Armstrong et al v. Sebelius et al

Filing 56

ORDER : The defendants, their officers and employees are preliminarily enjoined from any further effort to apply or enforce against Cherry Creek Mortgage Co., Inc. or the individual plaintiffs the preventive services requirements found at 42 U.S.C. § 300gg-13(a)(4) or the application of penalties found in 26 U.S.C. § 4980D, 26 U.S.C. § 4980H, and 29 U.S.C. § 1132, pending further order of this Court. by Judge R. Brooke Jackson on 9/17/2013. (trlee, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge R. Brooke Jackson
Civil Action No 13-cv-00563-RBJ
W.L. (BILL) ARMSTRONG;
JEFFREY S. MAY;
WILLIAM L. (WIL) ARMSTRONG III;
JOHN A. MAY;
DOROTHY A. SHANAHAN; and
CHERRY CREEK MORTGAGE CO., INC.,
a Colorado corporation,
Plaintiffs,
v.
KATHLEEN SEBELIUS, in her official capacity as
Secretary of the United States Department of Health
and Human Services;
SETH D. HARRIS, in his official capacity as Acting
Secretary of the United States Department of Labor,
JACOB J. LEW, in his official capacity as Secretary
of the United States Department of Treasury;
UNITED STATES DEPARTMENT OF HEALTH
AND HUMAN SERVICES;
UNITED STATES DEPARTMENT OF LABOR; and
UNITED STATES DEPARTMENT OF THE TREASURY,
Defendants.

ORDER

The case is before the Court again on plaintiffs’ motion for a preliminary injunction. For
the reasons set forth herein, the Court now grants the motion.
Facts
Plaintiffs, Cherry Creek Mortgage Co., Inc. and its owners, sued the government to
enjoin application of certain parts of the Patient Protection and Affordable Care Act and the

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Health Care and Education Reconciliation Act (collectively the “Affordable Care Act”) to them.
Specifically, plaintiffs challenge what they call the “HHS Mandate,” which requires certain
employers, including Cherry Creek, to include coverage for what the plaintiffs consider to be
abortion-inducing drugs and devices in the company’s group health insurance plan. The gist of
the claim is that forcing Cherry Creek to provide such coverage is a substantial burden on the
individual owners’ right to exercise their anti-abortion beliefs as practicing Evangelical
Christians.
Hobby Lobby.
There have been several lawsuits similar to this one filed in various jurisdictions,
including at least three in this district. In many if not all of them, plaintiffs sought a preliminary
injunction. As of the time of the preliminary injunction hearing in this case the courts, both at
the district and circuit level, were split. One of the decisions denying a preliminary injunction
was that of Judge Heaton in the Western District of Oklahoma. Hobby Lobby Stores, Inc. v.
Sebelius, 870 F. Supp. 1278 (W.D. Okla. 2012). Significantly, a two-judge motions panel of the
Tenth Circuit then denied plaintiffs’ motion for a preliminary injunction pending appeal in that
case. Hobby Lobby Stores, Inc. v. Sebelius, no. 12-6294, 2012 WL 6930302 (10th Cir. Dec. 20,
2012). The panel concluded: “We do not think there is a substantial likelihood that this court
will extend the reach of RFRA1 to encompass the independent conduct of third parties with
whom the plaintiffs have only a commercial relationship.” Id. at *3.
The Tenth Circuit, however, agreed to hear the matter en banc and set oral argument for
May 23, 2013, not quite two weeks after the preliminary injunction hearing in this Court in the
present case. The motion panel’s conclusion that plaintiffs probably could not establish a
substantial likelihood of success, coupled with the fact that the en banc argument was imminent,
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The Religious Freedom Restoration Act of 1993, 42 U.S.C. §§ 2000bb to bb-4.

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were influential factors in this Court’s denial of the motion for a preliminary injunction. See
Transcript, May 10, 2013 [#42] at 89-97. The Court noted, of course, that it would follow the
lead of the en banc panel once its decision was announced. Id. at 98. Shortly thereafter plaintiffs
filed a notice of appeal. [#39].
The en banc panel did come out differently. First, by way of quick review, the party
seeking the injunction must show “(1) likelihood of success on the merits; (2) a likely threat of
irreparable harm to the movant; (3) the harm alleged by the movant outweighs any harm to the
non-moving party; and (4) an injunction is in the public interest.” Hobby Lobby Stores, Inc. v.
Sebelius, No. 2013 WL 3216103, at *8 (10th Cir. June 27, 2013) (en banc). A majority of five
judges held that the district court erred in concluding that the plaintiffs had not demonstrated a
likelihood of success on their RFRA claim. Id. at *1. The same majority of five judges also held
that plaintiffs had satisfied the irreparable harm element of the preliminary injunction standard.
Id. A plurality of four judges also concluded that plaintiffs had satisfied the other two elements
(balance of the equities and public interest). The court therefore reversed the district court denial
of a preliminary injunction, but because there was not a majority as to the third and fourth prongs
of the test, the court remanded the case with instructions that the district court address those
factors and then reassess whether to grant or deny the preliminary injunction. Id. at **1-2.
On remand, after holding another hearing (apparently limited to briefs and oral argument)
Judge Heaton found that the balance of the equities favored the plaintiffs, and that the public
interest favored the preservation of the status quo until the issues raised by the plaintiffs could be
finally resolved on their merits. Accordingly, the court granted a preliminary injunction
restraining the government defendants from “any effort to apply or enforce, as to plaintiffs, the

