The lawsuit argues that President Trump’s termination of Harper and Otsuka was unlawful because NCUA Board members can only be removed “for cause,” consistent with the Federal Credit Union Act and nearly a century of U.S. Supreme Court precedent (e.g., Humphrey’s Executor v. United States). Their termination, without cause, allegedly violates the statute​.

2. Violation of the Administrative Procedure Act (APA)

The plaintiffs claim that actions taken by federal officials (specifically Treasury Secretary Scott Bessent, NCUA Executive Director Larry Fazio, NCUA Chairman Kyle Hauptman and White House official Trent Morse) following their terminations were “not in accordance with law,” exceeded statutory authority and violated required legal procedures under the APA​.

3. Declaratory Judgment Act

Harper and Otsuka seek a declaratory judgment that they remain lawful Members of the NCUA Board and that the President lacks the authority to remove them without cause, invoking the Declaratory Judgment Act.

4. Violation of the Separation of Powers

The complaint asserts that the President’s actions violated constitutional principles separating legislative and executive powers, specifically infringing on Congress’s authority to structure independent agencies and setting limits on removal protections​.

5. Writ of Mandamus

As an alternative remedy, Harper and Otsuka request a writ of mandamus, a judicial order compelling government officials to perform a duty owed to the plaintiffs, specifically, not to remove them except for cause​.

6. Equitable Relief for Statutory and Constitutional Violations

Finally, they seek equitable relief to halt ongoing violations of statutory and constitutional law. This count aims to preserve their rights without needing to create a new cause of action, relying instead on established principles of equitable judicial intervention​.

After the 12-page lawsuit was filed in U.S. District Court, CU Times communicated with two legal officials to help digest the meaning and significance of the lawsuit filed by Harper and Otsuka.

Henry Meier, Esq., with the law office of Henry Meier, Esq. and former SVP and general counsel for the New York Credit Union Association, said the lawsuit has two interconnected aspects to it.

“One is, obviously it's arguing that the removal of Otsuka and Harper were illegal and they want to be reinstated. A second component of it is a claim that because they were illegally thrown off the Board, that any actions taken by the Board are illegal and null and void. So, as a result, no matter what the outcome of the lawsuit … because while the lawsuit is pending, there will still be a question regarding the validity of any action taken by NCUA.”

Elizabeth A. Eurgubian, partner at the Washington, D.C.-based Atlas Advocacy and former NCUA Director of the Office of External Affairs and Communications and Policy Advisor to the Chair, pointed out that the one-member Board issue could pose a unique legal challenge.

"Regarding a one Board member quorum, there can be individuals that argue that a one member Board represents a quorum with that one member, but that's really for a court to decide when this is challenged,” Eurgubian said. “I personally think it's a tough argument to make, but I'm not a judge. I think it's safe to assume that significant decisions made with one Board member and not a two-member quorum will be challenged, resulting in costs and delays."

Meier said this lawsuit is similar to lawsuits filed by members of the National Labor Relations Board and the Federal Trade Commission, who were also fired by the Trump administration.

“You have a lawsuit that has an impact on NCUA operationally obviously,” Meier said. “But the ultimate issues are very common across the whole spectrum, which is, ultimately how much authority does the Trump administration have to control previously independent agencies?”

Eurgubian noted, “The legislative history and the way the statutory language was written present a strong argument that the Board members do not serve at the pleasure of the president and can only be removed for cause, even though that's not expressly stated in the statute. The DC Circuit case, Swan v. Clinton, supports that inference.” She added, “Courts will look at other indicators when there is not express language in the statute."

Meier said he believes the Trump administration might have a leg up in this legal fight. “Now, if I had to go one way or the other, with the exception that this is all new territory, I actually believe that at the end of the day, the side of the Trump administration will be the one that's upheld.” He added. “I think you most likely have a majority of the [Supreme] Court that's willing to say that we think Humphrey’s Executor doesn't reflect the way the Constitution is structured. And that as the executive, there's no such thing as independent agencies that are free of the removal power of the president.”

What is Humphrey’s Executor v. United States?

Humphrey’s Executor v. United States (1935) is a landmark U.S. Supreme Court case that upheld limits on a president’s ability to remove certain federal officials. Specifically, the Court ruled that Congress can create independent agencies whose leaders cannot be fired by the president without cause (such as inefficiency, neglect of duty or malfeasance), protecting these agencies from political interference. The case involved President Franklin D. Roosevelt’s attempt to fire a commissioner of the Federal Trade Commission (FTC) simply because of policy disagreements. The Court said this violated the law because the FTC was intended to be independent.

How does it relate to the Harper and Otsuka lawsuit?

Todd Harper and Tanya Otsuka are citing Humphrey’s Executor to argue that President Trump’s firing of them from the NCUA Board was illegal. Like the FTC in Humphrey’s Executor, the NCUA Board is an independent regulatory body created by Congress. Board members serve staggered terms and can only be removed "for cause" and not merely because of political disagreements. Harper and Otsuka argued that their sudden termination without cause violates the statutory protections Congress set up to preserve the NCUA’s independence, and undermines trust in the financial regulatory system.

According to the lawsuit, here's how Harper and Otsuka learned they were being fired from the NCUA, without explanation or cause.

Both Harper and Otsuka received an email on April 15 at 7:00 p.m. and 7:01 p.m. respectively from Deputy Assistant to the President and Deputy Director of the White House Presidential Personnel Office, Trent Morse, stating the following: “On behalf of President Donald J. Trump, I am writing to inform you that your position on the National Credit Union Administration is terminated, effective immediately. Thank you for your service.”

No reasons for the terminations were given, according to the lawsuit.

Meier said he doesn’t know how this will end, of course, but stated he believes Congress needs to step in and offer some kind of constitutional guidance for our country’s financial institutions so they aren’t simply bending to changing political winds.

“You do have a policy shift in which the administration is arguing that these jobs, which we have traditionally said are best shielded from direct political pressure, should be subject to direct political pressure,” Meier said. “Now, I would hope at some point Congress steps in. And even if it is constitutional for the administration to do what it's doing, someone should be making the point the other things we can do consistent with the Constitution, that can shield us from too much direct political influence over the economic oversight of this country.”