Reply to Response to Motion to Consolidate/Transfer Cases, State of Arizona v. Yellen, No. 2:21-cv-00514 (D. Ariz.), Doc. 70 (February 22, 2022)

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Defendants' reply in further support of their motion to transfer, in State of Arizona v. Yellen, Case No. 2:21-cv-00514-DJH, in the U.S. District Court for the District of Arizona, Document 70, filed February 22, 2022; the page lists related case 2:22-cv-00112-SPL. Defendants state that they moved to transfer Ducey v. Yellen, 2:22-cv-00112, to the Honorable Diane J. Humetewa under Local Rule 42.1. The reply argues that Arizona v. Yellen is still "pending" even though it is on appeal, that the parties in the two cases are substantially similar, and that transfer would avoid a substantial duplication of labor. The signature block names Stephen Ehrlich and Michael P. Clendenen, Trial Attorneys, Civil Division, Federal Programs Branch, U.S. Department of Justice, with /s/ Stephen Ehrlich.

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“Reply to Response to Motion to Consolidate/Transfer Cases, State of Arizona v. Yellen, No. 2:21-cv-00514 (D. Ariz.), Doc. 70 (February 22, 2022).” Original at storage.courtlistener.com. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/reply-to-response-to-motion-to-consolidate-transfer-cases-state-of-ari-420727d6b8/, SHA-256 561b7bb3a1e4dcd7a4e47ac1c050af1cabc0109374d1ddf1f276928d72d35962.

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Case 2:21-cv-00514-DJH Document 70 Filed 02/22/22 Page 1 of 8

1 BRIAN M. BOYNTON
Principal Deputy Assistant Attorney General
2 BRIAN D. NETTER
3 Deputy Assistant Attorney General
ALEXANDER K. HAAS
4
Director, Federal Programs Branch
5 BRIGHAM J. BOWEN
6 Assistant Director, Federal Programs Branch
MICHAEL P. CLENDENEN
7
STEPHEN EHRLICH
8 Trial Attorneys
9
U.S. Department of Justice
Civil Division, Federal Programs Branch
10 100 L Street, NW
11 Washington, DC 20005
Tel.: (202) 305-9803
12
Email: stephen.ehrlich@usdoj.gov
13
Counsel for Defendants
14
15
UNITED STATES DISTRICT COURT
16 DISTRICT OF ARIZONA
17
Case No. 2:21-cv-00514-DJH
18 State of Arizona,
19 Related case: 2:22-cv-00112-SPL
Plaintiff,
20
21 v. DEFENDANTS’ REPLY IN
FURTHER SUPPORT OF THEIR
22
Janet Yellen, in her official capacity MOTION TO TRANSFER
23 as Secretary of the Treasury, et al.,
24
Defendants.
25
26
27
28
Case 2:21-cv-00514-DJH Document 70 Filed 02/22/22 Page 2 of 8

1 Defendants previously moved for an order transferring Ducey v. Yellen,
2 2:22-cv-00112, to the Honorable Diane J. Humetewa under Local Rule 42.1 be-
3 cause it is related to Arizona v. Yellen, 2:21-cv-00514-DJH. In that motion, Defend-
4 ants explained that both cases involve substantially the same parties, arise from
5 the American Rescue Plan Act (“Rescue Plan” or “Act”), call for a determination
6 of similar legal issues, and would advance judicial economy if they were related.
7 Defs.’ Mot. at 1–3, ECF No. 68. In response, Plaintiff resorts to ad hominem at-
8 tacks, claiming that Defendants’ routine procedural motion somehow “is illus-
9 trative of Defendants’ willingness to outright ignore plain language of ARPA and
10 now the local procedural rules of this Court.” Pl.’s Opp’n at 1, 10, ECF No. 69.
11 Stripped of its rhetoric and aspersions, Plaintiff’s opposition to transfer is
12 little more than an attempt to prematurely argue the underlying legal issues of
13 this case. Defendants are happy to argue those legal issues at the appropriate
14 time and are confident they should prevail before either Judge Humetewa or
15 Judge Logan. But the issue in this motion is simply whether it is more efficient
16 for Judge Humetewa—who has already handled one case arising out of the Res-
17 cue Plan and is familiar with its contours and enforcement regime—to handle
18 Ducey v. Yellen. Under Local Rule 42.1, the answer is yes.
19 I. RULE 42.1 APPLIES BECAUSE BOTH DUCEY V. YELLEN AND ARIZONA V. YELLEN
ARE “PENDING” CASES.
20
21 Invectives aside, Plaintiff’s first argument regarding transfer is that Local
22 Rule 42.1 does not apply because that rule “limits transfers to when ‘two or more
23 cases are pending before different Judges,’” and Arizona v. Yellen is not “pending”
24 because it is now on appeal. Pl.’s Oppn at 1 (quoting LRCiv 42.1(a)). Plaintiff
25 cites nothing for that interpretation of “pending,” which is unsurprising because
26 courts have long held that “pending” cases include those on appeal. See Eik-
27 enberry v. Callahan, 653 F.2d 632, 635 (D.C. Cir. 1981) (“The ordinary meaning of
28 ‘pending’ includes cases pending on appeal.”); Carrera v. First Am. Home Buyers

