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Newland v. Burwell

United States District Court, D. Colorado

March 16, 2015

WILLIAM NEWLAND, PAUL NEWLAND, JAMES NEWLAND, CHRISTINE KETTERHAGEN, ANDREW NEWLAND, and HERCULES INDUSTRIES, INC., Plaintiffs,
v.
SYLVIA M. BURWELL, in her official capacity as Secretary of the United States Department of Health and Human Services; THOMAS E. PEREZ, in his official capacity as Secretary of the United States Department of Labor; JACOB LEW, in his official capacity as Secretary of the United States Department of the Treasury; UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES; UNITED STATES DEPARTMENT OF LABOR; and UNITED STATES DEPARTMENT OF THE TREASURY; Defendants

For William Newland, Paul Newland, James Newland, Christine Ketterhagen, Andrew Newland, Hercules Industries, Inc., a Colorado Corporation, Plaintiffs: David Andrew Cortman, Alliance Defending Freedom-Lawrenceville, Lawrenceville, GA; Erik William Stanley, Alliance Defending Freedom-Leawood, Leawood, KS; Kevin H. Theriot, Alliance Defending Freedom-Scottsdale, Scottsdale, AZ; Matthew Scott Bowman, Gregory Scott Baylor, Steven H. Aden, Alliance Defending Freedom-DC, Washington, DC; Michael Jeffrey Norton, Alliance Defending Freedom-Greenwood Village, Greenwood Village, CO.

For Kathleen Sebelius, in her official capacity as Secretary of the United States Department of Health and Human Services, Hilda Solis, in her official capacity as Secretary of the United States Department of Labor, Timothy Geithner, in his official capacity as Secretary of the United States Department of the Treasury, United States Department of Health and Human Services, United States Department of Labor, United States Department of the Treasury, Defendants: Michelle Renee Bennett, U.S. Department of Justice-DC-Federal Programs, Washington, DC.

PERMANENT INJUNCTION

John L. Kane, Senior United States District Judge.

The Tenth Circuit Court of Appeals affirmed my decision granting Plaintiffs a preliminary injunction barring enforcement of an HHS regulation requiring employer-provided group health plans to cover certain contraceptive drugs and services. Order and Judgment (Doc. 58). The parties agree that a permanent injunction should be entered in favor of Plaintiffs on their RFRA claim, but they disagree as to its scope.

Based on the inherent jurisdictional authority of this court and upon consideration of my July 27, 2012, Order granting Plaintiff's Motion for Preliminary Junction (Doc. 30), the rulings of the Tenth Circuit and the Supreme Court, the parties' reliance on the same factual record in existence on July 27, 2012, the parties' Joint Status Report (Doc. 69), the attached Memorandum Opinion, and the entirety of the pleadings and arguments offered in this case, and for good cause shown,

IT IS ORDERED that judgment is entered in favor of Plaintiffs and against Defendants on Plaintiffs' claim under the Religious Freedom Restoration Act, 42 U.S.C. § § 2000bb et seq.

IT IS FURTHER ORDERED that Defendants, their employees, agents, and successors in office are permanently ENJOINED from, directly or indirectly, (1) enforcing against Hercules Industries, Inc. (" Hercules" ) any regulation promulgated or amended pursuant to 42 U.S.C. § § 300gg-13(a)(4), or otherwise, requiring Hercules to provide health insurance coverage for abortifacients, contraception, sterilization, and related education and counseling to its employees; (2) from applying any penalties, fines, or assessments for noncompliance with any regulation promulgated or amended pursuant to 42 U.S.C. § § 300gg-13(a)(4), or otherwise, requiring Hercules to provide health insurance coverage for abortifacients, contraception, sterilization and related education and counseling to its employees, including those found in 26 U.S.C. § 4980D and 29 U.S.C. § § 1132 and 1185d; and (3) from taking any other actions based on noncompliance with any regulation promulgated or amended pursuant to 42 U.S.C. § § 300gg-13(a)(4), or otherwise, requiring Hercules to provide health insurance coverage for abortifacients, contraception, sterilization and related education and counseling to its employees;