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substantive requirements imposed in 42 U.S.C. § 300gg-13(a)(4). Hobby Lobby Stores, Inc. v.
Sebelius, No. CIV-12-1000, 2013 WL 3869832, at *2 (W.D. Okla. July 19, 2013).
Further Proceedings in the Present Case
Shortly after the Tenth Circuit’s en banc decision in Hobby Lobby was announced
plaintiffs asked this Court to reverse its previous denial of the preliminary injunction. [#48].
The government filed a brief in opposition, arguing that the irreparable harm analysis here is
different than that which existed in Hobby Lobby, and that in any event, the plaintiffs had not
established that the balance of the equities and the public interest factors (which were the subject
of the remand in Hobby Lobby) favored the entry of a preliminary injunction. [#49]. That
response was filed one day before Judge Heaton issued the injunction on remand.
On August 1, 2013 this Court issued an order asking whether the government continued
to oppose a preliminary injunction here and, assuming that it did, posing two questions to both
parties: (1) did plaintiffs’ pending appeal deprive this Court of jurisdiction to enter the injunction
as requested, and (2) if not, is there evidence in the record on which the Court can act without
another hearing. The parties took conflicting positions concerning the Court’s jurisdiction to act.
However, that is now moot in view of the circuit’s resolution of plaintiffs’ appeal, discussed
below.
With respect to the second question, the parties agreed that another hearing was not only
unnecessary but inappropriate. Plaintiffs’ response [#52] at 6; government’s response [#51] at 6.
The government pointed to certain documents cited in its original brief in opposition to the
motion for preliminary injunction, namely, an Institute of Medicine report; the preambles to the
July 2010 interim final rules and the February 2012 final rules; and portions of the legislative
history of the preventive services coverage provisions. [#51 at 6]. Those documents, the

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government contends, “support the government’s position that an injunction is contrary to the
public interest because it would interfere with the government’s goals of improving the health of
women and children and promoting public equality and that an injunction would harm third
parties – namely the employees of Cherry Creek.” Id. The government also cited certain
“admissions” in the plaintiffs’ complaint.
The plaintiffs took a different tack, and a little background will help. At the beginning of
the preliminary injunction hearing, I asked the parties whether the plaintiffs planned on
presenting evidence. Plaintiffs’ counsel responded that plaintiffs would not be presenting
evidence because the parties had stipulated that the facts alleged in plaintiffs’ verified complaint
may be accepted as true for purposes of preliminary injunction determination. Transcript [#42]
at 3. Government counsel agreed. Id. at 4. Now, in response to the Court’s second question,
plaintiffs took the position that their allegations, accepted as true, provided all the information
the Court needs to grant the injunction. [#51 at 5-12]. In contrast, plaintiffs argue, the
government relies on hearsay and speculation. Id. at 5.
The parties then jointly moved in the Tenth Circuit for an order summarily reversing this
Court’s denial of a preliminary injunction and remanding the case for consideration of the
remaining preliminary injunction factors in light of the en banc decision in Hobby Lobby. The
court agreed, finding that “plaintiff Cherry Creek has established a substantial likelihood of
success on the merits of its RFRA claim, and that the district court erred in concluding
otherwise.” Armstrong v. Sebelius, No. 13-1218, 2013 WL 4757949, at *1 (10th Cir. Sept. 5,
2013). The court remanded the case for further proceedings consistent with the Hobby Lobby
decision. Id.

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Conclusions
This Court denied plaintiffs’ motion for a preliminary injunction based on its conclusion
that plaintiffs had not established a substantial likelihood of success on the merits. That
conclusion has now been reversed. The case returns, therefore, for this Court’s consideration of
the remaining three prongs of the preliminary injunction standard. As indicated, the parties agree
that the Court need not, indeed should not, take further evidence. Neither party has requested
further oral argument, although there has been only a short time since the remand was ordered.
In any event, I am satisfied that further argument would not be of material assistance, and
therefore I turn to the remaining issues aided by the record already established.
Irreparable Harm
The irreparable harm issue was essentially resolved in plaintiffs’ favor by the holding of
the five-judge majority on that issue in Hobby Lobby. In its response to the plaintiffs’ motion to
enter an injunction “forthwith” following the en banc decision, the government attempted to
distinguish our case on the basis that plaintiffs waited until three months after the contraceptive
coverage requirement took effect before filing this suit and seeking preliminary injunctive relief,
and that during that three-month period plaintiffs continued to provide the coverage to which
they object. [#49 at 1]. I am not persuaded. In the verified complaint [#1], the allegations of
which have been stipulated as true for this purpose, plaintiffs allege that after they discovered
that Cherry Creek’s health insurance plan provided the objectionable coverage to the
approximately 400 of its approximately 730 employees who presently participate in the plan,
they immediately expressed their religious objections to the insurer. They received confirmation
that, without injunctive relief from a court, the insurer was required by the HHS Mandate to