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1 Prot. Co., 2012 WL 13012698, at *3 (C.D. Cal. Jan. 24, 2012) (collecting cases for the
2 proposition that a case is “pending” for purposes of the first-to-file rule even
3 when pending on appeal). So Arizona v. Yellen is still “pending” under Local
4 Rule 42.1 and Ducey v. Yellen may be straightforwardly transferred to Judge Hu-
5 metewa.
6 II. THE RULE 42.1 FACTORS FAVOR TRANSFER.
7 As for the Rule 42.1 factors, Plaintiff attempts to obfuscate the relevant in-
8 quiry with unnecessary rhetoric and premature argument of the underlying legal
9 merits. But, when analyzed properly, all of the Rule 42.1 factors favor transfer.
10 A. Ducey v. Yellen and Arizona v. Yellen involve functionally identical
parties, easily meeting the test for “substantially similar” parties.
11
12 As to whether both Ducey v. Yellen and Arizona v. Yellen “involve substan-
13 tially the same parties,” the answer is almost axiomatic. LRCiv 42.1(a). As De-
14 fendants previously explained, the defendants in both cases—the Secretary of the
15 Treasury, the Acting Inspector General of the Treasury Department, and the
16 Treasury Department itself—are identical. Defs.’ Mot. at 2. Plaintiff does not
17 address this point at all, instead arguing that the plaintiffs in the two cases—the
18 State of Arizona and the Governor of Arizona—supposedly have different inter-
19 ests. Pl.’s Opp’n at 5–6. Of course, even if that were true, the fact that three of
20 the four parties are the same across both cases would easily satisfy this factor;
21 the Rule speaks only of “substantially the same parties,” not totally overlapping
22 parties. LRCiv 42.1(a) (emphasis added).
23 Regardless, it makes no sense to say that the State of Arizona and the Gov-
24 ernor of Arizona, suing in his official capacity, represent different interests: both
25 are representing the sovereign interests of the State in how they spend Con-
26
27
28

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1 gress’s appropriated Rescue Plan funds. “[F]or all intents and purposes the gov-
2 ernor’s presence in the lawsuit means that the state is a party as well.”1 Lac Courte
3 Oreilles Band of Lake Superior Chippewa Indians of Wis. v. United States, 2002 WL
4 32350046, at *1 (W.D. Wis. Nov. 20, 2002). That’s why courts treat state officials
5 as equivalent to the State when sued in their official capacities. Hafer v. Melo, 502
6 U.S. 21, 25 (1991). And that’s why this District finds “substantially similar par-
7 ties” for purposes of Rule 42.1 where there are different named parties that all
8 function as representatives of the same sovereign. See Grand Canyon Skywalk
9 Dev., LLC v. Sa Nyu Wa, Inc., 2012 WL 6101901, at *3 (D. Ariz. Nov. 21, 2012)
10 (finding substantially the same parties, despite an additional twelve Tribal Coun-
11 cil defendants in one case, because “the pleadings largely treat the council mem-
12 bers as surrogates for the Tribe or Tribal Council”). If the State of Arizona (rather
13 the Governor) brought this same case to vindicate its (mis)use of federal funds,
14 would anyone contend that the Governor’s official interests were not represented
15 by the State? Surely not. After all, Plaintiff’s lawsuit revolves around funds that
16 Congress appropriated “to make payments to each of the 50 States,” not each of
17 the 50 gubernatorial offices. 42 U.S.C. § 802(b)(3)(A) (emphasis added). So both
18 Arizona v. Yellen and Ducey v. Yellen have “substantially similar,” if not function-
19 ally identical, parties.
20 B. Ducey v. Yellen and Arizona v. Yellen arise from substantially the
21
same event and involve substantially the same questions of law.

