Court Opinion

ID: 3065303
Source: CourtListenerOpinion
Date Created: 2015-10-14 22:30:41.081245+00
Date Added: 2024-06-11T09:00:20.259647
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

INDEPENDENT LIVING CENTER OF           
SOUTHERN CALIFORNIA, INC., a
nonprofit corporation; GRAY
PANTHERS OF SACRAMENTO, a
nonprofit corporation; GRAY
PANTHERS OF SAN FRANCISCO, a
nonprofit corporation; GERALD
SHAPIRO, Pharm. D. doing business
as Uptown Pharmacy and Gift
Shoppe; SHARON STEEN doing                    No. 08-56422
business as Central Pharmacy;
MARK BECKWITH; MARGARET
                                                D.C. No.
                                           2:08-cv-03315-CAS-
DOWLING; TRAN PHARMACY, INC.,                     MAN
doing business as Tran Pharmacy;
JASON YOUNG,
              Petitioners-Appellees,
                 v.
DAVID MAXWELL-JOLLY, Director of
the Department of Health Care
Services, State of California,
             Respondent-Appellant.
                                       

                            16647
16648       INDEPENDENT LIVING v. MAXWELL-JOLLY

INDEPENDENT LIVING CENTER OF           
SOUTHERN CALIFORNIA, INC., a
nonprofit corporation; GRAY
PANTHERS OF SACRAMENTO, a
nonprofit corporation; GRAY
PANTHERS OF SAN FRANCISCO, a
nonprofit corporation; GERALD
SHAPIRO, Pharm. D. doing business
as Uptown Pharmacy and Gift                   No. 08-56554
Shoppe; SHARON STEEN doing                       D.C. No.
business as Central Pharmacy;
MARK BECKWITH; MARGARET
                                          2:08-cv-03315-CAS-
                                                  MAN
DOWLING; TRAN PHARMACY, INC.,
doing business as Tran Pharmacy;                 ORDER
JASON YOUNG,
             Petitioners-Appellants,
                 v.
DAVID MAXWELL-JOLLY, Director of
the Department of Health Care
Services, State of California,
              Respondent-Appellee.
                                       
                  Filed December 21, 2009

    Before: Stephen Reinhardt, William A. Fletcher, and
            Milan D. Smith, Jr., Circuit Judges.

                          ORDER

   On July 9, 2009, we handed down an opinion arising out
of these two consolidated cases. See Independent Living Cen-
ter of S. Cal. v. Maxwell-Jolly, 572 F.3d 644 (9th Cir. 2009)
(Independent Living). Now, nearly five months later, Appel-
             INDEPENDENT LIVING v. MAXWELL-JOLLY          16649
lant/Appellee the California Department of Health Care Ser-
vices Director, David Maxwell-Jolly (Director) moves to
vacate that opinion. Despite his earlier vigorous prosecution
of the appeal, the Director has changed his view, and now
argues that we lacked jurisdiction to decide the appeal he
helped advance because the underlying preliminary injunction
entered by the district court became moot due to a change in
California law. We hereby recall the mandate in this case so
we may address the Director’s motion, and we deny the
motion because we hold that the district court’s damages
award ensured that both parties retained an interest in the case
despite the passage of AB 1183.

                      BACKGROUND

   In Independent Living, we addressed an issue raised by AB
5, which added §§ 14105.19 and 14166.245 to the California
Welfare and Institutions Code. These sections combined to
reduce payments under California’s Medi-Cal fee-for-service
program to various health care providers by ten percent. Id. at
649. The cuts were scheduled to take effect on July 1, 2008.
Id. We held that in implementing the rate reductions man-
dated by AB 5, the Director violated 42 U.S.C.
§ 1396(a)(30)(A) (hereafter § 30(A)). Id. at 652. We also held
that the Appellees/Appellants (Independent Living) were enti-
tled to retroactive relief, in the form of monetary damages,
because the state had waived sovereign immunity. Id. at 662.

   The Director now advises us that AB 1183 became effec-
tive on September 30, 2008, and amended § 14105.19(b)(1) to
provide that the ten percent rate reductions previously called
for in AB 5 would end on February 28, 2009. AB 1183 also
added § 14105.191, which provided for either one percent or
five percent rate reductions, depending on the service pro-
vider. AB 1183 is the subject of ongoing litigation, including
at least three appeals soon to be argued before our court based
on similar § 30(A) claims.
16650        INDEPENDENT LIVING v. MAXWELL-JOLLY
                        DISCUSSION

   Our jurisdiction depends on the existence of a “case or con-
troversy” under Article III of the Constitution. Public Utils.
Comm’n v. FERC, 100 F.3d 1451, 1458 (9th Cir. 1996). A
claim that has lost its character as a live controversy is consid-
ered moot, and thus we lack jurisdiction to consider it.
Rosemere Neighborhood Ass’n v. EPA, 581 F.3d 1169, 1172-
73 (9th Cir. 2009). Whether a live controversy exists depends
on whether we can grant effective relief “in the event that
[we] decide[ ] the matter on the merits.” NASD Dispute Reso-
lution, Inc. v. Judicial Council of Cal., 488 F.3d 1065, 1068
(9th Cir. 2007); see also Public Utils. Comm’n, 100 F.3d at
1458 (“The court must be able to grant effective relief, or it
lacks jurisdiction and must dismiss the appeal.”).

