AARP v. U.S. Equal Emp't Opportunity Comm'n
AARP v. U.S. Equal Emp't Opportunity Comm'n
Opinion of the Court
Presently before the Court is [48] AARP's Rule 59(e) motion to alter or amend the judgment in this case. On August 22, 2017, this Court found that EEOC had not provided a reasoned explanation for its decision to promulgate regulations under the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) ("the Rules") that set particular incentive levels for providing certain medical data to healthcare providers. Mem. Op. [ECF No. 47] at 33. The Rules allowed employer-sponsored wellness plans to offer employees discounts of up to 30% of the cost of self-only health coverage for divulging certain private medical information, or to impose penalties of up to 30% for not doing so. Id. at 4; see
Now, "[t]o avoid manifest injustice," AARP asks that the Court reconsider that decision and either (1) vacate the Rules but stay the mandate until January 1, 2018, or (2) issue an injunction against enforcement of the Rules effective January 1, 2018. AARP's Mem. of Law in Supp. of Rule 59(e) Mot. to Alter or Amend the Court's Aug. 22, 2017 Order ("AARP Mot.") [ECF No. 48-1] at 1. EEOC opposes the motion, arguing that a 2018 vacatur of the Rules would be too disruptive for employers and employees. Def.'s Mem. in Opp'n to Pl.'s Rule 59(e) Mot. to Alter or Amend Order ("Opp'n") [ECF No. 49] at 1-2. EEOC has also indicated that it intends to issue a final rule in October 2019 that would be applicable, at the earliest, in 2021. Def.'s Status Report [ECF No. 50] at 1 & n.1. In its reply brief, AARP raises another alternative: vacating the Rules but applying the order of vacatur only to plans that begin at least six months after *241the order is issued. AARP's Reply Supp. Rule 59(e) Mot. to Alter or Amend Order and Response to Def.'s Status Rep. ("Reply") [ECF No. 52] at 7-8. For the reasons explained below, the Court will grant AARP's motion and vacate the challenged portions of the ADA and GINA rules. However, to avoid the potential for disruption, the Court will stay the mandate until January 1, 2019.
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Motions to alter or amend a judgment under Federal Rule of Civil Procedure 59(e) lie within the discretion of the Court. Ciralsky v. CIA,
The Court's remedial decision in this case does not fall within the mine run of judgments subject to Rule 59(e) motions. This Court decided the issue without thorough argument from the parties. Neither side discussed the question of remedy in its summary judgment briefs. See Mem. Op. at 34. At oral argument, the Court asked each side what the Court should do if it determined that EEOC had not provided a sufficient explanation for the Rules; but neither party discussed its position in much detail, and neither addressed the legal framework used to determine whether vacatur is proper. See Tr. of Mot. Hearing [ECF No. 45] at 46:17-25, 65:6-66:17. This is therefore different from the common situation in which a moving party seeks to make an argument that it could have made previously on a legal question over which the parties already *242sparred in their briefing. See Ciralsky,
EEOC argues that AARP cannot assert manifest injustice now because its summary judgment motion did not request vacatur when it could have done so. Opp'n at 7. But there are good reasons to reexamine the Court's prior holding here. First, the Administrative Procedure Act itself contemplates vacatur as the usual remedy when an agency fails to provide a reasoned explanation for its regulations.
Second, AARP's Rule 59 motion has allowed both parties to air their positions on the remedial question, thereby helping the Court to make a fully informed decision. Indeed, agency vacatur determinations are unusually well-suited to post-judgment briefing. See Comcast Corp. v. FCC,
And third, the Court's initial opinion made clear that its remedial decision could be reexamined as circumstances evolved. The Court was particularly concerned about the "potentially widespread disruption and confusion" that could be caused by vacating the Rules in the middle of the 2017 plan year, when employers and employees alike had been relying on the Rules for eight months. Mem. Op. at 35. But it provided the parties with numerous signals that the decision not to vacate was subject to change: the opinion stated that disruption concerns "currently" outweighed the agency's deficiencies in reasoning, that vacatur would be "inappropriate at this time," that the Court assumed the agency could come up with new rules "in a timely manner," and that the Court would remand without vacatur "for the present." Id. at 35-36. In light of the parties' briefing, therefore, the Court will take a second look at remedies.