22 As Defendants previously explained, both cases stem from the Rescue Plan
23 and involve similar legal issues, so they both “arise from substantially the same
24
25
26 1 For the same reason, Plaintiff cannot distinguish Arizona v. Yellen on the

27 grounds that “the State of Arizona’s interests as a whole were being represented
due to the fact that state sovereignty was at the forefront of that case.” Pl.’s Opp’n
28 at 6. Not only does this misunderstand official-capacity suits, but Judge Hu-
metewa properly rejected the idea that Arizona’s sovereign rights were injured.
Arizona v. Yellen, 2021 WL 3089103, at *4 (D. Ariz. July 22, 2021).

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1 transaction or event” and “call for determination of substantially the same ques-
2 tions of law.” LRCiv 42.1(a).
3 Most prominently, “there was no administrative action by Treasury”—i.e.,
4 the statutory-enforcement mechanism of recoupment—against the State in either
5 Arizona v. Yellen or Ducey v. Yellen. See Pl.’s Opp’n at 8–9; 42 U.S.C. § 802(e) (spec-
6 ifying recoupment as the remedy for any misused funds, regardless of the reason
7 for misuse). So there are substantially similar jurisdictional questions in both
8 cases: whether the plaintiff can advance a pre-enforcement challenge to the Res-
9 cue Plan, or a regulation promulgated under the Rescue Plan, when Treasury has
10 not yet initiated a recoupment action. Defendants would submit there is no ju-
11 risdiction here because, like Arizona v. Yellen, recoupment is far from certain. See
12 Arizona v. Yellen, 2021 WL 3089103, at *5 (D. Ariz. July 22, 2021) (analyzing
13 whether Arizona has demonstrated a substantial likelihood of enforcement). In-
14 deed, Treasury’s January 2022 letter to Arizona explained that the agency is
15 “committed to working with recipients to take advantage of the many eligible
16 uses and great flexibility available” for Rescue Plan funds, and it “may” pursue
17 recoupment in the future or withhold future money if Arizona does not remedi-
18 ate its misuse of Rescue Plan funds. Compl. Ex. 6 at 2, ECF No. 1-7. Presumably,
19 Plaintiffs would disagree about the Court’s jurisdiction. See Pl.’s Opp’n at 8. But
20 the only relevant issue on this transfer motion is whether the jurisdictional issues
21 between Arizona v. Yellen and Ducey v. Yellen “call for determination of substan-
22 tially the same questions of law.” LRCiv 42.1(a). They do.
23 Given that both cases arise from the same event—that is, passage of the
24 Rescue Plan—it is no surprise that other legal determinations are substantially
25 similar. Both cases center around the interpretation of the permissible and im-
26 permissible uses of federal funds under 42 U.S.C. § 802(c) and Treasury’s regu-
27 lations promulgated thereunder. See 42 U.S.C. § 802(e). Both cases also implicate
28

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1 the Spending Clause, including the purported requirement that funding condi-
2 tions should be unambiguous. Compare Arizona Compl. ¶¶ 51–61, ECF No. 67-2
3 with Ducey Compl. ¶¶ 94–99, ECF No. 67-2. Judge Humetewa has already
4 delved into that area of law and examined the relevant cases on that issue. See
5 Arizona v. Yellen, 2021 WL 3089103, at *3–4.
6 To be sure, the legal claims are not identical across both cases. See Pl.’s
7 Opp’n at 6–7. But that is hardly fatal to Defendants’ transfer motion, as Rule 42.1
8 asks only whether there are “substantially the same questions of law.” Between
9 the threshold jurisdictional questions—which should resolve this case—and the
10 legal landscape of the claims in both cases, that factor is satisfied.
11 C. There would be a substantial duplication of labor, and a possibility
12
of inconsistent rulings, if Ducey v. Yellen and Arizona v. Yellen are
heard by different judges.
13
14 Finally, Defendants’ motion should be granted to further judicial economy
15 by avoiding duplication of labor and possible inconsistent rulings. Judge Hu-
16 metewa is already familiar with the Rescue Plan’s permissible and impermissible
17 uses, Treasury’s authority to promulgate regulations and seek recoupment un-
18 der that statutory regime, and the relevant legal frameworks surrounding both
19 the jurisdictional and merits issues here. See Arizona v. Yellen, 2021 WL 3089103,
20 at *2–6. Plaintiff attempts to downplay Judge Humetewa’s expertise, urging that
21 “[b]ecause Arizona v. Yellen was dismissed in its early stages on standing
22 grounds, the Court in that case did not address the merits of the State’s Spending
23 Clause or Tenth Amendment claims or interpret ARPA’s text.” Pl.’s Opp’n at 9.
24 Plaintiff is wrong. After receiving extensive briefing and argument on both
25 jurisdiction and the merits, Judge Humetewa proceeded to final judgment. Ari-
26 zona v. Yellen, 2021 WL 3089103, at *1; Fed. R. Civ. P. 65(a)(2). And although the
27 Court properly found that Arizona lacked standing, Judge Humetewa reached
28 that conclusion only after thoroughly examining the Rescue Plan’s text and the

