Order on Motion to Transfer Related Case, State of Arizona v. Yellen, No. 2:21-cv-00514 (D. Ariz.), Doc. 72 (April 22, 2022)

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Order in State of Arizona v. Janet Yellen, et al., No. CV-21-00514-PHX-DJH, Doc. 72, District of Arizona, filed April 22, 2022. The Court considers Defendants' Motion to Transfer (Doc. 68), which seeks to transfer Ducey v. Yellen, CV-22-00112-PHX-SPL, to this Court under Local Rule 42.1. It finds that the Arizona Matter remains pending for purposes of Local Rule 42.1(a) but that the two matters cannot be said to be substantially similar in transaction or event, and that they present substantially different questions of law. It finds the parties substantially similar and no potential for a significant duplication of labor, and denies the Motion. The order names Diane J. Humetewa, United States District Judge.

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“Order on Motion to Transfer Related Case, State of Arizona v. Yellen, No. 2:21-cv-00514 (D. Ariz.), Doc. 72 (April 22, 2022).” Original at storage.courtlistener.com. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/order-on-motion-to-transfer-related-case-state-of-arizona-v-yellen-no-a4fac9f580/, SHA-256 4790af95f6e2d7188172d57385bf5f964911a06837b90fb59224d4fc4a93a4e2.

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Case 2:21-cv-00514-DJH Document 72 Filed 04/22/22 Page 1 of 5

1 WO
2
3
4
5
6 IN THE UNITED STATES DISTRICT COURT
7 FOR THE DISTRICT OF ARIZONA
8
9 State of Arizona, No. CV-21-00514-PHX-DJH
10 Plaintiff, ORDER
11 v.
12 Janet Yellen, et al.,
13 Defendants.
14
15 Pending before the Court is Defendants’ Motion to Transfer (Doc. 68). Plaintiff has
16 filed a Response (Doc. 69), and Defendant filed a Reply (Doc. 70). For the following
17 reasons, the Court denies the Motion.
18 I. Background
19 In this action, Plaintiff, the State of Arizona (“Arizona”), challenged a provision
20 within American Rescue Plan Act of 2021 (“ARPA”), which restricted how States could
21 use federal funds intended to combat the Covid-19 pandemic (the “Arizona Matter”).
22 Specifically, Arizona challenged 42 U.S.C. § 802(c)(2)(A), which states that recipients
23 shall not use ARPA funds to “directly or indirectly offset a reduction in net tax revenue . .
24 . .” (the “Offset Restriction”). If such an offset were found, Defendant United States
25 Department of the Treasury could recoup the amount of funds that had violated the
26 Restriction. 42 U.S.C. § 802(e). Arizona challenged § 802(c)(2)(A) on the grounds that
27 the Offset Restriction was so ambiguous that it violated the spending clause. (Doc. 1).
28 Arizona also argued that the Offset Restriction infringed on its state sovereign immunity.
Case 2:21-cv-00514-DJH Document 72 Filed 04/22/22 Page 2 of 5

1 (Id.)
2 For reasons explained in the Court’s prior Order, Arizona lacked standing to pursue
3 the case because it had not demonstrated a concrete injury. (Doc. 61). In part of its
4 analysis, the Court had found there was no realistic danger that Defendants were seeking
5 to recoup any of the ARPA funds under 42 U.S.C. § 802(e). (Doc. 61 at 7–8). The Court,
6 therefore, dismissed this action for lack of subject matter jurisdiction. Plaintiff has since
7 filed an appeal with the Ninth Circuit. (Doc. 63).
8 Now, Defendants, the United States Department of the Treasury (the “Treasury”)
9 and Treasury officials, seek to transfer the matter of Ducey v. Yellen, CV-22-00112-PHX-
10 SPL (the “Ducey Matter”), to this Court under Local Rule 42.1. That matter, brought by
11 Arizona governor Douglas Ducey (“Governor Ducey”), deals with the potential
12 recoupment of ARPA funds for the alleged violation of 42 U.S.C. § 802(c)(1). As opposed
13 to the Offset Restriction, § 802(c)(1) describes what types of expenditures are permissible,
14 such as supporting essential workers, small businesses, and infrastructure, among other
15 uses (the “Permitted Uses”).
16 The dispute in the Ducey Matter concerns whether Arizona’s use of ARPA funds in
17 its “Plus-Up” program is permissible under the Permitted Uses. As alleged by Governor
18 Ducey, Defendants, had argued that the Plus-Up program’s use of ARPA funds was
19 impermissible, because it uses the funds to provide tuition relief for families so long as
20 schools do not enact a policy require face coverings. In the Duce Matter, Governor Ducey
21 argues that this use of funds remains consistent with Permitted Uses, and he brings claims
22 under the Administrative Procedure Act (“APA”) challenging Defendants’ contrary
23 statutory interpretation. He also seeks judicial declarations that 42 U.S.C. § 802, as a
24 whole, is unconstitutionally ambiguous and that Defendants have exceeded their power
25 under the non-delegation doctrine.
26 II. Discussion
27 The Local Rules provide that when two cases are pending before different judges,
28 parties may transfer a case to a single judge provided that the cases: “(1) arise from

