendo, the injunction that was entered here is unlawful because it goes far beyond what is needed to remedy the violations.

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And there are two.

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Which is a scope question, not a just knock out the injunction.

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I think it is.

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I think it is a scope question.

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That is correct.

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And there are there are two.

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violations that the district court found that plaintiffs were likely to establish here.

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One of them is the February 10th email that acting director vote sent on that morning, which was his first full business day on the job in which he directed employees not to perform any work tasks unless they were urgent.

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So

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Even suspending my disbelief, Judge Katz says that that email was a judicially reviewable final agency action that some plaintiff here has standing to challenge, and that was somehow unlawful.

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Even accepting all of that, the appropriate remedy for that violation would be to enjoin the agency from giving effect to the February 10th email.

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Of course, the injunction here goes far beyond that.

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Violation the district court reporter defined here is what it called on page 45 of the opinion, the decision to shut down the agency completely.

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Again, setting aside that no such decision exists, that would at most justify an injunction that precludes defendants from shutting down the agency while the case is being litigated on the merits.

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Which would look something like paragraph four of the BI.

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I think the one piece of this PI that is at least arguably consistent with the two principles that I articulated before is that first clause of item four of the injunction that goes up to the comma.

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And that's the clause that basically bars defendants from giving effect to that February 10th email.

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I don't think that's necessary.

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And if that's right, then likewise, any future action that replicates

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I think that would be fine.

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I think if the court stayed this injunction with the exception of that part of number four, that would be fine with us.

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That really isn't necessary because that email has been long since overtaken by events.

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But if the court left that part of the injunction in place, that I don't think would be any serious problem for the government.

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Can I take the government not to be disputing either

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paragraph one of the injunction, which requires the defendants and contractors not to delete or destroy data in violation of the Federal Records Act and in fact to take the steps to make sure that it has the capacity to preserve data.

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Is that right?

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So paragraph one, I don't think imposes any obligations on the agency that don't already exist by virtue of law and

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defendants intend to comply with the law and so it's not problematic for that reason.

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I do think it is problematic in that an injunction that simply says follow the law is generally inappropriate at least where there's not been.

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a specific finding by the district court that there had been a violation of that provision but there had been a finding by the district court of an intent and in fact action taken to terminate all contracts including contracts necessary to preserve data and no steps taken as the

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agency was being directed to wind down, no steps taken to preserve the data.

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So I appreciate your saying that that is legally required.

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But I think it's more than that, that the district judge didn't just come in with some hostility to the new administration and say, I'm going to tell you to comply with the law.

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There was a two-day full-on factual hearing.

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And she made fact findings about why she thought this

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this prophylaxis was prophylactic was permanently needed, right?

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And the key word there, I think, is prophylactic because the district court never found or adjudicated that there was a likely violation of any record keeping provision.

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So your position is that that is not implicit in finding that the plan and the intent continue to be to shut down the entire agency.

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I think it's not implicit, at least absent some finding that the actions that were taken impaired the agency from fulfilling these obligations and they failed to meet them.

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I think part of the problem here is that the district court simply failed to hold plaintiffs to their burden.

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They're trying to shift that burden over onto us.

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But it was the burden of the plaintiffs in this forward to come forward with evidence and an explanation of the following nature.

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If this agency is shut down,

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Here are the discrete agency actions that the agency will be unable to take, but is required by law to take.

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That's the test from Southern Utah Wilderness Alliance.

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When you're talking about agency action that's unlawfully withheld in action, which is I think what we're talking about here, consumers of government services saying if the agency takes these various internal steps, it won't be able to fulfill its statutory mandate, and that will injure us.

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They need to come forward and say,

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Here are the discrete agency actions that the agency is obligated by law with no discretion to take, that if they shut down, they will fail to take and injure us in the following grave and irreparable fashion.

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And they didn't do that.

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I also just have two others that I would love your views on.

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I did not take the government in its briefing to be substantially disputing paragraph five, which requires that to the extent that there are employees that need to do the statutory required work.

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that the agency needs to provide them with the means to do that work, either in office or remotely.

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And I know you quibble with the reference to a specific software program.

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Personally, I don't find that persuasive, because the court said this existing program wore something like it.

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But the general notion, and I know you object to the prevention of rifts or stop work,

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But assuming that somebody would keep working, I did not take you in your briefing to be objecting to the notion that the people who are still working would need the tools to do.

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So articulated, the government does not have a problem with that enabling employees to perform their statutorily required work.

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And I don't think we have a huge problem with number five, but I do think it does go beyond what's necessary.

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For example, and this is also goes to the last part of item four,

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where defendants are prohibited from putting employees on administrative leave, sometimes, in fact, often when employees are put on administrative leave, the employee may be cut off from access to the agency's systems.

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And it appears that under five, that's something that the agency would be forbidden from doing.

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But the key parts of the injunction that we are really focused on and that are truly problematic for the agency going forward

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are items two, three, four, and seven.

[00:12:45] Speaker 06:
So just to clarify, on six, maintaining a consumer hotline.

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You didn't mention that in your opening, but that seems to be something that the agency has accepted is not only required by law, but quite explicit.

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That's correct.

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So that one, again, falls in the bucket of your subjecting us to judicial superintendents of compliance.

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with the law without any adjudication that there has been a violation that injured the plaintiffs in any concrete, grave, irreparable fashion.

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But that's another one where I don't think it's going to require the agency to do much, if anything beyond what the law already requires.

[00:13:22] Speaker 03:
Mr. MacArthur, so I just want to be clear in part about what you're arguing.

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So your main concern is the matchup between the injunction and the alleged legal violation, which is the shutting down of the agency.

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Is the government also making an argument that the particular harm to these plaintiffs is not being addressed by this injunction?

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Because, you know, the harms here are, I mean, broadly speaking, something like loss of employment, loss of union revenue, I guess loss of CFPB services in some instances and loss of contracts, but almost all of those can be repaired with damages.

[00:14:06] Speaker 03:
So is the government also making that argument that the harm to these plaintiffs is not really being addressed necessarily by this injunction?

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Yes, judge rally are absolutely murky in the briefing.

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It is a bit murky, but I think there are two parts at least of the analysis that that goes to.

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One part is that first principle I laid out the tailoring tailoring principle requires the injunction to be tailored both to the violation and to the harms.

[00:14:36] Speaker 03:
So you're arguing both the tailoring is problematic as to both arms and the legal violence.

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That's correct.

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And the other place where I think this enters

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analysis is in the balancing of the equities, because I think the balancing of the equities here sharply favors the government, given the serious harms to Article 2 executive branch prerogatives on one side of the scales and on the other side of the scales, no real grave or irreparable harm that I can discern.

[00:15:05] Speaker 01:
They're both important principles.

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I didn't get the second one out of here.

[00:15:11] Speaker 01:
Stay brief.

[00:15:12] Speaker 04:
So I think you can see the second one.

[00:15:14] Speaker 01:
Tailoring to injuries rather than tailoring to the assumed legal violation of shutting down the agency.

[00:15:23] Speaker 04:
I think we did cite authority in our motion for the proposition that equitable relief has to be tailored to the harms.

[00:15:30] Speaker 06:
I am not sure that I see.

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I mean, again, of course, those are important principles, but some of the plaintiffs are organizations that represent

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consumers.

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And it seems to me that the plaintiff's principal argument here is that this is an agency that is charged with examining financial institutions with enforcement of, what is it, 18 different statutes that used to be spread among seven

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other agencies, and these are longstanding protections for the public against fraud, against unfair practices, against things like hidden fees, mortgage charges that are accelerated after a consumer is bound to the mortgage,

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things like that.

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And so the harms that are sought to be prevented are that the agency would not do the work that Congress set it up to do.

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And these plaintiffs, in your view, lack standing to raise those injuries?

[00:16:48] Speaker 04:
I think there may be some standing issues.

[00:16:51] Speaker 04:
We haven't briefed that here.

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We haven't briefed that at this stage, and I'm not prepared to talk about that in detail.

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But you could look, for example, at the Supreme Court's

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recent decision in the California case on Friday, where there was a very similar claim of consumers of agency services brought a claim seeking reinstatement of probationary employees that had been terminated.

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Citing Clapper, the Supreme Court said those plaintiffs didn't have standing.

[00:17:16] Speaker 04:
I think we are going to run into some of those same problems here.

[00:17:19] Speaker 04:
As I listen today to not not today, but as I listen to that description, the words that came into my mind are programmatic lawsuit.

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That's what this is.

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This is the very definition of a programmatic lawsuit that's seeking judicial supervision of how the executive branch executes the law on a day to day basis.

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They brought this programmatic lawsuit.

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They persuaded the district court to enter an over broad programmatic injunction, and it should be stayed because it's

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seriously impinges on article two prerogatives.

[00:17:53] Speaker 04:
And I would like to emphasize that what we're talking about here is a major presidential policy initiative of this administration, one that President Trump ran on and was elected by the American people to implement.

[00:18:09] Speaker 04:
And that is to significantly streamline and reform the federal workforce.

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And there are, you know,

[00:18:22] Speaker 06:
The president ran on and announced that his intent was to shut down CFPB.

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And I take it that you are disavowing that that is the plan.

[00:18:32] Speaker 04:
We are absolutely disavowing that that is the plan.

[00:18:34] Speaker 04:
I just want one qualification on the characterization of the president's statement.

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He said that was his goal in a colloquy with the press.

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And that's a goal that he is perfectly entitled to have.

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With Congress.

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and to express to the American people with Congress.

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He never said that was a goal that he was going to try to achieve without legislation.

[00:18:57] Speaker 06:
So this is a follow-up from Judge Katz's question.

[00:19:02] Speaker 06:
So far, as I read the record of the two days of hearings and the arguments and the preliminary injunction opinion, the district judge here

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is entering a preliminary injunction as she believed was necessary to prevent a total shutdown of the Bureau.

[00:19:28] Speaker 06:
And I take it that you're not seriously contesting that, at least in this posture, that that finding is, you haven't made it, you know,

[00:19:40] Speaker 06:
a challenge to the factual finding.

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So what you're looking for, and I understand it, is a tailoring of some of the provisions, at a minimum, a tailoring of some of the provisions.

[00:19:52] Speaker 06:
And you may have more wholesale arguments that you want to make.

[00:19:57] Speaker 06:
But the difficulty that I have is when the

[00:20:01] Speaker 06:
proceedings were going on in the district court when the district judge asked the government, well what are the, what's your understanding of what the statutorily required duties are?

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And she wasn't getting an explanation of that.

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And so it really left her unable to

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credit that the government really had a plan not to shut down the agency.

[00:20:36] Speaker 06:
It seemed like the plan that it came in with was shut down the agency and then legally realized, well, we don't have a case.

[00:20:46] Speaker 06:
We can't defend, at least not before this judge, we can't defend on that ground.

[00:20:50] Speaker 06:
So we need to take a more nuanced position.

[00:20:53] Speaker 06:
But the support for that I don't see in the record.

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So as an appellate judge,

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who, you know, how could I in the first instance help you get a more tailored injunction?

[00:21:08] Speaker 06:
Wouldn't for you the preferable course be for us to give some guidance and send it back to the district court for a limited time to take evidence on those issues?

[00:21:21] Speaker 04:
So I don't think there's a need for any further evidence here.

[00:21:24] Speaker 04:
I think the plaintiffs had a chance to meet their burden.

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and they didn't meet it.

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And I think it was not a fair inference of the district court to draw because council couldn't lay out all of the statutory or any all or any of the statutorily required functions.

[00:21:41] Speaker 04:
But that means there's no intent on behalf of the agency agency to comply with the law.

[00:21:47] Speaker 04:
I think that is something that's conceptually easy to understand.

[00:21:51] Speaker 04:
But

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You can't just spell it out.

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It's something that has to be worked out in practice on a day-to-day basis.

[00:21:58] Speaker 04:
And that is for the executive branch to do, to figure out, okay, what are the statutorily required functions here?

[00:22:05] Speaker 04:
And is any particular task or any particular employee's work or any particular contract necessary to enable the agency to fulfill those statutory obligations?

[00:22:16] Speaker 04:
That is the heartland of

[00:22:18] Speaker 04:
agency administration that is vested by the Constitution in the executive branch and is not subject to judicial supervision on pain of contempt under an injunction.

[00:22:28] Speaker 06:
Just to be fair to the district judge who, like all of you, was operating a very pressed timeline, she repeatedly made clear, repeatedly, throughout the proceedings and in her order that she recognizes the government's legitimate policy discretion, its ability to refocus the agency's work,

[00:22:51] Speaker 06:
to accord with its own priorities, including trimming discretionary programs.

