Poder in Action v. City of Phx.

481 F.Supp.3d 962

PODER IN ACTION, et al., Plaintiffs,

v.CITY OF PHOENIX, et al., Defendant.

No. CV-20-01429-PHX-DWL

United States District Court, D. Arizona.

Signed August 26, 2020

Brenda Munoz Furnish, Daniel Jay Adelman, Ellen Sue Katz, Orien Praiser Nelson, William E. Morris Institute for Justice, Phoenix, AZ, for Plaintiffs.

Cris A. Meyer, Phoenix City Attorneys Office, Emma Jane Cone-Roddy, Kristin Louise Windtberg, Mary Ruth O'Grady, Osborn Maledon PA, Leslie Steve Tuskai, City of Phoenix Law Department, Phoenix, AZ, for Defendant.

ORDER

Dominic W. Lanza, United States District Judge

INTRODUCTION

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") came into effect. Among other things, it allocated $150 billion to state, local, and tribal governments to assist those entities in covering "necessary expenditures incurred due to the public health emergency" arising from the COVID-19 pandemic. See 42 U.S.C. § 801(d). This $150 billion allocation is known as the Coronavirus Relief Fund ("CRF").

The City of Phoenix received $293 million of CRF funds and chose to use about 10% of that money, $25.7 million, to create the COVID-19 Emergency Utility Rent and Mortgage Assistance Program ("the Program"). The purpose of the Program is "to assist Phoenix residents affected by the COVID-19 emergency ... by providing aid to eligible Phoenix residents for utility bills (water, electric and/or gas), mortgage and rental obligations." (Doc. 24-1 at 2.)

When formulating the Program's eligibility criteria, the City consulted the Personal Responsibility and Work Opportunity Reconciliation Act ("PRWORA"), a federal statute enacted in 1996. Under PRWORA, "an alien who is not a qualified alien" is ineligible to receive any "federal public benefit" unless certain exceptions apply. See 8 U.S.C. § 1611(a). The City concluded that the distribution of CRF funds via the Program constitutes a "federal public benefit" and further concluded that none of PRWORA's exceptions were applicable. Thus, the City concluded that it was required, as a matter of federal law, to require applicants to the Program to "provide proof of qualified legal status in the U.S." (Doc. 24-1 at 19.) As a practical matter, this excluded many Phoenix residents.

Now pending before the Court is a motion for a preliminary injunction by Plaintiffs Poder In Action ("Poder"), the Arizona Dream Act Coalition ("ADAC"), and Aurora Galan Mejia (collectively, "Plaintiffs"). In a nutshell, Plaintiffs argue that the City isn't required by federal law to impose any immigration-related eligibility restrictions under the Program and that the City is affirmatively violating federal law by doing so. (Doc. 14.)

For the following reasons, the motion will be denied. First, Plaintiffs have not established a likelihood of success on the merits of their challenge to the Program. Instead, Plaintiffs have made a lesser showing—that there are "serious questions going to the merits" of their challenge. This is because the parties’ competing interpretations of PRWORA are both plausible. Although Plaintiffs raise a serious argument that the Program falls within PRWORA's exception authorizing the allocation of "[s]hort-term, non-cash, in-kind emergency disaster relief" without regard to the recipient's immigration status, the City's counter-arguments concerning the inapplicability of this exception have some force. This is a close question not directly addressed by any existing precedent.

Second, Plaintiffs have not established a likelihood (as opposed to a possibility) of irreparable harm in the absence of a preliminary injunction. Although there is intuitive appeal to the notion that withholding emergency housing assistance during a crisis will result in irreparable harm to those being deprived of the assistance, the sole individual plaintiff in this case has not demonstrated that she faces an imminent risk of eviction. In fact, her declaration suggests she has not missed any mortgage payments and simply wishes to avoid falling behind in the future. Ninth Circuit law suggests that, in the housing context, a more acute risk of eviction is necessary to warrant preliminary injunctive relief. Such a showing is particularly necessary here because the City has agreed to accelerate the ultimate resolution of Plaintiffs’ constitutional challenge to the Program, which the Court plans to do in the coming weeks. As for the entity plaintiffs’ assertion that some of their members and constituents face eviction in the absence of a preliminary injunction, those assertions lack foundation and are undermined, at least in part, by the fact that Arizona's Governor has issued a pair of executive orders delaying evictions during the pandemic. Although Plaintiffs dispute the extent to which those executive orders truly protect them, the orders still undercut the strength of Plaintiffs’ showing as to irreparable harm.

