United States District Court, District of Columbia
D. BATES UNITED STATES DISTRICT JUDGE
before the Court is  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 29
C.F.R. §§ 1630.14(d)(3), 1635.8(b)(2)(ii)-(iii).
The Court found that EEOC “failed to adequately explain
its decision to construe the term ‘voluntary' in
the ADA and GINA to permit the 30% incentive level adopted in
both the ADA rule and the GINA rule.” Mem. Op. at 33.
However, in light of the potential for disruption were the
Court to vacate the challenged Rules in the middle of a plan
year, the Court decided to remand without vacatur “for
the present.” Id. at 35-36.
“[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
the 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.
* * *
to alter or amend a judgment under Federal Rule of Civil
Procedure 59(e) lie within the discretion of the Court.
Ciralsky v. CIA, 355 F.3d 661, 671 (D.C. Cir. 2004);
see Black v. Tomlinson, 235 F.R.D. 532, 533 (D.D.C.
2006) (“[D]istrict courts have substantial discretion
in ruling on motions for reconsideration.”). While
“Rule 59(e) is not a vehicle to present a new legal
theory that was available prior to judgment, ”
Patton Boggs LLP v. Chevron Corp., 683 F.3d 397, 403
(D.C. Cir. 2012), a Rule 59 motion may be granted if
“there is an intervening change of controlling law, the
availability of new evidence, or the need to correct a clear
error or prevent manifest injustice, ”
Ciralsky, 355 F.3d at 671. There is no precise
definition of what constitutes “manifest injustice,
” Piper v. U.S. Dep't of Justice, 312
F.Supp.2d 17, 22 (D.D.C. 2004), as amended (May 13,
2004), though the term obviously contemplates prejudice to
the moving party.
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 sparred in their briefing. See Ciralsky, 355
F.3d at 673.
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. 5 U.S.C. §
706(2)(A) (“The reviewing court shall . . .
hold unlawful and set aside agency action, findings,
and conclusions found to be . . . arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law
. . . .” (emphases added)). And while the courts do not
always vacate in such circumstances, vacatur is
“normally require[d].” Mem. Op. at 33-34 (quoting
Advocates for Highway & Auto Safety v. Fed. Motor
Carrier Safety Admin., 429 F.3d 1136, 1151 (D.C. Cir.
2005)); see Am. Bioscience, Inc. v. Thompson, 269
F.3d 1077, 1084 (D.C. Cir. 2001). As AARP has asked the Court
from the start to “[v]acate 29 C.F.R. §§
1630.14(d)(3) and 1635.8(b)(2)(iii), ” Compl. [ECF No.
1] at 27, and as AARP claims that remand without vacatur
would continue the current harm to its members while EEOC
formulates new rules, see AARP Mot. at 6-7,
AARP's request deserves serious consideration.
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,
579 F.3d 1, 11 (D.C. Cir. 2009) (Randolph, J., concurring)
(“The briefs of the parties rarely discuss what remedy
the court should impose if the agency loses. This is
understandable. ‘It may be impossible for petitioners,
agencies, or intervenors to anticipate exactly how the
court's decision will come out. . . . The upshot is that
remand-only decisions are being made without sufficient
information . . . .'” (citation omitted)); see
also Standing Rock Sioux Tribe v. U.S. Army Corps of
Engineers, 255 F.Supp.3d 101, 147-48 (D.D.C. 2017)
(ordering parties to file post-judgment briefs on whether to
vacate because summary judgment briefing barely discussed
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
decision whether to vacate depends on  ‘the
seriousness of the order's deficiencies (and thus the
extent of doubt whether the agency chose correctly) and 
the disruptive consequences of an interim change that may
itself be changed.'” Allied-Signal, Inc. v.
U.S. Nuclear Reg. Comm'n, 988 F.2d 146, 150-51 (D.C.
Cir. 1993). In its prior opinion, the Court determined that
vacating the Rules would punish the employers and employees
who relied on them, and that the disruption vacatur would
thereby cause outweighed the agency's serious failure of
reasoning. Mem. Op. 34-35. AARP argues that the calculus is
different for 2018-that stakeholders will easily be able to
adjust to a vacatur that takes effect next year. AARP Mot. at
9- 10; Reply at 4-6. It therefore requests vacatur effective
January 1, 2018. AARP Mot. at 1.
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, 443 F.3d 890, 909 (D.C. Cir. 2006), and it is clear
from the record that vacatur is not a realistic option for
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., 579 F.3d
at 8. Here, EEOC failed to take into account statutory and
other concerns with its decision to set incentive levels at
30%. See Mem. Op. at 33 (“Neither the final
rules nor the administrative record contain any concrete
data, studies, or analysis that would support any particular
incentive level as the threshold past which an incentive
becomes involuntary in violation of the ADA and
GINA.”). This despite numerous comments pointing out
EEOC's lack of reasoning and condemning the 30% incentive
level as coercive. See id. at 22, 25-26, 32. As the
Court has noted, EEOC's “lack of a reasoned
explanation is a serious failing.” Id. at 34.
The first Allied Signal prong thus suggests that
vacatur is the proper remedy here.
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, 289 F.3d 89, 97 (D.C. Cir. 2002), there is
plenty of time for employers to develop their 2019 wellness
plans with knowledge that the Rules have been vacated. EEOC
has suggested that businesses need six months' lead time
to adjust to a change in the regulatory scheme, Opp'n at
3; the longest lead time for which any commenter asked during
EEOC's notice-and-comment process was twelve months,
see AR 3415-16 (Nat'l Bus. Grp. on Health), 3559
(Coll. & Univ. Prof'l Ass'n for Human Res.).
Thus, vacating as of January 1, 2019 would appear to avoid
any substantial disruptive effect.
“the second Allied-Signal factor is weighty
only insofar as the agency may be able to rehabilitate its
rationale for the regulation.” Comcast Corp.,
579 F.3d at 9. It is far from clear that EEOC will view a 30%
incentive level as sufficiently voluntary upon reexamination
of the evidence presented to it. That “the agency's
decision may very well be different on remand, ” Mem.
Op. at 34 (citation omitted), further reduces the
significance of the disruption prong of the vacatur test.
And, since AARP's members could be pressured by their
employers to give up private medical data as long as the
current Rules remain in place, AARP can credibly show
prejudice from a decision to remand ...