[00:22:56] Speaker 06:
And she explained that the preliminary injunction is not directed at how vigorously the CFPB will enforce particular provisions within the statute, whether agency resources should be allocated,

[00:23:07] Speaker 06:
to facilitate more robust supervision of non-traditional, non-depository lenders as opposed to more active monitoring of larger depository banking institutions, but just a stopgap to prevent complete elimination of the agency.

[00:23:23] Speaker 06:
So she's viewing the task before her, at least at the early stage.

[00:23:28] Speaker 06:
What do I need to do to make sure that when we get into the weeds, there will still be reversible contracts, if needed, that won't have to go through a whole new procurement process?

[00:23:41] Speaker 06:
Agencies with training that we won't have to go through an entirely new hiring process.

[00:23:45] Speaker 06:
So I read her to be absolutely agreeing with what you're saying about the

[00:23:52] Speaker 06:
the executives' prerogatives, but at the early stage, a, lacking confidence that the government really had figured out how it would implement a plan to run the agency along new priorities, and

[00:24:11] Speaker 06:
that she wasn't in a position to make the more nuanced cuts.

[00:24:19] Speaker 06:
Tell me what you disagree with about that, not on the record and in the posture with the briefing that you have.

[00:24:27] Speaker 04:
So I do recognize that the district court acknowledged those principles in the court's opinion, but they didn't get translated into the injunction.

[00:24:36] Speaker 04:
The injunction that was entered

[00:24:38] Speaker 04:
is inconsistent with those principles because it goes far beyond anything that's needed to keep the agency open and keep it fulfilling its statutory obligations.

[00:24:47] Speaker 04:
And the court, in all of the hundred plus pages of opinion, never explained why these various measures are necessary to keep the agency open and fulfilling minimum statutory obligations.

[00:24:59] Speaker 04:
Never explained why you have to reinstate

[00:25:01] Speaker 04:
every probationary and term employee that was fired.

[00:25:05] Speaker 04:
There was no finding made that in the absence of those employees, the agency would shut down and be unable to fulfill any statutory function.

[00:25:13] Speaker 04:
Same thing as to the contracts.

[00:25:15] Speaker 03:
The injunction essentially seeks to restore the pre-February 10th CFPB to its full functions.

[00:25:23] Speaker 04:
That is correct.

[00:25:23] Speaker 04:
And I take that to be the district court's understanding of what it means to maintain the status quo here, which is

[00:25:29] Speaker 04:
take the agency back to the form in which it existed in the prior administration.

[00:25:33] Speaker 04:
And I think that is fundamental misconception of what a district court is supposed to be doing on a preliminary injunction to maintain the status quo.

[00:25:42] Speaker 04:
To maintain the status quo is to prevent discrete actions that have been identified and found to be likely unlawful from causing grave and irreparable harm to the plaintiffs.

[00:25:51] Speaker 04:
And that's the burden that they

[00:25:53] Speaker 04:
failed to meet here never came forward and said if you shut down here the discrete things that the agency will be unable to do that it is required by law to do with no discretion and here's our grave and irreparable harm from that now craft an injunction around that instead we got this vastly overbroad injunction that requires us to reinstate every

[00:26:12] Speaker 04:
employee that had been fired to reinstate every contract, that prohibits the agency from terminating any employee except for cause, that prohibits the agency from terminating any contract, way beyond what was needed in order to redress the harms that had been demonstrated and the likely violations that had been found.

[00:26:36] Speaker 01:
So let's talk about employees, just to drill down a bit.

[00:26:43] Speaker 01:
Do you have any idea how many employees the agency has?

[00:26:49] Speaker 04:
So I was told that in the prior administration, it had been running at about 1,700 employees.

[00:26:55] Speaker 01:
That's what I had guessed.

[00:26:56] Speaker 01:
So here's, let me tell you how I'm thinking about this and then just I'll ask you for help, which is a riff of every agency employee

[00:27:13] Speaker 01:
would obviously cause a shutdown and disable the agency from performing statutory functions.

[00:27:24] Speaker 01:
And on the assumptions that I mentioned at the beginning, that you're not contesting at this stage of the case, like would seem to be enjoinable.

[00:27:36] Speaker 01:
If that's what the court had enjoined?

[00:27:38] Speaker 01:
So that's fine.

[00:27:39] Speaker 01:
Right.

[00:27:40] Speaker 01:
On the other hand,

[00:27:43] Speaker 01:
District court says no rifts at all.

[00:27:45] Speaker 01:
And one can imagine an agency doing lots of rifts that are perfectly consistent with meeting statutory obligations.

[00:27:53] Speaker 01:
And that's an overbreadth problem.

[00:27:57] Speaker 01:
And it's Article III, Article II friction.

[00:28:01] Speaker 01:
OK, but here's where I'm struggling a little bit, which is

[00:28:09] Speaker 01:
You know, you laid off, I think, something like 200.

[00:28:15] Speaker 01:
You want to riff 1,200.

[00:28:18] Speaker 01:
That leaves 300.

[00:28:19] Speaker 01:
Like, how do I know whether 300 employees can satisfy, can meet the statutory obligations?

[00:28:29] Speaker 01:
And how do we police that through, you know, on the stay motion?

[00:28:38] Speaker 01:
with what's before us.

[00:28:40] Speaker 04:
I don't see there's any way that a court could put itself in the position of trying to decide how many agency employees are necessary for the agency to fulfill its statutory functions.

[00:28:51] Speaker 01:
The 1200 number I think is... Okay, but then how do we manage?

[00:28:55] Speaker 01:
District court has this concern about shutting down the agency and on the facts which you assume for purposes of the stay.

[00:29:07] Speaker 01:
that was a legitimate concern.

[00:29:11] Speaker 04:
But the concern wasn't translated into an order that was tailored to that concern.

[00:29:16] Speaker 04:
I mean, at least as a rough cut at it, the court could have said something like, you can't

[00:29:25] Speaker 04:
You can't fire so many employees that the agency would be unable to fulfill its statutory functions.

[00:29:31] Speaker 04:
I think that's tough because that's vague.

[00:29:33] Speaker 04:
And as I say, I'm just not sure there's any judicially manageable standard that could exist for that.

[00:29:39] Speaker 06:
Well, so I have a question that gets to the elephant in the room, which is the missing definition of statutorily required functions.

[00:29:52] Speaker 06:
And I have to say I'm a little bit frustrated with the briefing on both sides and with the record from the district court on this point.

[00:30:01] Speaker 06:
There's a focus, understandably, on specific statutory requirements.

[00:30:08] Speaker 06:
You need this ombudsman.

[00:30:09] Speaker 06:
You need this office.

[00:30:11] Speaker 06:
You need this website.

[00:30:13] Speaker 06:
You need this capability to take consumer complaints and interact with them.

[00:30:18] Speaker 06:
But as I understand this agency, it is

[00:30:23] Speaker 06:
the agency that is supposed to carry out major programs.

[00:30:30] Speaker 06:
It's supposed to carry out the Fair Credit Billing Act, the Electronic Fund Transfer Act, the Homeowners Protection Act, the Gramm-Leach-Lyley Act, Real Estate Settlement Procedures Act, Truth in Lending, Truth in Savings.

[00:30:49] Speaker 06:
The question, in addition to the specified, you need this bureau and you need this function, the question that I have is, is it your understanding that if the government had no programs for enforcing any of these fundamental obligations about truth and lending, that that would

[00:31:14] Speaker 06:
be up to the discretion of the executive to take those to zero?

[00:31:20] Speaker 04:
Taking it to zero, I think likely not.

[00:31:23] Speaker 06:
Likely not.

[00:31:24] Speaker 04:
Likely not.

[00:31:26] Speaker 04:
But trying to enforce any level of activity, enforcement activity, supervision activity, I think that is absolutely off limits for the court.

[00:31:35] Speaker 04:
But to your broader question, and I know I'm going to sound like a broken record

[00:31:40] Speaker 04:
But the district court.

[00:31:41] Speaker 06:
It's up to the executive.

[00:31:42] Speaker 04:
No, no, that's not where I was going with this one actually.

[00:31:45] Speaker 04:
The district court does not have a roving mandate to ensure that the CFPB is fulfilling all of its statutory obligations.

[00:31:54] Speaker 04:
The problem that exists here lies at the feet of the plaintiffs because the district court's limited role here is to identify discrete violations leading to harms to these plaintiffs and it's their burden

[00:32:07] Speaker 04:
to come forward and connect those dots, and they never did.

[00:32:11] Speaker 01:
That may be... No, but then you're just, you're smuggling Lujan Wan Suha into the stay argument.

[00:32:20] Speaker 04:
I think the principles from Lujan and Southern Utah Wilderness Alliance do very much inform what a court is doing at the injunction stage, because it talks about courts lacking the power to superintend how agencies

[00:32:36] Speaker 04:
work out compliance with broad statutory mandates.

[00:32:40] Speaker 06:
Actually, what was before the district judge was a plan that appeared to be a total abdication

[00:32:49] Speaker 06:
of these statutory duties.

[00:32:52] Speaker 06:
I don't think the government ever acknowledged or mentioned how it planned to pursue any of its enforcement or supervision duties or regulatory duties under any of those statutes.

[00:33:06] Speaker 06:
And if the district court is making a finding that an executive that intended to shut down the agency had not developed a plan B

[00:33:18] Speaker 06:
To my mind, on an abusive discretion standard on review and on this record, it would be perilous for us to decide, without more facts, how to tailor this injunction.

[00:33:32] Speaker 06:
Now, I'm not questioning that there may indeed be ways to tailor it.

[00:33:39] Speaker 06:
But I'm questioning how you are confident that on a stay, we can do that.

[00:33:48] Speaker 04:
So Judge Fillard, to your preface to the question, I think it is not a fair burden to put on an agency to come into court and spell out, here is how we intend to execute all of our statutory responsibilities.

[00:34:02] Speaker 06:
I didn't ask, I didn't say that that was what was needed.

[00:34:05] Speaker 06:
I said there was no suggestion, there was no acknowledgement by the government lawyers in the district court of the nature of the large bulk of

[00:34:18] Speaker 06:
the agency's statutory responsibility.

[00:34:20] Speaker 04:
I think there was absolutely acknowledgement on the part of the government and the part of the government's witnesses that there are certain statutory obligations and that the agency is committed to fulfilling them.

[00:34:31] Speaker 04:
And that too is a matter of record.

[00:34:33] Speaker 06:
Can you point me to the, because I'm having trouble

[00:34:39] Speaker 06:
recalling those references.

[00:34:42] Speaker 06:
Can you point me to anything that you think is sort of on the way to acknowledging those responsibilities?

[00:34:49] Speaker 06:
So I think you can look at Mr. Martinez's declarations where he said- How about in the fact-finding hearing where a lot of what Mr. Martinez said was put under rather scathing cross-examination and there were some retreats from what he said in the declaration?

[00:35:06] Speaker 04:
I don't think there was ever any retreat from the key point in his declaration, which I think he reiterated in his testimony, that a few weeks into this process, I think everyone acknowledges that the first few weeks of February were a pretty turbulent time for the agency, but he said that by the time that he had filed his initial declaration on February 24th, that the agency's new leadership had started to gain control of the agency and that it was his understanding

[00:35:35] Speaker 04:
that the misimpression he and others had had earlier that there was some intent to shut down the agency was not the view of the agency leadership.

[00:35:43] Speaker 04:
And I think if you look at the record, you will see multiple occasions where Mr. Paoletta, and he is the chief legal officer of the CFPB who Mr. Martinez testified was functionally running the agency, you see him taking multiple actions

[00:36:00] Speaker 04:
to dispel that impression, making clear that employees need to be performing their statutory functions, don't have to ask permission, looking over contracts one by one to figure out is this one that was terminated one that we need for fulfillment of our statutory function.

[00:36:15] Speaker 04:
And the district court just simply swept that all aside and said that's window dressing.

[00:36:18] Speaker 06:
That wasn't the question that I asked because I read the record and I know that there were places where

[00:36:25] Speaker 06:
Martinez and government counsel said the plan is not to shut down the agency.

[00:36:31] Speaker 06:
The plan is to do the agency's statutorily required functions.

[00:36:36] Speaker 06:
What I was asking, I think there's a disconnect or the district judge was unpersuaded by those efforts at reassurance.

