Pierce v. Ducey
| Decision Date | 30 September 2019 |
| Docket Number | No. CV-16-01538-PHX-NVW,CV-16-01538-PHX-NVW |
| Parties | Michael Pierce, Plaintiff, v. Douglas A. Ducey, in his capacity as Governor of the State of Arizona, Defendant. |
| Court | U.S. District Court — District of Arizona |
Before the Court is Plaintiff's Motion for Entry of Final Judgment on the Merits (Doc. 122) and the responses and replies thereto. The responses principally contend that the case is now moot and beyond the jurisdiction of this Court to enter a merits judgment. The Motion will be granted and a declaratory judgment entered as follows:
Declaratory judgment is granted in favor of Plaintiff against the Governor of the State of Arizona and his successors in office and those acting on his behalf that the Arizona Statehood and Enabling Act Amendments of 1999, Pub. L. No. 106-133, 113 Stat. 1682 (1999), do not repeal or impair the Enabling Act requirement of congressional consent to any changes to the Arizona State Constitution that affect the investment or distribution of the assets in the School Land Trust Fund established by the Arizona Statehood and Enabling Act until and unless Congress provides consent to such changes, by way of amendment to the Arizona Statehood and Enabling Act or otherwise.
This case is governed by the principle that voluntary cessation of challenged conduct that can recur does not moot a case and does not deprive a federal court of jurisdiction to enter a merits judgment. The State of Arizona has twice—in 2012 and again in 2016—amended its Constitution to allow greatly increased withdrawal of School Land Trust funds without congressional consent as required by the Arizona Enabling Act. The State and its officers took those monies illegally and spent them. Before and after this suit in 2016, the defendants vociferously proclaimed that they no longer needed congressional consent and persisted in that position through two years of litigation. But on the eve of a ruling in this Court, they obtained a consent in the Consolidated Appropriations Act, 2018, at pages 1803-94 of that 2400-page bill. Yet even as defendants informed this Court that they had obtained the consent, they proclaim still that no such consent was required and that the State could take any amount of School Land Trust funds by merely amending its Constitution. That was a strategic one-time voluntary cessation, repudiated immediately.
Defendants say this case is now moot because the 2016 Arizona Constitutional Amendment has received congressional consent, which need not be obtained again. But the defendants constrict too narrowly the voluntary cessation exception to mootness. Dismissal as moot would leave the State free to take other increased monies from the School Land Trust without congressional consent in the future, just as it has done twice recently and threatens to do again. The State and the Governor have not disavowed such repetition and have proclaimed their ability to do it again. A voluntary cessation joined with a threat to do it again is the paradigm of unsuccessful blunting of power to adjudicate with its attendant effects of res judicata and assessment of costs and fees. This case is a poster child for the doctrine of voluntary cessation not mooting a case or controversy.
Arizona has followed a long-term policy of cutting funding for public education.
In the early 1990s, Arizona ranked 34th in the nation in per pupil funding, when we invested 87% of the national average. By 2015, Arizona was only investing 65% of the national average, dropping our ranking to 48th. We also rank at or near the bottom of all national studies comparing teacher pay among states.
Funding PreK-12 Education, Arizona Town Hall, at 11 (Nov. 2017), https://azmemory.azlibrary.gov/digital/collection/statepubs/id/32140/rec/1.
Arizona's decline in public school funding parallels other polices. First is tax cutting in general, which has been endemic since the 1990s. School choice is promoted by charter schools, which receive state funding and at a per pupil rate higher than public school students receive. Tax credits for private school tuition divert tax revenues to private schools. The public schools' slice of the pie has been shrinking, and so has the whole pie.
This led to a statute ratified in a 2000 referendum that required the Legislature to increase public school funding annually by the greater of 2% or the rate of inflation. A.R.S. § 15-901.01. That set a floor on the decline in public school funding. But the Legislature consistently defied that statute by denying the annual increase. After a dozen years of no increases, the Arizona Supreme Court held the Legislature's refusal was unlawful and ordered a declaratory judgment against the State and remanded for further proceedings for remedy. Cave Creek Unified Sch. Dist. v. Ducey, 233 Ariz. 1, 308 P.3d 1152 (2013). The declaratory judgment alone required a minimum increase of 24% in the school funding for the next year, assuming only the minimum 2% annual increase for the lost 12 years. The Legislature did not do even that.