Third, Ninth Circuit law provides that when (as here) a plaintiff has failed to demonstrate a likelihood of success on the merits, preliminary injunctive relief is available only if the plaintiff makes a particularly strong showing as to the balance-of-hardships factor. Plaintiffs have failed to do so here. This case, somewhat uniquely, involves a finite pool of resources that the City is seeking to distribute to Phoenix residents suffering from financial dislocation during the pandemic. If Plaintiffs were awarded benefits via a preliminary injunction, only for the City to ultimately prevail on the merits, this would diminish the funds available to others. In any event, Plaintiffs have not established any risk that the available funds will be depleted before an accelerated merits hearing.

For these reasons, Plaintiffs’ motion will be denied. This outcome should not, to be clear, be interpreted as a sign that Plaintiffs’ challenge to the Program will ultimately fail. Instead, it is compelled by the exacting standards applicable when assessing a request for a preliminary injunction, which "is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion." Lopez v. Brewer , 680 F.3d 1068, 1072 (9th Cir. 2012) (quotation omitted).

BACKGROUND

I. Factual Background

Poder and ADAC are nonprofit organizations that advocate on behalf of, and whose members include, immigrants and their families in Phoenix. (Doc. 24 ¶¶ 12-13.) Ms. Galan Mejia is a Phoenix resident and a Deferred Action for Childhood Arrivals ("DACA") recipient. (Id. ¶ 14.)

On March 11, 2020, Arizona Governor Douglas A. Ducey declared a public health emergency in response to the COVID-19 pandemic. (Doc. 36-1 at 2.)

On March 24, 2020, Governor Ducey issued an executive order entitled "Postponement of Eviction Actions." (Doc. 36-2.)

Subject to certain exceptions, it ordered law enforcement officers to "temporarily delay enforcement of eviction action orders for residential premises" when various "circumstances exist and are documented to the landlord or property owner." (Id. at 3.) One such circumstance was that "[t]he individual suffered a substantial loss of income resulting from COVID-19." (Id. ) The order clarified, however, that "[n]o provision of this Executive Order shall be construed as relieving any individual of the obligation to pay rent." (Id. at 4.) Finally, the order specified that it would "remain in effect for 120 days"—that is, until July 22, 2020. (Id. )

On March 27, 2020, President Trump signed the CARES Act into law. Pursuant to a population-based formula, the CARES Act allocated $293 million to the City to help cover expenses related to the pandemic. (Doc. 24 ¶ 3.)

On May 20, 2020, the City passed an ordinance setting aside $25.7 million of the CRF funds to create the Program. (Id. ¶ 19.) The City thereafter signed a contract with a nonprofit organization, the Arizona Community Action Association (known as "Wildfire"), to administer the Program. (Id. ¶¶ 19-20.) The contract provides that the "purpose" of the Program is to "creat[e] a temporary program to assist Phoenix residents affected by the COVID-19 emergency ... by providing aid to eligible Phoenix residents for utility bills (water, electric and/or gas), mortgage and rental obligations." (Doc. 24-1 at 2.) The contract further provides that the Program "will remain in effect until December 30, 2020 or the funds are depleted." (Id. ) The contract explains that "[f]unding will consist of one-time Coronavirus Relief Fund monies" (id. at 13) and specifies that, because "federal CRF grant funds" are at issue, "Wildfire agrees to comply with guidelines for applicable federal funding sources as identified herein ...." (Id. at 6.) Finally, as for the payment mechanism, the contract explains that participating agencies will "issue payment to local utility service providers and/or landlords or mortgage companies on behalf of the eligible client." (Id. at 15 [section 6.1.19].)

The contract identifies four eligibility requirements that applicants to the Program must establish (and Wildfire must verify): (1) "COVID-19 Job/Wage Instability," which can be demonstrated through proof of unemployment/termination, reduced hours or wages, increased day care costs, or other "reduction in income ... not tied to a formal employment structure" (id. at 20); (2) residency within the City, which can be demonstrated through identification documents, utility bills, and other sources (id. at 21); (3) identity verification, which can be established through similar documents (id. at 22); and (4) "verification of lawful presence in the United States" (id. at 23, capitalization omitted). During oral argument, the City explained that the final requirement was included solely due to the City's determination that it was required by PRWORA.

On July 16, 2020, Governor Ducey signed an executive order entitled "Continued Postponement of Eviction Enforcement Actions." (Doc. 36-1.) It largely mirrored the earlier order but...