   In addition, we have noted the “significant difference
between a request to dismiss a case or proceeding for moot-
ness prior to the time an appellate court has rendered its deci-
sion on the merits and a request made after that time.”
Armster v. United States District Court, 806 F.2d 1347, 1355
(9th Cir. 1987). Accordingly, we have concluded that dismiss-
ing an appeal after rendering our decision is an exercise
within our discretion. See id.; accord Mfrs. Hanover Trust Co.
v. Yanakas, 11 F.3d 381, 384 (2d Cir. 1993) (denying a joint
motion to vacate where the parties sought vacatur of an appel-
late court decision rather than a district court judgment and
the motion was not made while the appeal was pending).

   Adherence to such principles is particularly important in
cases involving government actors. Our holding in Armster,
in which we refused mandamus to vacate an earlier decision
on the ground of mootness allegedly caused by a change in
the government’s position, underscores this point. As we
explained in that opinion:

    In the case of the government, heads of administra-
    tive agencies and other public officials could as a
             INDEPENDENT LIVING v. MAXWELL-JOLLY           16651
    matter of course cause the withdrawal of decisions
    establishing unfavorable precedents or vindicating
    individual rights by complying with those decisions
    before the mandate issues. Such a result would be
    inconsistent with the manner in which our system of
    checks and balances is intended to operate.

806 F.2d at 1355-56. The same would apply to any change in
the government’s position, including legislative or executive
branch changes, regardless of their cause, and regardless of
whether the mandate had issued, as well as to any change in
circumstances resulting from such governmental action.

   The Director argues that AB 1183 rendered the appeal in
these cases moot, because at the time we entered our decision,
there was “nothing to enjoin.” According to the Director, this
controversy involved only injunctive relief, which was settled
when the ten percent rate reductions ended on February 28,
2009. We disagree.

   In Independent Living, we held that the injunction entered
by the district court constituted retroactive relief “requir[ing]
the State to pay monetary compensation to affected provid-
ers.” 572 F.3d at 660-61. On August 18, 2008, the district
court enjoined enforcement of the rate reductions for services
provided on or after July 1, 2008. Id. at 650. On August 27,
the district court amended that order because it believed that
its August 18 order violated the state’s Eleventh Amendment
sovereign immunity since it did not provide for only prospec-
tive injunctive relief. Id. at 650. We reversed the district
court’s August 27 order, id. at 662, concluding that even
though the district court’s order provided for retroactive
relief, and did not fall under the Ex parte Young exception to
sovereign immunity for prospective injunctive relief, id. at
661, since the Director had waived sovereign immunity, Inde-
pendent Living was entitled to money damages for the Direc-
tor’s past conduct, “extend[ing] to all services covered by that
injunction and provided on or after July 1, 2008,” id. at 663;
16652        INDEPENDENT LIVING v. MAXWELL-JOLLY
see id. at 661 (“Even if a plaintiff seeks damages for past con-
duct, sovereign immunity will not insulate a state from suit in
state court, provided the state has previously consented to be
sued in state court under like circumstances.”).

   Accordingly, the Director’s reliance on Bunker Ltd. Part-
nership v. United States, 820 F.2d 308, 311 (9th Cir. 1987) is
misplaced. In Bunker we held that “[w]here intervening legis-
lation has settled a controversy involving only injunctive or
declaratory relief, the controversy has become moot.” Id.
(emphasis added). This was not such a case. See Richmond v.
J.A. Croson Co., 488 U.S. 469, 478 n.1 (1989) (case not ren-
dered moot where plaintiff argued it was entitled to damages
pursuant to expired ordinance); Alvarez v. Smith, 558 U.S.
___, No. 08-351, Slip Op. at 5 (2009) (case rendered moot
where plaintiffs sought “only declaratory and injunctive relief,
not damages“) (emphasis added). The district court’s damages
award ensured that both parties retained an interest in the case
despite the passage of AB 1183, which merely provided that
the ten percent rate reductions would not continue past Febru-
ary 28, 2009. Cf. New England Health Care Employees Union
v. Mount Sinai Hosp., 65 F.3d 1024 (2d Cir. 1995) (district
court’s injunction of enforcement of Connecticut health care
statute not mooted by passage of new law where the state had
an interest in recouping over $1 million it was enjoined from
collecting). Thus, both parties had a “ ‘concrete interest in the
outcome of the litigation.’ ” Id. (quoting Firefighters Local
Union No. 1784 v. Stotts, 467 U.S. 561, 571 (1984)).

