718 F.2d 938 (9th Cir. 1983), 82-5437, Planned Parenthood of Cent. and Northern Arizona v. State of Ariz.

Docket Nº:82-5437.
Citation:718 F.2d 938
Party Name:PLANNED PARENTHOOD OF CENTRAL AND NORTHERN ARIZONA, an Arizona non-profit corporation; Planned Parenthood of Southern Arizona, an Arizona non-profit corporation; Jack Bashaw, M.D., on behalf of himself, his patients, and all others similarly situated, Plaintiffs-Appellees, v. The STATE OF ARIZONA; Bruce E. Babbitt, individually and as Governor of t
Case Date:October 18, 1983
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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718 F.2d 938 (9th Cir. 1983)

PLANNED PARENTHOOD OF CENTRAL AND NORTHERN ARIZONA, an

Arizona non-profit corporation; Planned Parenthood of

Southern Arizona, an Arizona non-profit corporation; Jack

Bashaw, M.D., on behalf of himself, his patients, and all

others similarly situated, Plaintiffs-Appellees,

v.

The STATE OF ARIZONA; Bruce E. Babbitt, individually and as

Governor of the State of Arizona; William Jamieson,

individually and as Director of the Department of Economic

Security; Robert K. Corbin, individually and as Attorney

General of the State of Arizona, their employees, agents,

representatives, successors, and those acting in concert

with them and all others similarly situated, Defendants-Appellants.

No. 82-5437.

United States Court of Appeals, Ninth Circuit

October 18, 1983

Argued and Submitted Feb. 18, 1983.

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[Copyrighted Material Omitted]

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Lawrence J. Rosenfeld, Dushoff & Sacks, Phoenix, Ariz., for plaintiffs-appellees.

Anthony B. Ching, Phoenix, Ariz., for defendants-appellants.

Appeal from the United States District Court for the District of Arizona.

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Before CHOY and ALARCON, Circuit Judges, and D. WILLIAMS, [*] District Judge.

CHOY, Circuit Judge:

Planned Parenthood instituted this suit to challenge the constitutionality of a footnote to an Arizona appropriation bill that forbade the expenditure of state social welfare funds to support nongovernmental organizations that perform abortions and engage in abortion-related activities. The district court, on a motion for summary judgment, declared the footnote unconstitutional and permanently enjoined its enforcement. Planned Parenthood of Central & Northern Arizona v. Arizona, 537 F.Supp. 90 (D.Ariz.1982). The State now appeals the summary judgment, the attorneys' fee awarded to Planned Parenthood, and a preliminary injunction issued during the course of the litigation.

I. Background

Arizona is a participant in a Title XX federal grant-in-aid program that provides federal funds for family planning services offered as a part of a state's social welfare program. During the period relevant to this suit, the federal government reimbursed a state for 90% of expenditures made for qualified family planning services, whether the state provided those services itself or contracted with private organizations to provide them. 42 U.S.C. Sec. 1397a(a)(1) (Supp. III 1979), amended by 42 U.S.C. Sec. 1397a (Supp. V 1981); 45 C.F.R. Secs. 228.70 et seq. (1978) (recodified 1980; repealed 1981). The providing agency or organization had to secure a 10% matching fund from state or private sources in order to complete funding for the services and to remain eligible for the 90% federal assistance. 45 C.F.R. Secs. 228.53-.54 (1978) (recodified 1980, repealed 1981).

The State of Arizona had been providing the 10% matching funds to private organizations that provided family planning services under contract with the State. However, effective throughout the fiscal year from July 1, 1980, to June 30, 1981, the State of Arizona enacted a footnote to its General Appropriations Bill that forbade the Department of Economic Security from giving state money to any nongovernmental "agencies or entities which offer abortions, abortion procedures, counseling for abortion procedures or abortion referrals." 1980 Ariz.Sess.Laws 842, 860 n. *. 1

Planned Parenthood of Central and Northern Arizona and Planned Parenthood of Southern Arizona (collectively referred to as Planned Parenthood) are private, non-profit, tax-exempt Arizona corporations that provide a full range of family planning services, including Title XX services provided under contract to the State of Arizona. Planned Parenthood of Central and Northern Arizona performs abortions and both organizations offer abortion referrals and abortion counseling. Thus, the Arizona Department of Economic Security, in order to comply with the statutory footnote, withheld state funding from Planned Parenthood.

Despite the loss of state funding, Planned Parenthood continued to operate as a provider of state family planning services and to receive federal Title XX funds. Under an arrangement with the State of Arizona, private funds contributed by Planned Parenthood, instead of state funds, were used to meet the 10% matching-fund requirement.

