Labor & Employment Law Daily Wrap Up, REMEDIES, DAMAGES—D.D.C.: Court declines to dismiss Appointments Clause, ultra vires claims against Musk, DOGE, (May 29, 2025)

By Kathleen Kapusta, J.D.

“The Constitution does not permit the Executive to commandeer the entire appointments power by unilaterally creating a federal agency pursuant to Executive Order and insulating its principal officer from the Constitution as an ‘advisor’ in name only.”

Allegations by 14 states against Elon Musk and the DOGE entities that Musk occupies a continuing position established by law and exercises significant authority pursuant to the laws of the United States without proper appointment are sufficient to state a claim under the Appointments Clause of the U.S. Constitution, a federal court in the District of Columbia ruled, denying the defendants’ motion to dismiss. Further, said the court, because the DOGE Executive Order provides no statutory or Constitutional basis for establishing the principal DOGE entity, the plaintiffs also state a claim for ultra vires conduct. The court, however, dismissed the states’ claims against President Trump (State of New Mexico v. Musk, No. 25-cv-429 (TSC) and 25-cv-643 (TSC) (D.D.C. May 27, 2025)).

DOGE. Shortly after his second inauguration, President Trump, pursuant to an Executive Order, renamed the U.S. Digital Service as the U.S. Department of Government Efficiency (DOGE) and, pursuant to a temporary organization statute, created within DOGE the DOGE Service Temporary Organization, which is dedicated to advancing the President’s 18-month DOGE agenda. The DOGE Service Temporary Organization is headed by the DOGE Administrator, who reports to the White House Chief of Staff.

President Trump instructed the DOGE Administrator to “commence a Software Modernization Initiative,” ordered the highest-ranking official at each federal agency to “take all necessary steps... to ensure [DOGE] has full and prompt access to all unclassified agency records, software systems, and IT systems,” and ordered the establishment of “DOGE Team members” within each agency “in consultation with the [DOGE] Administrator.” The DOGE EO identified no statutory authority for these actions. From January 29 to February 26, President Trump signed five additional Executive Orders expanding DOGE’s role and authority.

Alleging that Elon Musk, who was classified as a “special government employee,” leads DOGE and “exercise[es] virtually unchecked power across the entire Executive Branch, making decisions about expenditures, contracts, government property, regulations, and the very existence of federal agencies,” the state plaintiffs, represented by their Attorneys General, sued Musk, DOGE, U.S. DOGE Service Temporary Organization, and President Trump. They asserted violations of the Appointments Clause of the U.S. Constitution and conduct in excess of statutory authority.

Seeking declaratory and injunctive relief, they moved for a TRO. Finding they failed to show imminent, irreparable harm, the court denied their motion. The defendants then moved to dismiss and the states sought expedited discovery. When the court granted in part and denied in part their expedited discovery request, the defendants sought an emergency stay and writ of mandamus quashing the discovery order from the D.C. Circuit. Granting the stay, the D.C. Circuit concluded that the lower court should decide the defendants’ motion to dismiss before allowing discovery.

Standing. In its motion to dismiss, the defendants first argued that the states lack Article III standing. Disagreeing, the court found that at least two states—New Mexico and Washington— sufficiently alleged financial harms, which qualify as concrete injuries under Article III. Specifically, they allege that Washington State University expected to receive $9,508,761 from USAID, but “received Suspension/Stop Work Orders from either USAID or the prime award recipients” in early January. They also alleged that New Mexico’s Mining and Minerals Division (MMD) has been unable to obtain its federal funding.

Moreover, said the court, the alleged continued inability to draw down funds is an ongoing and future injury. MMD, the states claim, is “fully federally funded” and without access to those funds, it cannot provide vital safety services.

The court also found New Mexico’s allegations that the defendants gained unauthorized access to its private and proprietary information was sufficient to allege an injury in fact at this stage of of the proceedings. Finally, the court found the states sufficiently allege that the defendants caused their financial and programmatic harm by halting funding and cancelling contracts. The defendants, the court continued, also are the source of harm to the states’ privacy interests because they allegedly obtained unauthorized access to their private and sensitive information. Accordingly, the court found the states have standing to seek declaratory and injunctive relief for the Appointments Clause and ultra vires claims.

Appointments Clause claim. The defendants also moved to dismiss the states’ Appointments Clause claim alleging Musk’s actions violate the Appointments Clause because he has not been constitutionally appointed. While the defendants argued that because Musk does not occupy an office vested with formal powers by Congress, he is insulated from the Appointments Clause, the court explained that “constitutional safeguards are not so easily evaded.”

Special government employee. The defendants next argued that as a special government employee, Musk could never qualify as an officer of the United States subject to the Appointments Clause because the position is “necessarily time-limited.” But not only does the plain language of the statute defining special government employee confirm that they can qualify as officers, the defendants did not identify any authority concluding otherwise.