[00:36:48] Speaker 06:
And I'm not prepared to say unfairly so on this record because the government maybe thought that putting up the consumer complaint function and making sure that the individuals who were named in the statute had, you know, individual positions had somebody

[00:37:09] Speaker 06:
filling them, but I never saw anything in the record where the government explained, you know, we're going to do enforcement, of course, but we're going to focus more on, let's say, elders than on, you know, some other party that was different from what the prior administration did.

[00:37:27] Speaker 06:
So I think there's a lot of doubt.

[00:37:31] Speaker 06:
And really, I mean, you heard me.

[00:37:33] Speaker 06:
I put my cards on the table from the beginning.

[00:37:35] Speaker 06:
Why wouldn't the

[00:37:38] Speaker 06:
really only appropriate course be for us with some guidance to send this case back to the district court who has expressed again and again for interest in hearing from the government, you know, what's excess and what are the statutorily required duties?

[00:37:55] Speaker 04:
So we already presented to the district court, I think the core of the relief that we're asking from this court, which is to at a minimum stay provisions two, three, four and seven.

[00:38:07] Speaker 04:
And I think

[00:38:08] Speaker 04:
As Judge Katz and I discussed earlier, you could carve out that first clause, a floor with which we don't have a serious problem.

[00:38:15] Speaker 04:
We presented that to the district court in our renewed request for a stay below and the court rejected.

[00:38:20] Speaker 06:
But even holding the contracts, halting the contracts, but not finally terminating them, even that, in your view, causes the government irreparable harm.

[00:38:29] Speaker 06:
It absolutely does.

[00:38:30] Speaker 06:
What is the irreparable harm from that?

[00:38:32] Speaker 06:
Not paying any money, not having to have the contractors take action, but for example, in a

[00:38:39] Speaker 06:
contract where an expert has information that the agency needs going forward or where it's a data provision contract, that can be finally terminated before the government is confident that it's not taking down as statutorily.

[00:38:56] Speaker 04:
So the only thing that the court permitted us to do with regard to the contracts is based on an individualized assessment

[00:39:04] Speaker 04:
to stop the work or services.

[00:39:06] Speaker 04:
It does not follow from that that the government can always stop payment.

[00:39:09] Speaker 04:
In some cases, yes, but there may be contracts that have minimum service requirements.

[00:39:14] Speaker 04:
There may be incidental fees like paying flat fees or paying a project manager, but as long as that contract is in force, the government has to keep sending money out the door that it can never recover.

[00:39:29] Speaker 04:
And again, the Supreme Court

[00:39:30] Speaker 04:
just recently recognized in the California case that money that the government is being forced to spend by an injunction that it can never get back is irreparable harm to the government that supports a stay.

[00:39:42] Speaker 03:
If we were to send this back to the district court, the government argue that this whole injunction is moot because the district court's reason for the injunction is that the government is shutting down the bureau.

[00:39:55] Speaker 03:
And it seems that more recent evidence is that the government is

[00:39:59] Speaker 03:
not shutting down the CFPB.

[00:40:01] Speaker 03:
Would that just move the entire enterprise of this structural injunction?

[00:40:07] Speaker 04:
I mean, if we were able to persuade the district court of that, yes, and the government absolutely is not shutting down the Bureau.

[00:40:13] Speaker 04:
We stand by what we said.

[00:40:15] Speaker 04:
That's the premise of the injunction.

[00:40:16] Speaker 03:
It is not any particular harm to the plaintiffs.

[00:40:19] Speaker 03:
The premise of the injunction is that there is a shutdown of the CFPB, and the government has now said in many different filings that it is not shutting down the CFPB.

[00:40:28] Speaker 03:
So that is correct for the injunction seems to be have evaporated.

[00:40:33] Speaker 04:
I agree with you, Judge Rao.

[00:40:35] Speaker 04:
I am not confident there's anything that we can say or do to persuade this district court that that is the case.

[00:40:41] Speaker 04:
But I do want to assure this court that we stand by the representation that was made that was quoted in the administrative stay order that

[00:40:50] Speaker 04:
The Bureau will remain open and perform its legally required functions, and I am making that representation not just on behalf of myself or the Department of Justice.

[00:40:58] Speaker 04:
I have been specifically authorized by the Acting Director of the Bureau to make that representation to the Court.

[00:41:04] Speaker 01:
And the Acting Director reports to the President.

[00:41:09] Speaker 01:
That is correct.

[00:41:10] Speaker 01:
Are you authorized?

[00:41:12] Speaker 01:
I've been in your seat.

[00:41:15] Speaker 01:
I know the issue about getting

[00:41:18] Speaker 01:
clearance up the chain.

[00:41:19] Speaker 01:
And if you don't know, you don't know.

[00:41:21] Speaker 01:
But are you authorized to state on behalf of the entire executive branch as an officer of the court that the agency will remain running?

[00:41:32] Speaker 04:
I have not obtained authorization or sought authorization from the president on this issue.

[00:41:37] Speaker 04:
But I think if

[00:41:39] Speaker 04:
If you want to look at what the president's position on this is, you should look at the president's official acts.

[00:41:44] Speaker 04:
February 11th, the president nominated Jonathan McKernan to be the director of the Bureau, and Mr. McKernan recently testified before the Senate and confirmed that if he is confirmed, that on his watch, the Bureau will continue to enforce the consumer protection laws and will take all steps necessary to comply with the legally required functions of the Bureau.

[00:42:10] Speaker 01:
So back to the employees for a second.

[00:42:16] Speaker 01:
Suppose at this stage, I think we have to respect a prohibition on RIFs that would endanger the agency, but that I

[00:42:37] Speaker 01:
We think it's overbroad and want to make sure you have normal agency discretion to do rifts that would not.

[00:42:48] Speaker 01:
How would you help me write that stay opinion?

[00:42:54] Speaker 01:
What would you have us say?

[00:42:58] Speaker 04:
I think, I mean, it's very difficult to craft, but I think the court could have, I think the court would have the authority and could, for example, condition a grant of the stay on the government not implementing any riff that would leave the agency unable to perform its statutory functions.

[00:43:19] Speaker 04:
And then if the plaintiffs thought that the riff that was proposed or being implemented violated that condition, they could come back to this court and they could

[00:43:28] Speaker 04:
Ask the court to evaluate that and if necessary, lift the stay type of relief.

[00:43:32] Speaker 03:
Why in the face of Southern Utah wilderness?

[00:43:36] Speaker 04:
I think it isn't substantial tension with that, and that's why I freight.

[00:43:39] Speaker 03:
It just puts us in judicial receivership over over the employment decisions of the executive branch.

[00:43:45] Speaker 04:
I think it would to a certain extent, but I think there is a key distinction between what I was just proposing and what we're living with right now.

[00:43:52] Speaker 04:
But I was talking about is a condition of this court stay,

[00:43:57] Speaker 04:
an affirmative obligation that would be imposed on the government upon pain of contempt, but something that would exist as acting on the proceeding.

[00:44:05] Speaker 04:
You can look at the Supreme Court's decision in Trump versus Iraq in 2017.

[00:44:09] Speaker 04:
A stay is something that acts on the proceeding, not in personam.

[00:44:14] Speaker 04:
And so, as I said, if the plaintiffs thought there had been a violation of that, the remedy is not going to be come and try to hold the government in contempt in the district court.

[00:44:21] Speaker 04:
is going to be to come back to this court and say, we think the government's not complying with that condition.

[00:44:26] Speaker 04:
They proposed a riff that's gonna so gut the agency that it can't perform its statutory functions.

[00:44:32] Speaker 04:
You should vacate and stay.

[00:44:33] Speaker 01:
How in the world would we judge that?

[00:44:35] Speaker 01:
Like point of special master to take evidence?

[00:44:39] Speaker 04:
I think you would judge that with extraordinarily substantial deference to the executive branch's judgment that the remaining employees will be able to fulfill the statutory functions.

[00:44:50] Speaker 06:
I, our circuit has case law that it is the government's responsibility in a case in which it objects to the breadth of relief to propose narrower lawful relief.

[00:45:05] Speaker 06:
Once the district court has determined that the original plan

[00:45:09] Speaker 06:
was unlawful.

[00:45:10] Speaker 06:
That's exactly what happened here.

[00:45:11] Speaker 06:
The government says, no, you can't shut down.

[00:45:13] Speaker 06:
Now tell me what relief, short of the injunction that she put together, what relief are you asking for?

[00:45:25] Speaker 06:
And I saw no form of order from the government at any stage, because you were still fighting the

[00:45:33] Speaker 06:
Either I don't know we're not shutting down or we have full discretion where article two or what another fight you know that that sort of is memorializing record.

[00:45:44] Speaker 06:
I don't see any I mean part order that's narrower than this preliminary injunction that was ever proposed by the

[00:45:51] Speaker 04:
course, we didn't think that any injunction was appropriate at all.

[00:45:53] Speaker 04:
But part of this is simply a practical problem, right?

[00:45:55] Speaker 04:
Because we don't know what violation the court is going to find or what the scope of the relief the court is going to award is until it's done.

[00:46:02] Speaker 04:
And when it was done here, the court didn't didn't grant our request to stay in the relief order.

[00:46:09] Speaker 04:
The relief was made effective immediately, and we had a compliance report due in seven days.

[00:46:15] Speaker 04:
And I'll tell you when a district court enters an order like this after writing an opinion like this,

[00:46:21] Speaker 04:
It is time to appeal.

[00:46:22] Speaker 04:
And we came to this court as quickly as we could because there was no time to lose.

[00:46:26] Speaker 04:
We wanted to give you the maximum amount of time to evaluate our emergency request for relief before that compliance report was due in seven days.

[00:46:34] Speaker 06:
And there's no substitute date for the compliance report at this point?

[00:46:40] Speaker 04:
That has been stayed.

[00:46:41] Speaker 04:
Yeah.

[00:46:41] Speaker 04:
The district court, in response to our renewed request for a stay, stayed the compliance reporting deadline until this court resolves our stay motion in this court.

[00:46:51] Speaker 06:
So do you, the way I understand the posture in part is that the district court found an intent to shut down the agency and that the plan continued to be to shut down the agency perhaps in stages rather than one

[00:47:09] Speaker 06:
shutdown order, and various representatives of the government have said otherwise.

[00:47:15] Speaker 06:
And I take it that we would assess those representations under a voluntary cessation standard.

[00:47:24] Speaker 06:
Is that right?

[00:47:26] Speaker 04:
If there were a question of mootness on the table, that might be the way that you would assess that, yes.

[00:47:32] Speaker 06:
So the notion that parts or all of the preliminary injunction or mood would have to meet that.

[00:47:41] Speaker 04:
I do think you'd have to have that analysis, correct?

[00:47:44] Speaker 03:
You think there would have to be a voluntary cessation analysis against whether the government is following the law, which it's required to do?

[00:47:53] Speaker 03:
I think that's true.

[00:47:54] Speaker 03:
So the injunction could just remain in place because the government said it was following the law?

[00:47:59] Speaker 04:
I think that's too broad, Judge Rao, but I think if there were a determination that the government... Then the injunction could be in place indefinitely.

[00:48:08] Speaker 04:
Oh, we definitely don't want the injunction to be in place indefinitely.

[00:48:10] Speaker 03:
I mean, if it's about, it's a matter of voluntary cessation.

[00:48:13] Speaker 04:
I'm just, that seems like a remarkable... Well, I think we're talking about two different things here.

[00:48:17] Speaker 04:
Voluntary cessation would go, I think, to whether the claim itself is moot.

[00:48:22] Speaker 04:
I don't think that's the inquiry that you do when you're looking at whether there's a need for an injunction.

[00:48:29] Speaker 04:
Looking at that latter question, even if there's some possibility that it could be repeated, that's not enough to carry the burden to maintain the extraordinary injunction that the district court entered here.

[00:48:40] Speaker 06:
Let me ask you a sort of in-between question.

[00:48:44] Speaker 06:
So we've talked about how the government should not be required to justify, to explain and justify exactly how it would exercise its enforcement

[00:48:55] Speaker 06:
duties or its supervision of financial services entities duties.

[00:49:05] Speaker 06:
Is there anything, would it be inappropriate for the court to ask the government how many employees the government believes are required to support the statutorily required duties of the bureau?

[00:49:22] Speaker 04:
I think that's not a fair question to put to an agency.

[00:49:25] Speaker 04:
They may not know the answer.

[00:49:26] Speaker 04:
I mean, some of this has to be worked out day to day in practice.