The long pendency of that litigation led state leaders to hit on the idea of funding the school spending shortfall from the School Land Trust Funds. In 2012 the Legislature proposed a Constitutional Amendment to allow spending 2.5% annually of the School Trust Fund, regardless of earnings and gains in the fund and in disregard of losses in the fund, as had happened in the years after the 2008 stock market crash. "Best of all, it accomplishes this with NO new taxes and NO additional fund spending." Doug Ducey et al., Argument for Proposition 118, in Arizona General Election Guide, Secretary of State Ken Bennett, at 47, https://apps.azsos.gov/election/2012/Info/PubPamphlet/english/e-book.pdf. The voters enacted that Amendment, and the State just took the money, withoutgetting or even seeking the congressional approval required by the Enabling Act. As discussed in the March 26, 2018 order, 2018 WL 1472048, there was no credible or even colorable basis to forego that approval. The State just took the money and spent it. No one sued in 2012 to stop them from doing that.
That easy run on the School Land Trust was repeated and expanded a scant four years later to meet the State's next funding crisis after the Cave Creek case. State leaders settled on the same strategy to avoid raising the taxes needed to comply with that decision. The Legislature proposed another increase in withdrawal from the School Land Trust fund from 2.5% annually to 6.9% annually occasioned by the Cave Creek decision, thus "settling" that case entirely with School Land Trust Fund monies.
According to the Governor, Doug Ducey, Argument in Support, in Arguments Filed in Support of Proposition 123, at 1, https://apps.azsos.gov/election/2016/Special/PropInfo/123-Pro.pdf. The Amendment was passed by 50.9% of the vote at the special election.
The Governor and the State immediately took $259,266.20 as a one-time retroactive payment for fiscal year 2015-2016. Analysis by the Legislative Council estimated increased payment under Proposition 123 at "more than two billion dollars over that ten-year period." Analysis by Legislative Council, in What's on My Ballot? Arizona's Special Election Guide, Secretary of State Michele Reagan at 15, https://azmemory.azlibrary.gov/digital/collection/statepubs/id/28973.
As discussed in the order of March 26, 2018, during two years of litigation, the Governor and the State vigorously contended that the 1999 congressional consent to the 1998 Constitutional Amendment not only approved that amendment but also silently repealed the need for future congressional consent to any future amendment changing or increasing the withdrawals from the School Land Trust. The Governor and the State withdrew those funds from 2016 to March 26, 2018, without consent of Congress, just as they had from 2012 to 2015 under the 2012 amendment.
The Governor obtained a one-page insert into the 2400-page Consolidated Appropriations Act, 2018 that consented to Proposition 123. That bill was enacted without disclosure to the public or to the Senators and Congressmen who voted on it. By a filing on March 23, 2018, informing the Court of the congressional consent, the Governor and the State disavowed any concession of the merit of Plaintiff's claim and affirmed their position that no congressional consent is necessary, admitting that they got the consent to prevent a merits adjudication without disavowing their conduct. "While Governor Ducey and the State of Arizona continue to maintain that such consent was unnecessary, the issues and arguments raised by Plaintiff in this above-captioned litigation are mooted by the 2018 Act." (Doc. 112 at 1.)
"Article III of the United States Constitution limits the jurisdiction of the federal courts to 'Cases' and 'Controversies.'" Bayer v. Neiman Marcus Grp., Inc., 861 F.3d 853, 861 (9th Cir. 2017) (citing U.S. Const. art. III, § 2, cl. 1)). This limitation "requires those who invoke the power of a federal court to demonstrate standing—a 'personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief.'" Already, LLC v. Nike, Inc., 568 U.S. 85, 90 (2013) (quoting Allen v. Wright, 468 U.S. 737, 751 (1984)). As the Court previously concluded, Pierce demonstrated standing. (See generally Doc. 113 at 21-30 ().)
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