292 F. Supp. 3d 238
D.C. Cir.2017Background
- EEOC promulgated ADA and GINA regulations permitting employer wellness-plan incentives or penalties up to 30% of self-only health coverage cost for providing certain medical information (29 C.F.R. §§ 1630.14(d)(3), 1635.8(b)(2)(iii)).
- This Court held (Aug. 22, 2017) that EEOC failed to provide a reasoned explanation for adopting the 30% incentive level, but remanded without vacatur to avoid mid‑plan‑year disruption.
- AARP moved under Rule 59(e) to alter that remedial decision, asking the Court to vacate the incentive provisions (with either an immediate stay until Jan 1, 2018, or an injunction effective Jan 1, 2018); AARP later proposed vacatur for plans beginning at least six months after the order.
- EEOC opposed vacatur, arguing disruption to employers and employees; EEOC reported it would not issue a proposed rule until Aug. 2018 and not a final rule until Oct. 2019 (likely effective 2021).
- The Court found EEOC’s failure of reasoning serious and, balancing Allied‑Signal factors (seriousness of deficiencies vs. disruptive consequences), concluded vacatur is appropriate but stayed the vacatur until January 1, 2019 to avoid undue disruption and to give EEOC time to act.
- The Court also noted uncertainty whether Rule 59(e) or Rule 54(b)/inherent equitable powers governs reconsideration, but held AARP meets even the stricter Rule 59(e) standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether vacatur of the 30% incentive provisions is the proper remedy for EEOC's inadequate reasoning | AARP: vacatur is the normal remedy under the APA; remand without vacatur perpetuates harm to members | EEOC: vacatur now would be disruptive to employers/employees relying on the Rules | Court: Vacatur warranted because EEOC's reasoning failure is serious; remand without vacatur is unjust beyond 2018 |
| Proper effective date for any vacatur | AARP: immediate vacatur stayed until Jan 1, 2018 or vacatur applied to plans starting ≥6 months after order | EEOC: vacatur even in early 2018 would be too disruptive; needs lead time for plan design | Court: Vacatur issued but stayed until Jan 1, 2019 to balance disruption and prejudice |
| Whether the Court may reconsider its remedial decision under Rule 59(e) | AARP: Rule 59(e) motion appropriate to alter remedy; presents manifest injustice from leaving rules in place | EEOC: AARP could have sought vacatur earlier; reconsideration inappropriate | Court: Motion satisfies Rule 59(e) standards (manifest injustice/clear error); alternatively Rule 54(b) could apply but unnecessary to decide |
| Whether EEOC's stated rulemaking timeline affects remedy | AARP: EEOC's slow timeline increases prejudice from keeping rules in force | EEOC: Needs time; plans likely can't be adjusted until 2021 under current schedule | Court: EEOC's timeline (proposed rule Aug. 2018; final Oct. 2019) supports vacatur effective Jan 1, 2019 and court encourages expedited rulemaking |
Key Cases Cited
- Ciralsky v. CIA, 355 F.3d 661 (D.C. Cir. 2004) (standards for Rule 59(e) motions and reconsideration doctrine)
- Allied‑Signal, Inc. v. U.S. Nuclear Reg. Comm'n, 988 F.2d 146 (D.C. Cir. 1993) (two‑part vacatur balancing test: seriousness of deficiencies and disruptive consequences)
- Advocates for Highway & Auto Safety v. Fed. Motor Carrier Safety Admin., 429 F.3d 1136 (D.C. Cir. 2005) (vacatur usually required when agency action is arbitrary and capricious)
- Comcast Corp. v. FCC, 579 F.3d 1 (D.C. Cir. 2009) (courts may vacate where agency failed to address contrary evidence; remedial briefing often necessary)
- Chamber of Commerce v. SEC, 443 F.3d 890 (D.C. Cir. 2006) (agency better positioned than court to assess disruptive effects of vacatur)
- Friends of the Earth, Inc. v. EPA, 446 F.3d 140 (D.C. Cir. 2006) (district court retains remedial discretion, including stays of vacatur)
- Pueblo of Sandia v. Babbitt, 231 F.3d 878 (D.C. Cir. 2000) (orders remanding to agencies for significant further proceedings are not final)
- Int'l Union, United Mine Workers of Am. v. Fed. Mine Safety & Health Admin., 920 F.2d 960 (D.C. Cir. 1990) (remand reconsideration where agency not proceeding with reasonable diligence)