[00:49:31] Speaker 04:
And if the agency and I do think the record does support and this is consistent with the president's policy initiative that they think this agency is too large and that it should be substantially downsized and really cut back to its core minimum statutory functions and

[00:49:50] Speaker 04:
If in that process they go too far and they disable the agency from performing some mandatory statutory function, the answer is that is for a plaintiff withstanding to come in the door and say that was a discrete mandatory action.

[00:50:06] Speaker 04:
The Bureau was required to take.

[00:50:07] Speaker 04:
They failed to take it.

[00:50:09] Speaker 04:
I was injured in the following way.

[00:50:10] Speaker 04:
Order them to perform the action that was unlawfully withheld.

[00:50:14] Speaker 04:
That's how that gets worked out.

[00:50:15] Speaker 04:
It doesn't get worked out like on day one.

[00:50:17] Speaker 04:
when the acting director takes the reins of the agency and figures out exactly how the statutory responsibilities are to be implemented.

[00:50:29] Speaker 01:
Can I ask the scope question with regard to the contracts?

[00:50:37] Speaker 01:
Same, same framing.

[00:50:40] Speaker 01:
I don't want to disturb at this stage a prohibition on

[00:50:48] Speaker 01:
terminating all contracts, which would be disabling.

[00:50:51] Speaker 01:
But I want to make sure you have appropriate discretion.

[00:50:55] Speaker 01:
Is it the line between stop work orders and full termination, or is it something else?

[00:51:03] Speaker 01:
What line would you have us draw there?

[00:51:06] Speaker 04:
I think the line would be disabling the agency from performing its statutory functions.

[00:51:12] Speaker 04:
And again, there's no particular function that has to be performed by a contractor.

[00:51:18] Speaker 04:
It could be performed by agency staff instead.

[00:51:21] Speaker 04:
And that's another key flaw.

[00:51:22] Speaker 04:
The district court never found that these contracts were necessary.

[00:51:26] Speaker 04:
And that's not even an inquiry the court can undertake.

[00:51:29] Speaker 04:
Again, if there's a discrete failure to act, the court could order the agency to take the action that was unlawfully withheld.

[00:51:37] Speaker 04:
But it could not tell the agency how to do that and certainly not say you must retain a contractor to do that.

[00:51:52] Speaker 02:
There are no further questions.

[00:51:57] Speaker 06:
Thank you, Mr. MacArthur.

[00:51:58] Speaker 06:
And we'll hear now for appellees from Ms.

[00:52:03] Speaker 06:
Bennett.

[00:52:13] Speaker 05:
Good morning.

[00:52:14] Speaker 05:
May it please the court, Jennifer Bennett on behalf of the appellees.

[00:52:17] Speaker 05:
And some of what we just heard, I think, shows that this is an extraordinary case.

[00:52:22] Speaker 05:
The district court found, based primarily on hundreds of the CFPB's own documents and the testimony of its own witness, that the defendants had tried to dismantle the agency and that if given the opportunity, they were ready and willing and wanted to do so again.

[00:52:39] Speaker 05:
As Mr. Martinez, the chief operating officer of the agency, and again the defendant's own and sole witness, testified, the agency would be wiped out in 30 days.

[00:52:51] Speaker 05:
They canceled the agency's contracts.

[00:52:53] Speaker 05:
They ordered its employees to stop work.

[00:52:56] Speaker 05:
They placed virtually the entire agency on administrative leave.

[00:53:00] Speaker 05:
And they were in the process, admittedly, of firing everyone when the preliminary injunction motion was filed.

[00:53:07] Speaker 05:
The only thing that stopped the defendants from fully shutting down the agency was the district court's intervention.

[00:53:13] Speaker 05:
And the defendants don't assert that any of this is legal.

[00:53:18] Speaker 05:
And that's critical.

[00:53:19] Speaker 05:
At this stage, the defendants are not disputing that the actions that the district court found to have taken place were unlawful.

[00:53:28] Speaker 05:
And they don't even try to show that the court's findings that these actions did take place were clearly erroneous.

[00:53:35] Speaker 05:
And the defendants, as we just heard, aren't making any argument at this stage that the district court could not enter some injunction to preserve the status quo and to prevent the defendants from making it impossible

[00:53:48] Speaker 05:
for the court to enter relief at the end.

[00:53:51] Speaker 05:
So the defendant's sole argument at this stage is that the district court abused its discretion in defining the scope of the injunction.

[00:54:00] Speaker 05:
And for that reason, the defendants say, this court in an emergency stay posture should stay the whole thing pending appeal, or at the very least, it should stay the vast majority of its terms wholesale.

[00:54:13] Speaker 01:
Can I ask about scope?

[00:54:15] Speaker 01:
Sure.

[00:54:18] Speaker 01:
to me at this stage, pretty powerful case that it would be, you know, the district court could deal with a situation involving the termination of all employees and cancellation of every contract.

[00:54:37] Speaker 01:
Okay, but the injunction says don't terminate any employee except for cause.

[00:54:46] Speaker 01:
and don't terminate any contract.

[00:54:51] Speaker 01:
There's a huge gap, chasm between that aspect of the injunction and what the district court was quite rightly concerned about.

[00:55:04] Speaker 05:
Sure.

[00:55:04] Speaker 05:
So I understand that concern.

[00:55:05] Speaker 05:
And I want to take the two provisions in turn, maybe in reverse order.

[00:55:09] Speaker 05:
Sure.

[00:55:10] Speaker 05:
On the contracts provision, what the district court said is you can

[00:55:16] Speaker 05:
stop work, stop payment on any contract you like.

[00:55:19] Speaker 05:
And I heard the defendants just say that they can't stop payment.

[00:55:22] Speaker 05:
The only evidence in the record is that when they stopped work on all of the contracts of the agency, they stopped payment on those contracts.

[00:55:29] Speaker 05:
The only evidence before the court and in the record, and as I understand it from the contracting officers in the Bureau, this is correct, is that when you stop work, you stop payment.

[00:55:40] Speaker 05:
So all the district court did is say, you could stop work on any contract you want.

[00:55:45] Speaker 05:
You can stop paying on any contract you want.

[00:55:47] Speaker 05:
The only thing you cannot do is take the final step to make that your retrievable.

[00:55:53] Speaker 01:
Okay, so let's talk about termination.

[00:55:55] Speaker 01:
Sure.

[00:55:56] Speaker 01:
I mean, terminating all the contracts sounds bad, but terminating any contract sounds like something any agency would do in the ordinary course.

[00:56:08] Speaker 01:
Like you make contracts, you end contracts.

[00:56:11] Speaker 01:
That's just ordinary administration.

[00:56:13] Speaker 05:
Sure, so two answers.

[00:56:15] Speaker 05:
The first is the law is quite clear.

[00:56:18] Speaker 05:
Going back to Lowe's and the Supreme Court has also implied the same law when the government is a defendant.

[00:56:24] Speaker 05:
When a defendant is using what would otherwise be lawful behavior to effectuate an unlawful, and in this case, unconstitutional, plan and action, the court is permitted to enjoin what might otherwise be ordinary lawful behavior.

[00:56:43] Speaker 05:
if necessary, to ensure complete relief at the end and to preserve the status quo.

[00:56:47] Speaker 05:
And that's exactly what's going on here.

[00:56:49] Speaker 05:
The district court found and the CFPB's own records were that they wholesale terminated virtually every contract.

[00:56:59] Speaker 05:
And that includes things like the contract to maintain the database.

[00:57:03] Speaker 05:
It's not just people.

[00:57:04] Speaker 05:
It's the contract to maintain the database for consumer response, which is statutorily required.

[00:57:09] Speaker 05:
Every contract.

[00:57:10] Speaker 05:
that supervision required.

[00:57:12] Speaker 01:
So in order to prevent termination of a number of contracts that would be disabling, presumably a pretty high number, the court can enjoin the termination of any contract.

[00:57:32] Speaker 01:
And that is the most tailored option to

[00:57:39] Speaker 01:
to achieve the objective.

[00:57:41] Speaker 05:
So the court, I want to be clear.

[00:57:42] Speaker 05:
The court didn't enjoin the termination of any contract in any ordinary sentence.

[00:57:46] Speaker 01:
The court gave, and I want to be really- May not finalize the termination of any contract.

[00:57:52] Speaker 05:
Right.

[00:57:52] Speaker 05:
Well, so I want to make clear that when we ordinarily say terminate a contract, what we mean is nobody does work under that contract and we don't pay for it.

[00:58:00] Speaker 05:
That provision allows the defendants to do that.

[00:58:03] Speaker 05:
Any contract that they think is unnecessary to the statutory functions, that's the stop work orders that they sent out.

[00:58:09] Speaker 05:
Any contract that they think is unnecessary, the district court says, sure, have it stop work and stop paying for it.

[00:58:17] Speaker 05:
The only thing the district court prohibited is making that irrevocable so that we don't have to come back and forth to the court every time something is terminated to fight about at that time, whether it was or was not necessary to statutory functions.

[00:58:31] Speaker 05:
What the district court did is give as much discretion to the defendants as the court possibly could by saying, do whatever you want.

[00:58:38] Speaker 05:
There's just a final step that makes it irrevocable.

[00:58:41] Speaker 05:
Just don't take that final step.

[00:58:43] Speaker 06:
Now, if that is acceptable, and I should let you follow up for it.

[00:58:49] Speaker 01:
No, I just, maybe I don't understand the day-to-day contract administration.

[00:58:55] Speaker 01:
I thought she drew the line between

[00:59:01] Speaker 01:
stop work orders, which are fine, and termination, which is not termination of any contract, which is not.

[00:59:09] Speaker 05:
That's correct.

[00:59:10] Speaker 05:
But I think we're having maybe a terminology issues of a stop work order.

[00:59:14] Speaker 05:
And you can see this by the stop work orders that are in the record that they issued when they issued them to every contractor is in order that says don't do any more work.

[00:59:24] Speaker 05:
And it also says we're not going to pay you anymore.

[00:59:27] Speaker 05:
So it is essentially what I think ordinary people would think of as termination of a contract.

[00:59:31] Speaker 05:
But in government contracts, there's an additional step beyond, we're going to not use this anymore.

[00:59:37] Speaker 05:
We're not going to pay you, and you're not going to do any work.

[00:59:39] Speaker 05:
There's an additional step that you have to take to fully finalize it so that it's irrevocable.

[00:59:45] Speaker 05:
And once it's irrevocable, then you have to redo the whole procurement process.

[00:59:49] Speaker 05:
And so the contract provision is quite narrow.

[00:59:53] Speaker 05:
don't take that final irrevocable step so that if we disagree at the end of the case or if something is really, you know, very important in the interim, the court can grant relief.

[01:00:03] Speaker 05:
That's all that contract provision does.

[01:00:05] Speaker 01:
They have an existing contract.

[01:00:08] Speaker 01:
They can go to the contractor and say,

[01:00:10] Speaker 01:
stop all work and this is not stopgap.

[01:00:14] Speaker 01:
We intend, we never want you to perform any more work and when and if we're allowed to take that final step we intend to.

[01:00:27] Speaker 05:
Yes, yes and that's exactly what the the agency has done you know through the pendency of this proceeding.

[01:00:34] Speaker 03:
Miss Bennett you've said that

[01:00:35] Speaker 03:
that an injunction is permissible to allow district court to grant full relief to the plaintiff's harms at the end of the litigation.

[01:00:45] Speaker 03:
How is this injunction tied to these plaintiff's harms, right?

[01:00:50] Speaker 03:
Which largely include loss of employment or loss of contract, things like that.

[01:00:54] Speaker 03:
Why is maintaining the agency at the pre-February 10th level necessary to remedy these plaintiff's harms?

[01:01:03] Speaker 05:
So I think a couple of things on that.

[01:01:06] Speaker 05:
One is I don't think what the district court said is the agency has to be operating in the same way it operated before February 10th.

[01:01:13] Speaker 05:
The district court said very explicitly and intentionally in the preliminary injunction did not include any provision that would direct any of the policymaking officials at the Bureau to

[01:01:27] Speaker 03:
direct the Bureau's resources to any particular... A lot of these provisions are aimed, as you said, at keeping the status quo.

[01:01:34] Speaker 05:
Sure.

[01:01:34] Speaker 05:
Operationally, and the reason that that matters is because what the district court found, and again, the defendants are not contesting this.

[01:01:41] Speaker 05:
I think it would be very difficult for them to, given that it was their witness who testified to this.

[01:01:46] Speaker 05:
What the district court found is that the actions that the defendants were taking, and these are the actions that are listed in the preliminary injunction,

[01:01:56] Speaker 05:
or to shut down the agency.

