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6th Cir. Holds Federal Eviction Moratorium Exceeds Congressional Authority

eviction moratoriumThe U.S. Court of Appeals for the Sixth Circuit recently denied an emergency motion to stay a trial court’s order ending the federal Centers for Disease Control and Prevention’s moratorium on residential evictions.

In so ruling, the Sixth Circuit held that the plain meaning and ejusdem generis canons of interpretation indicate that 42 U.S.C. § 264 does not allow the CDC to halt evictions.

A copy of the opinion in Tiger Lily, LLC v. HUD is available at:  Link to Opinion.

The March 2020 CARES Act included a 120-day moratorium on eviction filings based on nonpayment of rent for tenants residing in certain federally financed rental properties, which expired in July 2020. Pub. L. No. 116-136, § 4024(b), 134 Stat. 281 (2020).

The CDC director then unilaterally issued the “halt order” declaring a new moratorium, halting evictions of certain “covered persons” through Dec. 31, 2020, purportedly based on authority found in Section 361 of the Public Health Service Act, 42 U.S.C. § 264, which provides the secretary of Health and Human Services with the power to “make and enforce such regulations as in his judgment are necessary to prevent the introduction, transmission, or spread of communicable diseases.” 85 Fed. Reg. 55292-01.

Congress subsequently passed the Consolidated Appropriations Act, which extended that halt order from Dec. 31 to Jan. 31. Pub. L. No. 116-260, § 502, 134 Stat. 1182 (2020).

Just before that statutory extension lapsed, the CDC director issued a new directive extending the order through March 31, again relying on the generic rulemaking power arising from the Public Health Service Act. 86 Fed. Reg. 8020-01 (citing 42 U.S.C. § 264(a)). On March 29, the CDC announced a further extension of the moratorium through June 30.

The plaintiffs in this case all own or manage residential rental properties. In September 2020, the plaintiffs challenged the halt order and sought a declaratory judgment that the order violated the Administrative Procedures Act and a preliminary injunction barring its enforcement. The trial court denied the preliminary injunction because it found that the plaintiffs’ loss of income did not rise to the level of an irreparable injury.

The government then moved for judgment on the pleadings. The plaintiffs countered with a Rule 56 motion for judgment on the administrative record. The trial court granted judgment in the plaintiffs’ favor, finding that the halt order exceeded the CDC’s statutory authority under 42 U.S.C. § 264(a).

The government appealed and moved the trial court for an emergency stay of its order granting judgment in favor of the plaintiffs because the halt order was set to expire on March 31. However, when the trial court did not oppose the plaintiffs’ proposed two-week response date (well past March 31), the government filed a stay motion before the Sixth Circuit.

The Sixth Circuit considers four factors when deciding whether to stay a judgment pending appeal: “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.” Nken v. Holder, 556 U.S. 418, 434 (2009) (quotation and brackets omitted). When a party has no likelihood of success on the merits, the Court does not grant a stay. SawariMedia, LLC v. Whitmer, 963 F.3d 595, 596 (6th Cir. 2020) (quoting Daunt v. Benson, 956 F.3d 396, 421–22 (6th Cir. 2020)).

Congress’s express authorization of the halt order ended on Jan. 31 when the order was set to expire under the Consolidated Appropriations Act. At that point, the CDC director had to rely solely on the rulemaking power stipulated in 42 U.S.C. § 264 to extend the halt order.

Under Section 264(a), the HHS secretary, and the CDC by extension, “may provide for such inspection, fumigation, disinfection, sanitation, pest extermination, destruction of animals or articles found to be so infected or contaminated as to be sources of dangerous infection to human beings, and other measures, as in his judgment may be necessary.” 42 U.S.C. § 264(a). The government asserted that a nationwide eviction moratorium is among the “other measures” for disease control that Congress envisioned when drafting the statute.

The Sixth Circuit disagreed and held that a catchall provision at the end of a list of specific items warrants application of the ejusdem generis canon, which says that “where general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words.” Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 114–15 (2001) (citation omitted).

The Court reasoned that a right to intrude on property to sanitize and dispose of infected materials is altogether different from a right to halt evictions.

Additionally, the Sixth Circuit noted, regulation of the landlord-tenant relationship is historically left up to the states to handle. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 440 (1982) (“[t]his Court has consistently affirmed that States have broad power to regulate housing conditions in general and the landlord-tenant relationship in particular”). Therefore, the Sixth Circuit stated that even if it were inclined to read section 264(a) as allowing the CDC to halt evictions, it cannot do so without some clear, unequivocal textual evidence of Congress’s intent to do so. Will v. Mich. Dep’t of State Police, 491 U.S. 58, 65 (1989).

The government argued that (i) a later subsection of section 264 acknowledges the HHS secretary’s authority to enforce quarantines, (ii) quarantines are not among the enumerated provisions of section 264(a), (iii) quarantines are different in kind from the enumerated provisions, and therefore, (iv) “other measures” must be read more expansively than the ejusdem generis canon allows. The Sixth Circuit was not persuaded because it concluded that the later subsection was specifically concerned with the CDC’s power to restrict liberty interests to avoid the spread of disease, and section 264(a) is only focused on property interest restrictions.

The government then contended that when Congress legislatively extended the halt order to Jan. 31 through the Consolidated Appropriations Act, it effectively acknowledged that section 264(a) authorizes the halt order. Again, the Sixth Circuit disagreed.

The Court noted that Congress referenced the CDC’s assertion that the halt order is supported by section 264(a) when it passed the Consolidated Appropriations Act. However, the Sixth Circuit held that congressional acquiescence does not take precedence over the plain text of section 264(a), which does not authorize the CDC to ban evictions.

The Sixth Circuit held that Congress does have “the power to ratify . . . acts which it might have authorized and give the force of law to official action unauthorized when taken.” Swayne & Hoyt, Ltd. v. United States, 300 U.S. 297, 301-02 (1937) (internal citation omitted). However, nothing in the Consolidated Appropriations Act expressly approves the CDC’s interpretation of section 264(a). H.R. 133, 116th Cong., div. N, tit. V, § 502.

Because the Sixth Circuit decided that the government is unlikely to succeed on the merits, the Court did not consider the remaining stay factors. See Maryville Baptist Church, Inc. v. Beshear, 957 F.3d 610, 615–16 (6th Cir. 2020).

As a result, the Sixth Circuit denied the government’s emergency motion to stay the trial court’s order pending appeal.

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The attorneys of Maurice Wutscher are seasoned business lawyers with substantial experience in business law, financial services litigation and regulatory compliance. They represent consumer and commercial financial services companies, including depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, financial asset buyers and sellers, loss mitigation companies, third-party debt collectors, and other financial services providers. They have defended scores of putative class actions, have substantial experience in federal appellate court litigation and bring substantial trial and complex bankruptcy experience. They are leaders and influencers in their highly specialized area of law. They serve in leadership positions in industry associations and regularly publish and speak before national audiences.

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