Labor & Employment Law Daily Wrap Up, REMEDIES, DAMAGES—1st Cir.: Preliminary injunction halting layoffs at three federal agencies allowed to stand, (Sep 12, 2025)

By Todd Harrison, J.D.

Recent Supreme Court cases granting the government’s requests for a stay of preliminary injunctions concerned arguments that were not present in this case.

Denying the government’s motion for a stay of a preliminary injunction freezing layoffs at three federal agencies, the First Circuit determined that the government failed to make the requisite “strong showing” that it was likely to succeed in challenging the plaintiffs’ Article III standing and that its failure to raise certain arguments to the district court doomed their contention that it was likely to succeed on appeal in showing the district court erred in basing the preliminary injunction on the plaintiffs’ likelihood of succeeding on their constitutional claims. As to recent Supreme Court decisions granting the government’s requests for a stay of preliminary injunctions, the court here noted that those decisions involved arguments that were not before the court in the instant action (State of Rhode Island v. Trump, No. 25-1477 (1st Cir. Sept. 11, 2025)).

The relevant agencies in this suit are the Institute of Museum and Library Services, the Minority Business Development Agency, and the Federal Mediation and Conciliation Service. This action stemmed from Executive Order 14,238, Continuing the Reduction of Federal Bureaucracy, issued on March 14, 2025.

Lawsuit. According to the plaintiffs, the government fired, placed on administrative leave, or reassigned almost all employees in the three agencies. They further alleged that the government cancelled a broad array of grants that the agencies had made. In addition, they contended these actions have resulted in and will continue to result in the plaintiffs not receiving services from the agencies.

The complaint set forth claims that the challenged actions of the government are in violation of the Administrative Procedure Act (APA), as well as various constitutional provisions. On the same day the motion was filed, the plaintiffs moved for a temporary restraining order, which was later converted to a request for a preliminary injunction.

After receiving input from the parties, the district court issued the preliminary injunction. The district court found that, in consequence of the grants having been terminated, the plaintiffs and their agencies would have to halt services and credited the testimony of at least one plaintiff that one of its business centers would have to close due to the termination of its grant. The government appealed, moving for a stay of the preliminary injunction, which the appellate court here addressed.

Supreme Court guidance. Before turning directly to the parties’ arguments, the appellate court noted the Supreme Court’s recent decision granting the government’s motion for a stay in Trump v. Boyle, 145 S. Ct. 2653 (2025). It noted too that the Court recently granted a stay in McMahon v. New York, 145 S. Ct. 2643 (2025), and a partial stay in National Institutes of Health v. American Public Health Association, No. 25A103, 2025 WL 2415669 (U.S. Aug. 21, 2025).

As to the impact of those decisions on the present case, the court explained that McMahon followed the First Circuit’s own decision rejecting a request to stay the injunction in that case. Although the Supreme Court ultimately opted to grant the stay request, it was unclear from its order which of the government’s arguments for the stay led the Court to grant the request. This was notable because the government in McMahon advanced arguments that it did not raise in the present action. The First Circuit also emphasized that the government in McMahon disputed the district court’s finding that the RIF at issue in that case had disabled the DOE from performing its statutorily assigned functions by pointing to the fact that a large number of DOE employees remained in their positions. Here, by contrast, the district court found that nearly all employees at the defendant agencies had been terminated.

Given these and other differences between this case and McMahon, the First Circuit could not conclude from the Court’s order in McMahon that this was a “like” case such that it must grant the stay requested here because the Court granted one there.

With regard to American Public Health Association, the government there in its stay request raised a number of arguments concerning the district court’s decision as to the grant terminations at issue in that case that it also raised before the First Circuit here. The Court largely based its grant of a partial stay based on the jurisdictional bar imposed by the Tucker Act and to its finding that the government faced irreparable harm insofar as the order compelled it to disburse funds that could not be recouped. The government did not advance similar Tucker Act and irreparable harm arguments in the present case.

Likelihood of success. Turning to the present motion, the court began with the first Nken factor, which concerns the government’s likelihood of success on the merits in its pending appeal. The government argued that it was likely to succeed in showing that the plaintiffs: (1) have not met their burden to show that they have Article III standing; and (2) have not shown that there is statutory subject matter jurisdiction over certain of their claims.

The government separately contended that, even assuming there was no jurisdictional bar to the plaintiffs’ claims, their APA claims fail on the merits because those claims failed to allege any “agency action” cognizable under the APA.

Finally, the government argued that the district court erred in basing the preliminary injunction on its determination that the plaintiffs’ claims brought under the Constitution were likely to succeed on the merits, because constitutional claims of that sort are impermissible under Dalton v. Specter, 511 U.S 462, 473 (1994). Ultimately, the court found the government’s arguments fell short of the requisite “strong showing” that it was likely to succeed on the merits of its challenge to the preliminary injunction.