"The decision whether to vacate depends on [1] 'the seriousness of the order's deficiencies (and thus the extent of doubt whether the agency chose correctly) and [2] the disruptive consequences of an interim change that may itself be changed.' " Allied-Signal, Inc. v. U.S. Nuclear Reg. Comm'n,
This request would have been problematic even had AARP attempted to expedite the initial summary judgment briefing or asked the Court to conduct the Rule 59 proceedings on an expedited basis. There is significant evidence in the record that employers need to know the regulatory incentive structure for the following year by June or July, at the latest, in order to have enough time to design their wellness plans. See Opp'n at 2-5; AR 2576 (Commonwealth of Ky.), 2863 (ERISA Indust. Comm.), 3379 (Alston & Bird LLP), 3415-16 (Nat'l Bus. Grp. on Health), 3485 (Chamber of Commerce of U.S.), 3559 (Coll. & Univ. Prof'l Ass'n for Human Res.), 3649 (Epstein, Becker & Green), 7202 (Soc'y for Human Res. Mgmt.). Any order vacating the Rules therefore would have had to come several months prior to the Court's August 22 decision in order to avoid nationwide disruption. AARP's assertions to the contrary notwithstanding, see AARP Mot. at 4-6, the Court cannot simply assume that employers will be able to adjust their wellness plans on the fly, or that employees will be able to cope with a shift in their healthcare plans on such short notice. "The Commission is in a better position than the court to assess the disruptive effect of vacating the Rule[s]," Chamber of Commerce v. SEC,
Moving further into the future, however, the balancing test begins to shift toward vacatur. Courts in this circuit "have not hesitated to vacate a rule when the agency has not responded to empirical data or to an argument inconsistent with its conclusion." Comcast Corp.,
Meanwhile, the concerns about disruption that caution against vacatur in the near future disappear over time. Nearly all of EEOC's arguments against AARP's motion revolve around the harm that employers and employees would face if the Court were to vacate the Rules weeks before the 2018 wellness plans come into effect. See Opp'n at 2-8. But unlike with 2018 plans, for which "[t]he egg has been scrambled," Sugar Cane Growers Co-op. of Fla. v. Veneman,
Moreover, "the second Allied-Signal factor is weighty only insofar as the agency may be able to rehabilitate its rationale for the regulation." Comcast Corp.,
It is also noteworthy that, since the Court issued its August 22 decision, EEOC has provided new information regarding its rulemaking timeline. See Def.'s Status Report at 1 & n.1. Though AARP did not provide (and could not have provided) this information in its initial Rule 59 motion, the information is properly before the Court as the Court considers AARP's motion. According to EEOC, the agency does not intend to issue a notice of proposed rulemaking until August 2018, and does not plan to issue a final rule until October 2019.
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For these reasons, the Court will grant AARP's motion to alter or amend the judgment, and will vacate the challenged incentive portions of the ADA and GINA rules, 29 C.F.R. Sections 1630.14(d)(3) and 1635.8(b)(2)(iii). However, the Court will exercise its discretion to stay the effective date of its vacatur order until January 1, 2019. See Friends of Earth, Inc. v. EPA,
Both parties have treated the instant motion as properly brought under Federal Rule of Civil Procedure 59(e), rather than Rule 54(b). It is not entirely clear whether Rule 59(e) is, in fact, the correct vehicle for this motion. "Rule 54(b) operates while a case is still ongoing in district court and before any appealable final judgment has been entered .... Rule 59(e), in contrast, is a motion for reconsideration that is filed only after the district court's entry of a final judgment." Cobell v. Jewell,
The Court's determination that the balance of the equities favors vacatur as of January 2019 differs somewhat from AARP's alternative proposal, which calls for applying the Court's decision to any plans "that begin six months or more after" the Court issues its opinion. Reply at 7-8. However, as noted above, there are indications in the record that some employers may need as long as twelve months to comply with a new regulatory regime. Additionally, some wellness plans do not follow the calendar year; providing a year's notice ensures that no employer will have its current plan disrupted, and will give all employers at least some lead time to adjust for the 2019 plan year. And, as discussed below, waiting to vacate until January 2019 gives EEOC more time to come up with new interim or permanent rules. Thus, a vacatur decision that takes effect early in 2019 would best balance the need to protect employees' privacy with the need to avoid disrupting healthcare plans nationwide. In the Court's view, such a decision ultimately does not conflict with AARP's request to "issue an order of vacatur effective as soon as practicable after January in 2018." Reply at 8.
The two nominees EEOC has mentioned have yet to have a final confirmation vote scheduled, and may be subject to further hearings. See PN 724, Janet Dhillon, Equal Employment Opportunity Commission, https://www.congress.gov/nomination/115th-congress/724; PN 859, Daniel M. Gade, Equal Employment Opportunity Commission, https://www.congress.gov/nomination/115th-congress/859.
Reference
- Full Case Name
- AARP v. UNITED STATES EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
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- 14 cases
- Status
- Published