   Furthermore, “[a]lthough we are only permitted to interpret
the old statutory provision that is before us, if the new statu-
tory provision has manifestly not changed the law, a contro-
versy arising under the old statutory provision will be capable
of repetition under the new one. If so, the controversy is not
moot.” Bunker Ltd., 820 F.3d at 312; accord Nat’l Ass’n of
Neighborhood Health Centers, Inc. v. Mathews, 551 F.2d 321,
339 (D.C. Cir. 1976) (rejecting mootness where “the new stat-
ute, in pertinent part, appears quite similar to the old one”
             INDEPENDENT LIVING v. MAXWELL-JOLLY           16653
(footnote omitted)). While we express no view as to the ongo-
ing litigation with respect to AB 1183, the very existence of
that litigation is further evidence that this controversy is “ca-
pable of repetition.” In fact, Independent Living has chal-
lenged the new law on essentially the same legal theory. Thus,
whatever changes the Director has undertaken with respect to
§ 14105.191 do not convince us that the controversy arising
under § 141015.19 is moot.

   While it is clear that this case was not moot at the time of
our decision, we feel constrained to comment on the circum-
stances surrounding the Director’s bringing this “new” law to
our attention. AB 1183 became effective on September 30,
2008, yet the Director waited more than a year to file the
instant motion. Though we heard argument in Independent
Living on February 18, 2009, just ten days before the new rate
reductions were to end, the Director said nothing about the
pending termination. The Director now “regrets” the delay in
bringing this issue to our attention and asserts that counsel did
not become aware of it until preparing a “potential” petition
for certiorari in the United States Supreme Court. This expla-
nation is belied by the record of proceedings in this case. On
June 1, 2009, over a month before we issued our opinion in
this case, the Director filed his reply brief in the Supreme
Court seeking a petition for certiorari respecting our earlier
decision in Independent Living Center of S. Cal., Inc. v.
Shewry, 543 F.3d 1050 (9th Cir. 2008). We are particularly
troubled by a footnote contained in that brief. It provides:

    The case is not moot. After the Ninth Circuit’s order
    on July 11, 2008, the district court enjoined some of
    the reductions mandated by AB 5. See Independent
    Living Ctr. of S. Cal. v. Shewry, No. CV 08-3315
    CAS, 2008 WL 3891211 (C.D. Cal. Aug. 18, 2008).
    Petitioner’s appeal of the district court’s order is
    pending in the Ninth Circuit. As respondents note, a
    subsequent enactment (AB 1183) amended Califor-
    nia Welfare and Institutions Code § 14105.19 to sun-
16654       INDEPENDENT LIVING v. MAXWELL-JOLLY
    set the reductions on February 28, 2009, and
    enacted a new set of smaller reductions to take their
    place, see id. § 14105.191. While that makes respon-
    dents’ claim for injunctive relief moot, the appeal
    presents a live controversy because the injunction
    forced the state to pay providers hundreds of mil-
    lions of dollars more in Medi-Cal reimbursements
    than the state would have had to pay had AB 5
    remained in full force. The Ninth Circuit’s decision
    regarding the preliminary injunction will determine
    whether the state is entitled to recoup those extra
    payments. And a decision by this Court that respon-
    dents lacked a private cause of action would likewise
    mean that AB 5 was improperly enjoined, thereby
    entitling the state to recoup those monies the state
    was wrongly forced to pay.

(emphasis added). Not only has the Director now taken the
exact opposite position regarding mootness, he has feigned
ignorance of precisely the facts described in the above foot-
note. The California Rules of Professional Conduct prohibit
members of the bar from misleading the judiciary through any
false statement of fact or law. CALIFORNIA RULES OF
PROFESSIONAL CONDUCT R. 5-200 (2009). We find the Direc-
tor’s representation through the Attorney General that he only
recently became aware of, in his words, the “jurisdictional
problem” created by AB 1183, to be a clear violation of Rule
5-200, and gives us pause about accepting the veracity of
future pleadings filed by the Attorney General on behalf of
the Director, if not more generally.

   Granting the Director’s motion would not be a wise exer-
cise of our discretion. Both our decision in Armster and the
Second Circuit’s decision in Manufacturers Hanover identi-
fied the abuses that would result from vacating an appellate
court decision following its issuance. While both cases
involved conduct occurring after the appeals had been
decided, their underlying concerns are applicable here. See
             INDEPENDENT LIVING v. MAXWELL-JOLLY          16655
Mfrs. Hanover Trust Co., 11 F.3d at 384 (reasoning that
vacating an appellate court’s judgment “would allow the par-
ties to obtain an advisory opinion of the court of appeals in
a case in which there . . . may no longer be, any genuine case
or controversy”); Armster, 806 F.2d at 1355 (explaining that
vacating the decision would deprive the petitioners of a deci-
sion “that adjudicated properly presented questions concern-
ing their specific constitutional rights”). Vacating the opinion
would neither be in the public interest, nor would it be fair to
the parties to the litigation. However, because we hold that
this case was not rendered moot, we deny the Director’s
motion on that basis. The mandate shall reissue immediately.

  DENIED.