Newland et al v. Sebelius et al
PERMANENT INJUNCTION by Judge John L. Kane on 3/16/2015. (Attachments: # 1 Memorandum, # 2 Order) (babia)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge John L. Kane
Civil Action No. 1:12-cv-1123
ANDREW NEWLAND, and
HERCULES INDUSTRIES, INC.
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;
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. § 2590.7152713(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
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.
summarize the parties’ specific disagreements regarding the permanent injunction and resolve
each point of contention seriatim.
After the Tenth Circuit issued its decision in Hobby Lobby Stores, Inc. v. Sebelius, Sylvia
Burwell replaced Kathleeen Sebelius as the Secretary of Health and Human Services, and she
was substituted as the Petitioner on appeal to the Supreme Court.
Law of Injunctions
It is well established that an injunction is a form of equitable relief. See Signature Prop.
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 (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 (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 Assoc. 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
(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
(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.
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
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.
threshold matter, the Tenth Circuit held that the Contraceptive Mandate did not serve a
The Tenth Circuit declined to reach the Plaintiffs’ First Amendment claim. Hobby
Lobby, 723 F.3d at 1121 n. 2.
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
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 (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 authority for the injunction.
Defendants raise three primary objections to Plaintiffs’ proposed permanent injunction.
First, they argue that because the Supreme Court’s Hobby Lobby decision was limited to the
application of the 2013 contraceptive mandate regulations to closely-held corporations, the
injunction should only preclude the government from enforcing the 2013 contraceptive mandate
regulations against Hercules Industries, Inc.
In other words, Defendants suggest that the
government should be able to revise its Contraceptive Mandate regulations and impose them on
all of the Plaintiffs without violating the terms of the permanent injunction. Second, Defendants
argue that because the Hobby Lobby decision was limited to the rights of the closely-held
corporation and not the rights of the closely-held corporation’s ownership, the injunction should
be limited to Hercules. Finally, Defendants argue that the injunction should be premised on the
Supreme Court’s decision in Hobby Lobby and Defendants’ consent.
I discuss each issue seriatim.
1. Scope of the Injunction
The parties misapprehend the appropriate scope of a permanent injunction. Plaintiffs
contend Defendants should be permanently enjoined from enforcing the Contraceptive Mandate
against them, without making any specific allowance for the possibility that the government
could re-formulate the Contraceptive Mandate in compliance with the Supreme Court’s decision
in Hobby Lobby. Defendants argue that the injunction should be limited to the Contraceptive
Mandate as it was struck down by the Supreme Court in Hobby Lobby, effectively allowing the
government to unilaterally circumvent the permanent injunction without first seeking an order
modifying or dissolving the injunction. These arguments fail to recognize the binding decisions
of the Tenth Circuit and Supreme Court and the fundamental principles of injunctive relief.
Plaintiffs’ proposed injunction fails to account for the limited nature of the Tenth
Circuit’s and Supreme Court’s Hobby Lobby decisions. The Tenth Circuit and the Supreme
Court limited their decisions regarding the validity of the Contraceptive Mandate to the
regulations enforcing that mandate. Neither court determined that the statute underlying the
Mandate violated the RFRA rights of the corporate plaintiffs or, a fortiori, the RFRA rights of
the individual owners.
Moreover, Plaintiffs in this case primarily sought relief from the
regulations enforcing the Contraceptive Mandate.
They sought relief from the Preventive
Services provision of the ACA only “to the extent Defendants have used [the statute] to mandate
coverage to which Plaintiffs and other employers have religious objections.” Accordingly, the
injunction is limited to the Contraceptive Mandate regulations, and does not extend to the
statutory Preventive Services Mandate.
Additionally, although the Tenth Circuit based its decision on its determination that the
government lacked a compelling interest in enforcing the Contraceptive Mandate, the Supreme
Court’s decision was based on its determination that the Contraceptive Mandate was not the least
restrictive means of accomplishing the government’s interest. The Supreme Court assumed
without deciding that the Contraceptive Mandate furthered a compelling interest. This
distinction is significant. If there were no compelling interest, then regardless of whether the
government provided an accommodation for closely-held corporations, the Contraceptive
Mandate would still violate RFRA. Because, however, the Supreme Court’s decision focused
on the least restrictive means determination, it expressly held that the government could provide
accommodations that would bring the Contraception Mandate into compliance with RFRA.
Defendants’ proposed injunction fails to account for the fundamental principles of
injunctive relief. If the injunction is to fulfill its equitable purpose, it must provide meaningful
relief to Plaintiffs.
The government’s proposed injunction would, in effect, allow the
government to unilaterally modify or dissolve the injunction without first demonstrating a
change in circumstances justifying such modification or dissolution. That cannot be.
As with any other injunction, the government may seek to modify or dissolve the
injunction entered in this case if “a significant change either in factual conditions or in law
renders continued enforcement detrimental to the public interest.” Horne, 557 U.S. at 447
(quotation omitted). The government, however, bears the burden of justifying modification or
dissolution (i.e., that a regulation enforcing the Contraceptive Mandate does not violate
Hercules’ RFRA rights).
As the Supreme Court held, the government may revise its Contraceptive Mandate
regulations to bring them into compliance with RFRA. It is not, however, the government’s right
to unilaterally determine that it is entitled to enforce any such regulations against Plaintiffs. The
injunction makes clear that it will remain in full force and effect until I order otherwise, and the
injunction is neither dissolved nor modified by the unilateral action of either party.
Finally, the issues not decided by the Supreme Court and the Court of Appeals did not
vanish. Namely, questions remain concerning, inter alia, the individual owners’ standing and
whether the First Amendment claims of Plaintiffs are enforceable. Should the government seek
to dissolve the injunction, Plaintiffs may seek to re-assert these claims as an additional defense to
any prospective enforcement of revised regulations enforcing the Contraceptive Mandate.
2. Parties Bound by and Benefiting from the Injunction
Both the Tenth Circuit and the Supreme Court declined to determine whether the owners
of a closely-held corporation have standing in their own right to assert a RFRA claim. Plaintiffs
argue that the injunction should extend to both Hercules and the Newlands, while Defendants
argue that the injunction should be limited to Hercules only.
As both parties acknowledge, there is no practical difference at this time in terms of the
result: whether or not the injunction applies to the Newlands, the government will be enjoined
from violating Hercules’ RFRA rights, and the very essence of Hercules’ RFRA rights are the
rights of the Newlands. Accordingly, and in following the Tenth Circuit and the Supreme Court,
the injunction is “limited” to Hercules; the claims of the individual owners remain unresolved.
3. Authority for the Injunction
Without justification, Defendants argue that the injunction should be premised on the
Supreme Court’s Hobby Lobby decision and “the defendants’ consent.”
arrogation of authority offends the very structure of our government, and ignores the exclusive
jurisdictional authority of the United States District Court to provide such relief.
Notwithstanding Defendants’ suggestion to the contrary, the injunction is entered under the
jurisdictional authority of the United States District Court and it remains in full force an effect
unless and until modified or dissolved by the District Court upon a showing of just cause or by
order entered by the Court of Appeals following review.
The permanent injunction against Defendants shall issue in favor of Hercules Industries,
Inc. The claims of William Newland, Paul Newland, James Newland, Andrew Newland, and
Christina Ketterhagen are abated pending further action by the Court.
Dated: March 16, 2015
BY THE COURT:
s/ John L. Kane
Senior U.S. District Court Judge
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