Standing. First addressing the government’s arguments concerning the plaintiffs’ Article III standing, the court noted that the plaintiffs alleged that they have been and will continue to be injured by the denial of funds to which they are entitled and will continue to be injured by the government’s failure to provide services on which they rely. Thus, the complaint does not allege that the plaintiffs will be injured simply by the Executive’s general failure to adhere to the separation of powers in the abstract.

The court noted too that the government did not meaningfully dispute in its stay motion the district court’s findings that the losses of funding and services of which the plaintiffs complain have or will imminently occur. So, if the government was contending that the plaintiffs had not plausibly demonstrated an “injury in fact” for purposes of securing their Article III standing, it had failed to make a strong showing as to its likelihood of success, explained the court.

Indeed, continued the court, the government here, unlike in McMahon, did not argue that the plaintiffs "lack any non-speculative harm to support Article III standing," nor did it argue, as it did in McMahon, that it was likely to succeed in showing that the plaintiffs’ asserted injuries were not caused by the actions at issue.

The district court had found that the termination of the employees and other actions of the agency defendants that the preliminary injunction covers directly caused and will continue to cause the loss of services of which the plaintiffs complain. The government failed to make any developed argument that this finding was clearly erroneous, said the court.

APA claims. Having concluded that the government failed to make a strong showing that it was likely to succeed in challenging the plaintiffs’ Article III standing, the court addressed its contentions as to the district court’s reasoning that the plaintiffs’ claims were likely to succeed on the merits.

Here, the court found that it need not address any of the government’s arguments concerning the portion of the district court’s decision addressing the plaintiffs’ APA claims because it failed to persuasively contest the district court’s grant of the preliminary injunction insofar as it was based on the plaintiffs’ constitutional claims.

Dalton. The district court held that, independent of the APA claims, the plaintiffs were likely to succeed in demonstrating that the agency defendants’ actions violated the Take Care Clause and the constitutional separation of powers.

According to the government, the district court erred in this finding because the plaintiffs’ constitutional claims were “little more than a repackaging of plaintiffs' alleged statutory violations.” Drawing from Dalton, the government contended that such claims ‘“are not constitutional” claims’” insofar as they simply ‘“alleg[e] that the President has exceeded his statutory authority.’” However, the government had failed to raise its Dalton argument in its motion for a stay before the district court dooming their argument that they are likely to succeed on appeal in showing that the district court erred in basing the preliminary injunction on the plaintiffs’ likelihood of succeeding on their constitutional claims.

Irreparable harm. Turning to the irreparable harm factor, the government argued that the preliminary injunction allows the district court, as to each agency, to “superintend[] its own judgment about requisite agency staffing,” and to “second-guess[]... every staffing decision the agencies make.” However, the First Circuit had rejected a similar argument in another case and the government failed to provide any reason why the outcome should be any different here.

As to the termination of grants, the government contended that it would be subject to irreparable harm by having to disburse funds that may not be recoverable if it later prevails on the merits. To be sure, observed the court, the plaintiffs contend that the government’s “own evidence states that grant payments ultimately found to be unwarranted may be recovered through ‘debt collection procedures[.]’” However, the court did not see how the evidence to which the plaintiffs’ point can be read to undermine the government’s contention in this respect.

Injury. Next, the government argued that the plaintiffs will not be substantially injured if the preliminary injunction is stayed pending appeal, contending that the gravamen of their claims is monetary and is thus reparable. However, the court noted that the government failed to develop any argument in support of its apparent premise that a harm must be irreparable to be substantial.

Public interest. Finally, the court addressed the public interest factor. The government’s arguments on this score succeeded only to the extent that it may not be able to recoup wrongfully disbursed funds at the close of litigation. However, as the court had previously held, “there is generally no public interest in the perpetuation of unlawful agency action.” Thus, the government failed to meet its burden on this factor. Accordingly, the motion for a stay was denied.

The case is No. 25-1477.

Judge: Barron, D.

Attorneys: Natalya A. Buckler, Office of the Attorney General, for State of Rhode Island. Sean Bunny, Office of the Attorney General, for State of New York. David Dana Day, Office of the Attorney General, for State of New York. Anya M. Binsacca, Office of the Attorney General, for State of California. Sara Miron Bloom, U.S. Attorney's Office, for Donald J. Trump, Kenneth Jackson, Institute of Museum and Library Services, Keith E. Sonderling, and Minority Business Development Agency.

MainStory: TopStory RemediesDamages Procedure PublicEmployees MaineNews MassachusettsNews NewHampshireNews PuertoRicoNews RhodeIslandNews GCNNews