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Case 1:25-cv-02990-ER Document 137 Filed 11/17/25 Page 1 of 24
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
STATE OF NEW YORK, et al.,
Plaintiffs,
No. 25 Civ. 2990 (ER)
v.
STIPULATION AND ORDER
UNITED STATES DEPARTMENT OF EDUCATION, STAYING CASE
et al.,
Defendants.
This STIPULATION AND ORDER STAYING CASE (“Stipulation”) is made by and
between plaintiffs the State of New York, the State of Arizona, the State of California, the State of
Delaware, the District of Columbia, the State of Hawai‘i, the State of Illinois, the State of Maine,
the State of Maryland, the Commonwealth of Massachusetts, the People of the State of
Michigan, the State of Minnesota, the State of Nevada, the State of New Jersey, the State of New
Mexico, the State of Oregon, and Josh Shapiro, in his official capacity as Governor of the
Commonwealth of Pennsylvania (“Plaintiffs”), and Linda McMahon in her official capacity as
Secretary of the United States Department of Education and the United States Department of
Education (the “Department” or “Education”) (together, the “Government,” and with Plaintiffs,
the “Parties”).
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Recitals
a. On April 10, 2025, Plaintiffs filed a complaint (ECF No. 1) (“Complaint”) in the
above-captioned action (the “Action”) against the Government asserting claims concerning a
March 28, 2025, letter from Education Secretary Linda McMahon, which rescinded prior
approvals granted by the Department extending the period of time for Plaintiffs to liquidate funds
provided under the COVID-era Education Stabilization (“ES”) appropriations laws and modified
Plaintiffs’ periods to liquidate these funds to expire as of 5:00pm ET on March 28, 2025 (the
“March 28 Rescission Letter”).
b. The Complaint asserted two claims against the Government under the
Administrative Procedure Act (“APA”), alleging that the actions embodied in the March 28
Rescission Letter were arbitrary and capricious and contrary to law.
c. On April 11, 2025, Plaintiffs moved for a preliminary injunction, requesting that
the Court enjoin the Government from enforcing the directives in the March 28 Rescission Letter
(ECF Nos. 10, 11).
d. On May 6, 2025, the Court granted Plaintiffs’ motion for a preliminary injunction
and enjoined the Government from enforcing or implementing as against Plaintiffs during the
pendency of the litigation the directives in the March 28 Rescission Letter (ECF No. 77) (the “May
6 Order”).
e. The May 6 Order also enjoined the Government from modifying the Department’s
previously approved periods for Plaintiffs to liquidate ES funds without providing notice to
Plaintiffs at least fourteen (14) days prior to the effective date of such modification.
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f. On May 11, 2025, the Department sent a letter to Plaintiffs rescinding the
previously granted liquidation extensions effective May 25, 2025 (“May 11 Rescission Letter”).
g. On May 14, 2025, Plaintiffs moved for an ex parte temporary restraining order
pending a decision on Plaintiffs’ second preliminary injunction motion (ECF Nos. 83-87), seeking
to enjoin the Government from implementing the directives in the May 11 Rescission Letter.
h. On May 20, 2025, the Court granted the temporary restraining order (ECF No. 95),
pending resolution of Plaintiffs’ motion for a second preliminary injunction.
i. On June 3, 2025, the Court granted Plaintiffs’ second preliminary injunction motion
and issued an order enjoining the Government from enforcing or implementing as against Plaintiffs
during the pendency of the litigation the directives in the March 28 Rescission Letter and the May
11 Rescission Letter (“June 3 Order”) (ECF No. 106).
j. On June 4, 2025, the Government filed a Notice of Appeal of the June 3 Order.
k. On June 6, 2025, the Government moved in the Second Circuit to stay the June 3
Order pending appeal.
l. On June 20, 2025, the Second Circuit denied the Government’s motion to stay the
June 3 Order pending appeal.
m. On August 11, 2025, the Parties stipulated to withdraw the appeal with prejudice
and without costs or attorneys’ fees pursuant to Federal Rule of Appellate Procedure 42(b).
n. In light of the procedural posture of the Action and the period of time remaining
before the Plaintiffs’ extended liquidation periods expire (“Expiration Date”), the Parties seek to
avoid the expense and effort of litigating this Action by agreeing to an interim stay pending the
Expiration Date and the Department’s final determination of all timely payment requests submitted
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by Plaintiffs as of the Expiration Date, subject to Plaintiffs’ right to resume litigating the case in
the event that the Government fails to perform the undertakings set forth in this Stipulation.
Otherwise, Plaintiffs shall voluntarily dismiss the Action within fourteen (14) days after the
Department renders a final determination on all timely submitted outstanding requests.
NOW THEREFORE, in consideration of the mutual promises, covenants, representations,
and other consideration contained in this Stipulation, Plaintiffs and the Government hereby agree
as follows:
1. No Admission of Liability
This Stipulation is not, is in no way intended to be, and should not be construed as, an
admission of liability, fault, or violation of any law, rule, or regulation on the part of Secretary
McMahon, the Department, or any of the Department’s present or former departments, agencies,
agents, officials, or employees. This Stipulation is entered into by the Parties for the purpose of
compromising disputed claims and avoiding the expenses and risks of further litigation.
