COURTS CONTINUE TO GRAPPLE WITH THE ADMINISTRATION’S UNPRECEDENTED REMOVAL OF AGENCY LEADERS WITHOUT CAUSE – Better Markets and others have been sounding the alarm as the Administration wages war against the federal agencies established by Congress to protect all Americans from threats to their health, safety, and financial well-being. Part of that assault involves summarily firing or “removing” commissioners and other independent agency heads simply because of their political affiliation and without any cause related to performance.  These terminations clearly violate statutory provisions and long-standing Supreme Court precedent limiting at-will termination, but that hasn’t stopped the Administration.  Here’s a rundown of some of the latest developments in the cases challenging removal without cause.

Slaughter v. Trump, No. 25-909 (D.D.C., July 17, 2025) – On July 17, a federal judge in D.C. ruled that President Trump had unlawfully removed Rebecca Slaughter from her position as a commissioner at the Federal Trade Commission (FTC), ordering that she be reinstated. U.S. District Judge Loren L. AliKhan pointed to the statutory protections Congress put in place to shield the FTC from political interference, including a requirement that commissioners can only be removed for cause—specifically for inefficiency, neglect of duty, or malfeasance. These protections were upheld by the Supreme Court nearly a century ago in Humphrey’s Executor v. United States, a landmark decision in which the Court unanimously affirmed that Congress can indeed protect members of independent agencies from removal by the President without cause. Even though Humphrey’s Executor expressly forbade removing FTC Commissioners for mere policy disagreements, President Trump’s letter removing Commissioner Slaughter specifically invoked policy reasons for the firing, stating, “Your continued service on the F.T.C. is inconsistent with my administration’s priorities.”

Here, the district court rightly found that this rationale for removal was insufficient under existing law. Drawing parallels to Humphrey’s Executor, in which President Franklin D. Roosevelt sought to remove an FTC commissioner for similar reasons, Judge AliKhan rejected the Trump Administration’s attempt to sidestep the Supreme Court’s firmly established precedent. She pushed back against suggestions that the Supreme Court’s recent skepticism of removal protections in other cases, such as those involving the National Labor Relations Board and the Merit Systems Protection Board, provided grounds for ignoring established precedent. Those decisions, she emphasized, involved different agencies and did not explicitly overturn Humphrey’s Executor.  The question of whether the Supreme Court still endorses Humphrey’s Executor, the judge wrote, is up to the Supreme Court itself. Judge AliKhan therefore declined to act in the Supreme Court’s place, refusing to endorse the government’s view that Humphrey’s Executor had been implicitly overruled. As a result, the judge declared Slaughter’s removal invalid and issued an injunction preventing the administration from interfering with her role.

Following the ruling, Commissioner Slaughter released a statement underscoring the importance of for-cause removal protections across independent financial agencies like the SEC, FDIC, and Federal Reserve, stating they help ensure economic stability in the face of shifting political leadership. “All these agencies were designed by Congress so that the economy wouldn’t experience whiplash every time the political winds change,” Slaughter said. “This case is about ensuring that working families’ 401(k)s are protected, that investors can rely on the stability of the markets, and that the rich and powerful can’t buy their way out of the rules that apply to average business owners.”

As expected, the Administration promptly moved for an administrative stay of the district court’s order in the D.C. Circuit, pending a decision over whether a stay pending appeal should issue.  See Slaughter v. Trump, Case No. 25-5261 (D.C. Cir.).  The motion relied largely on the Supreme Court’s recent stay of lower court orders finding in favor of members of the Merits Systems Protections Board and the National Labor Relations Board.  Trump v. Wilcox, 145 S. Ct. 1415 (2025).  The D.C. Circuit issued the stay on Monday, July 21, and set an expedited briefing schedule.  The court observed that “[t]he purpose of this administrative stay is to give the court sufficient opportunity to consider the motion for a stay pending appeal and should not be construed in any way as a ruling on the merits of that motion.”

Harper v. Bessent, No. 25-01294 (D.D.C., July 22, 2025) – In another removal case, on Tuesday, July 22, a D.C. federal judge ruled that President Trump acted unlawfully when he removed two Democratic members of the National Credit Union Administration (NCUA) board without cause. Judge Amir H. Ali determined that board members Todd M. Harper and Tanya F. Otsuka were wrongfully dismissed in April and must be reinstated, as NCUA board members can only be removed for cause before their terms expire.

