State of California v. the Little Sisters of the Poor
911 F.3d 558
9th Cir.2018Background
- The ACA/HRSA require group health plans to cover FDA-approved contraceptive methods without cost-sharing; agencies adopted regulations implementing this requirement.
- Agencies created a categorical religious exemption for certain employers and an "accommodation" allowing nonprofit religious organizations to self-certify and shift provision of contraceptive coverage to insurers.
- After litigation (including Hobby Lobby and Zubik), the agencies declined earlier changes to the accommodation but, following an Executive Order, issued two interim final rules (IFRs) in Oct. 2017 expanding exemptions for entities with "sincerely held" religious or moral objections and making the accommodation optional.
- Five states sued the agencies in N.D. Cal., challenging the IFRs as procedurally invalid under the APA for lack of notice-and-comment; the district court entered a nationwide preliminary injunction enjoining enforcement of the IFRs.
- The agencies, plus intervenors (Little Sisters; March for Life), appealed venue, standing, and scope of the injunction; Ninth Circuit panel reviewed and addressed mootness, venue, standing, likelihood of success on APA claim, irreparable harm, and injunction scope.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Venue: whether CA may sue in N.D. Cal. under 28 U.S.C. §1391(e) | States reside throughout their borders; venue proper in any district where state is located | Agencies: a state is an "entity" and ‘‘principal place of business’’ limits residence to single district | Venue proper; state "resides" in every district within its borders |
| Standing: whether plaintiff states have Article III standing to challenge IFRs | States allege procedural APA injury (lack of notice-and-comment) that will cause economic harm when residents lose contraceptive coverage, increasing state program costs | Agencies: harms speculative and too attenuated; plaintiffs cannot show probable injury | States have standing to bring procedural APA claim (probable injury supported by administrative analysis and declarations) |
| APA procedural violation: whether agencies lawfully issued IFRs without notice-and-comment (good cause/statutory authority/harmless error) | Plaintiffs: agencies lacked good cause, lacked statutory authority to bypass APA, and error was not harmless | Agencies: claimed good cause (urgency, RFRA concerns, cost reduction) and relied on HIPAA-authorizing language permitting interim final rules | Agencies likely lacked good cause and statutory authority; failure to provide notice-and-comment was likely not harmless; plaintiffs likely to succeed on APA claim |
| Scope of preliminary injunction: whether nationwide relief was appropriate | Plaintiffs: nationwide injunction required because no public had opportunity to comment | Defendants: nationwide injunction overbroad; relief should be limited to plaintiffs' jurisdictions | District court abused discretion with nationwide injunction; injunction affirmed only as to the plaintiff states and vacated elsewhere |
Key Cases Cited
- Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751 (2014) (recognized RFRA-based exemption for closely held for-profit employers)
- Zubik v. Burwell, 136 S. Ct. 1557 (2016) (vacated and remanded contraceptive accommodation cases to seek accommodations balancing religious exercise and coverage)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (standing requires concrete injury in fact; procedural-right plaintiffs must show risk to concrete interests)
- Winter v. NRDC, 555 U.S. 7 (2008) (standards for preliminary injunctions)
- Citizens for Better Forestry v. U.S. Dep’t of Agric., 341 F.3d 961 (9th Cir. 2003) (standing for procedural APA claims; relaxed traceability/redressability)
- Valverde v. United States, 628 F.3d 1159 (9th Cir. 2010) (narrow construction of APA good-cause exception for interim rules)
- Paulsen v. Daniels, 413 F.3d 999 (9th Cir. 2005) (interim rule promulgated without notice-and-comment not harmless where public had no pre-effective notice)
- NRDC v. EPA, 279 F.3d 1180 (9th Cir. 2002) (final rule must be a logical outgrowth of proposed rule to dispense with fresh notice-and-comment)
- Pennsylvania v. New Jersey, 426 U.S. 660 (1976) (self-inflicted fiscal injuries attributable to a state’s own legislative choices are not traceable for standing purposes)
- Wyoming v. Oklahoma, 502 U.S. 437 (1992) (state had standing where another state’s law caused a direct loss of specific tax revenues)