IT IS FURTHER ORDERED that in the event Defendants seek relief or modification of this Permanent Injunction, Defendants must first move this Court to modify or dissolve this injunction by showing that a significant change either in factual conditions or in law renders continued enforcement of the injunction detrimental to the public interest; and

IT IS FURTHER ORDERED that any petition by Plaintiffs for attorney fees or costs shall be submitted on or before 45 days (or the next business day if that day falls on a weekend or a court holiday) from the date this judgment is issued.

MEMORANDUM OPINION

William Newland, Paul Newland, James Newland, Christine Ketterhagen, and Andrew Newland (the " Newlands" ) and Hercules Industries, Inc., their closely-held family corporation (collectively the " Plaintiffs" ), filed this suit seeking relief from the Defendants' actions in implementing the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (March 23, 2010) and Pub. L. No. 111-152 (March 30, 2010) (" ACA" ). Specifically, the Plaintiffs objected to the regulations enforcing a portion of the statutory Preventive Services Mandate, 42 U.S.C. § § 300gg-13(a)(4), which would have required them to pay for or otherwise facilitate insurance coverage for abortifacient drugs, contraception, sterilization, and related education and counseling. See 26 C.F.R. § 54.9815-2713(a)(1)(iv); 29 C.F.R. § 2590.715-2713(a)(1)(iv); 45 C.F.R. § 147.130(a)(iv) (collectively, along with the HRSA guidelines requiring no-cost sharing coverage of FDA-approved contraception methods and the statutory penalties for non-compliance, the " Contraception Mandate" ).

On July 27, 2012, I ordered a preliminary injunction temporarily prohibiting Defendants from enforcing the Preventive Services Mandate against Plaintiffs, including the substantive requirement imposed in 42 U.S.C. § 300gg-13(a)(4), the application of the penalties found in 26 U.S.C. § § 4980D & 4980H and 29 U.S.C. § 1132, and any determination that the requirements were applicable to Plaintiffs. Preliminary Injunction Order (Doc. 30) at 17-18.

Defendants appealed the entry of the preliminary injunction to the Tenth Circuit, which affirmed my decision. Relying on its en banc decision in Hobby Lobby Stores, Inc. v. Sebelius, the court found that Hercules was likely to succeed on the merits of its RFRA claim. Order and Judgment (Doc. 58) at 6-7. The Tenth Circuit also found that my determinations that Hercules would suffer irreparable harm, that the balance of harms tipped in favor of Hercules, and that the public interest supported the preliminary injunction were not an abuse of discretion. Id. at 7-9. The Tenth Circuit remanded the case with instructions to abate further proceedings pending the Supreme Court's resolution of Burwell v. Hobby Lobby Stores, Inc., another challenge to the Contraception Mandate.[1] Id. at 9-10.

On June 30, 2014, the Supreme Court issued its decision in Hobby Lobby, concluding that the Contraceptive Mandate, as applied to closely held corporations, violates the Religious Freedom Restoration Act (" RFRA" ). Accordingly, I reinitiated proceedings to resolve Plaintiffs' challenge to the Contraceptive Mandate.

On remand, the parties agree that a permanent injunction should be entered in favor of Plaintiffs on their RFRA claim, but they disagree as to the precise nature of that judgment. Specifically, the parties dispute the scope of the permanent injunction to which Plaintiffs are entitled.

Plaintiffs suggest that I should simply convert the preliminary injunction into a permanent injunction. Defendants contend that the language of the preliminary injunction is unnecessarily broad and should be more closely tethered to the holding in the Supreme Court's Hobby Lobby decision. Although the permanent injunction order accompanying this memorandum resolves these issues, I write separately to address more thoroughly the parties' disputes and the basis for the permanent injunction entered.