[01:01:58] Speaker 03:
And there's no.

[01:01:58] Speaker 03:
But now they're not shutting down the agency.

[01:02:01] Speaker 05:
Well, so I think that they have made an assertion before this court that they are not shutting down the agency.

[01:02:07] Speaker 05:
And I want to address that, because I think that's important.

[01:02:09] Speaker 03:
Why is even shutting down the agency connected to the harms of the plaintiff, right?

[01:02:13] Speaker 03:
So I mean, maybe shutting down the agency entirely, but keeping it open at some minimal level, why wouldn't that be sufficient?

[01:02:22] Speaker 05:
Well, so it's two questions.

[01:02:24] Speaker 05:
Shutting down the agency, I think, is Mr. Martinez, again, their own witness, testified that that would be irreparable harm.

[01:02:31] Speaker 05:
And you can see that when the agency, even in the few weeks that the agency was basically fully shut down.

[01:02:40] Speaker 05:
For example, one of the plaintiffs is at the Virginia Poverty Law Center, which depends on the agency to be able to help consumers.

[01:02:50] Speaker 05:
agency shut down, its consumer complaint division essentially shut down.

[01:02:54] Speaker 05:
It was taking in things into an automated database, which itself was already breaking down.

[01:02:58] Speaker 05:
It wasn't doing anything to help consumers.

[01:03:00] Speaker 05:
So people facing imminent foreclosures did not get any help.

[01:03:04] Speaker 05:
16,000 complaints just went totally unanswered.

[01:03:08] Speaker 05:
And that division works hand in hand with the enforcement division and the supervision division.

[01:03:13] Speaker 03:
Um, to give, uh, specific harms that perhaps could be remedied, you know, in a more specific lawsuit.

[01:03:22] Speaker 03:
Right.

[01:03:22] Speaker 03:
But, but this is a lawsuit about, you know, the entire structural approach to how the agency should be run.

[01:03:29] Speaker 05:
Well, so, so two, two things I want to say about that.

[01:03:32] Speaker 05:
One is, you know, I think that question goes to likelihood of success.

[01:03:37] Speaker 05:
And it is not the defendants at this stage have not made that argument for this court.

[01:03:42] Speaker 05:
And they have to make a strong showing on likelihood of success.

[01:03:45] Speaker 05:
And they've made no showing at all on this argument.

[01:03:47] Speaker 05:
That's why it's not briefed.

[01:03:49] Speaker 05:
There will be no showing at all that they are likely to succeed on that argument on appeal.

[01:03:56] Speaker 05:
And so I think it's not in as this case comes to this panel.

[01:04:00] Speaker 05:
I don't think it's in the set of issues that's even before this panel.

[01:04:04] Speaker 06:
Which argument are you referring to?

[01:04:06] Speaker 05:
The argument, I take it, Judge Rao, your argument is essentially is whether the preliminary injunction is necessary to remedy the harms of the plaintiffs.

[01:04:17] Speaker 03:
There's a question about tailoring that the government has certainly made.

[01:04:20] Speaker 05:
That's right.

[01:04:21] Speaker 05:
And their tailoring argument, I wouldn't, you know, if you look at their briefs, there is no explanation at all.

[01:04:26] Speaker 05:
They don't give any reticulated argument about that there's a tailoring problem to harm.

[01:04:31] Speaker 05:
And their only tailoring argument is

[01:04:33] Speaker 05:
look, this injunction stops us from performing, from using tools we would otherwise want to use that are lawful.

[01:04:42] Speaker 05:
And so to go back, I think I, to go back to your question, Judge Katz, is about termination, because I think that is the other place that they are, that the defendants are.

[01:04:52] Speaker 01:
My contract termination?

[01:04:53] Speaker 05:
Oh, sorry, employee terminations.

[01:04:56] Speaker 05:
Yeah, sure.

[01:05:00] Speaker 01:
And I put my cards on the table.

[01:05:03] Speaker 01:
I think lots of rifts are perfectly ordinary and appropriate.

[01:05:07] Speaker 05:
There's no disagreement that the law allows agency to conduct rifts.

[01:05:12] Speaker 05:
I think that the reason the termination provision is

[01:05:16] Speaker 05:
I don't think they're likely to succeed that this termination provision is overbroad.

[01:05:21] Speaker 05:
And I'll explain why.

[01:05:22] Speaker 05:
I also don't think that the defendants have made any showing of irreparable harm for keeping it in place just through the pendency of appeal.

[01:05:31] Speaker 05:
So on the first issue, the district court found, and this is again based on the testimony of the defendant's own chief operating officer, that the agency was using RIFs to shut down the agency.

[01:05:45] Speaker 05:
Uh, it was doing it in stages.

[01:05:47] Speaker 05:
So it was not, you know, the, what the agency was doing was not laying off everybody in one fell swoop.

[01:05:53] Speaker 05:
It was laying off probationary employees and then term employees and then 1200 employees and then the rest.

[01:05:59] Speaker 05:
And so, so it was not that the agency, it was an all or nothing thing.

[01:06:03] Speaker 05:
And what the district court also found again, based on the testimony of the agency's chief operating officer is that this plan continued.

[01:06:11] Speaker 05:
And the only evidence before the district court is that the only reason the agency was trying to conduct rifts was to shut down the agency.

[01:06:20] Speaker 05:
And there was no different plan.

[01:06:22] Speaker 05:
The agency never told the district court.

[01:06:24] Speaker 05:
And in fact, the defense counsel told the district court the reverse, that there is not a new lawful plan.

[01:06:31] Speaker 05:
There's nothing specific that we want to do that this provision is actually prohibiting us from doing.

[01:06:36] Speaker 03:
Well, Ms.

[01:06:37] Speaker 03:
Bennett, I mean, whose obligation is it to determine in the first instance

[01:06:42] Speaker 03:
what the statutory minimum are of an agency.

[01:06:46] Speaker 03:
I mean, why would the executive branch have to explain that to a district court?

[01:06:53] Speaker 03:
Well, so I'll note that.

[01:06:56] Speaker 03:
In detail, right?

[01:06:58] Speaker 03:
Because that's the argument.

[01:06:59] Speaker 03:
The argument is that the government has to detail what it thinks specifically is the statutory minimum, the precise number of employees.

[01:07:07] Speaker 03:
I mean, how can that be something that is

[01:07:11] Speaker 03:
is susceptible to judicial control.

[01:07:14] Speaker 05:
So two answers to that.

[01:07:16] Speaker 05:
One is we are not making an argument, and the district court did not base its ruling on an argument that the defendants had some burden to initially propose an injunction.

[01:07:28] Speaker 05:
It was our burden, of course, to satisfy the preliminary injunction factors and to propose relief that we believe was necessary to preserve the status quo and to prevent

[01:07:40] Speaker 05:
the shutting down of the agency during the litigation.

[01:07:43] Speaker 05:
And what the district court found is that this preliminary injunction was necessary.

[01:07:48] Speaker 03:
And then once that burden... The district court found it was necessary, as Judge Pillard also alluded to, was that the district court thought that the government hadn't said what the statutory minimum were.

[01:08:00] Speaker 03:
And in the absence of some representation about what the statutory minimum

[01:08:05] Speaker 03:
required that this injunction was appropriate.

[01:08:08] Speaker 03:
So that was a material part of the district court's reasoning.

[01:08:12] Speaker 05:
I think that might be, I can see reading the district court's opinion that way, but I actually think what was going on.

[01:08:19] Speaker 05:
So the plaintiffs, for example, filed a list of the statutory obligations that we thought were, that the agency was required to fulfill.

[01:08:29] Speaker 05:
And the defendants at the hearing refused to even comment on them.

[01:08:33] Speaker 05:
And they said, you cannot.

[01:08:34] Speaker 05:
enter an injunction that just says fulfill statutory functions because we don't know what that means.

[01:08:40] Speaker 05:
And they said, even if you enter an injunction that has a list, we think that there will be too many fights before the district court about whether we fulfilled that to make that a manageable injunction.

[01:08:53] Speaker 05:
So the defendants are here proposing an injunction that they told the district court was unlawful to enter.

[01:09:00] Speaker 05:
And so given that, what the district court did is say, OK, what I need to do

[01:09:05] Speaker 05:
is I need to make sure that during the pendency of this case, that's it.

[01:09:09] Speaker 05:
Just while we're figuring out what the facts are, whether the... That could be a very long time, given the pace of litigation in our courts.

[01:09:18] Speaker 05:
Sure.

[01:09:18] Speaker 03:
And that's why, you know... It could be two years into a president's term before he could direct how an agency should function and at what level.

[01:09:28] Speaker 05:
So I think that is a, you know, a question for the merits panel to determine and also, you know, the tools about

[01:09:35] Speaker 05:
there are tools for modification.

[01:09:36] Speaker 05:
The district court has expressly said, I am open for business.

[01:09:41] Speaker 05:
And so I think that's a question for the length of the injunction and whether an injunction of that length would cause irreparable harm to the defendants that outweighs the harm to the plaintiffs and the public interest.

[01:09:51] Speaker 05:
I think those are all questions for the merits panel.

[01:09:53] Speaker 05:
The question here is just, in the time that it takes to get to the merits panel, has the defendant shown that there is sufficient irreparable harm

[01:10:02] Speaker 05:
When they haven't even identified any specific action they want to take that is lawful, that this injunction would prohibit.

[01:10:11] Speaker 05:
All they've said is, hypothetically, it impinges on our Article II authority to have an injunction that hypothetically limits what we can do.

[01:10:21] Speaker 05:
But they told the district court the only RIF plan we have in place is a plan that would lead to shutting down the agency.

[01:10:28] Speaker 05:
and explicitly said, we have not come up with any other lawful plan.

[01:10:33] Speaker 05:
So this injunction in practice, the termination provision does not enjoin anything that the defendants have, any specific thing that the defendants have said we want to do.

[01:10:46] Speaker 06:
I have a very specific question for you about the paragraph that says, the defendant shall not enforce the February 10th, 2025 stop work order or require employees to take administrative leave in furtherance of that order, not reinstitute or seek to achieve the outcome of a work stop etc.

[01:11:09] Speaker 06:
Is it your understanding that that is referring to a stoppage of all the employees in the agency or any telling of any subset of employees that they have to stop working?

[01:11:25] Speaker 05:
I think it's a prohibition on essentially the kind of stop work order that was issued before, which was an agency-wide mandate to stop doing work with no exception for statutorily required functions.

[01:11:40] Speaker 05:
It is very clearly two points on one it is it is directed at people, which is to say the agency can't say, you know, nobody at the agency should be working with no vehicle for people to do their statutory required work.

[01:11:56] Speaker 05:
It does not say.

[01:11:57] Speaker 05:
that the agency cannot direct what work those people should be doing or stop any particular set of work that the agency is doing.

[01:12:07] Speaker 05:
I think the district was very clear about that.

[01:12:09] Speaker 05:
I mean, I think this provision is clear.

[01:12:11] Speaker 05:
I think the district was also very clear about that in the opinion.

[01:12:15] Speaker 06:
My another question is you had said that the district judge said, you know, tailoring fine.

[01:12:21] Speaker 06:
I'm open for business.

[01:12:23] Speaker 06:
I want to hear from you.

[01:12:24] Speaker 06:
But in ruling on whether the district court had jurisdiction to

[01:12:30] Speaker 06:
explicitly address a stay request from the government and answering in the affirmative that the district court believed it did have jurisdiction.

[01:12:40] Speaker 06:
It said it did not believe that it would have jurisdiction to modify the injunction going forward now that the case is in the court of appeals.

[01:12:48] Speaker 06:
Do you disagree with that?

[01:12:49] Speaker 06:
And if it has no authority pending the stay appeal to change anything,

[01:12:59] Speaker 06:
Is that the best use of time or should we?

[01:13:05] Speaker 06:
Reband to the to the seems like everybody thinks that the district judge should have a crack at some kind of narrowing.

[01:13:17] Speaker 06:
But it just seems like it's going to be longer than necessary before she gets that chance.

[01:13:22] Speaker 06:
Or do you have a different view of the district court's ongoing jurisdiction while this day motion is pending here?

[01:13:29] Speaker 05:
So I do think the district court has ongoing jurisdiction.

[01:13:34] Speaker 05:
An injunction is different than is not subject to the same ordinary rule, of course, that when something goes up on appeal, the district court loses jurisdiction, the federal rules.

