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Franciscan Alliance, Inc. v. Azar

United States District Court, N.D. Texas, Wichita Falls Division

October 15, 2019

FRANCISCAN ALLIANCE, INC., et al., Plaintiffs,
v.
ALEX M. AZAR II, Secretary of the United States Department of Health and Human Services; and UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendants.

          MEMORANDUM OPINION AND ORDER

          REED O' CONNOR UNITED STATES DISTRICT JUDGE.

         Before the Court are Putative Intervenors American Civil Liberties Union of Texas's and River City Gender Alliance's (collectively, “Putative Intervenors”) Renewed Motion to Intervene, Brief in Support, and Appendix in Support (ECF Nos. 129-31), filed February 1, 2019; Plaintiffs' Response (ECF No. 140), filed February 25, 2019; Defendants' Response (ECF No. 141), filed February 25, 2019; and Putative Intervenors' Reply (ECF No. 144), filed March 11, 2019. Also before the Court are Plaintiff States' Renewed Motion for Summary Judgment, Brief in Support, and Appendix in Support (ECF Nos. 132-34), filed February 4, 2019; Private Plaintiffs' Renewed Motion for Partial Summary Judgment, Brief in Support, and Appendix in Support (ECF Nos. 135-37), filed February 4, 2019; Defendants' Response (ECF No. 154), filed April 5, 2019; Putative Intervenors' Response (ECF No. 155), filed April 5, 2019; Plaintiff States' Reply (ECF No. 157), filed May 3, 2019; and Private Plaintiffs' Reply (ECF No. 158), filed May 3, 2019.

         I.BACKGROUND

         In its December 31, 2016 Order granting Plaintiffs' motions for a preliminary injunction and applying the injunction throughout the country, the Court set forth the extensive statutory, regulatory, and procedural background to this case. See Order 1-12, ECF No. 62. Since that time, there have been several important procedural developments. On January 24, 2017, the Court deferred ruling on Putative Intervenors' original motion to intervene because it was not yet clear whether Defendants would adequately represent Putative Intervenors' interest. Order 7, ECF No. 69. On March 15, 2017, Plaintiffs filed a motion for summary judgment. Pls.' Mot. Summ. J., ECF No. 82. On March 27, 2017, Putative Intervenors filed a motion to stay proceedings pending appeal of the Court's denial of their motion to intervene. Putative Intervenors' Mot. Stay, ECF No. 85. On May 2, 2017, Defendants filed a motion to remand and stay litigation pending the United States Department of Health and Human Services' (“HHS”) reconsideration of the regulation at issue, entitled Nondiscrimination in Health Programs & Activities (“the Rule”), 81 Fed. Reg. 31376 (May 18, 2016), codified at 45 C.F.R. § 92. Defs.' Mot. Remand & Stay, ECF No. 92. On June 30, 2017, the Fifth Circuit declined to rule on Putative Intervenors' motion to intervene as of right because this Court had not yet ruled on the motion for permissive intervention. Fifth Circuit's J., ECF No. 104. On July 10, 2017, after a hearing, the Court stayed the case in order to allow HHS to review the Rule. Order, ECF No. 105. The Court deferred ruling on Putative Intervenors' pending motion to intervene based on Defendants' contention that a change to the Rule could moot the case and on Putative Intervenors' own concerns cited in their motion to stay. Id. On December 17, 2018, Plaintiffs and Defendants filed a joint motion to lift the stay and set a briefing schedule.[1] Joint Mot. Lift Stay, ECF No. 125. The Court granted the parties' requests, lifting the stay and setting a briefing schedule for Putative Intervenors' renewed motion to intervene, as well as the parties' renewed motions for summary judgment. Order, ECF No. 126. Those motions are now fully briefed and ripe for ruling. The Court granted HHS two years to complete its review and amend the Rule at issue. Despite HHS's better efforts, the rule remains on the books. 45 C.F.R. § 92 (2016). Accordingly, the Court finds that principles of equity and judicial economy favor ruling on the pending motions, allowing the other parties in this case to conclude two years of litigation on these issues.

