Labor & Employment Law Daily Wrap Up, PUBLIC EMPLOYEES—D.D.C.: Court lacked jurisdiction over claims of organizations challenging dismantling of USAID, (Jul 30, 2025)

By Ronald Miller, J.D.

The court found that the “employment-related injuries” asserted by organizations representing employees of USAID were appropriately channeled to various agencies, while PDAs would be channeled to either the Board of Contract Appeals or the Court of Federal Claims.

A federal district court in the District of Columbia concluded that it did not have subject-matter jurisdiction over claims of the American Foreign Service Association, and that the Personal Services Contractor Association failed to demonstrate it was likely to succeed on the merits of its motion for a preliminary injunction. Four organizations had challenged the government’s dismantling of USAID. The court determined that AFSA and AFGE did not, and PSCA likely did not, have standing to challenge the government’s non-personnel actions with respect to USAID (American Foreign Service Association v. Trump, Nos. 1:25-cv-352 (CJN) and 1:25-cv-469 (CJN) (D.D.C. July 25, 2025)).

Dismantling of UISAID. In two consolidated cases, four organizations challenge the Trump Administration’s dismantling of UISAID. Three of the organizations represent employees or contractors at USAID. The fourth organization is a humanitarian group that sees its mission as combatting global poverty, inequality, and injustice. Each organization alleges that the government’s actions taken with respect to USAID violates the Constitution, the Administrative Procedure Act, and are ultra vires.

Until recently, USAID used its appropriated funds to support humanitarian and development projects in approximately 120 foreign countries—both via its independent work and via grants awarded to partner organizations and governments.

Executive Order. On January 20, 2025, however, President Trump issued an Executive Order directing “a 90-day pause in United States foreign development assistance,” pending an “assessment of [its] programmatic efficiencies and consistency with United States foreign policy.”

In a January 24 memorandum, Secretary of State Marco Rubio implemented the Executive Order that paused “all new obligations of funding, pending a review, for foreign assistance programs funded by or through the [State] Department and USAID.” On February 3, 2025, Secretary Rubio delegated to Peter Marocco the duties of Deputy Administrator of USAID to “begin the process of engaging in a review and potential reorganization of USAID’s activities to maximize [its] efficiency and align [its] operations with the national interest.”

Employees on administrative leave. Deputy Administrator Marocco began by placing USAID employees on administrative leave and terminating contracts with USAID personal services contractors (PSCs). Then, on March 28, 2025, “the Department of State and USAID notified Congress of their intent to undertake a reorganization that would realign certain USAID functions to the Department of State... and discontinue other residual USAID functions inconsistent with Administration priorities.”

Also on March 28, 2025, USAID notified its civil and foreign service personnel of a “consolidated agency-wide Reduction-In-Force” (RIF) action, occasioned by the anticipated elimination of “substantially all non-statutory positions” at the agency. Remaining PSCs’ contracts are likewise being terminated effective July 1, 2025, or September 2, 2025.

Complaint. On February 7, 2025, plaintiffs AFSA and AFGE filed a complaint alleging that defendants were violating the Constitution and the APA by “dismantl[ing]” USAID through their funding pause, administrative leave placements, and related actions, and sought a temporary restraining order that would require the government to “immediately cease actions to shut down USAID’s operations.”

The court entered a limited TRO that required the government until February 14 to reinstate USAID direct-hire employees who had been placed on administrative leave and to withhold from placing any additional employees on administrative leave or evacuating them from their overseas posts. But the court did not restrain the government from implementing the 90-day freeze on foreign assistance funding.

On February 21, 2025, the court denied AFSA’s and AFGE’s motion for a preliminary injunction. The court concluded that the plaintiffs and their members did not in fact face a risk of irreparable harm from the essentially “employment-related injuries” that they alleged their members were facing. As for likelihood of success on the merits, the court held that it likely lacked jurisdiction to adjudicate AFSA’s and AFGE’s claims. Finally, the Court observed that both plaintiffs and the government had identified plausible harms as a result of the progression/cessation of the government’s actions with respect to USAID, meaning that the final two preliminary injunction factors also did not tip in plaintiffs’ favor.

During this period, the Personal Services Contractor Association (PSCA) filed its own action alleging that defendants had violated the Constitution and the APA by “dismantl[ing]” USAID. It also moved for a TRO. The court concluded that none of the alleged harms to the PSCA’s members met the high standard needed to warrant preliminary relief. The court also explained that the PSCA was unlikely to succeed on the merits of its claims because the case “present[ed] as essentially a federal contract dispute” over which it likely lacked jurisdiction. Finally, the balance of the equities favored the government.

Summary judgment motion. On March 10, 2025, the AFSA plaintiffs moved for summary judgment on all their claims, which is now before the court. For its part, the government moved to dismiss, and in the alternative, cross-moved for summary judgment. The PSCA moved for a preliminary injunction that would “stop the [allegedly] illegal dismantling and destruction of USAID.”