[01:13:43] Speaker 05:
And we cited this in our response.

[01:13:46] Speaker 05:
to the Defendage 28J letter, the federal rules explicitly say that while an appeal is pending, the district court maintains jurisdiction to modify, vacate, add an injunction.

[01:13:59] Speaker 05:
And I did not find on at least short notice, I didn't see any case from this circuit addressing that rule, but there are cases in other circuits

[01:14:10] Speaker 05:
You know, explain that that is that is true in their cases from a number of district courts in the circuit saying that and so the laws in the law is pretty clear actually that even while on appeal, the usual Griggs rule district court loses some jurisdiction doesn't apply to the modification of injunctions.

[01:14:28] Speaker 05:
You know, go ahead.

[01:14:29] Speaker 05:
Sorry.

[01:14:29] Speaker 06:
You referred a few minutes ago to a list of the statutory duties of the agency that the plaintiffs provide.

[01:14:38] Speaker 06:
Are you referring to the attachment to the Greer Doe declaration?

[01:14:44] Speaker 06:
That's right.

[01:14:44] Speaker 05:
Yes, Your Honor.

[01:14:44] Speaker 06:
The statutory requirements for continuous operation of the CFPB.

[01:14:48] Speaker 05:
That's right.

[01:14:52] Speaker 05:
And just, I want to address

[01:14:55] Speaker 05:
Couple of things, pie in permitting.

[01:14:57] Speaker 05:
One is this idea that the court can rest on the reassurances of counsel, that if you stay this injunction or if you stay it with the exception of telling us to do our statutory functions, that we will comply with the statutory functions, those are exactly the same representations that the district court found to be untrue.

[01:15:18] Speaker 05:
And that they're same representations that were, in fact, disavowed by the defendant's own witness.

[01:15:25] Speaker 06:
Can you be more specific about that last point?

[01:15:27] Speaker 05:
Sure.

[01:15:28] Speaker 05:
So I take these representations in the brief.

[01:15:32] Speaker 05:
The facts that are cited for that is, one, Martinez's declaration, and specifically his assertion that, quote, our leadership is working or has worked to comply with statutory functions.

[01:15:44] Speaker 05:
And the transcript, if you look, and this is cited at the district court's opinion on page 93, it's the transcript of March 10, pages 187 to 88.

[01:15:53] Speaker 05:
What Mr. Martinez testified is he knows now that that wasn't true when he said it.

[01:15:59] Speaker 05:
And the reason he said it is because agency leadership, Mark Paoletta, told him it was true, but now he knows it's not true.

[01:16:07] Speaker 05:
So the main thing that the defendants are relying on for their assertion that the agency is now going to comply with statutory functions is this declaration.

[01:16:15] Speaker 05:
And this declaration was disavowed under oath by the person who made it.

[01:16:21] Speaker 05:
that he also said, in fact, I don't know whether the agency is complying with statutory functions.

[01:16:28] Speaker 05:
The other thing that the agency is relying on for this assertion are the emails that the district court found and the agency has not challenged this finding that were nothing more than window dressing.

[01:16:40] Speaker 05:
And I think you can see, if you look at the agency's own reply before this court, why it would be problematic to rely on those emails, especially

[01:16:50] Speaker 05:
while ignoring the district court's findings that those emails could not be relied upon.

[01:16:55] Speaker 05:
So in the defendant's reply brief, it's page 11 and 12, they cite emails that they say show that statutorily required contracts have been unterminated.

[01:17:06] Speaker 05:
What Mr. Martinez testified, they tried to make the same argument in the district court.

[01:17:12] Speaker 05:
And what Mr. Martinez testified, this is on the March 10th transcript, page 170, rather 171,

[01:17:19] Speaker 05:
But in fact, that was a misreading of the emails.

[01:17:22] Speaker 05:
What the government is doing is putting two emails together that don't actually go together.

[01:17:27] Speaker 05:
What actually was unterminated is a very small handful of technology contracts.

[01:17:33] Speaker 05:
That is the spreadsheet that was attached to the email they're citing.

[01:17:36] Speaker 05:
It was not all of the contracts that underlie the Bureau statutory functions.

[01:17:43] Speaker 06:
Can you give us a sense of what some of the contracts are?

[01:17:46] Speaker 06:
There are contracts that relate to enforcement.

[01:17:49] Speaker 06:
There are contracts that relate to supervision.

[01:17:53] Speaker 06:
What is the general nature of those and how could they relate to the agencies?

[01:18:00] Speaker 06:
How could a judge know whether they relate to an agency's sexually required duties?

[01:18:05] Speaker 05:
Sure, so I think the,

[01:18:08] Speaker 05:
To give you some examples first, so for example, the Consumer Response Division identified five contracts that were necessary to its function that that division administered, all of which were canceled.

[01:18:19] Speaker 05:
And those included, for example, a contract to maintain the database that takes in complaints.

[01:18:25] Speaker 05:
Without that contract, the database quickly degrades and will not be able to take complaints anymore.

[01:18:31] Speaker 05:
Another one, and this is, I think, will highlight the difficulty that the district court judge would have absent the defendant's help

[01:18:38] Speaker 05:
is an anti-virus contract.

[01:18:41] Speaker 05:
The defendants in canceling all of the contracts canceled an anti-virus contract, which screened everything coming into that database for viruses and particularly attachments.

[01:18:52] Speaker 05:
And by canceling that contract, they rendered the database virtually non-functional.

[01:18:58] Speaker 05:
And we asked in the district court over and over again, hey, we would be happy to propose something narrower to identify specific contracts, but to do that,

[01:19:07] Speaker 05:
we would need a list of the contracts, which we know exists, and the defendants refuse to provide one.

[01:19:12] Speaker 05:
And I think as the First Circuit recently made clear, once we meet our burden that a preliminary injunction is necessary and show that this is the minimum necessary manageable injunction to prevent the harm and to preserve the status quo, the party opposing the injunction can't just

[01:19:34] Speaker 05:
say, well, it's an up or down vote, you either enter this or not, and then try later to say, oh, actually, you should narrow it in this way, or you should have used this information.

[01:19:44] Speaker 03:
Ms.

[01:19:46] Speaker 03:
Bennett, can I ask you if on February 10th, agency leadership had decided to just said something other than what they said?

[01:19:56] Speaker 03:
They took the same actions, but they didn't say they were shutting down the agency.

[01:20:00] Speaker 03:
They just decided to

[01:20:02] Speaker 03:
stop work on a number of matters while they figured out how to go forward with, you know, what the president had directed them to do.

[01:20:11] Speaker 03:
Would that be amenable to an injunction?

[01:20:15] Speaker 05:
So if what the agency in fact did is stop just stop work on matters temporarily, I think it would be I don't know that that would be amenable to injunction.

[01:20:25] Speaker 05:
But what the district court found and what the defendants have not challenged is that is not what the agency did.

[01:20:30] Speaker 03:
In fact, what the agency did is... I'm asking you, I'm asking you a counter, arguably a counterfactual.

[01:20:36] Speaker 03:
Sure.

[01:20:37] Speaker 03:
So they don't say they're shutting down the agency, but they take more or less the same actions for a couple of weeks.

[01:20:45] Speaker 03:
I think if this... Would there be any claim to get into district court for an injunction of this nature?

[01:20:50] Speaker 05:
I think if by the same actions, what you mean is stop all work,

[01:20:55] Speaker 05:
put everybody on administrative leave pending the implementation of a plan to fire everyone and to transfer any remaining HR functions and data to preservation functions to some other agency.

[01:21:07] Speaker 05:
I think absolutely.

[01:21:08] Speaker 05:
I don't think the words we are shutting down the agency is what matters here.

[01:21:11] Speaker 05:
I think what matters here is that the decision was.

[01:21:15] Speaker 03:
So what would be the challenge to that action?

[01:21:17] Speaker 03:
If you were to come to court and they haven't said we're shutting down the agency, what would you be challenging?

[01:21:22] Speaker 03:
What would the plaintiffs here be able to challenge?

[01:21:25] Speaker 05:
I think the challenge would still be to decision to shut down the agency, the agency that doesn't need to say we're shutting down, but if it has decided to take actions that would in fact- Could former employees challenge their temporary being put on administrative leave?

[01:21:42] Speaker 03:
Would that be amenable to a lawsuit?

[01:21:45] Speaker 03:
I think- Would the union have standing, would they be injured by a temporary, you know,

[01:21:51] Speaker 03:
You know, putting people on administrative leave.

[01:21:53] Speaker 03:
Would these plaintiffs be able to challenge the contracts being unwound one by one?

[01:22:00] Speaker 05:
I want to be really clear that I think those are all hard questions and they're not presented by this case precisely because what the district court found and what the defendant's own testimony showed

[01:22:10] Speaker 05:
is that it was not contracts being unwound one by one.

[01:22:13] Speaker 05:
In fact, there's documents that show they canceled wholesale all of the contracts.

[01:22:18] Speaker 03:
And who would have standing to challenge the cancellation of contracts by a federal agency?

[01:22:23] Speaker 05:
I think if a federal agency canceled all of their contracts, meaning that the agency could not perform its statutorily required functions that harmed, you know, the plaintiffs, for example, if the wholesale cancellation of contracts

[01:22:41] Speaker 05:
prevented consumers from getting the relief that they otherwise needed.

[01:22:44] Speaker 05:
That would certainly be challengeable.

[01:22:45] Speaker 03:
But I want to note that that's... They would have to show that, right?

[01:22:47] Speaker 03:
They would have to show that the cancellation of the contracts prevented them from getting something that they were required to receive under statute.

[01:22:56] Speaker 05:
I think that's right.

[01:22:56] Speaker 03:
And I want to just note we're getting pretty... That's a very specific showing.

[01:23:01] Speaker 05:
So I think that's right.

[01:23:02] Speaker 05:
I think it's very far afield, both from this court is before this court right now, which is whether the defendants are entitled

[01:23:08] Speaker 05:
and have met their burden to prove that an extraordinary measure, a stay pending just the resolution of this appeal, is warranted.

[01:23:17] Speaker 05:
And also, from the facts that the district court found, what the district court found, which the defendants are not disputing, at least at this stage, because it would be very difficult to dispute, is not that there was contract cancellation separate from a temporary pause on work, separate from

[01:23:36] Speaker 05:
something else.

[01:23:37] Speaker 05:
What the district court found, and is well supported by the record, is that the agency was in the midst of a decision to shut down.

[01:23:44] Speaker 05:
And each of these actions were the actions that the agency took to shut it down.

[01:23:49] Speaker 05:
And all the district court's preliminary injunction does is mirror the agency's actions that it in fact took to admittedly shut down the agency.

[01:23:58] Speaker 06:
Let me ask you about the employees.

[01:24:01] Speaker 06:
You had a useful colloquy with Judge Katzis about the contracts.

[01:24:09] Speaker 06:
The employment situation feels

[01:24:14] Speaker 06:
a little harder, more employees.

[01:24:17] Speaker 06:
And the way that the plenary injunction is written, it requires reinstatement of probationary and term employees.

[01:24:31] Speaker 06:
And I understand that at least one, perhaps more probationary or term employees who are not usually protected by any, you know,

[01:24:43] Speaker 06:
need for a reason before they're fired, that at least one of them was the person in a statutorily defined role.

[01:24:51] Speaker 06:
So there's a little bit of a hunk there maybe, but one typically would assume that the government would put a different person in to cover that job.

[01:25:00] Speaker 06:
And so what conceivable ground would there be in the district court's concern or finding that there was a plan to shut down the agency to not allow at least

[01:25:14] Speaker 06:
the termination of probationary and term employees.

[01:25:18] Speaker 05:
So I think there was a number.

[01:25:20] Speaker 05:
So I want to separate reinstatement from RIFS.

[01:25:22] Speaker 05:
And I hear the reinstatement question.

[01:25:26] Speaker 05:
There was a bunch of evidence in the record that the defendants wholesale terminated everyone.

[01:25:33] Speaker 05:
And by doing so, that had an impact on statutorily required functions.

[01:25:38] Speaker 06:
So I wanted to get there, but I wanted to separately ask about the probationary and term employees and why that isn't a kind of separate question, whether they could just be let go at the outset.

[01:25:55] Speaker 05:
So it might be a separate question.

[01:25:57] Speaker 05:
The defendants have not made that argument, actually, at all anywhere, as far as I am aware, and certainly not before this court.

[01:26:05] Speaker 05:
The claim in this case is not that the way that they were let go violated the statutes governing how you can terminate probationary and term employees, although I do believe that, in fact, it did that.