2. Defense of Future Proceedings
This Stipulation shall not in any manner be construed as determinative of the issues raised
in the Complaint and shall not be deemed a determination on the merits of claims raised in the
Complaint. Further, this Stipulation does not represent or reflect the legal position of Plaintiffs or
the Government concerning the alleged violations of law. In addition, notwithstanding the
provisions of any paragraph herein, this Stipulation shall not bind or collaterally estop the Parties
or their present and former agencies, subdivisions, subsidiaries, administrators, principals, officers,
employees, directors, members, agents, attorneys, whether in an individual or official capacity, or
any of them, or all of them, in this Action if the stay is lifted and the case proceeds to be litigated,
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or in any pending or future actions or proceedings in which the same or similar issues are raised,
from prosecuting or defending any and all issues raised, or from advancing any claims or defenses.
3. Government’s Undertakings
For and in consideration of the undertakings by Plaintiffs set forth in this Stipulation, the
Government hereby agrees to the following:
a. The Government shall not rescind, revoke, modify, or shorten Plaintiffs’ ES
funding liquidation extensions approved prior to March 28, 2025, for any reason.
b. The May 6 Order and June 3 Order shall remain in full force and effect until the
conclusion of this Action or as determined by further order of the Court.
c. For pending ES funding liquidation payment requests previously submitted by
Plaintiffs, the Department shall use reasonable, good faith efforts to make prompt determinations
regarding those requests and disburse payments in the ordinary course for approved payments. For
liquidation payment requests submitted after the date this Stipulation is “so ordered” by the Court
(“Effective Date”), the Department shall use reasonable, good faith efforts to promptly review
such requests, with the expectation that the Department will use best efforts to process the requests
or seek additional information within fourteen (14) days of receipt of the request, and that Plaintiffs
will use best efforts to respond to such requests for additional information within seven (7) days
of such requests. Any demand for additional information by the Department for processing such
requests shall be limited to that which is reasonably necessary to show the request falls within the
previously approved ES funding liquidation extension or that the request is otherwise an allowable
use of such ES funds.
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d. For contracts entered into by Plaintiffs, their State Education Agencies, and/or their
Local Education Agencies that were obligated within the period of availability, that were approved
as part of Plaintiffs’ ES funding liquidation extensions prior to March 28, 2025, and that did not
expire on or before March 28, 2025 (“Affected Contracts”), in consideration of the sixty-seven
(67) days between the March 28 Letter and the June 3 Order during which Plaintiffs could not
make use of their contractors’ services, the Government shall permit Plaintiffs to extend the terms
of such Affected Contracts by sixty-seven (67) days following a thirty (30) day period for
negotiation of the extension (“Negotiation Period”) and deem any such extended contract to be
timely obligated and approved for purposes of Plaintiffs’ approved ES funding liquidation
extensions, provided no such extended contract shall extend the period for Plaintiffs to liquidate
their ES funds beyond their approved liquidation extension periods and provided the only
modification to the terms of the contract is the performance period. Subject to these limitations,
for any contract that has expired or will expire within thirty (30) days of the Effective Date, the
sixty-seven (67) day extension shall run from the end of the Negotiation Period rather than the
expiration of the date of the contract.
4. Stay Terms and Conditions
a. Upon execution of this Stipulation, the Parties agree to submit this Stipulation to
the Court to be “so ordered.” Upon the Effective Date, all proceedings in this Action contemplated
by the Federal Rules of Civil Procedure, including discovery, pleadings, and motion practice, are
stayed subject to the Government performing the undertakings described in Section 3. In the event
that the Government does not perform any of the undertakings described in Section 3, the Plaintiffs
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may, at their sole option, elect to request by letter motion that the Court lift the stay under this
Stipulation and allow the litigation to proceed.
b. Within fourteen (14) days after the Department notifies Plaintiffs that all of
Plaintiffs’ ES funding liquidation payment requests submitted as of the Expiration Date have been
determined and processed by the Department (as per the determinations), and subject to Plaintiffs’
verification of the same, the Parties shall voluntarily dismiss this Action, with prejudice, pursuant
to Federal Rule of Civil Procedure 41(a)(1)(A)(ii).
5. Miscellaneous Provisions
a. The Court shall retain jurisdiction over all matters concerning the terms of this
Stipulation.
b. The Parties understand and agree that this Stipulation contains the entire agreement
between them and that no statements, representations, promises, agreements, or negotiations, oral
or otherwise, between the Parties that are not included herein shall be of any force or effect.
c. It is contemplated that this Stipulation may be executed in several counterparts,
with a separate signature page for each party. All such counterparts and signature pages, together,
shall be deemed to be one document.
d. Nothing in this proposed stipulation should be construed as limiting or preventing
the Department and its agents, the Department’s Office of the Inspector General, or any federal
oversight authority, from being able to perform its grant oversight responsibilities and, if
necessary, take appropriate actions in furtherance of those responsibilities.