I begin with a brief discussion of the law of injunctions before summarizing the pertinent portions of the Tenth Circuit's and the Supreme Court's Hobby Lobby decisions. I then summarize the parties' specific disagreements regarding the permanent injunction and resolve each point of contention seriatim.

LEGAL BACKGROUND

Law of Injunctions

It is well established that an injunction is a form of equitable relief. See Signature Props. Int'l Ltd. P'ship v. City of Edmond, 310 F.3d 1258, 1268 (10th Cir. 2002) (citing Roe v. Cheyenne Mountain Conference Resort, Inc., 124 F.3d 1221, 1231 (10th Cir. 1997)). Consequently, my discretion in formulating an injunction is informed by equitable principles. ClearOne Commc'ns, Inc. v. Bowers, 643 F.3d 735, 752 (10th Cir. 2011) (citing Garrison v. Baker Hughes Oilfield Operations, Inc., 287 F.3d 955, 962 (10th Cir. 2002)). My authority to provide injunctive relief survives the discontinuance of the illegal conduct giving rise to the need for an injunction, F.T.C. v. Accusearch Inc., 570 F.3d 1187, 1201 (10th Cir. 2009) (citing United States v. W.T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894, 97 L.Ed. 1303 (1953)). Furthermore, the prevailing party " has a right to expect that prospective relief will be maintained unless the injunction is vacated or modified by the court." Dowell by Dowell v. Bd. of Educ. of Okla. City Pub. Sch., Indep. Dist. No. 89, 795 F.2d 1516, 1521 (10th Cir. 1986) (citations omitted).

Discretion is not, however, without limits. The injunction " must be narrowly tailored to remedy the harm shown." ClearOne Commc'ns, Inc., 643 F.3d at 752. The order entering the injunction must state the reasons why the injunction is issued, specifically state the terms of the injunction, and describe in reasonable detail the act or acts restrained or required. Fed.R.Civ.P. 65(d). Furthermore, where an injunction implicates an act of Congress, I cannot " ignore the judgment of Congress, deliberately expressed in legislation." United States v. Oakland Cannabis Buyers' Co-op., 532 U.S. 483, 497, 121 S.Ct. 1711, 149 L.Ed.2d 722 (2001). Even where I have cause to issue an injunction regarding a congressional act, Congress is free to change the terms of the underlying substantive law, and " it is those amended laws--not the terms of past injunctions--that must be given prospective legal effect." Biodiversity Assocs. v. Cables, 357 F.3d 1152, 1165 (10th Cir. 2004). The same is not true with respect to changes in administrative regulations, which are evaluated in the exercise of discretion.

Finally, an injunction " must be obeyed until it is reversed, even if it is erroneously issued, and in some instances even if the court that issued the injunction lacked jurisdiction of the subject matter." Dan B. Dobbs, Law of Remedies: Damages -- Equity -- Restitution 105 (2007). Nevertheless, a party may seek to modify or dissolve an injunction in the court where the injunction was entered if " a significant change either in factual conditions or in law renders continued enforcement detrimental to the public interest." Horne v. Flores, 557 U.S. 433, 447, 129 S.Ct. 2579, 174 L.Ed.2d 406 (2009) (quotation omitted). In such an event, " the party seeking relief bears the burden of establishing that changed circumstances warrant relief." Id. A district court will modify or dissolve an injunction on the basis of a change in underlying statutes, but it is the court, not the parties, that is charged with the authority to do so. See Miller v. French, 530 U.S. 327, 341-42, 120 S.Ct. 2246, 147 L.Ed.2d 326 (2000). The authority to modify or dissolve an injunction is one of the pivotal reasons why courts retain jurisdiction over such equitable proceedings.

With these principles in mind, I turn to the pertinent portions of the Tenth Circuit's and the Supreme Court's Hobby Lobby decisions.