In addition, said the court, an individual may qualify as a constitutional officer even though their position is “temporary” and created to accomplish a single task. Individuals “designated as special government employees have been subject to the appointment process when placed in positions that exercise significant authority,” the court stated, noting that “Defendants may not circumvent the Appointments Clause by designating individuals as special government employees.”

Continuing and permanent. Further, while Musk was classified as a special government employee within the federal government, the court found the states sufficiently pleaded that his position qualifies as “continuing and permanent, not occasional or temporary.” To the court, that the DOGE Service Temporary Organization has a termination date of July 4, 2026, while the overarching DOGE entity does not, suggested permanence. In addition, because the President can instruct another individual to lead DOGE, the position is not personal to Musk.

Nor are Musk’s duties incidental, said the court, pointing to the states’ allegations he influences the operations of at least 17 agencies, the existence of federal programs, employment terms for millions of individuals, federal funding decisions, and data usage practices. “Those duties are central, as opposed to incidental, to the regular operations of government.”

Established by law. In what it called a “left-field effort to dismiss,” the court noted that the defendants focused on the requirement that constitutional offices “be established by law.” Essentially, said the court, “Defendants argue, so long as the Executive acts without Congressional authority, the court cannot review its conduct.” Rejecting the defendants’ attempt “to sanction unlimited Executive power, free from checks and balances,” the court explained that “the Constitution prohibits unilateral control over ‘official appointments’ by ‘dividing the power to appoint the principal federal offices... between the Executive and Legislative Branches.’” Accordingly, the court rejected the defendants’ “perverse reading of the Appointments Clause.”

Significant authority. The court next found that the states sufficiently allege that Musk exercises significant authority pursuant to the laws of the United States. Specifically, they allege that the President is the only individual in the Executive Branch who resolves matters of greater significance than does Musk and that Musk decides the continued existence of federal agencies, the employment terms for millions of federal employees, and federal funds allocated by grants, contracts, and loans. They also allege that the President assigns tasks and duties to Musk directly, Musk reports only to the President, Musk briefs the President only “as needed,” and he takes actions “without advance consultation with President Trump or White House staff.”

Rejecting the defendants’ attempt to frame Musk as a mere advisor without any formal authority, the court explained that to reach this conclusion, it had to ignore, misconstrue, or reject the states’ allegations, which it could not do on a motion to dismiss. Thus, it denied the defendants’ motion to dismiss the Appointments Clause claim.

Ultra vires claim. Turning to the states’ ultra vires claim, the court here noted that courts can enjoin federal officials where their actions are not authorized by statute, the Constitution, or common law. While the defendants argued that the temporary organization statute does not contain a private cause of action, the court, finding that equitable review was not expressly precluded here, noted that the D.C. Circuit has “never held that a lack of a statutory cause of action is per se a bar to judicial review.”

Nor was the court persuaded by the defendants’ assertion that the states could potentially direct their lawsuit at the agencies pursuant to the APA as the states were not challenging any agency action and the President expressly exempted DOGE from the definition of an agency under the APA.

Not insulated. Actions taken pursuant to Executive Orders are also not insulated from judicial review. “If the President issues an illegal command,” the court explained, “courts have [the] power to compel subordinate executive officials to disobey” that command.

Exceeds authority. Regarding the states’ allegations Musk’s and DOGE’s conduct exceeds the authority granted by the temporary organization statute and that no other statute authorizes the defendants’ actions, the court pointed out that the only statutory basis for the DOGE Executive Order is the temporary organization statute, which contains no substantive delegation of powers. Further, the defendants did not claim that Musk or DOGE’s conduct falls under the President’s express Constitutional powers. Thus, the court found that the states adequately allege Musk and DOGE’s conduct is “unauthorized by any law” and, in doing so, state an ultra vires claim.

Moreover, the court observed, even if the temporary organization statute granted substantive authority to the DOGE Service Temporary Organization, it does not authorize or grant any powers to the permanent, overarching DOGE organization. Because the DOGE Executive Order provides no statutory or Constitutional basis for establishing the principal DOGE entity, the court found the state plaintiffs state a claim for ultra vires conduct and it also refused to dismiss this claim.

The case is No. 25-cv-429 (TSC) and 25-cv-643 (TSC).

Judge: Chutkan, T.

Attorneys: Astrid Carrete, New Mexico Department of Justice, for State of New Mexico. Adam Kirschner, Maryland Office of the Attorney General, for State of Maryland. Bruce Van Spiva (Campaign Legal Center) for Japanese American Citizens League. Christopher M. Lynch, U.S. Department of Justice, for Elon R. Musk.

Companies: Japanese American Citizens League

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