Jurisdiction. The central question in these cases is whether the court possesses subject-matter jurisdiction over plaintiffs’ claims. The court concluded that it does not have subject-matter jurisdiction over the AFSA claims, such that the AFSA complaint must be dismissed for lack of subject-matter jurisdiction and the PSCA has failed to demonstrate it is likely to succeed on the merits of its claims. PSCA has not demonstrated that it or its members will suffer irreparable harm before a judgment on the merits as a result of the government’s actions, or that the equities favor preliminary relief.

While each plaintiff in these cases argued that it was challenging the “wholesale dissolution” of USAID, rather than any more granular action taken by defendants, those contentions were undermined by the nature of the relief plaintiffs sought. Injunctions that would recall furlough notices to affected workers, and declaratory judgments that those actions were unlawful. Here, the only relief that plaintiffs have standing to seek is beyond the court’s capacity to award.

Standing. AFSA, AFGE, and PSCA all asserted similar theories of injury, and did so under the rubrics of both organizational and associational standing. As to the former, they allege that defendants’ actions have interfered with their “strong interest in representing and protecting their members,” and have as a result “stretched” their resources. As to associational standing, they point to various “emotional, reputational, and financial harms” that they allege their members have suffered as a result of the government’s actions with respect to USAID.

The court did not decide whether AFSA, AFGE, and PSCA lacked standing entirely. Rather, it noted that the only recognizable harms the associations asserted depended entirely on their members’ employment or contractual relationships with USAID. The associations’ alleged injuries are traceable to the government’s personnel actions regarding USAID and would be redressed by relief that addressed those actions. However, they would not be redressed at all by an injunction or declaratory judgment that did something else.

Therefore, the court assumed, without deciding, that AFSA, AFGE, and PSCA have standing to challenge the government’s actions with respect to the employment or contract status and related working conditions of USAID’s employees and PSCs, and to seek relief from those discrete personnel actions. But AFSA and AFGE did not, and PSCA likely did not, have standing to challenge the government’s non-personnel actions with respect to USAID.

Here, AFSA, AFGE, and PSCA sought declaratory and injunctive relief that spans far beyond, and thus would not redress, the personnel-related injuries they have alleged.

Third-party standing doctrine. Oxfam alleged injuries as a result of the cancellation of USAID’s grants. Although Oxfam does not itself receive grant money from USAID, it alleges that the withdrawal of USAID funding from humanitarian projects abroad has placed an “inordinate burden” on it. In making these arguments, Oxfam ran headlong into the third-party standing doctrine. Here, even assuming Oxfam had the requisite “close relationship” with third-party recipients of USAID funds, it has not identified any reason that those recipients could not bring their own action to restore funding.

Insofar as Oxfam alleged injury based on its own perceived need to reallocate its resources to fill gaps previously occupied by USAID, that harm is precisely the sort of “mere setback” to an organization’s mission that falls below the showing required for organizational standing. These alleged injuries are not sufficiently concrete or particularized to confer on Oxfam standing to challenge broader, non-funding related aspects of the government’s conduct with respect to USAID.

In sum, AFSA, AFGE, and PSCA had standing only to object to the government’s personnel-related actions at USAID, and Oxfam lacks standing entirely.

Channeling. The court determined that nothing has changed since it reached its respective preliminary determinations about the mandatory channeling of the claims of AFSA and AFGE, which represent USAID employees, that the Civil Service Reform Act (CSRA), Federal Service Labor Management Relations Statute (FSLMRS), and Foreign Service Act (FSA) likely channel their members’ claims to various agencies and provide for subsequent review in specific Article III courts.

As to the PSCA, which represents USAID PSCs, the court held that the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101—09, likely channels its members’ claims to either the Board of Contract Appeals or the Court of Federal Claims.

AFSA, AFGE, and the PSCA argued that their claims “do not belong before a specialized tribunal” because they turn on “questions of administrative and constitutional law” rather than questions about the merits of employee and PSCs’ terminations.

However, the court concluded that it lacked jurisdiction over AFSA’s and AFGE’s claims, and likely lacked jurisdiction over the PSCA’s claims, and thus that the PSCA has not established a likelihood of success on the merits.

The cases are Nos. 1:25-cv-352 (CJN) and 1:25-cv-469 (CJN).

Judge: Nichols, C.

Attorneys: Karla A. Gilbride (Public Justice) for American Federation of Government Employees, American Foreign Service Association and Oxfam America, Inc. Carolyn E. Shapiro (Scnapper-Casteras) for Personal Services Contractor Association. Richard Cody Giles, U.S. Department of Justice, for Donald J. Trump.

Companies: American Federation of Government Employees; American Foreign Service Association; Oxfam America, Inc.; Personal Services Contractor Association

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