A federal judge has dismantled the legal foundation of President Donald Trump’s lawsuit against the Internal Revenue Service, concluding that the case was never a genuine dispute between opposing parties but instead an attempt to secure judicial legitimacy for a negotiated agreement that could not have survived normal litigation.
In a 56-page order issued Monday, US District Judge Kathleen Williams vacated the earlier dismissal, declared that the lawsuit had been filed for an improper purpose, and ordered Rule 11 sanctions proceedings against plaintiffs’ counsel while referring several attorneys to state bar authorities for potential disciplinary review.
“In sum, the facts before this Court demonstrate there was never adverseness between the Parties; there was never a case or controversy; and there was never a question as to who would prevail,” the judge wrote.
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READ: Trump (The Government) Settles IRS Tax Suit By Trump (The Citizen)
This comes after 35 former federal judges demanded to reopen the dismissed IRS lawsuit, on grounds that the settlement constitutes a fraud on the court and an unlawful raid on the federal treasury.
“Improper purpose”
Rather than focusing primarily on the abandoned $1.776 billion Anti-Weaponization Fund, Williams built her opinion around Article III of the US Constitution. Her central conclusion was that the President could not establish the required “case or controversy” because he exercised authority over the Treasury Department, the IRS, and ultimately the Justice Department lawyers responsible for defending those agencies.
Williams further wrote that the lawsuit “was brought for an improper purpose” and found it was intended to obtain “the imprimatur of judicial legitimacy” for a settlement that lacked a viable legal or factual basis.
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Williams devoted much of the ruling to explaining why presidential control over executive agencies mattered more than the merits of Trump’s underlying claims regarding the leak of his confidential tax information.
The opinion cited the President’s constitutional authority over executive agencies, statutory authority regarding Treasury leadership, and Executive Order 14215, which directs executive branch officials to follow presidential and attorney general legal interpretations in litigation unless specifically authorized otherwise. According to the court, those authorities undermined the existence of genuinely adverse parties capable of litigating against each other.
“Therefore, not only does the Executive Order demonstrate President Trump’s espoused control over Defendants’ conduct generally in litigation, it also demonstrates President Trump’s actual control in this litigation,” the order wrote.
The judge also pointed to what she viewed as unusual litigation conduct. During the 109 days the case remained pending, no attorney appeared on behalf of the US to defend the government’s legal position before the parties announced their agreement. The opinion contrasted that approach with other IRS data leak litigation, where government lawyers actively challenged plaintiffs’ claims through motions to dismiss and other filings.
“Extraordinary award”
The court also separately criticized the proposed settlement itself. According to the opinion, the agreement attempted to establish extraordinary remedies that extended well beyond the claims actually presented in court. Williams described the arrangement as providing benefits for unidentified future claimants whose potential injuries had no direct connection to the lawsuit before her.
““And the extraordinary award fashioned by the Parties for claims that were never litigated, and have yet to be defined, on behalf of unidentified third parties whose future remedies bear no relationship to the claims in this case, indicates that real adverse interests were never before the Court,“ the court said.
The judge also cited Acting Attorney General Todd Blanche’s later public announcement that the Anti-Weaponization Fund would not proceed. Rather than viewing that statement as resolving the controversy, Williams said it suggested Blanche believed he could speak on behalf of both sides of the litigation, reinforcing her conclusion that the parties had acted together rather than as legal opponents.
“Acting Attorney General Blanche’s decision, which has not been memorialized or adopted by Plaintiffs or their lawyers, demonstrates his confidence that he could speak for, and bind, both sides of this matter. This certitude supports the conclusion that the Parties worked in tandem and were never actually adverse,” the ruling also wrote.
Earlier, US District Judge Leonie Brinkema blocked the legality of the said fund, issuing a preliminary injunction after the Justice Department said the plan was no longer moving forward but did not provide a sworn, binding commitment that it would not be revived.
Another section of the order examined the backgrounds of senior Justice Department officials who approved the settlement, including Blanche and Associate Attorney General Stanley Woodward Jr., both of whom previously represented Trump or individuals connected to him in other matters. The opinion presented those relationships as part of its analysis of whether sufficient adversarial independence existed in the litigation but it did not accuse either official of criminal misconduct.
The ruling effectively nullifies the settlement that had resolved Trump’s $10 billion lawsuit against the IRS over leaked tax records and further complicates any effort to revive provisions tied to the abandoned Anti-Weaponization Fund or related immunity protections.
Beyond the immediate case, the decision may become an important precedent addressing the constitutional limits of litigation involving a sitting president and executive agencies under presidential control. Rather than resolving the dispute on tax law or settlement doctrine, Williams framed the controversy as a separation-of-powers issue that goes to whether federal courts can hear lawsuits when one side effectively directs both participants in the case.
“The President may be the functional ‘dominus litis’ of the Executive Branch, but as a party to a civil suit, he, as well as all the parties and lawyers before a court, are bound by the rules,” the order wrote.
