Appeals Court Rejects Trump's Bid to Remove Fed Governor

The U.S. Court of Appeals for the D.C. Circuit declined to stay a lower court injunction requiring that Federal Reserve Governor Lisa D. Cook remain in office. 

The Order leaves in place the lower court’s directive requiring Federal Reserve Chair Jerome Powell and the Board to recognize Governor Cook’s authority and allow her to continue performing her official duties. (See related coverage.) The court held that the government had not met the stringent standard for a stay pending appeal under Nken v. Holder, finding it had not shown a sufficient likelihood of success on the merits or a balance of harms that would justify halting the injunction.

According to the appellate decision, Ms. Cook is likely to prevail on her Fifth Amendment due process claim because the Federal Reserve Act’s "for cause" protection creates a "constitutionally protected property interest" in her position. The Court rejected the government’s argument that principal officers can never hold such an interest and noted that Ms. Cook was removed without notice or an opportunity to respond. The Court further held that the equities favor Ms. Cook, distinguishing this case from recent Supreme Court stay orders by pointing to the strength of her due process claim and the Fed’s statutory independence. The Court also said that maintaining the injunction preserves the status quo, while granting a stay would cause disruption rather than stability.

In a partial dissent, one appellate judge argued that a stay was warranted, reasoning that pre-appointment misconduct can constitute valid cause for removal. The judge also asserted that high-ranking officials such as Federal Reserve Governors lack a personal due process right to retain office. The judge concluded that the government’s interests outweigh the risks when removal is based on serious allegations.