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The fiscal 1980-1981 contract between Arizona and Planned Parenthood called for $47,000 in family planning services. Planned Parenthood brought suit in the district court to enjoin enforcement of the footnote to the appropriations bill.

On October 7, 1980, the district court preliminarily enjoined the defendants from complying with the challenged footnote, thus forcing the State to provide 10% of the total contract amount (i.e., $4,700) in state funds to Planned Parenthood. The State of Arizona appealed the preliminary injunction, but the appeal was dismissed as moot after the district court declared the Arizona footnote unconstitutional and issued a permanent injunction on February 8, 1982. The district court's reasons for declaring the footnote unconstitutional were (1) that it infringed Planned Parenthood's freedom of speech and (2) that it was void for vagueness. On this appeal, the State of Arizona challenges the merits of the district court's decision declaring the footnote unconstitutional and enjoining its enforcement, the correctness of the issuance of the preliminary injunction, and the award of attorneys' fees.

II. Free Speech Claim

In setting forth their positions, both Planned Parenthood and the State of Arizona invoke principles of law well established in Supreme Court doctrine. The thrust of Planned Parenthood's argument is that the effect of the Arizona footnote is to penalize Planned Parenthood for exercising its constitutional right to freedom of speech; 2 "abortion referral" and "counseling for abortion procedures" are constitutionally protected speech, and the State of Arizona cannot declare such activities to be illegal. See Bigelow v. Virginia, 421 U.S. 809, 95 S.Ct. 2222, 44 L.Ed.2d 600 (1975) (statute making it a misdemeanor to sell or circulate any publication encouraging or prompting the procuring of an abortion declared an infringement of freedom of speech).

Planned Parenthood argues, and the district court agreed, that the challenged Arizona statute is an unconstitutional attempt to do indirectly what the State could not do directly. In other words, Planned Parenthood maintains that instead of instituting a criminal penalty that restricts freedom of speech, the State is attempting to dissuade constitutionally protected speech activities by withdrawing a government benefit from those who engage in such activities.

The Supreme Court has clearly articulated that government may not restrict exercise of constitutionally protected rights, even when that restriction takes the form of withholding a benefit, rather than applying a penalty, for that exercise.

For at least a quarter-century, this Court has made clear that even though a person has no "right" to a valuable governmental benefit and even though the government may deny him the benefit for any number of reasons, there are some reasons upon which the government may not rely. It may not deny a benefit to a person on a basis that infringes his constitutionally protected interests--especially, his interest in freedom of speech. For if the government could deny a benefit to a person because of his constitutionally protected speech or associations, his exercise of those freedoms would in effect be penalized and inhibited. This would allow the government to "produce a result which [it] could not command directly." Speiser v. Randall, 357 U.S. 513, 526 [78 S.Ct. 1332, 1342, 2 L.Ed.2d 1460 (1958) ]. Such interference with constitutional rights is impermissible.

Perry v. Sindermann, 408 U.S. 593, 597, 92 S.Ct. 2694, 2697, 33 L.Ed.2d 570 (1972).

For example, in Sherbert v. Verner, 374 U.S. 398, 83 S.Ct. 1790, 10 L.Ed.2d 965 (1963), a Seventh Day Adventist challenged a South Carolina law denying unemployment benefits to persons who failed without good cause to accept employment. The

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State declined to recognize as good cause her refusal to work on Saturday for religious reasons. The Supreme Court emphasized that the law placed her in a position of having to choose between denying the precepts of her religion and forfeiting benefits. Therefore, the Court found that the operation of the statute imposed a burden on the plaintiff's free exercise of her religion:

In a sense the consequences of such a disqualification to religious principles and practices may be only an indirect result of welfare legislation within the State's general competence to enact; it is true that no criminal sanctions directly compel appellant to work a six-day week. But this is only the beginning, not the end, of our inquiry.... Here not only is it apparent that appellant's declared ineligibility for benefits derives solely from the practice of her religion, but the pressure upon her to forego that practice is unmistakable. The ruling forces her to choose between following the precepts of her religion and forfeiting benefits, on the one hand, and abandoning one of the precepts of her religion in order to accept work, on the other hand. Governmental imposition of such a choice puts the same kind of burden upon the free exercise of religion as would a fine imposed against appellant for her Saturday worship.

.. It is too late in the day to doubt that the liberties of religion and expression may be infringed by the denial of or placing of conditions upon a benefit or privilege.

Id. at 403-04, 83 S.Ct. at 1793-94 (footnotes omitted).

Similarly, the Supreme Court struck down a California statute that limited a tax exemption to those members of the exempted class who affirmed their loyalty to the state...

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