Rueda v. Yellen

Decision Date07 March 2022
Docket NumberCivil Action ELH-20-1102
CourtU.S. District Court — District of Maryland
PartiesJUANA RUEDA, Plaintiff, v. JANET YELLEN, et al., Defendants.

JUANA RUEDA, Plaintiff,
v.
JANET YELLEN, et al., Defendants.

Civil Action No. ELH-20-1102

United States District Court, D. Maryland

March 7, 2022


MEMORANDUM OPINION

Ellen L. Hollander, United States District Judge.

This case presents constitutional challenges to a portion of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), Pub. L. 116-136, 134 Stat. 281 (2020), and as later amended by the Consolidated Appropriations Act, 2021 (the “CAA”), Pub. L. 116-260, Div. N, Title II, § 273(a), 134 Stat. 1182, 1976-78 (2020). Congress enacted the CARES Act in March 2020 in response to the health and economic crisis caused by the COVID-19 pandemic. It was amended on December 27, 2020, when President Trump signed the CAA into law. The provision in issue, 26 U.S.C. § 6428, concerns stimulus payments to eligible taxpayers, generally in the form of an advanced refund of a tax credit.

Sixteen plaintiffs, all U.S. citizens, initially filed suit in this case, challenging the constitutionality of the CARES Act. ECF 1. Because their spouses lacked legal status, and did not have a Social Security Number (“SSN”), they were not eligible for the stimulus payments. Id. But, as a result of the CAA, Juana Rueda is the only remaining plaintiff.

Rueda has filed a “Second Amended Class Action Complaint For Declaratory And Injunctive Relief.” ECF 66 (“SAC”).[1] The defendants are Janet Yellen, the Secretary of the U.S.

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Department of the Treasury (the “Secretary”); Charles Rettig, the Commissioner of the Internal Revenue Service (the “IRS”); the U.S. Department of the Treasury; and the IRS (collectively, the “Government”). Id. ¶¶ 10-13.[2]

Under 26 U.S.C. § 6428(a)(1), an “eligible individual . . . shall be allowed” a “credit against the tax imposed” for the 2020 tax year in the amount of $1, 200, or $2, 400 “in the case of eligible individuals filing a joint return.”[3] An eligible individual also receives an additional $500 credit for each qualifying child under the age of seventeen. Id. § 6428(a)(2). Receipt of this money “shall be treated” as a refundable credit, id. § 6428(b), meaning that the impact payment is not taxed even if it exceeds the recipient's tax liability. Notably, in 2020 the advance refund of the tax credit was based on the information in the filer's 2018 or 2019 tax return. See 26 U.S.C. §§ 6428(f)(1), (5). Further, the CARES Act directed the Secretary of the Treasury to issue the refund or credit “as rapidly as possible, ” but specified that no refund or credit “shall be made or allowed” after December 31, 2020. Id. § 6428(f)(3)(A).

However, as originally enacted, a provision of the CARES Act, Title II, § 2201(a), 134 Stat. at 335-40, codified at 26 U.S.C. § 6428(g)(1)(B) (March 2020), denied economic assistance to an otherwise eligible individual if his or her spouse lacked a SSN and the couple filed a joint tax return.[4] As noted, the original sixteen plaintiffs, all United States citizens whose spouses lack

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legal status, challenged the constitutionality of this provision. See ECF 31 (the “First Amended Complaint”). They asserted, inter alia, that 26 U.S.C. § 6428(g)(1)(B) violated the First and Fifth Amendments to the Constitution. Id. ¶¶ 75-96.[5]

In a Memorandum Opinion (ECF 43) and Order (ECF 44) of August 5, 2020, I denied the Government's motion to dismiss. See Amador v. Mnuchin, 476 F.Supp.3d 125 (D. Md. 2020). In particular, I rejected the Government's contentions that the United States had not waived its sovereign immunity; that plaintiffs lacked standing; that plaintiffs had failed to state a claim under the Fifth Amendment's due process and equal protection principles; and that plaintiffs had failed to state a claim under the First Amendment's protection of freedom of association. ECF 43 at 12-32, 38-39. But, I agreed with the Government that plaintiffs had failed to state a claim under the free speech clause of the First Amendment. Id. at 32-38.

In December 2020, while the parties were engaged in discovery, Congress amended the CARES Act. Of relevance here, by way of the CAA, Congress expanded 26 U.S.C. § 6428(g) to permit married couples who file taxes jointly to claim the CARES Act credit even if only one spouse possesses a SSN. See 26 U.S.C. § 6428(g)(1)(B)(i).[6] But, Congress retained the requirement that both spouses have SSNs in order to receive advance refunds of the tax credit, and

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it also maintained the deadline of December 31, 2020, for issuance of advance refunds. See 26 U.S.C. § 6428(f)(3)(A). As a result, “newly-eligible individuals were shut out of the advance refund component of the program.” ECF 66, ¶ 3. Instead, they had to claim the tax credit on their 2020 federal income tax returns. Id. ¶¶ 51-54. But, those who were initially eligible for the tax credit, and received it via the advance refund, based their requests on their 2018 or 2019 tax returns. In contrast, those who were newly eligible had to base the request on information pertaining to the 2020 tax year.

