In a dramatic twist, a federal appeals court has overturned a previous victory for the Trump administration concerning the embattled Consumer Financial Protection Bureau (CFPB). This decision, announced on Wednesday, reignites a legal battle that many thought was concluded.

The U.S. Court of Appeals for the District of Columbia Circuit issued a brief yet impactful two-page per curiam order that mandates a full court rehearing of a case initiated by the National Treasury Employees Union (NTEU), which challenges extensive layoffs. The case will now be heard en banc, meaning by all judges of the court rather than a smaller panel.

“The court has decided to rehear this case en banc,” the order stated. It further declared that the previous judgment from August 15, 2025, is nullified. Moreover, the partial stay issued on April 11, 2025, and subsequently modified on April 28, 2025, remains in effect.

This decision effectively nullifies a previous ruling from the summer by a three-judge panel. That ruling had allowed the federal government to move forward with extensive workforce reductions, citing a lack of jurisdiction and an insufficient claim from the plaintiffs.

The case has experienced a tumultuous journey through the legal system, with multiple rounds of deliberation and reversals at both the district and appellate court levels. Now, with the full court set to review, the future of the case remains uncertain.

In the underlying case, the NTEU alleged Office of Management and Budget (OMB) Director Russ Vought unlawfully fired CFPB employees without cause and scrubbed data, including important CFPB contracts “necessary for cybersecurity.” The lawsuit alleged various constitutional insufficiencies and violations of the Administrative Procedure Act (APA), the statute governing agency behavior.

After the lawsuit was filed in February, U.S. District Judge Amy Berman Jackson, a Barack Obama appointee, issued a multi-pronged preliminary injunction in March. The lower court judge opined that she was acting with haste to “make sure [the CFPB] hasn’t been choked out of its very existence” before a final judgment on the merits could be issued.

In early April, however, the appellate court stepped in to stay several prongs of the injunction, allowing some firings to continue.

Specifically, the appeals court modified the third prong of the eight-pronged injunction to allow the government to perform a RIF of employees determined “after a particularized assessment to be unnecessary to the performance” of the CFPB’s statutorily mandated duties.

In turn, the Trump administration took the court’s permission slip and ran, aiming to dye it pink at scale. One week later, OMB used the panel’s order to try to fire between 1,400 and 1,500 employees, which would have eliminated some 90% of the agency’s workforce.

The next day, Jackson issued a second injunction to stop the firings.

In late April, the panel reversed itself – clarifying some of the language but broadly making the proposed wave of layoffs impermissible.

“In response, plaintiffs highlight that the proposed RIF currently at issue, involving nearly 90 percent of agency employees, exceeds the scope of the RIF that prompted the district court’s original preliminary injunction,” the panel explained, in a volte-face.

Still, all that spring jostling was essentially an appetizer.

In August, in a 2-1 decision, Trump-appointed U.S. Circuit Judges Gregory Katsas and Neomi Rao voted to vacate the injunction in full.

“We hold that the district court lacked jurisdiction to consider the claims predicated on loss of employment, which must proceed through the specialized-review scheme established in the Civil Service Reform Act,” Katsas wrote. “And the other plaintiffs’ claims target neither final agency action reviewable under the Administrative Procedure Act nor unconstitutional action reviewable in equity.”

In other words, the majority said the plaintiffs filed a defective lawsuit alleging far too much – and in the wrong court system – and that Jackson’s relief for the plaintiffs could simply not be squared with those basic legal errors by the employees on the chopping block.

The August ruling goes on, at length:

The plaintiffs seek to set aside an abstract decision, inferred from a constellation of discrete actions, to prophylactically ensure that the Bureau can fulfill its statutory mandate. This theory contravenes all the APA limits…agency action, finality, ripeness, and discreteness alike. If the plaintiffs’ theory were viable, it would become the task of the judiciary, rather than the Executive Branch, to determine what resources an agency needs to perform its broad statutory functions. Such pervasive judicial control of agency administration falls well beyond limited APA review.”

Now, a different majority has had a say and the judges are offering the NTEU, and several other plaintiffs, a second bite at the appellate apple.

Briefing for the full appellate court’s rehearing is set to begin on Jan. 9, 2026, and end by Feb. 17, 2026. The court further explained that the schedule was almost certainly set in stone.

“Because the briefing schedule is keyed to the date of argument, the court will grant requests for extension of time limits only for extraordinarily compelling reasons,” the per curiam order reads.