Brief (Non Appeal), State of Arizona v. Yellen, No. 2:21-cv-00514 (D. Ariz.), Doc. 48 (June 18, 2021)

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A supplemental brief by Plaintiff State of Arizona, Document 48 in Case No. 2:21-cv-00514-DJH, filed 06/18/21, in the U.S. District Court for the District of Arizona against Janet Yellen, in her official capacity as Secretary of the Treasury, and others. The brief states that on June 11, the Court asked the parties to address Ohio v. Yellen and whether Arizona's requested preliminary injunction would redress the alleged harm. Arizona argues that a preliminary injunction would prevent irreparable harm and that the Ohio decision supports it. It contends that the reasons the Ohio court found an injunction ineffective are not present in this case. The brief is signed s/ Drew C. Ensign.

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“Brief (Non Appeal), State of Arizona v. Yellen, No. 2:21-cv-00514 (D. Ariz.), Doc. 48 (June 18, 2021).” Original at storage.courtlistener.com. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/brief-non-appeal-state-of-arizona-v-yellen-no-2-21-cv-00514-d-ariz-doc-4143f47a2c/, SHA-256 6e71dc74b34bab2a8d88d7b771c4e04a565f7f9caf289d2702cfc3e527f968cb.

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Case 2:21-cv-00514-DJH Document 48 Filed 06/18/21 Page 1 of 7

1 MARK BRNOVICH
ATTORNEY GENERAL
2 (Firm State Bar No. 14000)
3 Joseph A. Kanefield (No. 15838)
Brunn (Beau) W. Roysden III (No. 28698)
4 Drew C. Ensign (No. 25463)
5 Wilson Freeman (admitted pro hac vice)
Robert J. Makar (No. 33579)
6 2005 N. Central Ave
7 Phoenix, AZ 85004-1592
Phone: (602) 542-8958
8 Joe.Kanefield@azag.gov
Beau.Roysden@azag.gov
9
Drew.Ensign@azag.gov
10 Wilson.Freeman@azag.gov
Robert.Makar@azag.gov
11
Attorneys for Plaintiff State of Arizona
12 UNITED STATES DISTRICT COURT
13 DISTRICT OF ARIZONA
14
No. 2:21-cv-00514-DJH
15
STATE OF ARIZONA,
16 SUPPLEMENTAL BRIEF
Plaintiff,
17 v.
JANET YELLEN, in her official capacity
18 as Secretary of the Treasury et al.;
19 Defendants.
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Case 2:21-cv-00514-DJH Document 48 Filed 06/18/21 Page 2 of 7

1 INTRODUCTION
2 On June 11, this Court requested that the parties address the decision in Ohio v.
3 Yellen, No. 21-CV-181, 2021 WL 1903908 (S.D. Ohio May 12, 2021), and whether
4 “Plaintiff’s requested preliminary injunction would redress the alleged harm.” As set forth
5 below, a preliminary injunction would prevent irreparable harm and Ohio supports its
6 issuance. Ohio involved virtually identical issues, and notably concluded that:
7 1) “[S]tanding and ripeness were present”;
8 2) “Ohio ha[d] a substantial likelihood of showing that the ARPA violates the
9 Spending Clause”;
10 3) The Tax Mandate so was ambiguous that “the Court cannot fathom what it” meant
11 and “the federal government was largely unwilling to hazard a guess as to what it
12 meant either”; and
13 4) “[T]he (likely) unconstitutional ambiguity [of the Tax Mandate] … constitutes not
14 only an injury in fact, but also irreparable harm.” Id. at *11-14.
15 In the unique circumstances presented, however, the Ohio court concluded that a
16 preliminary injunction would not provide effective relief, given (1) the narrowness of the
17 injunction sought by Ohio, and (2) the fast-moving nature of the litigation (with permanent
18 injunctive relief fully briefed a mere 30 days later). As explained below, however, those
19 factors are not present here and this Court can craft a preliminary injunction that will
20 provide effective relief. Ohio accordingly is no obstacle. Indeed, it appears likely that the
21 Ohio court will soon grant permanent injunctive relief, which would affirmatively support
22 the State’s claims.
23 ARGUMENT
24 I. This Court Can Grant Effective Preliminary Injunctive Relief And Ohio
25 Stands As No Obstacle To Doing So
26 The May 12 Ohio decision arose in a unique context: Ohio was seeking narrow
27 relief—disclaiming any injunction broader than enjoining the Secretary’s recoupment—
28 and the case was moving so quickly that only permanent injunctive relief would address

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Case 2:21-cv-00514-DJH Document 48 Filed 06/18/21 Page 3 of 7

