A Tale Of Two Cases -- The Supreme Court Sends Another Message To Lower Court Judges Impeding Trump Policy Changes

CJ Roberts sits this one out, but the real news comes from who got on board with four conservatives.

Yesterday, for the second time, the Supreme Court stepped into a case involving a dispute over policy changes made by the Trump Administration, and blocked by an activist district judge who issued a Temporary Restraining Order requiring that Biden Administration spending priorities continue while the lawsuit is pending.

The earlier case and the new case both involve grant funding that the Trump Administration was seeking to end. The plaintiffs in each case are the entities set to receive the funding and claiming they will suffer harm as a result of the Trump Administration’s change in policy.

In the earlier case, Chief Justice Roberts issued an emergency Administrative Stay halting the TRO issued by a District Judge in Washington D.C. that would have forced the Trump Administration to send approximately $2 billion in foreign aid to every NGO who had a grant or contract with USAID or the Treasury Department at the end of the Biden Administration. In response to earlier resistance by the Trump Administration to his poorly crafted TRO, the judge showed his irritation by giving the Administration only 48 hours to disburse the funding covered by his Order —without specifying those recipients. On February 26, Chief Justice Roberts stayed that Order until the matter could be considered by the entire court. I wrote about the Chief’s intervention here.

At that point in time there were only a handful of challenges to new Trump Administration policies pending in courts across the country, and only a few of those cases had resulted in TROs or Preliminary Injunctions impeding the Administration’s efforts.

But the hopes of conservatives were dashed one week later when the full court voted 5-4 against a Stay on the judge’s TRO while the case was pending — with an important caveat.

In the Order Denying the Emergency Stay request, the district judge was directed by the Court to clarify precisely what it was the Administration needed to do to comply with his TRO since that was a far from clear given the way it was written. As it turned out, during the period the matter was stayed, the Administration made decisions on what to do with the grants and contracts at issue in the case, and those decisions covered most of what the Judge later ordered the Administration to do in response to the Supreme Court’s direction in that regard. What he ended up ordering the Government to do turned out to be far less consequential than his original TRO which basically said “Just pay everybody.” We have heard very little with regard to that particular case since the Supreme Court’s Order on March 5.

Justice Alito wrote a dissenting Opinion in connection with that March 5 Order, and his dissent was joined by Justices Thomas, Gorsuch, and Kavanaugh. Those four would have granted the Stay on the grounds that the Plaintiffs were almost certain to eventually lose on jurisdictional grounds because their claims for money arose from terminated contracts and grants. Such claims would have to be brought in the Federal Court of Claims, and not in the District Court.

The district judge had not dealt with the jurisdictional challenges in any substantive way prior to entering his TRO — in fact, during the hearing on the TRO motion, he told the Government that it would be able to address the jurisdictional issues in greater detail in the briefing over whether to convert the TRO into a Preliminary Injunction. The judge, in effect, moved forward in entering a sweeping TRO without addressing the basic question of whether he had jurisdictional authority to act at all.

This jurisdictional issue — sufficiently clear to the four dissenting Justices that they would have granted the Stay until it was resolved — was not extensively briefed as part of the Emergency Stay so the five Justices in the Majority did not deal with it. They were satisfied to let the case go back to the District Judge for him to deal with it in the first instance, and if unsatisfied the Government could appeal that issue to the Court of Appeals if a Preliminary Injunction was issued.

Justice Barrett joined with the Chief Justice and three liberal justices to make up the majority. She has pointedly noted in the past that she does not favor litigants and the Court using the “shadow docket” — emergency motions — to obtain preliminary decisions on the merits. The four Justices in the minority coming to the conclusion that the District Judge lacked jurisdiction, when that question wasn’t before the Court, is the kind of matter she disfavors. So it was not surprising to see her join with the others to not issue the Stay and suggest how the case below should be resolved.

As noted at the top, yesterday the Supreme Court did issue an Emergency Stay of a TRO issued by a Massachusetts District Judge. That TRO directed the Administration to continue funding educational grants to States for the hiring of teachers. The Biden Administration conditioned those grant funds on the States actively using “DEI” hiring practices with regard to new teacher hires. Starting January 20, the Trump Administration has directed that no federal programs or funding shall engage in any form of “DEI” practices or policies for any purpose.

The Order granting the Stay is very short — only 3 paragraphs stretching over two pages.

Two dissenting opinions were issued in response to the Order — a two paragraph dissent written by Justice Kagan which was not joined by any other Justice.

The other dissent was written by Justice Jackson, joined by Justice Sotomayor, is 17 pages long and covers many substantive and procedural issues she claims are raised by the Majority’s Order.

The Chief Justice voted against the Stay, but did not join either dissent and as a result his reasons are not know. Presumably, he didn’t think the TRO in this instance should be subject to review, and/or he didn’t think the circumstances were such that “Emergency” action by the Court was warranted.

But this time Justice Barrett voted with same four conservatives who would have issued a Stay in the earlier case back in early March — Justices Alito, Thomas, Gorsuch, and Kavanaugh.

