Labor & Employment Law Daily Wrap Up, REMEDIES, DAMAGES—D.D.C.: Trump administration can move forward with dismantling of library agency, (Jun 10, 2025)

By Todd Harrison, J.D.

There is a substantial question as to whether claims surrounding the cancellation of grants are contractual in nature and, if so, should be heard before the Court of Federal Claims.

Denying the American Library Association’s and AFSCME’s request for a preliminary injunction seeking to enjoin the Trump administration from gutting the Institute of Museum and Library Services (IMLS), a federal court in the District of Columbia determined that the plaintiffs were unlikely to succeed in establishing jurisdiction. Specifically, the court pointed to a recent Supreme Court decision as well as other cases in the D.C. Circuit that cast doubt on whether such claims should be brought before the Court of Federal Claims, particularly when the claims concern what might be properly framed as governmental contracts, such as the cancelation of grants that were at the heart of this proceeding (American Library Association v. Sonderling, No. 25-1050 (RJL) (D.D.C. Jun. 6, 2025)).

IMLS. In 1996, Congress passed the Museum and Library Services Act (MLSA) establishing the IMLS as an independent agency tasked with “facilitat[ing] access to resources in all types of libraries for the purpose of cultivating an educated and informed citizenry,” and “encourag[ing] and support[ing] museums in carrying out their educational role, as core providers of learning and in conjunction with schools, families, and communities.”

The IMLS is also required to issue certain grants. Congress appropriated $294,800,000 to the IMLS through September 2025 in order to carry out the mandates of the MLSA.

Executive order. On March 14, President Trump issued an executive order describing the IMLS as “unnecessary,” and stated that it “shall reduce the performance of [its] statutory functions and associated personnel to the minimum presence and function required by law.”

Subsequently, the vast majority of IMLS staff were placed on administrative leave and the newly installed acting director terminated all members of the board. On April 1, the defendants started informing state grantees that their IMLS grants were terminated, effective immediately.

TRO. On April 7, the plaintiffs filed this lawsuit seeking a preliminary injunction, asserting claims under the APA, the Take Care Clause, the First Amendment, the separation of powers, and the ultra vires doctrine, alleging that the defendants’ actions to dismantle the IMLS violated the agency’s statutory mandates.

Following a hearing on April 30, the court converted the preliminary injunction motion into a motion for a TRO, and issued a narrow TRO preserving the status quo. The parties were ordered to submit a proposed supplemental briefing schedule for the preliminary injunction. Here, the court reviewed the motion for a preliminary injunction in light of recent developments in case law.

Tucker Act. According to the defendants, the Tucker Act applies to this case because the termination of grants is the cornerstone of the plaintiffs’ claims, and these grants are essentially contracts with the federal government. In response, the plaintiffs argued that they were not asserting any contract claims against the government and instead based their claims on “rights enshrined in the Constitution and provided by statutes.”

Application of the Tucker Act depends on whether a case is, at its essence, contractual, explained the court. The court found this to be a close question in the present case, made even closer by a recent Supreme Court per curiam decision and the D.C. Circuit’s treatment of similar issues in a collection of cases involving the U.S. Agency for Global Media (USAGM).

Recent cases. On April 4, the Supreme Court issued a per curiam decision casting doubt on district courts’ jurisdiction to hear cases involving grant terminations. Dep 't of Educ. v. California, 145 S.Ct. 966 (Apr. 4, 2025). This decision in turn informed the D.C. Circuit’s decision in the USAGM cases, which involved the Executive Branch’s actions to dismantle USAGM by canceling grants.

There, a three-judge panel granted a stay of a preliminary injunction, finding that the Tucker Act likely applied and vested jurisdiction on the Court of Federal Claims. In reaching its conclusion, the panel considered whether the plaintiffs’ claims were, at essence, contractual. It also found that the relief ordered by the district court included specific performance of the grant agreements—a quintessential contractual remedy. Accordingly, the panel found the plaintiffs’ claims were "squarely contract claims under the Tucker Act."

Rehearing petitions. This was not, however, the final word. The plaintiffs quickly filed petitions for a rehearing en banc. The D.C. Circuit denied in part and granted in part the petitions. The D.C. circuit reversed the stay ordered by the panel, finding the government had not made the requisite strong showing of a likelihood of success on the merits.

Further, although the D.C. Circuit expressed apprehension toward the panel’s conclusion that the USAGM cases belong in the Court of Federal Claims, it did note that reversing the panel’s stay “of course does not constrain the ability of the panel that hears the government's appeals to reach any conclusion following full merits briefing and argument.” In addition, Judge Katsas issued a partial dissent, citing the Supreme Court’s decision in Department of Education v. California, to support his conclusion that orders which mandate specific performance of contracts with the federal Government “fall within the exclusive jurisdiction of the Court of Federal Claims.”