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provide the coverage. Therefore, Cherry Creek complied with the mandate but began to explore
ways of eliminating the coverage. Id. at ¶¶ 8-11. This suit was filed on March 5, 2013. Under
the circumstances, I cannot find that plaintiffs slept on their rights.
The verified complaint alleges, among other things, that being forced to continue to
comply with the mandate “will have a profound and adverse effect on Plaintiffs and how they
negotiate contracts and compensate their employee,” id. ¶ 98, and “will make it difficult for
Plaintiffs to attract quality employees because of uncertainty about health insurance benefits,” id.
¶ 99. They further allege that, if they refuse to provide health insurance to their employees or
omit the objectionable drugs and devices from the coverage, they will be subjected to
enforcement actions and very substantial monetary penalties that could put Cherry Creek out of
business. Id. at ¶¶ 76-81. Beyond that, in the eyes of the individual plaintiffs, each day that
Cherry Creek is forced to provide the objectionable coverage their sincerely held religious
beliefs are violated. Id. passim. Accepting all of these allegations as true, the Court concludes
that plaintiffs have met their burden of showing “a likely threat of irreparable harm to the
movant.”
Balancing the Harms
The third requirement for a preliminary injunction is that “the harm alleged by the
movant outweighs any harm to the non-moving party.” On remand Judge Heaton found that “the
government’s interest in providing Hobby Lobby and Mardel’s 13,000 employees with access to
all FDA-approved contraceptive methods, through their employment-based health plans, is not
insignificant.” Hobby Lobby Stores, Inc. v. Sebelius, 2012 WL 3869832 at *1. However, he
tempered his assessment by noting that the bulk of the FDA-approved methods of contraception
will still be available to the employees notwithstanding the preliminary injunction (because the

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plaintiffs did not object to such methods), unlike other employees who were exempted from the
contraceptive-coverage requirement of the Affordable Care Act. He compared that to the harms,
particularly the substantial monetary penalties and violation of religious rights, that were alleged
by the plaintiffs. On balance, “the court finds that the threatened injury to the corporations if the
injunction does not issue outweighs the potential harm to the government.” Id.
I take it as a given that the fact that the legislation and regulations thereunder were
enacted reflects a significant governmental interest. It is difficult, possibly all but impossible, to
compare that interest to the private but not insignificant interest of Cherry Creek and its owners.
Nevertheless, when I attempt to balance what might be a temporary infringement on the
government’s interest (until the merits are ultimately resolved by the Supreme Court) with what
on the face of the stipulated facts is a Hobson’s Choice between a continuing infringement of
religious freedom or potentially crippling monetary penalties, I join Judge Heaton in concluding
that the balance of the harms tips in favor of the plaintiffs for purposes of preliminary injunctive
relief.
Public Interest
The question is whether an injunction is in the public interest. There is, long has been,
and probably always will be, division within the public on issues relating to abortion. The
resolution of the legal challenges to the Affordable Care Act such as those presented in this case
will not end that division, but those challenges need resolution, and that is why we have courts
and the rule of law. There is a general public interest in preserving the status quo while the legal
proceedings take their course. In that conclusion I again join Judge Heaton. See Hobby Lobby,
2013 WL 3869832 at *1.

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There is one irony presented by this case that was not presented in Hobby Lobby. Here,
the status quo is that Cherry Creek Mortgage has been and still is providing the coverage to
which plaintiffs object. That being so, the preliminary injunction does not preserve the status
quo, which is the stuff of most injunctions, but instead alters it. The answer is that the status quo
would be Cherry Creek’s refusing to provide coverage for what they classify as abortifacients
had they not unwittingly begun to provide the coverage and then run into an insurmountable
roadblock when they directed their insurer to terminate the coverage. As such, the substance of
the order entered here today is to preserve the status quo as it existed before the Affordable Care
Act until the merits of the claims can be properly decided.
Order
The defendants, their officers and employees are preliminarily enjoined from any further
effort to apply or enforce against Cherry Creek Mortgage Co., Inc. or the individual plaintiffs the
preventive services requirements found at 42 U.S.C. § 300gg-13(a)(4) or the application of
penalties found in 26 U.S.C. § 4980D, 26 U.S.C. § 4980H, and 29 U.S.C. § 1132, pending
further order of this Court.
DATED this 17th day of September, 2013.
BY THE COURT:

___________________________________
R. Brooke Jackson
United States District Judge

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