Sharpe Holdings, Inc. et al v. United States Department of Health and Human Services et al

Filing 160

MEMORANDUM: IT IS HEREBY ORDERED that the motion of plaintiffs for permanent injunctive and declaratory relief (Doc. 138 ) is GRANTED. An appropriate Judgment Order is filed herewith. Signed by Magistrate Judge David D. Noce on 3/28/18. (JAB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
NORTHERN DIVISION

SHARPE HOLDINGS, INC., et al.,
Plaintiffs,
v.
UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES,
et al.,
Defendants.

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No. 2:12 CV 92 DDN

MEMORANDUM
This action is before the court on the motion of plaintiffs CNS International
Ministries (CNS) and Heartland Christian College (HCC) for permanent injunction and
declaratory relief following remand from the United States Court of Appeals for the
Eighth Circuit and the United States Supreme Court. (Doc. 138). For the reasons set
forth below, plaintiffs’ motion is granted. An appropriate Judgment Order is entered
herewith.

BACKGROUND
This action was commenced on December 20, 2012, by certain individual and
corporate for-profit plaintiffs against the Department of Health and Human Services
(HHS), the Secretary of HHS, the Department of the Treasury, the Secretary of the
Treasury, the Department of Labor, and the Secretary of Labor. These plaintiffs claim
the Affordable Care Act’s1 contraceptive mandate violates the Religious Freedom
1

The Patient Protection and Affordable Care Act, Pub. L. 111-148 (Mar. 23, 2010), and
the Health Care and Education Reconciliation Act, Pub. L. 111-152 (Mar. 30, 2010), are
collectively known as the “Affordable Care Act” (ACA).

Restoration Act (RFRA); the Free Exercise and Establishment Clauses of the First
Amendment to the Constitution of the United States; plaintiffs’ freedoms of speech and
association guaranteed by the First Amendment; and the Administrative Procedures Act,
5 U.S.C. § 706(2).2

They sought a declaration from the court that the ACA’s

contraceptive mandate and its enforcement violate the First Amendment, the Fifth
Amendment, RFRA, and the APA.

They also sought an order prohibiting the

enforcement of the mandate against them and moved for a temporary restraining order
and a preliminary injunction on December 20, 2012. This court issued a temporary
restraining order on December 31, 2012, and then a preliminary injunction on June 28,
2013.
Plaintiffs then amended their complaint to add CNS and HCC, both non-profit
organizations and the current movants, as plaintiffs on December 4, 2013. The temporary
restraining order and the preliminary injunction were expanded to include these plaintiffs
on December 30, 2013, a decision defendants appealed as to CNS and HCC in February
2014.
New decisions by the United States Supreme Court and changing regulations
necessitated supplemental briefing and letters to the United States Court of Appeals for
the Eighth Circuit. (Doc. 144 at 7). On September 17, 2015, that Court affirmed this
Court’s decision in favor of CNS and HCC. Sharpe Holdings, Inc. v. Dept. of Health and
Human Serv., 801 F.3d 927 (8th Cir. 2015). This created a split in the circuits, and the
Supreme Court granted petitions for certiorari brought by other religious claimants in
similar cases on November 6, 2015. Defendants filed their petition for a writ of certiorari
on December 15, 2015, which the Supreme Court granted on June 16, 2016, vacating the
Eighth Circuit’s decision and remanding for further proceedings. It vacated all of the
circuits’ decisions on this issue, and it required the parties find an alternative solution to

2

Only the RFRA challenge remains before this Court; all other grounds were dismissed.
(Doc. 102).
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the problematic “augmented accommodation” in place at the time. Zubik v. Burwell, 136
S. Ct. 1557, 1560 (2016). On June 22, 2016, pursuant to the Zubik opinion, the Court of
Appeals vacated its September 17, 2015 opinion and reopened the case.
On October 6, 2017, the government issued new interim final rules (new IFRs)
that greatly expanded the scope of permissible religious objections to the contraceptive
mandate. Accordingly, on October 13, 2017, defendants dismissed their appeal. On
November 17, 2017, plaintiffs moved for a permanent injunction from this court.
Defendants objected on December 8, 2017, asserting that the new IFRs rendered the
matter moot and that a permanent injunction was therefore inappropriate.
On December 15, 2017, the United States District Court for the Eastern District
Court of Pennsylvania issued a preliminary injunction barring the application of the new
IFRs. Pennsylvania v. Trump, 281 F. Supp. 3d 553 (E.D. Pa. 2017) On December 21,
2017, the United States District Court for the Northern District of California followed
suit. California v. Health and Human Services, 281 F. Supp. 3d 806 (N.D. Cal. 2017).
On December 22, 2017, in the case at bar, the government subsequently dropped its
mootness challenge, declined to advance any substantive defense of the “augmented
accommodation,” and adopted no position as to the appropriateness of permanent
injunctive relief in this case. (Doc. 152 at 2).