Hobby Lobby

The owners of Hobby Lobby Stores, Inc. and Mardel, Inc. filed suit challenging the regulations imposing the Contraceptive Mandate under RFRA, the Free Exercise Clause of the First Amendment, and the Administrative Procedure Act. Like Hercules, both Hobby Lobby and Mardel are closely-held corporations whose owners run them according to Christian principles. Hobby Lobby Stores, Inc. v. Sebelius, 723 F.3d 1114, 1120 (10th Cir. 2013). Like the Newlands, the Greens (the owners of Hobby Lobby and Mardel) objected to the Contraceptive Mandate because it violated their religious beliefs. Id. at 1120-21. After the district court denied their motion for a preliminary injunction, Hobby Lobby, Mardel, and the Greens appealed to the Tenth Circuit. Id. at 1125. They sought, and were granted, initial en banc consideration of their appeal. Id.

The Tenth Circuit overturned the district court's decision, finding that Hobby Lobby and Mardel had established a strong likelihood of success on the merits of their RFRA claim.[2] Id. at 1121. As an initial matter, the Tenth Circuit concluded that the corporations had standing to challenge the Contraceptive Mandate, but it did not reach a decision regarding the owners' individual standing to challenge the Mandate. Id. at 1126.

Turning to the merits of Hobby Lobby's and Mardel's RFRA claim, the Tenth Circuit concluded that a closely-held corporation can exercise religion, within the scope of RFRA, Id. at 1132. The Tenth Circuit then concluded that the Contraceptive Mandate substantially burdens a corporation's exercise of religion where the corporation is closely-held, the corporation's owners unanimously share religious beliefs by which they govern the corporation, and the Contraceptive Mandate is contrary to the owners' sincerely held religious beliefs. Id. at 1138-43.

Having determined that Hobby Lobby and Mardel met their burden of establishing a substantial burden, the Tenth Circuit next considered whether the government had met its burden of showing that the Contraceptive Mandate serves a compelling government interest and that the challenged regulation constitutes the least restrictive means of serving that interest. As a threshold matter, the Tenth Circuit held that the Contraceptive Mandate did not serve a compelling government interest, because the government's asserted interest in enforcing the Contraceptive Mandate against Hobby Lobby and Mardel was too broadly formulated. Id. at 1143. The court also held that the existence of numerous exemptions from the Contraceptive Mandate undermined the government's argument that it had a compelling interest in enforcing the Contraceptive Mandate against Hobby Lobby. Id. at 1143-44. Furthermore, the Tenth Circuit held that, even if there was a compelling interest, the Contraceptive Mandate was not the least restrictive means of serving that interest. Id. at 1144. Accordingly, the Tenth Circuit remanded the case to the district court for further consideration of the remaining preliminary injunction factors.

The Supreme Court upheld the Tenth Circuit's en banc decision, holding that the regulations imposing the Contraceptive Mandate, as applied to closely-held corporations with sincerely held religious beliefs contrary to the Mandate's requirements, violated RFRA. Burwell v. Hobby Lobby Stores, Inc., 134 S.Ct. 2751, 2759, 189 L.Ed.2d 675 (2014). The basis for the Supreme Court's decision was not, however, identical to that of the Tenth Circuit.

Similar to the Tenth Circuit, the Supreme Court held that a closely-held corporation can exercise religion under RFRA, id. at 2775, and that the Contraceptive Mandate violated Hobby Lobby's sincerely-held religious beliefs. Id. at 2779. Unlike the Tenth Circuit, the Supreme Court did not determine whether the Contraceptive Mandate furthered a compelling governmental interest. Id. at 2780. Instead, the Supreme Court assumed the Mandate advanced a compelling interest, but it held that the Mandate was not the least restrictive means of furthering that interest. Id. In making this finding, the Court relied heavily on the existing accommodation for non-profit organizations with religious objections, finding that such an accommodation " does not impinge on [Hobby Lobby's] religious belief that providing insurance coverage for the contraceptives at issue here violates [its] religion, and it serves HHS's state interests equally well." Id. at 2782.

With these principles in mind, I turn to this case and the parties' arguments regarding the scope of and the ...


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