The government had admitted it lacked cause for the terminations but claimed the president held broad authority to remove board members and that in any event, reinstatement was not an appropriate remedy. Judge Ali disagreed, finding that both the design and function of the NCUA suggest Congress intended to limit presidential removal power. He emphasized that the agency’s structure—a bipartisan board with staggered terms and Senate confirmation—supported the need for independence from executive control.  Ali also noted that although the current statute doesn’t explicitly say removal must be for cause, the deletion of language from an earlier version of the statute stating board members served “at the pleasure of the president” reflected Congress’s intent to impose limits. The court further found that such protections are constitutionally sound and necessary to ensure the independence of financial regulatory agencies.

The judge issued an order preventing the Trump administration from interfering with Harper and Otsuka’s roles, preserving their authority and access to the benefits of their positions. In response, Harper and Otsuka praised the decision as a win for both the rule of law and the millions of Americans who rely on credit unions.  Unfortunately, the district court’s decision faced another immediate challenge in the appellate court, and in this case, the D.C. Circuit administratively stayed the lower court’s order and established an expedited briefing schedule on the request for a stay pending appeal.  Harper v. Bessent, No. 25-5268 (D.C. Cir.).

Trump v. Boyle, No. 25A11 (S. Ct., July 23, 2025) – Unfortunately, adding fuel to the Administration’s arguments is another Supreme Court stay just issued on Wednesday, July 23, 2025.  This case centers on whether the President has the authority to remove members of the Consumer Product Safety Commission (CPSC) without cause, in light of longstanding Supreme Court precedent in Humphrey’s Executor.  President Trump removed three Biden-appointed CPSC commissioners without cause, even though the Consumer Product Safety Act only permits removal for “neglect of duty or malfeasance.” A federal district judge in Maryland ruled that those removals were illegal, upheld the statute’s for-cause removal provision, and ordered the commissioners reinstated. Boyle v. Trump, No. 8:25-cv-1628 (D. Md., June 13, 2025).

On July 21, however, the Supreme Court granted an emergency stay halting that order and preventing the commissioners from returning pending appeal in the Fourth Circuit.  The Court relied upon its ruling in Trump v. Wilcox involving removals from the NLRB and MSPB. Because the Court addressed the issue on its emergency docket, its opinion was exceedingly brief.  The Court indicated that the executive powers exercised by the CPSC were similar to those exercised by the NLRB, suggesting that the case was not governed by Humphrey’s Executor.

Justice Kagan, in dissent (joined by Justices Sotomayor and Jackson), criticized the majority for the process: “The majority has acted on the emergency docket—with ‘little time, scant briefing, and no argument’—to override Congress’s decisions about how to structure administrative agencies so that they can perform their prescribed duties.”  As to substance, Justice Kagan decried the Court’s decision “to destroy the independence of an independent agency, as established by Congress,” with the “scantiest of explanations.  She also observed that in doing so, “the majority has also all but overturned Humphrey’s Executor v. United States, 295 U. S. 602, 626 (1935), a near-century-old precedent of this Court.”  And she ended her dissent with a warning about the larger ramifications: “By means of such actions, this Court may facilitate the permanent transfer of authority, piece by piece by piece, from one branch of Government to another.”

The common thread in all of these cases is that federal district courts tend to enforce the laws against the removal of agency leaders without cause.  Their decisions reflect respect for Congress’s intent to protect the independence of agencies and respect for the  enduring legacy of Humphrey’s Executor—at least until the Supreme Court expressly overrules it.  Yet the appellate courts, including the Supreme Court, are bending to the Administration’s will, at least pausing the lower court stays and signaling that Humphrey’s Executor may soon be overruled.

OTHER CASES TO NOTE — Look for our summaries in next month’s newsletter:

• C. Circuit vacates SEC rule that hampered the ability of firms to provide timely and independent advice to shareholders about their proxy votes. Institutional Shareholder Services, Inc. v. SEC, No. 24-CV-5105 (D.C. Cir.).
• Eleventh Circuit strikes down SEC’s funding model for the Consolidated Audit Trail (CAT), a key market surveillance tool, but stops short of eliminating the CAT. American Securities Association v. SEC, No. 23-13396.