ANALYSIS
In Zubik, the Supreme Court directed that “the parties on remand should be
afforded an opportunity to arrive at an approach going forward that accommodates
petitioners’ religious exercise while at the same time ensuring that women covered by
petitioners’ health plans ‘receive full and equal health coverage, including contraceptive
coverage.’” Zubik, 136 S. Ct. at 1560. Shortly thereafter, the government expressed its
opinion that: “there [is] ‘no feasible approach . . . at this time that would resolve the
concerns of religious objectors, while still ensuring that the affected women receive full
and equal health coverage, including contraceptive coverage.’”
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California, 281

F. Supp. 3d at 818 (quoting Department of Labor, FAQs about Affordable Care Act
Implementation Part 36 (Jan. 9, 2017)). Insofar as the new IFRs are now presented as the
government’s position, they are presently enjoined from enforcement by District Courts
in Pennsylvania and California. See Pennsylvania, 281 F. Supp. 3d at 585; California,
281 F. Supp. 3d at 832.
Thus, the parties before this Court are “[returned] to the state of affairs before
October 6, 2017 . . . the exemption and accommodation as they existed following the
Zubik remand remain in effect, as do any court orders enjoining Defendants from
enforcing those rules against specific plaintiffs.” California, 281 F. Supp. 3d at 832-33;
see also Pennsylvania, 281 F. Supp. 3d at 585 (“A preliminary injunction will maintain
the status quo: those with exemptions or accommodations prior to October 6, 2017 will
maintain their status, those with injunctions preventing enforcement of the Contraceptive
Mandate will maintain their injunctions, but those with coverage will maintain their
coverage as well.”).
This Court is mindful of the Supreme Court’s statement that it:
expresses no view on the merits of the cases. In particular,
the Court does not decide whether petitioners’ religious
exercise has been substantially burdened, whether the
Government has a compelling interest, or whether the current
regulations are the least restrictive means of serving that
interest.
Zubik, 136 S. Ct. at 1560; see also id. at 1561 (Sotomayor, J., concurring):
Lower courts… should not construe [Zubik] as signals of
where this Court stands. We have included similarly explicit
disclaimers in previous orders… Yet some lower courts have
ignored those instructions. See, e.g., Sharpe Holdings, Inc. v.
Department of Health and Human Servs.… (C.A.8 2015)…
On remand in these cases, the Courts of Appeals should not
make the same mistake.
The Zubik concurrence also noted that vacating the appellate rulings, without
further substantive guidance, means that lower appellate courts “remain free to reach the
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same conclusion or a different one on each of the questions presented by these cases.”
Zubik, 136 S. Ct. at 1562. While the Eighth Circuit Court of Appeals’ decision in Sharpe
was vacated, the undersigned finds its reasoning persuasive. Therefore, this Court’s
reasoning on remand is substantially the same as that laid out by the Court of Appeals in
its opinion for purposes of plaintiffs’ RFRA challenge.
Under RFRA, federal law may not “substantially burden a person’s exercise of
religion” unless the government “demonstrates that application of the burden to the
person (1) is in furtherance of a compelling governmental interest; and (2) is the least
restrictive means of furthering that compelling governmental interest.” 42 U.S.C. §
2000bb-1(b). Plaintiffs under RFRA have the initial burden to show a substantial burden
upon their sincere religious exercise or belief. Gonzales v. O Centro Espirita Beneficente
Uniao do Vegetal, 546 U.S. 418, 428 (2006). If plaintiffs succeed, the government has
the burden to show that it has a “compelling interest” in applying “the challenged law ‘to
the person’ – the particular claimant whose sincere exercise of religion is being
substantially burdened.” Id. at 430-31 (quoting 42 U.S.C. § 2000bb-1(b)). Non-profit
and closely-held for-profit corporate plaintiffs are “persons” for purposes of RFRA
challenges. Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 2769-75 (2014).
Financial penalties for religiously-motivated noncompliance with a regulatory duty
constitute a substantial burden. Id. at 2779.
Whether or not expressed religious conviction is consistent with related scripture
is not within the scope of judicial review. Sharpe, 801 F.3d at 938-39 (citing Thomas v.
Review Bd. of Indiana Employment Security Div., 450 U.S. 707, 716 (1981)). A religious
objector’s description of its religious beliefs must be accepted regardless of whether the
Court considers those beliefs “acceptable, logical, consistent, or comprehensible.”
Thomas, 450 U.S. at 714. A Court's function is narrow and is to decide whether the
religious objector's religious belief “reflects ‘an honest conviction.’” Hobby Lobby, 134
S. Ct. at 2779 (quoting Thomas, 450 U.S. at 716.) Thus, because of CNS and HCC’s
religious beliefs, the sincerity of which is unchallenged, this Court concludes that
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"compelling their participation in the accommodation process by threat of severe
monetary penalty is a substantial burden on their exercise of religion.” Sharpe, 801 F.3d
at 942.
The government’s interests in safeguarding public health and in ensuring that
women have equal access to health care have been assumed to be compelling interests for
purposes of RFRA challenges. Id. at 943 (citing Hobby Lobby, 134 S. Ct. at 2780). This
Court makes the same assumption and proceeds to the government's weighty burden of
showing "that the contraceptive mandate and accommodation process are the least
restrictive means for furthering the government's compelling interests." Id.
Plaintiffs object on religious grounds not just to the contraceptive mandate but also
to the government's accommodation process. (Doc. 139).