[01:26:19] Speaker 05:
But that's not the claim in this case.

[01:26:21] Speaker 05:
The claim in this case is that,

[01:26:23] Speaker 05:
That was one step in the defendant's plan to shut down the agency.

[01:26:28] Speaker 06:
All right, so stepping back and looking more broadly at, I guess there are these three provisions, two, three, and four, that deal with people working.

[01:26:38] Speaker 06:
And three, for example, says, the defendants shall not terminate any CFPB employee except for cause related to individual employee's performance or conduct

[01:26:50] Speaker 06:
And defendants shall not issue any notice of reduction in force to any CFPB employee.

[01:26:55] Speaker 06:
And what I take that, I mean, I know there's a difference between a termination, a reduction in force, and potentially what I take to be more a term of art in this litigation, a stop work order.

[01:27:07] Speaker 06:
My question is, what can the government do in shifting its priorities in seeking to streamline the agency?

[01:27:18] Speaker 06:
I take it that neither the district judge nor your clients dispute that in ordinary circumstances, it would be nothing whatsoever unlawful about

[01:27:34] Speaker 06:
trimming the workforce and redirecting what people are doing.

[01:27:40] Speaker 06:
And so why no ability even to have people on administrative leave not working?

[01:27:48] Speaker 06:
Why do they need to keep paying a lot of people that they, under their plan B, may not at all need?

[01:27:58] Speaker 05:
Yeah, so the answer lies in what the district,

[01:28:03] Speaker 05:
the action in the plan to shut down the agency was and continue to be, which is we, the only reason we are going to use reductions in force is to shut down the agency.

[01:28:15] Speaker 05:
I do think that if the defendants had, once that is the evidence, I think just for the pendency of the litigation,

[01:28:24] Speaker 05:
the district court can say, look, the only evidence I have is the only reason you're going to conduct this is to shut down the agency.

[01:28:31] Speaker 05:
And you still plan to do this.

[01:28:33] Speaker 05:
And I think it's worth thinking about what alternatives the district court had.

[01:28:36] Speaker 05:
One, this provision comes from an order that the defendants agreed to.

[01:28:42] Speaker 05:
And so when the defendant sat down to draft a provision that the defendants thought would be manageable,

[01:28:48] Speaker 05:
and prevent harm through the course of at least the preliminary injunction proceedings.

[01:28:54] Speaker 05:
This is what the defendants came up with.

[01:28:57] Speaker 05:
And the reason for in conjunction with the plaintiffs.

[01:29:00] Speaker 06:
They'll never agree to anything again.

[01:29:01] Speaker 06:
They agreed to that as a temporary measure to move forward without everything blowing up.

[01:29:11] Speaker 05:
Right, so I want to be really clear.

[01:29:13] Speaker 05:
The argument is not that anything the defendants agree to or the government agrees to for a small period of time therefore prohibits them from saying, you know, from getting a stay or from saying later, you know, we, you know, this is going to cause us harm if it is prolonged.

[01:29:29] Speaker 05:
I think in the context of this litigation, where the only thing the defendants are challenging is the scope of the provision.

[01:29:37] Speaker 05:
And when the defendants had to sit down,

[01:29:40] Speaker 05:
and work out a provision with this scope, this is what the defendants agreed to.

[01:29:47] Speaker 05:
And the defendants have not been able to offer anything else.

[01:29:50] Speaker 05:
And I think that I will concede it as hard as why a district court judge has discretion to draft the preliminary injunction that the district court thinks is manageable and therefore necessary to preserve the status quo.

[01:30:03] Speaker 05:
And I think it's worth thinking about what the other options are.

[01:30:06] Speaker 05:
The other option that's been presented to you is, say,

[01:30:10] Speaker 05:
Uh, don't terminate anyone that's necessary to our statutory functions.

[01:30:14] Speaker 05:
Um, that is the only thing the district court, uh, that the defendants told the district court below, they could, it could not enter and that they said, we would not know what that means.

[01:30:23] Speaker 05:
We could not comply with that.

[01:30:25] Speaker 05:
And what that would have is a series of us coming back to this court.

[01:30:28] Speaker 05:
over and over and over again.

[01:30:30] Speaker 05:
We'd never get to the merits because that's not a manageable injunction.

[01:30:34] Speaker 05:
That's what they said.

[01:30:34] Speaker 05:
You could imagine another one that based it on percentage or numbers.

[01:30:41] Speaker 05:
But of course, we know from the student loan ombudsman, from other special offices, that it is not a percentage of employees.

[01:30:49] Speaker 05:
There are particular people that are needed or particular roles that are needed.

[01:30:53] Speaker 05:
And a reduction in force, at least as the agency was considering it, is taking out roles.

[01:30:58] Speaker 05:
It's not taking out people.

[01:31:00] Speaker 05:
It's cutting out roles.

[01:31:02] Speaker 05:
And there was no way for the district court to be able to say,

[01:31:07] Speaker 05:
don't cut 25% because then you might cut the role of the student loan ombudsman or the entire consumer response division.

[01:31:14] Speaker 05:
And so that is not a manageable, that is not something that would work.

[01:31:21] Speaker 05:
The court could have entered no prohibition on termination.

[01:31:24] Speaker 05:
And then as the district court found, the RIF notices that are ready to go would be sent out

[01:31:32] Speaker 05:
and the agency would be shut down within 30 days.

[01:31:35] Speaker 06:
So is there any narrowing whatsoever that plaintiffs are amenable to or even amenable to working toward with the government?

[01:31:48] Speaker 05:
Absolutely.

[01:31:49] Speaker 05:
So I want to be really clear.

[01:31:50] Speaker 05:
Our position is not that we would be unwilling to narrow this.

[01:31:57] Speaker 05:
Our position is, as far as we could tell and the district court could tell,

[01:32:02] Speaker 05:
This is the only provision that would be able to preserve the status quo and be manageable.

[01:32:09] Speaker 05:
At that point, if the defendants who have more information come forward and say, actually, the thing we want, the thing that we think will still be administrable and permissible would be this thing, I think absolutely we would be amenable to talking about that and to either before the district court or

[01:32:29] Speaker 05:
or independently conferring about that.

[01:32:31] Speaker 05:
But what this court has said in Laker, with the First Circuit made clear in New Jersey, is that once the district court and the plaintiffs have satisfied the burden to show that an injunction is necessary, the district court has discretion to enter an injunction that the district court believes is necessary.

[01:32:53] Speaker 05:
And part of necessity has to be manageability.

[01:32:56] Speaker 05:
to award the relief and the defendant's inability to propose anything narrower that would effectuate the same results is evidence that no narrower provision would be sufficient.

[01:33:15] Speaker 06:
As you say in your response of 28-J letter, you gave authorities that district court could continue to modify an injunction while this appeal of a denial of an emergency stay is pending.

[01:33:28] Speaker 06:
If there were some material narrowing, then how does that affect the stay appeal?

[01:33:43] Speaker 06:
Does that change the record so that we don't have a court looking, I'm sorry, how does that affect the appeal of the preliminary injunction?

[01:33:54] Speaker 06:
If the injunction by that time is narrowed, then that appeal would be dismissed and there would have to be a new appeal?

[01:34:03] Speaker 05:
I think that there could be supplemental briefing on, I don't think you'd need a new appeal.

[01:34:07] Speaker 05:
I think there could be supplemental briefing on the effect of that narrowing and whether it mooted out any parts of the appeal.

[01:34:14] Speaker 05:
And so I do think if what this court believes is the best option here would be for the district court to take another crack at it.

[01:34:24] Speaker 05:
If the defendants, again, the only, I hear the termination provision being the main hang up.

[01:34:31] Speaker 05:
And again, the defendants have not identified anything they actually want to do that would be legal and prohibited by this prohibition.

[01:34:37] Speaker 05:
But if they do have that, and this court thinks that it should go back to the district where I absolutely think this court could say, look, we are staying, for example, continue the administrative stay that it entered.

[01:34:50] Speaker 05:
So we are not staying any of the provisions that were already agreed to because we want to make sure that the whole agency isn't laid off in 30 days,

[01:34:58] Speaker 05:
You know, in waves, crucial parts of it aren't laid off.

[01:35:01] Speaker 05:
We want to make sure the contracts aren't finally canceled.

[01:35:03] Speaker 05:
We want to make sure all the data isn't deleted.

[01:35:05] Speaker 05:
So we're going to keep at least those provisions in place and continue the stay and encourage.

[01:35:13] Speaker 05:
And that will continue until or unless and until the district court enter some order modifying the injunction to encourage the defendants to go back and ask for that.

[01:35:24] Speaker 01:
Since you mentioned the administrative stay.

[01:35:27] Speaker 01:
Sure.

[01:35:28] Speaker 01:
Could you live with a stay pending appeal that has the conditions that we put in the administrative stay?

[01:35:40] Speaker 05:
Yes.

[01:35:41] Speaker 01:
I think we could just extend what we do.

[01:35:43] Speaker 05:
Yes.

[01:35:43] Speaker 05:
I think we could live with that pending the resolution of the merits of the appeal.

[01:35:47] Speaker 05:
Both sides have been living with that for about two months.

[01:35:50] Speaker 05:
I think especially we're very happy to consent to an expedited appeal.

[01:35:54] Speaker 05:
I suspect the defendants are as well.

[01:35:56] Speaker 05:
if this court were to grant that.

[01:35:58] Speaker 05:
But I think extending exactly what this court did pending this argument.

[01:36:04] Speaker 06:
And is it the plaintiff's position that the government cannot even put subsets of employees on?

[01:36:18] Speaker 06:
Sorry, I just managed to make my chair.

[01:36:20] Speaker 06:
No problem.

[01:36:25] Speaker 06:
To to put any employees on administrative leave if there were just people you thought we're not going to need them.

[01:36:32] Speaker 06:
it's gonna be bad for morale if they're sitting twiddling their thumbs, have a certain, you know, the last 10 people that are in enforcement, because we're not gonna do that kind of, you know, we're gonna de-prioritize that kind of enforcement, and the 20 other people that already do that are gonna be sufficient.

[01:36:48] Speaker 06:
That's, if they're starting to make those more nuanced judgments and wanna put side rails on people, that's not, as you understand it, permitted under the current injunction.

[01:37:00] Speaker 05:
I think it depends on what they're doing.

[01:37:02] Speaker 05:
What the current injunction prohibits essentially is re-effectuating a stop work order via the use of something else that's not called a stop work order, so administrative leave.

[01:37:10] Speaker 05:
I think if this court is concerned.

[01:37:12] Speaker 06:
But we've clarified that that would be like wholesale, broad-based stop work, as opposed to something more tailored to as the priorities are being put into place under the new director, assuming he's soon confirmed.

[01:37:28] Speaker 05:
I think that's right.

[01:37:28] Speaker 05:
I mean, I will say one of the reasons in the record that the defendants issued a stop work order initially instead of putting everybody on administrative leave is because there are statutory limits on administrative leave.

[01:37:40] Speaker 05:
Those aren't part of this case.

[01:37:41] Speaker 05:
So I think if this court wanted to stay, if there was concern about the administrative leave provision, if this court wanted to stay that or to make clear that what it means is using

[01:37:54] Speaker 05:
broad-based administrative leave that would be equivalent to a stop work order, I don't think we would have any objection to that pending the resolution of the appeal.

[01:38:01] Speaker 03:
I just had one question, which is, we couldn't find any, but I'm wondering if plaintiffs are aware of any similar type of injunction that was imposed against a federal agency in the past, and what the litigation around that, if there was such an injunction, how that played out.

[01:38:23] Speaker 05:
I believe a very long time ago, there was, and I believe it only made it through the district court.

[01:38:31] Speaker 05:
I don't, I can't recall whether it, I don't believe there was an appellate decision ever, but during the Nixon administration, my understanding is that it's the only time that anybody has ever attempted to shut down an agency and it was quite different, but I'm happy to, I can't remember the name of that case, but I'm happy to,

[01:38:46] Speaker 05:
one, make sure that I'm actually correctly remembering that.

[01:38:50] Speaker 05:
And if so, I'm happy to submit it.

[01:38:51] Speaker 03:
So only one district or case that does that.

[01:38:54] Speaker 05:
I think that's right.

[01:38:54] Speaker 05:
And I think the reason for that is because this has never happened before.

[01:38:59] Speaker 05:
We are aware of, I am aware of no instance before this happened of an acting non-Senate confirmed director of an agency trying to shut down an agency that Congress created within a week

[01:39:16] Speaker 05:
so that it was shut down before a Senate confirmed director could even come in.

