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Ninth Circuit:
No En Banc Rehearing in Case Over Legal Aid Funding
Divided Panel Rejects Call for En Banc Review of Denial of Bid for Stay of Preliminary Injunction Directing Reinstatement of Payments for Representation of Unaccompanied Migrant Children
By a MetNews Staff Writer
A divided Ninth U.S. Circuit Court of Appeals on Friday denied a request for en banc rehearing over a decision declining to stay a preliminary injunction directing the Executive Branch to reinstate funding to a left-leaning immigration group that provides, among other services, legal representation for unaccompanied migrant children through subcontracting with firms across the nation.
The case originated after Community Legal Services and Social Justice Collaborative, two Bay Area immigration firms, and other organizations filed a complaint against the U.S. Department of Health and Human Services (“HHS”) in March, asserting that the Executive Branch violated the Administrative Procedure Act (“APA”) by cancelling a $200 million contract with Acacia Center for Justice that served as a source of the plaintiffs’ funding.
They sought only declaratory and injunctive relief.
Acacia describes itself as a “non-governmental organization that supports and partners with a national network of human rights defenders who provide legal defense to immigrants” and says that the “U.S. immigration…system is…intentionally designed to exploit, exclude, criminalize, detain, and deport people who have historically been viewed as undeserving of inclusion in our national fabric, particularly Black and brown people.”
Under the Trafficking Victims Protection Reauthorization Act of 2008 (“TVPRA”), HHS is required to “ensure, to the greatest extent practicable,” that all unaccompanied children in immigration custody receive legal representation. In March, President Donald Trump’s administration paused the flow of federal dollars to Acacia, which was the sole vendor paid by the federal government to provide legal aid for migrant minors.
Preliminary Injunction
On April 29, District Court Judge Araceli Martínez-Olguín of the Northern District of California, an appointee of Democratic President Joe Biden, granted the plaintiffs’ request for preliminary relief, ordering:
“Defendants are ENJOINED from withdrawing the services or funds…as of March 20, 2025, under the Trafficking Victims Protection Reauthorization Act of 2008…, particularly [the] provision of funds for direct legal representation services to unaccompanied children.”
In May, a divided three-judge panel denied the government’s motion for a stay pending appeal of the preliminary injunction. Circuit Judge Lucy H. Koh, a Biden appointee, joined by Senior Circuit Judge William A. Fletcher, who was placed on the court by Democratic President Bill Clinton, concluded that the government had not shown a likelihood of success on the merits. Koh and Fletcher were each appointed by Democrats.
Dissenting, Circuit Judge Consuelo M. Callahan, an appointee of Republican President George W. Bush, wrote that “[e]ven if the district court had jurisdiction,” a decision to cut funding “is committed to agency discretion.”
En Banc Reconsideration
Fletcher and Koh wrote in support of Friday’s order denying en banc reconsideration of the stay denial. Circuit Judges Patrick J. Bumatay and Lawrence VanDyke, joined in by Callahan as well as Circuit Judges Sandra S. Ikuta, Mark J. Bennett, Ryan D. Nelson, Daniel P. Collins, Kenneth K. Lee, and Daniel Aaron Bress, penned a dissent, saying:
“Though Plaintiffs style this suit as one premised on the APA, ‘in essence’ it’s contractual. This dispute therefore belongs in the Court of Federal Claims, and we’re powerless to hear it. This should have been a hard point to miss….Even so, our court has decided against rehearing this case. In doing so, we leave in place a novel and intrusive injunction that the district court never had the authority to enter.”
Ikuta, like Callahan, was placed on the court by President George W. Bush. The remaining dissenters are Trump appointees.
Breach of Contract Action
Koh and Fletcher acknowledged that, under the Tucker Act, codified at 28 U.S.C. §1491, the Court of Federal Claims has exclusive jurisdiction over any breach of contract claim against the federal government seeking monetary damages over $10,000. However, they rejected the view that the plaintiffs’ claims amount to a restyled breach of contract action arising out of the Acacia agreement, saying:
“The bottom line is that Plaintiffs have no contract with the Government. They do not invoke any contractual terms as the basis for their action. Nor do they seek a contractual remedy from the Government. Rather, Plaintiffs seek declaratory and injunctive relief requiring compliance with the statutory obligations set out by Congress and the regulatory obligations set forth by Defendants themselves. Thus, as the district court put it, ‘Plaintiffs’ claims have no business before the [Court of Federal] Claims.’ ”
Noting that “every presidential administration since the TVPRA’s passage has provided funding for direct representation of unaccompanied children,” they pointed out that the APA directs that agency actions that are arbitrary or capricious are to be “set aside.”
No Reinstatement
They opined:
“Plaintiffs do not seek reinstatement of the Acacia contract. Rather, Plaintiffs challenge the Cancellation Order because the Government had previously complied with the TVPRA and the Foundational Rule solely through the Acacia contract and failed to provide any meaningful alternative to comply with the TVPRA.”
Koh and Fletcher added:
“The non-contractual source of Plaintiffs’ rights is dispositive….In any event, the second inquiry, ‘the type of relief sought,’ also supports jurisdiction in the district court….Under this prong, we assess whether the ‘complaint…seeks monetary relief.’…It does not.”
Under those circumstances, they declared:
“Our court made the correct decision in denying en banc review….In this appeal, the Government’s merits arguments have been limited solely to whether the district court had subject matter jurisdiction to entertain this appeal. For the reasons stated above, as well as those stated in our opinion denying the Government’s motion for a stay, the Government has failed to make the required ‘strong showing’ that it will likely succeed on the merits of its jurisdictional argument.”
Dissenting View
Dissenting, Bumatay and VanDyke asserted:
“The Supreme Court has warned against an ‘imperial Judiciary.’…In recent times, the Court has repeatedly needed to dial back lower court decisions that exceed the judiciary’s equitable authority….For cases involving hot-button policy issues, our review is often constrained—and sometimes curtailed altogether. That means staying in our lane and respecting our jurisdictional bounds. But once again, the Ninth Circuit fails to respect our role and the Supreme Court’s guidance.”
Saying that “groups opposed to the [federal government’s] policies rushed to the federal courthouse in San Francisco” after the administration “stopped funding ongoing work while the Executive Branch reviews the integrity of its multimillion-dollar payments to Acacia,” they asserted:
“But the district court never had jurisdiction in this case. No matter how hard we squint, we can’t avoid the fact that this is a contract dispute. No statute or regulation entitles Plaintiffs to funding. Instead, Plaintiffs simply want money from the federal government based on the government’s contract with the organization that Plaintiffs have subcontracted with.”
Subcontractor Exception
Characterizing the majority’s decision to deny rehearing as “brush[ing] aside these jurisdictional concerns” by creating a “subcontractor exception” to the Tucker Act, they reasoned:
“Now subcontractors can bring suits arising out of government contracts in any district court, including allowing them to utilize the full array of equitable relief available to district courts, while contractors are limited to the Court of Federal Claims.”
Citing two U.S. Supreme Court cases decided earlier this year, Department of Education v. California and National Institutes of Health v. American Public Health Association, the judges said:
“It’s our duty to follow the Supreme Court’s lead on how to exercise our equitable power. In cases where a district court’s jurisdiction is likely wanting,…the Court has directed that we stay injunctions against the Executive Branch.”
The case is Community Legal Services v. U.S. Department of Health and Human Services, 25-2808.
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