1 the harms that the Ohio court recognized. Moreover, Ohio had not sought consolidation
2 under Rule 65(a)(2), and instead elected for expedited briefs on final resolution of the case.
3 Ohio is therefore not an obstacle to the State’s motion here for three reasons.
4 First, this Court could either consolidate the preliminary injunction hearing with the
5 merits under Rule 65(a)(2) or expedite proceedings, as the Ohio has done. Either course
6 would obviate the issue flagged by this Court’s June 11 order and would cause no prejudice
7 to any party.1
8 Second, the issue in the Ohio case was created by the narrowness of the relief sought
9 by Ohio: “The preliminary injunction that Ohio requests here is directed solely at the
10 Secretary’s exercise of her recoupment powers.” Ohio, 2021 WL 1903908, at *14. Here,
11 however, the State has sought a blanket injunction against any and all enforcement of the
12 Tax Mandate. See Doc. 11-3.
13 This Court, unlike the Ohio one, accordingly has authority to craft effective
14 preliminary injunctive relief that would prevent irreparable harm to the State. This Court
15 could, for example, enjoin the Secretary from enforcing the Tax Mandate against any tax
16 cut in place while the preliminary injunction is in place, even if that injunction is later
17 reversed or dissolved. The Ninth Circuit notably crafted similarly flexible relief in Mi
18 Familia Vota v. Hobbs, 977 F.3d 948 (9th Cir. 2020). There, this Court had entered a
19 preliminary injunction that “extended the [voter] registration deadline by eighteen days to
20 October 23, 2020.” Id. at 951. Although the Ninth Circuit concluded that the injunction
21 “was an obvious abuse of discretion,”2 the Court nonetheless held that it would permit
22 anyone that had registered under the terms of that defective injunction to vote and further
23
1
On June 17, this Court denied the State’s request to consolidate under Rule 65(a)(2) as
24 “untimely,” as it was “was filed one week before oral argument.” Doc. 46. This Court has
authority to consolidate sua sponte, however. See Charles Alan Wright et al, 11A Fed. Prac.
25
& Proc. Civ. § 2950 (5th ed.) (“[T]he trial court can transform a preliminary-injunction
26 hearing into a consolidated hearing at any time and may do so on its own motion.”).
Moreover, Rule 65(a)(2) expressly permits consolidation even “after beginning the hearing
27 on a motion for a preliminary injunction.” Fed. R. Civ. P. 65(a)(2) (emphasis added). This
Court could thus consolidate under Rule 65(a)(2) even after the June 22 hearing.
28 2
Id. at 955 (Bybee, J., concurring); accord id. at 952-53 (majority opinion) (recognizing
four independent reasons why order was likely an abuse of discretion).

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Case 2:21-cv-00514-DJH Document 48 Filed 06/18/21 Page 4 of 7

1 even provided “a two-day grace period.” Id. at 954-55. The Ninth Circuit further observed
2 that in Andino v. Middleton, 141 S.Ct. 9 (Oct. 5, 2020), the Supreme Court had provided
3 that “‘any ballots cast before this stay issues and received within two days of this order
4 may not be rejected for failing to comply with the witness requirement.’” Mi Familia Vota,
5 977 F.3d at 954 (quoting Andino). These cases thus make clear that the equitable powers
6 of federal courts extends to issuing injunctions blessing conduct taken under their auspices
7 even if the injunction is later stayed or vacated. This Court accordingly could enjoin the
8 Secretary from enforcing the Tax Mandate in any form against tax cuts that are in effect
9 during the pendency of the preliminary injunction—which would squarely remedy the
10 irreparable harm that the Ohio court recognized would occur under the Tax Mandate (but
11 would not be remedied under Ohio’s more-limited request for relief).
12 Similarly, and in addition, this Court could craft a preliminary injunction that
13 permits the State to certify under ARPA with the “indirectly offset” aspect of the Tax
14 Mandate preliminarily enjoined, with a proviso that if the preliminary injunction is
15 subsequently reversed, dissolved, or not converted into permanent injunctive relief, then
16 the State could withdraw its certification and forego future ARPA funds. Such relief would
17 give the State critical certainty as to what the legal effect of its certification would be—
18 which, absent judicial construction, is woefully unclear. This lack of clarity was so stark
19 that the Ohio court “c[ould] not fathom what it would mean to “indirectly offset a reduction
20 in the net tax revenue.” 2021 WL 1903908, at *12. And then, if the clarity provided by the
21 binding construction embedded in a preliminary injunction is later dissolved, the State
22 should be permitted to withdraw a certification made with the reassurance provided by that
23 preliminary injunction no longer in place.
24 Third, the Ohio court was addressing the State’s injury under a very different
25 timeframe and different factual circumstances. The Ohio litigation is notably moving much
26 faster than this litigation: although Ohio filed its motion for a preliminary injunction only
27 19 days before the State, the Ohio court resolved that motion more than a month ago on
28 May 12. Similarly, permanent injunctive relief has now been fully briefed in the Ohio case;

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Case 2:21-cv-00514-DJH Document 48 Filed 06/18/21 Page 5 of 7

