Healthy Futures of Texas v. Department of Health and Human Services

          MEMORANDUM OPINION

          KETANJI BROWN JACKSON UNITED STATES DISTRICT JUDGE

         Before this Court at present are ripe cross-motions for summary judgment in the instant class action, which involve legal claims that are indistinguishable from the dispute that this Court recently considered and resolved in Policy and Research, LLC v. HHS, No. 18-cv-346, 2018 WL 2184449, (D.D.C. May 11, 2018). (See Pl.'s Mot. for Summ. J. on the Individual and Class Claims, ECF No. 7, at 12-16; Defs.' Cross-Mot. to Dismiss or for Summ. J., ECF No. 18, at 18-28.)^[1] In fact, the only new issue that has arisen in the context of the summary judgment motions at issue here is HHS's contention that the equitable doctrine of laches bars Healthy Futures of Texas (“Healthy Futures”) and the other class members (collectively “Plaintiffs”) from filing their lawsuit now-some ten months after the challenged agency action, and more than two months after Policy and Research, LLC and other similarly situated plaintiffs filed lawsuits asserting identical claims in federal districts across the country.^[2]

         For the reasons explained below, this Court rejects HHS's laches argument, and it also finds no reason to depart from its conclusion that (1) the termination provisions of HHS's regulations apply to the agency's unexplained decision to “shorten” the project periods for the grants it had awarded to the class members under the Teen Pregnancy Prevention Program (“TPPP”), such that this decision is not committed to agency discretion by law, see Policy & Research, LLC, 2018 WL 2184449, at *7-12, and (2) HHS acted arbitrarily and capriciously in violation of the Administrative Procedure Act (“APA”), 5 U.S.C. § 706(2)(A), because it terminated Plaintiffs' project periods without providing any explanation for this action and without complying with its own regulations, Policy & Research, LLC, 2018 WL 2185559, at *13. Accordingly, Plaintiffs' motion for summary judgment is GRANTED, Defendants' cross-motion to dismiss and for summary judgment is DENIED, and HHS's decision to shorten these project periods will be VACATED. A separate Order that requires HHS to accept and process the class members' noncompeting continuation applications to the same extent and in the same manner as before the agency decided to “shorten” the project periods for grants made under the TPPP will follow.

         I. THE LACHES DISPUTE

         HHS contends that Healthy Futures and the class members it represents unreasonably delayed the filing of the instant lawsuit (which challenges agency action that occurred last summer), and it further maintains that HHS would be prejudiced if Plaintiffs' belated request for an injunction is granted, because HHS is currently engaged in the expensive, labor-intensive process of awarding the contested TPPP grant funds to other organizations through a recompetition process. (See Defs.' Mem. in Opp'n to Pl.'s Mot. for Summ. J. & in Supp. of Their Cross-Mot. to Dismiss or for Summ. J. (“Defs.' Mem.”), ECF No. 18-1, at 14-18.) In this regard, HHS emphasizes the following “factual circumstances, ” which, in the agency's view, render the April 27, 2018 filing of the instant action “unreasonable[.]” (Id. at 15.) First of all, HHS points out that the agency's “announcement” that each of the class members' project periods was being shortened, effective June 30, 2018, and “was made ten months ago.” (Id. at 16.) Moreover, “[e]ven after [other] grantees began filing lawsuits to challenge HHS's decision, Healthy Futures (and the putative class it represents) waited another two-and-a-half months before seeking to assert its rights.” (Id. (emphasis added); see also id. (decrying this delay as “not reasonably expeditious behavior” (internal quotation marks and citation omitted)).) HHS also highlights the fact that the class claims involve “government grants and contracts”-a context in which “expedient assertion of claims is vital.” (Id. at 15 (citing LTMC/Dragonfly, Inc. v. Metro. Wash. Airports Auth., 699 F.Supp.2d 281, 293 (D.D.C. 2010)).)

         HHS further insists that it would “unfairly prejudice” the agency to allow this case to proceed now. (Id. at 16.) This is because, while the class members purportedly dithered over instigating legal action to protect their interests, the agency “spent a year analyzing the [TPPP] and developing a new approach to the program at a cost to the agency of millions of dollars and many house of staff time.” (Id. at 16-17.) Pursuant to these efforts, HHS recently announced that the grant funding that Plaintiffs seek to preserve with this lawsuit will be competitively redistributed, so HHS argues here that the “requested relief interferes with the recompetition” both “by reducing the funds available to the agency to award to new grantees and diminishing HHS's investment in reviewing and redesigning the TPP Program[, ]” and also by thwarting the legitimate expectations of the members of the public who will “commit resources to participate in that recompetition.” (Id. at 17.) Thus, notwithstanding the fact that other TPPP grantees had launched several (ultimately successful) lawsuits challenging HHS's decision to cut the previous round of TPPP grant awards short prior to the time that the agency announced the recompetition, HHS maintains that it had “good reason to believe” that these grantees' alleged rights to the funding “had been abandoned” during the ten months that elapsed between the agency's decision to shorten Plaintiffs' project period and the class action lawsuit that Healthy Futures filed in this Court. (Id. at 18 (internal quotation marks and citation omitted)); see also Id. at 16 (“When a litigant creates an impression of acquiescence that has led others to make substantial financial commitments, laches should apply to defeat the claim.” (internal quotation marks and citation omitted)).)

