What Was the Case?
Unnamed plaintiffs, former employees at USAID,
sued Elon Musk and DOGE over its dismantling of the agency.
U.S. District Judge Theodore Chuang ruled that Musk can make DOGE act, which means he is effectively its head. That means Musk should have been nominated by the president and faced Senate confirmation. The White House argued that Musk is a senior advisor and special government employee.
The judge also ruled DOGE’s actions exceeded the authorities of the executive branch and encroached upon those of the legislative branch.
Is It a Big Deal?
Yes, it appears to be a big deal. Judge Chuang essentially ruled that Musk and DOGE had to stop doing what they were doing. The suit deals with USAID, but it throws a wrench into how DOGE has been operating
The judge added, “DOGE had taken numerous actions without any apparent advance approval by agency leadership at the Departments of Education, Energy, and NIH,” explained
Carl Tobias, Williams chair in law at the University of Richmond. Chuang also “admonished Musk that failure to comply with the ruling’s requirements might lead Chuang to hold Musk and his team members in contempt of court.”
“Rogue judges are subverting the will of the American people in their attempts to stop President Trump from carrying out his agenda,” said the White House in an emailed statement. “If these Judges want to force their partisan ideologies across the government, they should run for office themselves. The Trump Administration will appeal this miscarriage of justice.”
What Comes Next?
The White House could ask for a stay, letting DOGE continue to operate while the case moves through the courts. A stay isn’t likely, said Tobias. He believes an appeal will come, but it would likely be 2026 before the Supreme Court hears the case.
What Would Investors Like?
Investors would probably prefer that Musk head back to Austin, Texas, and focus on his car company.
Through Tuesday trading, Tesla stock was down 47% since the Jan. 20 inauguration. Weak early-year sales data from around the globe, along with
protests at Tesla facilities, have investors wondering if Musk’s Washington pivot has permanently damaged Tesla’s brand.
“The word balance has been missing with Elon Musk and his ability to run Tesla as CEO. Instead [he’s] focusing all of his energy and time driving his DOGE initiative within the Trump administration,” wrote Wedbush analyst
Dan Ives in a recent report. “There has been little to no sign of Musk at any Tesla factory or manufacturing facility the last two months, and perception has become reality for Tesla shares.”