1 a mere 30 days after that May 12 decision. In that posture, a preliminary injunction in the
2 extremely short window between May 12 and the Ohio court’s likely imminent decision
3 on permanent injunctive relief was unlikely to prevent irreparable harm (particularly given
4 the narrowness of the relief sought).
5 None of that is true here: there is no schedule for briefing permanent injunctive
6 relief, and any preliminary injunctive relief is therefore likely to be in effect for longer than
7 the short time-window at issue in the Ohio case. Indeed, the Arizona Legislature is
8 currently attempting to pass a budget right now in the shadow of the Tax Mandate. See,
9 e.g., Bob Christie, Arizona Legislature still stuck on budget terms after hiatus, Fox10
10 Phoenix (Jun. 12, 2021), https://www.fox10phoenix.com/news/arizona-legislature-still-
11 stuck-on-budget-terms-after-hiatus1. Without knowing the actual effect/validity of the Tax
12 Mandate, this is extremely difficult to do. But removing the threat of enforcement during
13 the pendency of these debates would provide valuable clarity, even if it did not provide
14 guaranteed protection.
15 For all of these reasons, this Court could craft effective preliminary injunctive relief
16 that would prevent at least some irreparable harm (the existence of which the Ohio court
17 already found), and the Ohio decision is no hindrance to the preliminary injunction that the
18 State has requested in this context.
19 II. Ohio Affirmative Supports All Other Aspects Of The State’s Motion.
20 It is also worth observing that the Secretary’s reliance on the Ohio decision (Doc.
21 39) as supporting her arguments is a demonstration of cherry-picking that is near peer-less
22 in its audacity. Conspicuously absent in her notice is any acknowledgment of the Ohio
23 court’s holdings that Ohio had Article III standing, that it challenge was ripe, and that Ohio
24 was likely to prevail on the merits and would suffer irreparable harm from the Tax
25 Mandate. Significantly, the Ohio court determined:
26 • The merits were not “particularly close.” Ohio, 2021 WL 1903908, at *1.
27 • “[N]ot only does the Constitution require Congress to tell States that there are
28 conditions, but Congress must also tell States what those conditions are.” Id. at *5.

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Case 2:21-cv-00514-DJH Document 48 Filed 06/18/21 Page 6 of 7

1 • “It is Congress passing the Act, not the State accepting the money, that violates the
2 Constitution…. So, if the ARPA violates the Spending Clause, that violation already
3 has occurred.” Id. at *7.
4 • “If Ohio is correct on the merits of its Spending Clause claim…, then Congress has
5 fallen short in delivering the constitutionally required clarity. If so, Ohio suffered
6 an injury in its role as sovereign.” Id. at *8.
7 • “Moreover, as part of that budgeting process, Ohio was (and is) considering
8 changes to its tax laws, and a lack of certainty as to the consequences … had (and
9 still has) an immediate impact on the state.” Id. “Being told to wait for the federal
10 government to act provides no relief on either front, and does nothing to avoid the
11 injury in fact.” Id.
12 • In NFIB v. Sebelius, 567 U.S. 519 (2012), “not a single one of the Justices thought
13 that standing provided an impediment to reaching those merits,” even though
14 “States were challenging, in 2012, an amendment to the Medicaid funding statute
15 … that would impose financial consequences starting in 2014.” Id. at *10.
16 • “The issue here is not that the Secretary may seek recoupment in the future—a
17 dispute that may not be ripe. Rather, the issue is that Ohio alleges it does not have
18 the constitutionally-required clarity at present.” Id.
19 • [T]he federal government claimed that the Spending Clause does not require that
20 the substance of the conditions be clear, but merely that the statute make clear that
21 conditions exist. Wrong. As noted above, Supreme Court and Sixth Circuit
22 precedent directly reject that view.” Id. at *12.
23 * * * * *
24 The upshot is that what the Secretary portrayed to this Court as a victory is, in
25 reality, likely little more than a short-term stay of execution—which even now glosses over
26 completely Ohio’s victory on standing and ripeness, as well as the Ohio court’s conclusion
27 that Ohio (and by extension Arizona here) was likely to prevail on the merits. To the extent
28 that Ohio is a victory for the Secretary at all, it is a likely Pyrrhic and fleeting one.

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Case 2:21-cv-00514-DJH Document 48 Filed 06/18/21 Page 7 of 7

1 RESPECTFULLY SUBMITTED this 18th day of June, 2021.
2
MARK BRNOVICH
3 ATTORNEY GENERAL

4 By s/ Drew C. Ensign
5 Joseph A. Kanefield (No. 15838)
Brunn W. Roysden III (No. 28698)
6
Drew C. Ensign (No. 25463)
7 Wilson Freeman (admitted pro hac vice)
Robert J. Makar (No. 33579)
8 Assistant Attorneys General
9 Attorneys for Plaintiff Arizona
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