         On behalf of the class it represents, Healthy Futures vigorously disputes HHS's assertion of laches. (See Pl.'s Reply Mem. in Further Supp. of Mot. for Summ. J. & Mem. in Opp'n to Defs.' Cross-Mot. to Dismiss or for Summ. J. (“Pl.'s Reply”), ECF No. 22, at 6-11.) For one thing, Healthy Futures disagrees with the agency's contention that there was an unreasonable delay with respect to the filing of this lawsuit, and it does so largely by pointing to certain facts and circumstances that existed at the time that HHS's decision to shorten the TPPP grants was made, which the organization says demonstrably influenced the timing of its response during the ten months prior to the filing of its action. (See Id. at 6-8.) Specifically, Healthy Futures notes that “HHS's budget request for fiscal year 2018 proposed to eliminate the TPPP in May 2017, and Congress did not pass a 2018 funding bill rejecting that proposal under March 23, 2018.” (Id. at 6.)^[3] With respect to the agency's contention that the instant action should be deemed untimely on equitable grounds, Healthy Futures argues that filing this lawsuit five weeks after the time that Congress rejected HHS's elimination request “can hardly be deemed a delay, let alone an unreasonable one.” (Id. at 7.) Healthy Futures also urges the Court to disregard HHS's suggestion “that delay should be measured from the filing of the four prior lawsuits[, ]” because the agency “offers no support for the notion that a lawsuit becomes untimely, as an equitable matter, when it post-dates the filing of similar suits by two months and the decisions in those suits by a few days.” (Id.)

         As to prejudice, Healthy Futures maintains that any such allegation by the agency is “implausible because HHS's decision [to stop funding the existing TPPP grants] has been contested from the start.” (Id. at 8.) That is, according to Healthy Futures, various TPPP grantees took swift action to express their dissatisfaction with HHS's decision to shorten these grant awards soon after the agency announced that decision; these actions included writing letters to the agency, “attempting to appeal the decision” through the administrative process, and encouraging House and Senate members to inquire about this HHS's decision. (Id.) In addition, on February 15, 2018, “nine grantees filed lawsuits challenging” this agency's decision. (Id. at 9.) Therefore, Healthy Futures argues that HHS was fully aware of the TPPP grantees' claims prior to its April 20, 2018 announcement that the funding would be recompeted (see id.), and “at no point did HHS have reason to rely on an impression of acquiescence” to its decision; indeed, “HHS developed the new [recompetition announcements] in light of the possibility of challenges to the termination of the TPPP grants and issued them in the midst of such litigation.” (Id. (internal quotation marks omitted).)

         This Court heard from the parties regarding HHS's laches argument, among other things, during a status conference that it held in this matter on May 21, 2018. The parties' cross-motions for summary judgment became ripe on May 30, 2018.

         II. LEGAL STANDARDS

         The legal standards applicable to motions for summary judgment in APA cases are set forth in this Court's Policy and Research, LLC opinion. See 2018 WL 2184449 at *6. These are the standards that this Court has applied to rule on the summary judgment motions that are presented here.

         With respect to laches, it is important to note that “[l]aches is ‘a defense developed by courts of equity' to protect defendants against ‘unreasonable, prejudicial delay in commencing suit.'” SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 137 S.Ct. 954, 960 (2017) (quoting Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.Ct. 1962, 1967, 1973 (2014)). The doctrine is “founded on the notion that equity aids the vigilant and not those who slumber on their rights” and thereby permit “pertinent evidence [to] become[] lost” or “equitable boundaries [to] blur as defendants invest capital and labor into their claimed property.” NAACP v. NAACP Legal Def. & Educ. Fund., Inc., 753 F.2d 131, 137 (D.C. Cir. 1985). It also serves to prevent plaintiffs from gaining “the unfair advantage of hindsight while defendants suffer the disadvantage of an uncertain future outcome.” Id. If the doctrine applies in a given case, a plaintiff will be barred from pursuing “claims of an equitable cast[.]” Petrella, 134 S.Ct. at 1973.

         Significantly for present purposes, the application of “[l]aches does not depend solely on the time that has elapsed between the alleged wrong and the institution of suit; it is principally a question of the inequity of permitting the claim to be enforced-an inequity founded upon some change in the condition or relations of the property or the parties.” Gull Airborne Instruments, Inc. v. Weinberger, 694 F.2d 838, 843 (D.C. Cir. 1982) (internal quotation marks and citation omitted). Thus, to establish a successful laches defense, the party asserting the defense must show “(1) [a] lack of diligence by the party against whom the defense is asserted, and (2) prejudice to the party asserting the defense[, ]” Nat'l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 122 (2002), and “[t]he amount of prejudice required in a given case varies with the length of the delay[, ]” Pro-Football, Inc. v. Harjo, 565 F.3d 880, 884 (D.C. Cir. 2009). In other words, “[i]f only a short period of time elapses between accrual of the claim and suit, the magnitude of prejudice required before suit would be barred is great[.]” Id. (quoting Gull Airborne Instruments, 694 F.2d at 843).

         Because the laches inquiry necessarily requires the district court to “weigh [] both the length of delay and the amount of prejudice, it leaves the district court very broad discretion to take account of the particular facts of particular cases.” Id. at 885. Thus, whether or not laches applies is necessarily a holistic and fact-bound determination. And there is nothing about the nature of a class action lawsuit that makes the defense of laches inapplicable to the claims of the class representative or class members, so when laches is raised to defend against claims in that context, the Court must engage in the necessary holistic evaluation of the facts in those cases as well. See, e.g., Does I through III v. District of Columbia, 232 F.R.D. 18, 32 (D.D.C. 2005), rev'd in part, vacated in part on other grounds sub nom. Doe ex rel. Tarlow v. ...