Case: Maryland Department of Labor v. United States
1:26-cv-01505 | U.S. Court of Federal Claims
Filed Date: Oct. 8, 2026
Case Ongoing
Clearinghouse coding complete
Case Summary
This case challenges the Department of Labor’s cancellation of grants to various states. It was filed in the United States Court of Federal Claims and was assigned to Eleni M. Roumel.
On October 9, 2026, fourteen U.S. states—Maryland, Wisconsin, California, Colorado, Delaware, Illinois, Kentucky, Maine, Michigan, New Jersey, New Mexico, New York, Oregon, and Pennsylvania—filed a lawsuit against the federal government. The plaintiffs, represented by their respective attorneys general or authorized representatives, sought redress for the Department of Labor’s (DOL’s) alleged wrongful termination of competitive grants awarded under the American Rescue Plan Act (ARPA) of 2021. These grants were intended to modernize state unemployment insurance (UI) systems, with objectives including fraud prevention, equitable access to benefits, and timely payment of claims.
The dispute arose from the DOL’s administration of six related grant programs: IT Modernization, Integrity, Navigator, Tiger Team, Equity, and Fraud Prevention Grants. The plaintiffs alleged that they had applied for and received one or more of these grants, entering into formal agreements with the DOL to implement critical UI system improvements. After beginning work under these agreements, the states claimed they had expended significant resources and made substantial progress toward the grant objectives. However, on May 22, 2025, the DOL abruptly terminated all plaintiffs’ grant agreements through boilerplate letters, citing “changed agency priorities” as the sole justification for the decision. The plaintiffs contended that the grant agreements permitted termination only under narrow, specified circumstances—such as criminal conduct or material breach—and did not authorize termination based on shifting administrative priorities.
The plaintiffs further alleged that the DOL’s reliance on 2 C.F.R. § 200.340(a)(2), a statute that governs federal grant terminations, as authority for the terminations was legally flawed. They argued that this regulation was not clearly or unambiguously incorporated into the grant agreements at issue. Even if the regulation had been incorporated, the plaintiffs maintained that it did not provide a valid basis for termination due to changed priorities. The DOL’s actions, they claimed, disrupted ongoing projects, destroyed the states’ reasonable expectations of performance, and left critical UI modernization efforts incomplete with unspent grant funds.
The lawsuit asserted seven causes of action against the DOL. In Count I, the plaintiffs alleged a breach of the grant agreements, arguing that the DOL’s termination violated the express terms of the contracts. Count II presented an alternative claim, asserting that even if 2 C.F.R. § 200.340 were deemed part of the agreements, the regulation did not permit termination for changed priorities. Count III alleged that the DOL’s termination of grants aimed at promoting equitable access violated the statutory mandate of 15 U.S.C. § 9034(a), which governs ARPA funding. The remaining counts centered on the DOL’s alleged breach of the implied duty of good faith and fair dealing. Count IV claimed that the DOL imposed new, unagreed-upon terms and conditions, while Count V and Count VI accused the agency of relying on erroneous and bad-faith interpretations of 2 C.F.R. § 200.340 and 15 U.S.C. § 9034(a), respectively. Finally, Count VII alleged that the DOL failed to provide the required procedural safeguards, including formal notice and an opportunity to object, before terminating the grants.
The plaintiffs sought monetary damages in an amount to be determined at trial, along with pre- and post-judgment interest. They also requested reimbursement for reasonable fees, costs, and expenses, including attorneys’ fees, pursuant to 28 U.S.C. § 2412, as well as any other relief the court deemed appropriate. Jurisdiction was premised on the Tucker Act, 28 U.S.C. § 1491, which confers authority on the Court of Federal Claims to adjudicate claims for money damages against the United States founded upon contracts, statutes, regulations, or the Constitution.
This case is ongoing.
Summary Authors
Grace Honig (10/22/2026)
People
For PACER's information on parties and their attorneys, see: https://www.courtlistener.com/docket/74942914/parties/maryland-department-of-labor-v-united-states/
Colbert, Frances None (- United States (national) -)
Giovanatti, Neil (- United States (national) -)
Jamieson, Keith (- United States (national) -)
Mayo, Steven Travis (- United States (national) -)
Moskowitz, David (- United States (national) -)
Documents in the Clearinghouse
Docket
See docket on RECAP: https://www.courtlistener.com/docket/74942914/maryland-department-of-labor-v-united-states/
Last updated Oct. 25, 2026, 3:09 a.m.
Docket for: MARYLAND DEPARTMENT OF LABOR v. United States
Case Details
State / Territory:
Case Type(s):
Fair Housing/Lending/Insurance
Special Collection(s):
Trump Administration 2.0: Challenges to the Government
Key Dates
Filing Date: Oct. 8, 2026
Case Ongoing: Yes
Plaintiffs
Plaintiff Description:
Maryland, Wisconsin, California, Colorado, Delaware, Illinois, Kentucky, Maine, Michigan, New Jersey, New Mexico, New York, Oregon, and Pennsylvania
Plaintiff Type(s):
Public Interest Lawyer: Yes
Filed Pro Se: No
Class Action Sought: No
Class Action Outcome: Not sought
Defendants
Federal
United States
Defendant Type(s):
Case Details
Causes of Action:
Other Dockets:
U.S. Court of Federal Claims 1:26-cv-01505
Available Documents:
Outcome
Prevailing Party: None Yet / None
Relief Sought:
Relief Granted:
Source of Relief:
Issues
General/Misc.:
Case Summary of Maryland Department of Labor v. United States, Civil Rights Litig. Clearinghouse, https://clearinghouse.net/case/48525/ (last updated 10/22/2026).