Rueda was not eligible for an advance payment, and instead had to claim the tax credit on her 2020 tax return. 26 U.S.C. § 6428(f)(1), (5). However, because Rueda has a son who turned 17 during 2020, and plaintiff could pursue the assistance only by filing a tax return for 2020, Rueda was ineligible for the $500 tax credit provided by 26 U.S.C. § 6428 for a child under the age of 17. ECF 66, ¶¶ 1-7, 9, 51-55. Thus, Rueda asserts that she continues to be harmed by the structure of 26 U.S.C. § 6428 merely because her husband lacks a SSN. As a result, she renews her claims of violations of her rights under the First and Fifth Amendments. Id. ¶¶ 70-91.

The Government has moved to dismiss, pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). ECF 73. It is supported by a memorandum. ECF 73-1 (collectively, the “Motion”). Plaintiff opposes the Motion. ECF 74 (the “Opposition”).[7] And, the Government has replied. ECF 75 (the “Reply”). Thereafter, the Court requested additional briefing as to any cases from other courts addressing the circumstances presented in the SAC. ECF 80. Although the parties provided the requested briefing, they did not identify any cases squarely on point. See ECF 81 (Government's response); ECF 82 (plaintiff's response).

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No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I shall grant the Motion.

I. Factual Background[8]

The COVID-19 virus triggered the worst public health crisis the country has experienced since 1918.[9] The novel coronavirus is a highly contagious and sometimes fatal respiratory illness. As of March 7, 2022, the coronavirus has infected some 446 million individuals worldwide and has caused roughly 6 million deaths, including approximately 958, 000 deaths in the United States as well as 79 million infections. See COVID-19 Dashboard, The Johns Hopkins Univ., https://bit.ly/2WD4XU9 (last accessed Mar. 7, 2022).[10]

The virus first appeared in Wuhan, China in December 2019. In a matter of months, COVID-19 spread to every corner of the globe. On March 12, 2020, the World Health Organization declared COVID-19 a global pandemic. See WHO Director-General's opening remarks at the mission briefing on COVID-19, World Health Org. (March 12, 2020),

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https://bit.ly/2XWdodD. The next day, President Trump declared a national emergency. See The White House, Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak (Mar. 13, 2020), https://bit.ly/3flFu8i.

As the virus began to spread, the Centers for Disease Control and Prevention implored those living in this country to practice “social distancing, ” in order to help thwart the spread of the virus. See Coronavirus Disease 2019 (COVID-19), How to Protect Yourself & Others, Ctrs. For Disease Control & Prevention, https://bit.ly/3dPA8Ba. And, in the spring of 2020 nearly every state in the country issued mandatory stay-at-home orders, directing residents to remain at home except to conduct essential activities. See Sarah Mervosh et al., See Which States Are Reopening and Which Are Still Shut Down, N.Y. Times (May 15, 2020), https://nyti.ms/2Z6Fm7F. As a result, life as we know it largely came to a halt; schools, restaurants, bars, shopping malls, retail stores, and houses of worship all shuttered for a significant period of time.

Social distancing measures, although necessary to stem the spread of the virus, had enormous economic consequences. Personal consumption in March 2020 plummeted by a record 7.5 percent. See Personal Income and Outlays: March 2020, U.S. Bureau of Econ. Analysis (Apr. 30, 2020 8:30 a.m.), https://bit.ly/3d8wUZ2. In the month of April 2020 alone, more than 20 million Americans lost their jobs, driving the unemployment rate to 14.7 percent, the largest single-month increase ever recorded. See Economic News Release, U.S. Bureau of Lab. Stat. (May 8, 2020 8:30 a.m. EST), https://bit.ly/2UGiOYr. These losses reached people from all stations of life: the leisure and hospitality industry lost 7.7 million jobs (nearly half the industry), while the education and health services industry, the professional and business services industry, and the retail trade industry each shed more than 2 million jobs. Id.

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To alleviate the incredible economic devastation wrought by the pandemic, Congress passed the CARES Act in March 2020, and President Trump signed it into law on March 27, 2020. See Pub. L. 116-136, 134 Stat. 281 (2020). The CARES Act was a $2.2 trillion stimulus package. As relevant here, § 2201(a) of the CARES Act, codified at 26 U.S.C. § 6428, harnessed the federal tax infrastructure to provide emergency financial assistance to American families, in the form of an advance refundable tax credit. See Economic Impact Payment Information Center, Internal Revenue Serv. (July 15, 2020), https://bit.ly/2WEtZBO; The CARES Act Provides Assistance to Workers...

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