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 24(a) permits a party to seek intervention as of right, while Rule 24(b) allows a party to seek permissive intervention. Fed.R.Civ.P. 24. “Although the movant bears the burden of establishing its right to intervene, Rule 24 is to be liberally construed.” Wal-Mart Stores, Inc. v. Tex. Alcoholic Beverage Comm'n, 834 F.3d 562, 565 (5th Cir. 2016) (citation omitted). “Federal courts should allow intervention when no one would be hurt and the greater justice could be attained.” Id. (quoting Sierra Club v. Espy, 18 F.3d 1202, 1205 (5th Cir. 1994)) (internal quotation marks omitted).

         A. Intervention as of Right

         Rule 24(a)(2) of the Federal Rules of Civil Procedure provides that:

[o]n timely motion, the court must permit anyone to intervene who . . . claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest.

         A proposed intervenor is entitled to intervene if all the following elements are satisfied:

(1) the application for intervention must be timely;
(2) the applicant must have an interest relating to the property or transaction which is the subject of the action;
(3) the applicant must be so situated that the disposition of the action may, as a practical matter, impair or impede his ability to protect that interest; and (4) the applicant's interest must be inadequately represented by the existing parties to the suit.

Texas v. United States, 805 F.3d 653, 657 (5th Cir. 2015) (quoting New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co. (NOPSI), 732 F.2d 452, 463 (5th Cir. 1984) (en banc)). “Failure to satisfy one requirement precludes intervention of right.” Haspel & Davis Milling & Planting Co. Ltd. v. Bd. of Levee Comm'rs of the Orleans Levee Dist., 493 F.3d 570, 578 (5th Cir. 2007); see also Espy, 18 F.3d at 1205.

         B. Permissive Intervention

         Federal Rule of Civil Procedure 24(b)(1) provides that “[o]n timely motion, the court may permit anyone to intervene who: (A) is given a conditional right to intervene by a federal statute; or (B) has a claim or defense that shares with the main action a common question of law or fact.” Fed.R.Civ.P. 24(b)(1). “In exercising its discretion, the court must consider whether the intervention will unduly delay or prejudice the adjudication of the original parties' rights.” Fed.R.Civ.P. 24(b)(3). Permissive intervention under Rule 24(b) “is wholly discretionary with the [district] court . . . even though there is a common question of law or fact, or the requirements of Rule 24(b) are otherwise satisfied.” Kneeland v. Nat'l Collegiate Athletic Ass'n, 806 F.2d 1285, 1289 (5th Cir. 1987). Intervention is appropriate when: “(1) timely application is made by the intervenor, (2) the intervenor's claim or defense and the main action have a question of law or fact in common, and (3) intervention will not unduly delay or prejudice the adjudication of the rights of the original parties.” Frazier v. Wireline Sols., LLC, No. C-10-3, 2010 WL 2352058, at *4 (S.D. Tex. June 10, 2010) (citation omitted); In re Enron Corp. Sec., Derivative & “ERISA” Litig., 229 F.R.D. 126, 131 (S.D. Tex. 2005).

         C. Summary Judgment

         Summary judgment is proper when the pleadings and evidence show “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[T]he substantive law will identify which facts are material.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine issue of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. The movant makes a showing that there is no genuine issue of material fact by informing the court of the basis of its motion and by identifying the portions of the record that reveal there are no genuine material-fact issues. See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

         When reviewing the evidence on a motion for summary judgment, the court must resolve all reasonable doubts and inferences in the light most favorable to the non-movant. See Walker v. Sears, Roebuck & Co., 853 F.2d 355, 358 (5th Cir. 1988). The court cannot make a credibility determination in light of conflicting evidence or competing inferences. Anderson, 477 U.S. at 255. And if there appears to be some support for the disputed allegations, such that “reasonable minds could differ as to the import of the evidence, ” the court must deny the motion for summary judgment. Id. at 250.

         D. Vacatur

         When reviewing an agency action, “the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.” 5 U.S.C. § 706. Further, the court “shall . . . hold unlawful and set aside agency action, findings, and conclusions found to be-arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Id. at § 706(2)(A). Because Congress “provided vacatur as a standard remedy for APA violations, ” courts typically “invalidate-without qualification-unlawful administrative rules as a matter of course, leaving their predecessors in place until the agencies can take further action.” Pennsylvania v. President United States, 930 F.3d 543, 575 (3d Cir. 2019).

         III. ANALYSIS

         A. ...


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