State of California v. the Little Sisters of the Poor, 941 F.3d 410

Background

The ACA's Women’s Health Amendment (42 U.S.C. § 300gg‑13(a)(4)) requires group health plans to cover HRSA‑recommended women’s preventive services without cost‑sharing; HRSA guidelines include all FDA‑approved contraceptives.
Agencies implemented an "accommodation" allowing many nonprofit religious objectors to opt out by self‑certifying, after which insurers/TPAs provide contraceptive coverage directly to employees.
In 2017–2018 the agencies issued interim and then final rules creating broader religious and moral exemptions (making the accommodation optional for many objectors); states sued under the APA seeking to enjoin enforcement.
The district court entered a preliminary injunction limited to the plaintiff states and D.C.; Ninth Circuit previously affirmed parts of that injunction (California v. Azar) and this appeal challenged the later final rules and the preliminary injunction.
The Ninth Circuit (majority) affirmed: states have standing, the appeal is not moot despite a near‑contemporaneous nationwide injunction in Pennsylvania, the agencies likely lacked statutory authority under the ACA to issue blanket exemptions, RFRA did not require the exemptions, and the accommodation likely does not substantially burden religious exercise. Judge Kleinfeld dissented on mootness.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing	States will suffer concrete, irreparable economic harm from lost enforcement of contraceptive coverage mandates.	No standing or law‑of‑the‑case reasons to revisit prior ruling.	States have standing; prior panel precedent and Dept. of Commerce v. New York support causation.
Mootness (effect of Pennsylvania nationwide injunction)	Appeal is not moot; limited injunction still warrants review and relief; case fits capable‑of‑repetition‑yet‑evading‑review.	Nationwide injunction elsewhere moots this appeal because relief here would be ineffective.	Appeal not moot; courts retain jurisdiction and exception applies (duration too short and reasonable expectation of repetition).
Statutory authority under ACA	Final rules exceed agencies’ authority because statute mandates coverage and delegates only what preventive services to cover, not who may be exempted.	Agencies have discretion to shape implementation and grant accommodations/exemptions consistent with statute and precedent.	Agencies likely lacked statutory authority to create broad religious/moral exemptions; rules likely arbitrary vis‑à‑vis statute’s text and purpose.
RFRA and substantial burden	Pre‑rule accommodation violated RFRA and agencies were authorized/required to adopt exemptions; RFRA permits rule changes to avoid violations.	Accommodation does not substantially burden religious exercise; agencies lack authority to issue blanket exemptions under RFRA; courts must adjudicate RFRA claims individually.	RFRA did not authorize the blanket exemption; the accommodation likely does not substantially burden religion, so exemptions not required.

Key Cases Cited

California v. Azar, 911 F.3d 558 (9th Cir. 2018) (prior panel decision on standing and injunction scope)
Department of Commerce v. New York, 139 S. Ct. 2551 (2019) (standing can rest on predictable effect of government action on third parties)
Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014) (RFRA framework; accommodation context)
Zubik v. Burwell, 136 S. Ct. 1557 (2016) (vacatur/remand encouraging accommodations; did not decide RFRA merits)
Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008) (preliminary injunction standard)
FCC v. Fox Television Stations, Inc., 556 U.S. 502 (2009) (standards for reviewing agency changes of policy)
City of Arlington v. FCC, 569 U.S. 290 (2013) (scope of agency statutory authority review)
FERC v. Electric Power Supply Ass'n, 136 S. Ct. 760 (2016) (interpretation of statutory text and core purpose in reviewing agency action)