The Supreme Court has not

decided whether the government's accommodation process complies with RFRA. Id. at
943-44. The Eighth Circuit has noted that the government's accommodation process is
not the least-restrictive means to further these compelling interests. Id. at 944 (noting
approval by the Supreme Court of less-demanding alternatives in cases following Hobby
Lobby). “[C]ost may be an important factor in the least-restrictive means analysis, but
both RFRA and its sister statute, RLUIPA, may in some circumstances require the
Government to expend additional funds to accommodate citizens’ religious beliefs.”
Hobby Lobby, 134 S. Ct. at 2781. The evidentiary record thus far in this case has not
shown that alternatives3 would be so administratively or financially burdensome as to
make the “augmented accommodation” the government’s least-restrictive means.
Sharpe, 801 F.3d at 944-45.
Plaintiffs are entitled to a declaratory judgment as follows:

Alternatives might include less-demanding opt-outs; direct assumption by the
government of the costs of providing contraceptives; subsidies or tax credits to
employees unable to obtain the contraceptives at issue from their employers; distribution
of contraceptives at public clinics and hospitals; and providing the contraceptives at issue
through government healthcare-insurance exchanges. Sharpe, 801 F.3d at 944-45.
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The contraceptive mandate in the Affordable Care Act and implementing
regulations and the accommodations as augmented on August 27, 2014, violate the
rights of plaintiffs CNS and HCC pursuant to the Religious Freedom Restoration
Act. Plaintiffs CNS and HCC are not subject to any fines, already accrued or
imposed in the future, for their non-compliance with such laws.
See 28 U.S.C. § 2201(a); Fed.R.Civ.P. 57.
Plaintiffs are also entitled to permanent injunctive relief. The Eighth Circuit has
stated the factors for considering permanent injunctive relief thus:
To obtain a permanent injunction, [movant is] required to show: (1) its
actual success on the merits; (2) that it faces irreparable harm; (3) that the
harm to it outweighs any possible harm to others; and (4) that an injunction
serves the public interest.
Community of Christ Copyright Corp. v. Devon Park Restoration Branch of Jesus
Christ's Church, 634 F.3d 1005, 1012 (8th Cir. 2011). The Court previously considered
the appropriateness of injunctive relief and found that application of the factors
prescribed by Dataphase Systems, Inc. v. C.L. Systems, Inc. 640 F.2d 109, 113 (8th Cir.
1981) (en banc), tipped in favor of the plaintiffs. Sharpe Holdings, Inc. v. U.S. Dept. of
Health and Human Services, 2012 WL 6738489 (E.D. Mo. 2012); Sharpe Holdings, Inc.,
2013 WL 6858588 (E.D. Mo. 2013). Those results adhere today. Furthermore, in light
of the Eighth Circuit’s prior reasoning on plaintiffs’ RFRA challenge to the
accommodation process, and particularly given that the government no longer advances a
substantive defense thereof, this Court holds that plaintiffs have attained actual success
on the merits and are entitled to a permanent injunction.

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CONCLUSION
For the reasons stated above,
IT IS HEREBY ORDERED that the motion of plaintiffs for permanent
injunctive and declaratory relief (Doc. 138) is GRANTED. An appropriate Judgment
Order is filed herewith.

/S/ David D. Noce
UNITED STATES MAGISTRATE JUDGE
Signed on March 28, 2018.

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