It is possible that they drew her vote for the Stay — unlike in March on the USAID funding case — because the Order issued is relatively narrowly tailored to specific facts in the teacher grant funding case. The Order focues on three particular issues in justifying the issuance of the Stay:

1. While normally a TRO is not subject to appeal in the Circuit Court or an emergency motion to the Supreme Court, the nature of the TRO issued by the District Judge in Massachusetts had many of the “hallmarks” of a preliminary injunction that would be appealable. Curiously, the Order didn’t specify what those “hallmarks” were in this instance. That certainly would have been helpful in other cases. But there might not have been a consensus among the five as to what those “hallmarks” should be so they are going to leave that issue for lower courts to work out in the first instance. There are decisions in various Circuits where the issue has been addressed. It might simply be that the five Justices were not prepared to weigh-in on that issue without full briefing and consideration of how each Circuit deals with the topic.

2. The Government has strongly challenged the jurisdictional basis for the TRO because the claims made for the canceled grant funding likely fall under the jurisdiction of the Federal Court of Claims and not the District Court. This is the same argument made earlier in the USAID case that did not draw Justice Barrett’s vote to issue a Stay.

3. Because the States had not committed to returning the grant funds if they lose on the merits, and no bond was required that would compensate the Government if it’s decision to withhold the grants is upheld, the Government has a strong case that it will suffer “irreparable harm” if forced to pay over the funds prior to the issue being litigated. This point was combined with the fact that the States all conceded they would proceed with the hiring programs even without the federal grant funds. If the States ultimately prevailed, the grant funds would replace the funds taken from other sources available to the states. Thus, the States were not likely to suffer “irreparable harm” from not being paid pursuant to a TRO while the matter was pending. If the States choose to not engage in additional hiring due to the loss of the grant funds, that would be choice made by the States and not one compelled by the loss of funding.

Justice Kagan’s dissent addresses only “2” above — she does not agree that the issue of whether these claims must be brought in the Federal Court of Claims is a resolved matter, and would leave that issue for the district court to decide in the first instance.

I’m not going to even make an effort to explain Justice Jackson’s dissent. It is enough to say she objected to all three stated grounds for issuing the stay, and advocates for the continued use of DEI programs by the Government.

My takeaways:

1. There is likely now a sentiment among at least 5 Justices that the lawfare via TRO/Injunction from liberal/progressive district judges has reached a dangerous level, and some signals need to be sent not just to the district judges but also the the Appeals Courts who should be issuing stays on these TROs and Injunctions. The Order clears the way for TROs to be treated as de facto injunctions which are appealable. Currently activist district judges are compelling compliance with TROs — which they can extend beyond the initial 14 days — while Appeals Courts stand idly by on the basis that TROs are not “final orders” subject to appeal.

2. There is language in the Order that suggests at least 5 votes now exist for the proposition that some significant amount of the ongoing litigation over new Administration policies regarding cancelling grants, contracts, and other spending cuts, needs to be filed in the Court of Claims. This should now form a solid foundation for Circuit Court decisions that a substantial number of the district judges issuing TROs and Injunctions are without jurisdictional authority to do so.

3. The district judges need to take seriously the requirement under the Federal Rules of Civil Procedure that meaningful financial bonds be posted to protect the Government from financial losses should it win these cases after being forced to pay out money while the cases are pending.

4. Justice Barrett could have written a concurring Opinion but did not. If she didn’t agree with “1”, “2”, and “3” above, she could have made that clear in such a concurrence. Given that she did not, I think it is a fair supposition that she agreed with all 3. That is very significant on Point 2 regarding some significant number of these cases belonging in the Court of Claims, thereby taking jurisdiction away from the activist district judges with regard to how the Government spends taxpayer money.

The Administration already seems to have the upper hand in the litigation over terminating Executive Branch Officers in order to bring “independent” offices and agencies under greater Executive control. It should win the dispute over terminating large numbers of federal employees, but it might need to backup a step or two and ensure it is complying with statutes that apply to “Reductions In Force” — RIFs — of the federal workforce. The losses in district court on that issue have not involved whether federal workers can be let go, they have involved whether the Administration is following the steps created by Congress for how such reductions must be carried out.

Getting favorable outcomes — or at least getting the cases away from activist district judges — on the disputes over reducing Government spending would be a huge win in two respects. First, the goal of reducing the budget deficit in some meaningful manner would be advanced. Second, we now know that all manner of progressive/Marxist NGO funding was routed from various Government agencies and programs for the purpose of advancing the progressive/Marxist ideology and keeping the activist groups swimming in cash.

A case pending in the Western District of Washington, where the district judge has ordered continued funding of organizations with contracts to help refugee resettlement, could be among the first to be impacted by the yesterday’s Supreme Court action. I wrote about this Judge and this case in March. In most respects, the 9th Circuit has already issued a stay of the district judge’s order in that case —but it didn’t specifically address the issue of continued funding of the NGO plaintiffs. The Judge took this position even though the Ninth Circuit’s Stay Order “grants the stay in all other respects” with the exception of not allowing persons already approved for admission into the U.S. as refugees. The Judge specifically states that the Plaintiffs are likely to prevail on their APA claims with regard to the suspended funding as a basis to impose an injunction mandating the continued funding of the NGO operations.

That decision — which also came down yesterday — will likely need to be revisited now based on the language in the Supreme Court’s Order in the teacher grant funding case, which he does not even mention.