[01:39:20] Speaker 05:
The reason I think there aren't cases about this is just it has never happened before.

[01:39:25] Speaker 06:
Even in this administration?

[01:39:26] Speaker 06:
You're saying this is the first?

[01:39:27] Speaker 05:
I think USAID might be similar.

[01:39:30] Speaker 05:
And that litigation is still ongoing.

[01:39:34] Speaker 05:
The challenge there was different.

[01:39:38] Speaker 05:
And so it had different features.

[01:39:42] Speaker 05:
And the government there

[01:39:45] Speaker 05:
was contesting it here, what we have is a factual record from the government's own witness that, in fact, that is exactly what happened.

[01:39:52] Speaker 05:
And I'm aware of no case even in this administration that has that factual record from an evidentiary hearing on a preliminary injunction.

[01:40:02] Speaker 05:
I think that's why we haven't seen it yet.

[01:40:06] Speaker 05:
It's just the first case to have presented the situation.

[01:40:10] Speaker 01:
But if you broaden

[01:40:13] Speaker 01:
broaden the lens to not agency shutdown cases, but cases where a party against the government is faced with a situation that looks like wholesale mismanagement, unlawful acts, right, and tries to use the APA

[01:40:41] Speaker 01:
as a vehicle for, you know, something that looks like a structural injunction, which is normally the polar opposite of an APA case, which is, you know, it starts as an appellate proceeding, it's on the record, there's a discrete legal issue, the agency lays bare a legal error and then remands to the agency.

[01:41:05] Speaker 01:
We're like the opposite extreme already.

[01:41:10] Speaker 01:
I can think of one, which is Cobell, which was not a happy experience for this court.

[01:41:19] Speaker 05:
So a couple of things on that.

[01:41:22] Speaker 05:
In the APA context, the way these cases usually arise is we think that you are, SUA, for example, is an example.

[01:41:31] Speaker 05:
You are told not to impair some environmental agency, and we think

[01:41:36] Speaker 05:
your version of what it means.

[01:41:37] Speaker 01:
SUA is an example.

[01:41:38] Speaker 01:
And the bottom line is not one that... Well, right.

[01:41:42] Speaker 05:
But I want to make clear the reason that that is quite different from this case.

[01:41:46] Speaker 05:
And there, what the challenge is, we essentially don't impair some geographic area, the environmental sanctity of some geographic area.

[01:41:57] Speaker 05:
And the agency thought not impairing it meant one thing, and the plaintiffs wanted them to do something else.

[01:42:02] Speaker 05:
So that was a challenge to the way in which the agency was, as a policy matter, implementing a statutory command.

[01:42:10] Speaker 05:
And that's virtually all of the APA cases.

[01:42:12] Speaker 05:
When you think about it, that's what's going on here.

[01:42:14] Speaker 05:
That is absolutely not what's going on.

[01:42:16] Speaker 05:
The district court is not trying to tell the agency, you are not supervising the right banks.

[01:42:22] Speaker 05:
You are not enforcing the right laws.

[01:42:23] Speaker 05:
You are not bringing enough enforcement actions or too many enforcement actions.

[01:42:28] Speaker 05:
You know, your regulations have to be X or Y. None of that is happening here.

[01:42:32] Speaker 05:
This is very different than any of those cases.

[01:42:35] Speaker 05:
What this is is you are just shutting down the agency.

[01:42:38] Speaker 05:
You are just not doing it.

[01:42:40] Speaker 05:
You have no authority to shut down the agency.

[01:42:42] Speaker 05:
It's also why this isn't just an APA case.

[01:42:44] Speaker 05:
It's a direct constitutional separation of powers case.

[01:42:49] Speaker 01:
It's a statutory case, but.

[01:42:51] Speaker 05:
I'm sorry?

[01:42:52] Speaker 01:
It's a statutory.

[01:42:53] Speaker 01:
I mean, you say it's constitutional,

[01:42:57] Speaker 01:
the constitutional violation is failing to follow statutes and the take care clause.

[01:43:04] Speaker 01:
I mean, that's just Dalton versus Specter.

[01:43:07] Speaker 01:
Just on the characterization, is it constitutional or statutory?

[01:43:10] Speaker 05:
Sure.

[01:43:11] Speaker 05:
I don't think so.

[01:43:12] Speaker 05:
I think this is what Dalton makes clear.

[01:43:14] Speaker 05:
I think we're now far afield from anything that's going to decide.

[01:43:17] Speaker 01:
And I don't want to put on the table, is this direct against the president?

[01:43:21] Speaker 01:
Sure.

[01:43:22] Speaker 05:
But just to answer your question about Dalton, what was at issue in Dalton was there was authority to do a thing.

[01:43:31] Speaker 05:
And the question was, did the president

[01:43:34] Speaker 05:
do that, it was closing a naval base, I believe.

[01:43:36] Speaker 05:
Did the president abuse its discretion in exercising the authority that Congress did give it?

[01:43:41] Speaker 05:
And Dalton makes really clear that that's a different situation than when the executive does something without any statutory authority.

[01:43:48] Speaker 05:
And that's what's going on here.

[01:43:50] Speaker 05:
There is no statutory authority.

[01:43:52] Speaker 05:
That's what makes this a Youngstown situation as opposed to a Dalton situation.

[01:43:56] Speaker 05:
And Dalton explicitly gives this distinction in the case.

[01:43:59] Speaker 05:
There's just no statutory authority for the executive to shut down the agency.

[01:44:04] Speaker 06:
So you see the separation of powers issue the way Mr. MacArthur was saying in his opening that, yes, the government does have authority to have a plan.

[01:44:14] Speaker 06:
And he characterizes what the plan that President Trump had announced to shut down this agency being a plan to go to Congress and seek rescission of the CFPB authorizing statute and duty.

[01:44:28] Speaker 06:
So the fact that the administration has not done that is, in your view, a violation of separation of powers, because that's the only permissible way to actually do it.

[01:44:40] Speaker 01:
That's right.

[01:44:40] Speaker 01:
Yes.

[01:44:43] Speaker 01:
I mean, just on the framing, it does seem to me

[01:44:56] Speaker 01:
case is framed that is source of difficulty.

[01:45:01] Speaker 01:
This does seem to me like SUA in the sense that you are, in order to create the unlawful agency action that is the focus of your case, which is the shutdown order, you're building that up from individual pieces that could not support review.

[01:45:26] Speaker 01:
An employee couldn't go to district court in the APA, through the APA, and ask for an order, don't fire me.

[01:45:40] Speaker 01:
We could channel through the CSRA, that would just not even get into court.

[01:45:48] Speaker 05:
Potentially, I think it did.

[01:45:50] Speaker 01:
I mean, I think.

[01:45:51] Speaker 01:
And the funding,

[01:45:54] Speaker 01:
Funding is another piece of this.

[01:45:57] Speaker 01:
If you went into district court and asked for an order in the APA to direct the agency to seek more funds, you'd run headlong into the statute that deems the funding level to be within the discretion of the director.

[01:46:16] Speaker 01:
And so you have all these discretionary

[01:46:21] Speaker 01:
discrete acts that don't support review that you're trying to stitch together to create, you know, the reviewable action, which you say is the order to shut down the agency.

[01:46:36] Speaker 05:
I don't.

[01:46:37] Speaker 05:
I understand.

[01:46:38] Speaker 01:
I mean, I'm presaging the merits of the SUA issue, right, which they didn't

[01:46:47] Speaker 01:
government didn't raise, but it may be, you know, that aspect of the case, maybe why we're struggling with the remedial aspects of like, how are we gonna, you know, rifts are lawful, how are we gonna, contract terminations are lawful, how are we gonna manage those kinds of agency actions, which won't normally support an APA challenge.

[01:47:11] Speaker 05:
I think there are a few answers to that.

[01:47:13] Speaker 05:
So one, APA challenges are,

[01:47:15] Speaker 05:
commonly based on a decision that is then effectuated in multiple ways.

[01:47:22] Speaker 05:
The challenge here is to the decision to shut down the agency.

[01:47:25] Speaker 05:
And the preliminary injunction is just explaining, it's mirroring the actions that the defendants actually took to effectuate that decision.

[01:47:36] Speaker 05:
you know, the, it's, it's, it would not themselves be challenged.

[01:47:41] Speaker 05:
I'm not sure that that's true.

[01:47:42] Speaker 05:
I mean, we, we would brief when we, I think we could, we would brief that if the government had raised it and maybe they'll raise it on the, on the marriage appeal.

[01:47:49] Speaker 05:
But, uh, you know, we have it and could brief that, uh, but, but I do think that for the APA purposes, there are, there are plenty of cases where, where

[01:48:00] Speaker 05:
decisions are implemented through specific means, as opposed to something that's saying, I don't like that you did this, and I don't like that you did that, and it is somehow separate.

[01:48:09] Speaker 05:
I think it's quite a different thing, and there are cases about that.

[01:48:14] Speaker 05:
And second, under the law in this court, it's clear that whatever is true under the APA, that doesn't apply to a separation of powers

[01:48:26] Speaker 05:
direct constitutional challenge, that the APA can't somehow withdraw from this court the power to determine whether the administration is complying with the Constitution.

[01:48:42] Speaker 05:
Thank you.

[01:48:43] Speaker 06:
Thank you very much.

[01:48:45] Speaker 06:
We'll hear a rebuttal.

[01:48:46] Speaker 06:
But let me just say before we do, I'm assuming that some people in the gallery have not been in a federal court argument before.

[01:48:54] Speaker 06:
It would be appropriate to refrain from nodding or shaking heads or making other expressions of approval or disapproval of what counsel are saying when they're.

[01:49:05] Speaker 06:
Thank you.

[01:49:06] Speaker 06:
And did Mr. MacArthur reserve time?

[01:49:10] Speaker 06:
How much time?

[01:49:11] Speaker 06:
All right.

[01:49:16] Speaker 04:
I just have two points that I'd like to respond to that Ms.

[01:49:20] Speaker 04:
Bennett made.

[01:49:22] Speaker 04:
The first is toward the beginning of her argument, she talked about cases saying that there are certain circumstances in which courts can appropriately enjoin lawful conduct.

[01:49:34] Speaker 04:
I think that was an idea that first surfaced in their 28-J letter.

[01:49:38] Speaker 04:
I looked at the cases that they were citing, and those cases involve permanent injunctions

[01:49:44] Speaker 04:
after there's been a final adjudication that a private party had violated the law.

[01:49:49] Speaker 04:
And even those cases recognize that even in that context, that is very much the exception to the rule of tailoring.

[01:49:58] Speaker 04:
Very different circumstances and factors are at play when you are talking about an injunction intruding on

[01:50:04] Speaker 04:
the executive branch's operation of its internal affairs.

[01:50:08] Speaker 06:
I understand the distinction you're making between private and governmental parties being enjoined, but it would seem that your other distinction, that those are permanent injunctions, actually cuts in favor of the point that she was making.

[01:50:18] Speaker 06:
A preliminary injunction is preliminary, it's temporary, and often is change nuance narrowed.

[01:50:27] Speaker 04:
So I have the opposite instinct about that, Judge Pillard, which is

[01:50:30] Speaker 04:
At the preliminary injunction stage, there hasn't yet been an adjudication that anyone has violated the law.

[01:50:35] Speaker 04:
There's been a first preliminary look at the merits.

[01:50:40] Speaker 04:
But I do think that the even more important point there is about the executive branch because what happened here is the district court in an effort to stave off what it considered a separation of powers violation itself committed a separation of powers violation.

[01:50:57] Speaker 04:
The other point I want to respond to is

[01:50:59] Speaker 04:
on the balance of harms.

[01:51:01] Speaker 04:
And this is why Judge Katz says we really cannot live with the status quo under the administrative stay.

[01:51:09] Speaker 04:
And it also goes to a point in their opposition brief that I think is just flat wrong.

[01:51:15] Speaker 04:
They said on page three that disinjunction does not dictate policy decisions.

[01:51:21] Speaker 04:
It manifestly does.

[01:51:23] Speaker 04:
Decisions about the size of an agency's workforce

[01:51:27] Speaker 04:
about the discretionary work that employees should or should not undertake.

[01:51:32] Speaker 06:
Wait, how does it do the latter?

[01:51:35] Speaker 06:
Size of the workforce may be an issue, but what has addressed the discretionary work?

[01:51:43] Speaker 04:
So I think this goes to your questions about the scope