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Case 2:21-cv-00514-DJH Document 72 Filed 04/22/22 Page 3 of 5

1 substantially the same transaction or event; (2) involve substantially the same parties or
2 property; (3) involve the same patent, trademark, or copyright; (4) call for determination
3 of substantially the same questions of law; or (5) for any other reason would entail
4 substantial duplication of labor if heard by different Judges.” LRCiv 42.1(a).
5 Governor Ducey first argues that Local Rule 42.1(a) cannot serve to consolidate the
6 two matters because the original matter in this Court is no longer pending. (Doc. 69 at 2).
7 District courts have a “large measure of discretion” when interpreting and applying their
8 local rules. Lance, Inc. v. Dewco Servs., Inc., 422 F.2d 778, 784 (9th Cir. 1970). When
9 determining what “pending” means courts across the country have widely determined that
10 this term includes cases pending on appeal. Carrera v. First Am. Home Buyers Prot. Co.,
11 2012 WL 13012698, at *3 (C.D. Cal. Jan. 24, 2012) (collecting cases); Eikenberry v.
12 Callahan, 653 F.2d 632, 635 (D.C. Cir. 1981) (“The ordinary meaning of ‘pending’
13 includes cases pending on appeal.”). Therefore, the Court finds that the Arizona Matter
14 remains pending for purposes of Local Rule 42.1(a).
15 a. Similarity of Transaction or Event
16 There is no doubt that there are some similarities in both matters. Each involves the
17 restrictions placed on the use of ARPA funds, and each seeks to declare the restrictions as
18 unconstitutionally ambiguous. Governor Ducey argues that the Ducey Matter is different
19 because it involves a challenge to administrative action that occurred after the events giving
20 rise to the Arizona Matter. (Doc. 69 at 6). The Court finds this point persuasive. Although
21 both matters dealt with the same underlying statute, the context out of the matters are
22 factually distinct. The Yellen Matter dealt with a challenge to the Offset Restriction’s bare
23 language, whereas the Ducey Matter deals with Defendant’s interpretation of the Permitted
24 Uses and whether the Plus-Up program is a permitted use. Therefore, while these matters
25 are related, the Court finds that they cannot be said to be substantially similar.
26 b. Similarity of the Parties
27 Next, the Court finds that the parties in both matters are substantially similar.
28 Governor Ducey argues that the parties are not substantially similar because he was not a

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Case 2:21-cv-00514-DJH Document 72 Filed 04/22/22 Page 4 of 5

1 party to the Arizona Matter. (Doc. 69 at 6). This is true, but the Defendants in both matters
2 are the same and although Governor Ducey was not named in the Arizona Matter, he was
3 certainly involved as the “official authorized to accept and expend funds received from the
4 federal government or any agency thereof.” (Doc. 1 at ¶ 11) (citing A.R.S. § 41-101.01).
5 Therefore, because the only difference in the parties is that one Plaintiff is the state of
6 Arizona and the other is Arizona’s governor, the parties are substantially similar.
7 c. Questions of Law
8 As to the questions of law, the Court finds the two matters present substantially
9 different questions. The Arizona Matter challenged the Offset Restriction on its face, and
10 the Ducey Matter challenges Defendants’ interpretation of the Permitted Uses. The Court
11 recognizes that the Arizona Matter was dismissed because the State of Arizona failed to
12 demonstrate a concrete injury and that, now, the Ducey Matter faces a similar challenge
13 from Defendants in a pending Motion to Dismiss. But this appears to be the only
14 significant question that overlaps. The merits of each case, otherwise, depend on distinct
15 legal issues.
16 d. Potential Duplication of Labor
17 The Court’s familiarity with ARPA’s history, might save some time in the Court’s
18 evaluation of the issues in the Ducey Matter. But this background information is easily
19 understood and would hardly pose a significant burden on any other court. Therefore, there
20 is no potential for a significant duplication of labor.
21 III. Conclusion
22 Overall, the Court finds that the similarities between the Arizona and Ducey matter
23 do not warrant granting Defendants’ Motion to Transfer.
24 …
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Case 2:21-cv-00514-DJH Document 72 Filed 04/22/22 Page 5 of 5

1 Accordingly,
2 IT IS HEREBY ORDERED that Defendants’ Motion to Transfer (Doc. 68) is
3 DENIED.
4 Dated this 22nd day of April, 2022.
5
6
7 Honorable Diane J. Humetewa
8 United States District Judge

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