To date, the D.C. Circuit has yet to rehear the USAGM cases en banc. As such, it remains undecided whether those cases belong in district court or in the Court of Federal Claims. Nonetheless, the court here found the Supreme Court’s and the D.C. Circuit panel’s reasoning informative and persuasive.

Source of rights. Turning to the case at hand, the court explained that the first prong of the Tucker Act test is whether the source of rights upon which the plaintiffs based their claims was contractual. Although the plaintiffs contend that the defendants had failed to comply with Congress’s statutory mandates for the IMLS, the court found that the main mechanism through which the defendants allegedly violated those mandates was through the termination and suspension of grants.

“As our Circuit's panel compellingly reasoned in the USAGM cases, plaintiffs' framing of their claims for relief under the AP A and the Constitution do not necessarily take this case out of the ambit of the Tucker Act,” said the court. As such, the court looked to the substance of the plaintiffs’ claims to determine the source of their rights.

Injury. From the outset, the court found that the plaintiffs’ complaint was focused on the defendants’ efforts to cancel IMLS grants, and this focus was woven into each of the claims for relief. The grant terminations were also the “heart and soul” of the plaintiffs’ standing and irreparable harm arguments, said the court, pointing to numerous declarations from plaintiffs’ members explaining how the grant terminations caused them injury. In this instance, the court determined that the plaintiffs’ standing and irreparable injury largely did not exist prior to and apart from rights created under their grant agreements.

Government contracts. Having found that the plaintiffs’ claims for relief, standing arguments, and irreparable harm allegations were all keyed to the defendants’ termination of grants, the court further found that these grants were essentially contracts with the government.

As with the grants in the USAGM cases, the court explained, the IMLS grants are part of a Congressional “contractual scheme for allocating funds to the grantees.” Such an arrangement, continued the court, creates contracts between the grant recipients and the federal government.

“The core dispute between plaintiffs and defendants arose when defendants terminated those contracts,” said the court. Thus, it appeared to the court that the plaintiffs’ claims may indeed by contract claims under the Tucker Act.

Relief sought. Directing its attention to the second prong of the Tucker Act test—the relief sought—the court explained that this inquiry comes down to whether a plaintiff is effectively seeking monetary damages.

In this instance, the plaintiffs sought broad injunctive relief. Still, observed the court, the relief sought repeatedly referenced the reinstatement of grants. Here, the court again found compelling “the Supreme Court's and the USAGM panel's reservations about a district court ordering enforcement of a contractual obligation against the Government.”

The plaintiffs had asked the court to order the defendants to “[r]estore funding pursuant to the terms of all grants, cooperative agreements, and contracts, consistent with the terms of the agreements.” The practical effect of such relief would be to order specific performance of the grant agreements, explained the court, which is, of course, a quintessential contractual remedy, a type of remedy that made the panel in the USAGM cases uncertain of the district court’s jurisdiction.

Non-monetary relief. This was not the only relief sought by the plaintiffs, however. They also sought an injunction reinstating all IMLS employees and otherwise mandating the defendants comply with IMLS’s statutory obligations. On this point, the court looked to whether this non-monetary relief has “considerable value” independent of any potential monetary relief. The court answered this question in the negative.

Reinstatement. First, the plaintiffs sought reinstatement of IMLS staff. The court determined that the value of this relief was intertwined with the value of reinstating grants, as the plaintiffs asserted that the reductions in staff would dramatically slow the processing of applications for grants and reimbursements.

Although the court noted that the plaintiffs alleged some independent harm from the mass terminations in that IMLS staff advise librarians around the country on a daily basis, the value of remedying this harm was ancillary to the value of reinstating the grants, said the court, explaining that if it were to reinstate staff but not the grants, it would call into question how much the plaintiffs and its members would benefit from the IMLS being fully staffed.

“There would be no grants for the staff to issue and manage, and—taking plaintiffs' allegations as true—there would be substantially fewer programs and libraries left for IMLS staff to advise,” said the court.

Data collection. Second, the plaintiffs asked the court to order IMLS to continue its data collection. The court again found this harm to be related to contract terminations, noting that in order to grant this form of relief, the court would have to require IMLS to reinstate its data collection contracts—a form of relief which raises Tucker Act questions.

Concluding that the Tucker Act may indeed require the plaintiffs to bring their case in the Court of Federal Claims, the court found that the plaintiffs failed to show a substantial likelihood of success in establishing the district court’s jurisdiction. Thus, the court denied without prejudice the motion for a preliminary injunction.

The case is No. 25-1050 (RJL).

Judge: Leon, R.

Attorneys: Chris Gair (Gair Gallo Eberhard) for American Library Association. Heidy L. Gonzalez, U.S. Department of Justice, for Keith Sonderling.

Companies: American Library Association

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