IN WITNESS WHEREOF, the Parties hereto acknowledge that they have read this
Stipulation and accept and agree to the provisions contained herein, and have each executed this
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ROB BONTA KATHLEEN JENNINGS
ATTORNEY GENERAL OF CALIFORNIA ATTORNEY GENERAL OF THE STATE OF
DELAWARE
By: ____________________ By: ____________________
Maureen C. Onyeagbako* Ian Liston
Supervising Deputy Attorney General Director of Impact Litigation
José Pablo Galán de la Cruz* Vanessa L. Kassab
Deputy Attorney General Deputy Attorney General
Cheryl L. Feiner* Delaware Department of Justice
Senior Assistant Attorney General 820 N. French Street
California Attorney General’s Office Wilmington, DE 19801
1300 I Street, Ste. 125 (302) 683-8899
P.O. Box 944255 vanessa.kassab@delaware.gov
Sacramento, CA 94244-2550
Telephone: (916) 210-7324 Counsel for the State of Delaware
Email: Maureen.Onyeagbako@doj.ca.gov
Pablo.Galan@doj.ca.gov
Cheryl.Feiner@doj.ca.gov
Counsel for the State of California
BRIAN L. SCHWALB ANNE E. LOPEZ
ATTORNEY GENERAL FOR THE DISTRICT OF ATTORNEY GENERAL FOR THE STATE OF
COLUMBIA HAWAI I
By: ____________________ By: ____________________
Andrew Mendrala* David D. Day*
Assistant Attorney General Special Assistant to the Attorney General
Public Advocacy Division
Office of the Attorney General for the Solicitor General
District of Columbia 425 Queen Street
400 Sixth Street, NW Washington, DC Honolulu, HI 96813
20001 (808) 586-1360
(202) 724-9726 kaliko.d.fernandes@hawaii.gov
Andrew.Mendrala@dc.gov
Counsel for the State of Hawai i
Counsel for the District of Columbia
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AARON M. FREY KWAME RAOUL
ATTORNEY GENERAL FOR THE STATE OF ATTORNEY GENERAL FOR THE STATE OF
MAINE ILLINOIS
By: ____________________ By: ____________________
Sarah A. Forster* Cara Hendrickson*
Assistant Attorney General Assistant Chief Deputy Attorney General
Office of the Attorney General Elena S. Meth*
6 State House Station Assistant Attorney General
Augusta, ME 04333-0006 Office of the Illinois Attorney General
Tel.: 207-626-8800 115 S. LaSalle St.
Fax: 207-287-3145 Chicago, IL 60603
Sarah.Forster@maine.gov (773) 835-0182
Cara.Hendrickson@ilag.gov
Counsel for the State of Maine Elena.Meth@ilag.gov
Counsel for the State of Illinois
ANTHONY G. BROWN ANDREA JOY CAMPBELL
ATTORNEY GENERAL FOR THE STATE OF ATTORNEY GENERAL OF MASSACHUSETTS
MARYLAND
By: ____________________ By: ____________________
Keith M. Jamieson* Katherine Dirks
Elliott Schoen* Chief State Trial Counsel
Alan J. Dunklow* Office of the Attorney General
Assistant Attorneys General One Ashburton Place, 20th Floor
Office of the Attorney General Boston, MA 02108
200 Saint Paul Place (617) 963-2427
Baltimore, Maryland 21202 david.kravitz@mass.gov
(410) 576-6960
kjamieson@oag.state.md.us Counsel for the Commonwealth of
Massachusetts
Counsel for the State of Maryland
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DAN RAYFIELD RAÚL TORREZ
ATTORNEY GENERAL FOR THE STATE OF ATTORNEY GENERAL OF THE STATE OF NEW
OREGON MEXICO
By: ____________________ By: ____________________
Sara Van Loh OSB #044398* Anjana Samant
Senior Assistant Attorney General Deputy Counsel
100 SW Market Street New Mexico Department of Justice
Portland, Oregon 97201 408 Galisteo Street
Tel (971) 673-1880 Santa Fe, New Mexico 87501
Fax (971) 673-5000 (505) 270-4332
Sara.VanLoh@doj.oregon.gov asamant@nmdoj.gov
Attorneys for the State of Oregon Attorney for Plaintiff State of New Mexico
JENNIFER C. SELBER
General Counsel
Michael J. Fischer
Executive Deputy General Counsel
By: ____________________
Thomas P. Howell*
Deputy General Counsel
Governor’s Office of General Counsel
30 N. 3rd Street, Suite 200
Harrisburg, PA 17101
(717) 460-6786
thowell@pa.gov
Counsel for Governor Josh Shapiro,
Commonwealth of Pennsylvania
* Admitted Pro Hac Vice
SO ORDERED:
November 17, 2025
Dated: ______________________ ___________________________________
New York, New York HONORABLE EDGARDO RAMOS
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