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1 relevant Spending Clause precedents, including an extensive analysis of cases
2 like Pennhurst, Arlington Central, NFIB v. Sebelius, and Mayweathers. See Arizona
3 v. Yellen, 2021 WL 3089103, at *4–6. That is all work Judge Logan may need to
4 duplicate if Ducey v. Yellen is not transferred to Judge Humetewa. See Garcia v.
5 Salvation Army, 2015 WL 5646640, at *2 (D. Ariz. Sept. 25, 2015) (granting motion
6 to transfer where the judge “ha[d] developed familiarity with the issues involved
7 in the cases”). And having a different judge decide Ducey v. Yellen raises the
8 specter of inconsistent rulings between the two cases, which also weighs in favor
9 of transfer. See Caron v. Caesars Ent. Corp., 2020 WL 1323105, at *2 (D. Ariz. Mar.
10 20, 2020) (granting motion to transfer where “transfer and consolidation will
11 avoid the potential of inconsistent outcomes”).
12 Plaintiff does not meaningfully engage with those points and fails to ad-
13 dress Defendants’ cited cases, instead resting on his argument that a transfer will
14 not advance judicial economy because Arizona v. Yellen is on appeal. Pl.’s Opp’n
15 at 9. There is little question that having two cases at the same stage of litigation
16 may avoid more duplication of labor. But that says nothing about whether a sub-
17 stantial duplication of labor would be avoided by having the same judge decide
18 two cases with functionally identical parties and substantially overlapping legal
19 issues, despite differing stages of litigation. And it would. See Garcia, 2015 WL
20 5646640, at *2 (granting motion to transfer where the judge “ha[d] developed fa-
21 miliarity with the issues involved in the cases,” even though the second case was
22 filed nine months after the first). Plaintiff’s cited cases are not to the contrary, as
23 each of them involved cases at different stages of litigation that did not meet the
24 other Rule 42.1 factors for a transfer. See Cagle v. Ryan, 2018 WL 2688775, at *2
25 (D. Ariz. June 5, 2018) (finding none of the transfer factors met, including because
26 “only one of the several present case Defendants” was in both cases); City of Phoe-
27 nix v. First State Ins. Co., 2016 WL 4591906, at *20 (D. Ariz. Sept. 2, 2016) (detailing
28 the “substantial differences” between the two cases); Robert Kubicek Architects &

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1 Assocs., Inc. v. Bosley, 2012 WL 6554396, at *8 (D. Ariz. Dec. 14, 2012) (explaining,
2 without analyzing the transfer factors, that “whether and to what extent [plain-
3 tiff] will have any claims against [other defendants] suitable for consolidation
4 with this case depends on outcomes yet to be determined”). Because it would be
5 a substantial duplication of labor for Judge Logan to decide Ducey v. Yellen, it
6 should be transferred to Judge Humetewa.
7
8 DATED: February 22, 2022 Respectfully submitted,

9 BRIAN M. BOYNTON
10 Principal Deputy Assistant Attorney General
11
BRIAN D. NETTER
12 Deputy Assistant Attorney General
13
ALEXANDER K. HAAS
14 Director, Federal Programs Branch
15
BRIGHAM J. BOWEN
16
Assistant Director, Federal Programs Branch
17
18 /s/ Stephen Ehrlich
MICHAEL P. CLENDENEN
19
STEPHEN EHRLICH
20 Trial Attorneys
21 Civil Division, Federal Programs Branch
U.S. Department of Justice
22 1100 L Street, NW
23 Washington, DC 20005
Phone: (202) 305-9803
24
Email: stephen.ehrlich@usdoj.gov
25
26 Counsel for Defendants

27
28

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