Sixth Circuit Holds CDC’s Eviction Moratorium Likely Ultra Vires and Unenforceable

COVID-19 Update

The Sixth Circuit Court of Appeals held earlier this week that the CDC is unlikely to prevail on the merits and therefore a ruling from the Western District of Tennessee holding that the federal eviction moratorium “is ultra vires; and is unenforceable in the Western District of Tennessee” would not be stayed pending appeal. The ruling is a serious blow to the federal eviction moratorium at least in the states it covers (Ohio, Tennessee, Kentucky and Michigan). Monday's ruling is at least the third federal court to strike down the CDC eviction moratorium and the first Circuit-level decision on the issue.

Background

One of the earliest measures enacted to address the economic fallout from the COVID-19 pandemic was the passage of the CARES Act on March 27, 2020, which included a moratorium on evictions. While technically Congress acted with respect to properties secured by loans that it to some extent controlled by virtue of a mortgage loan originated by governmental or quasi-governmental actors like Fannie Mae, Freddie Mac, Ginnie Mae, and the VA, FHA, and USDA, or where the loans were originated by banks under federal charters (see CARES Act Section 4024), it was typical for private entities and other non-federal regulators to grant similar protections during the early period of the pandemic. Loans with a government connection cover most of the residential market.

The CARES Act Congressional moratorium expired in July 2020, but most states and populous counties and cities enacted similar moratoriums on their own authority that applied throughout the Summer and into the fall of 2020. This was true in almost all US states.

Around September 2020, however, it became clear that some states were expecting to generally end lockdowns and therefore end eviction moratoriums as 2020 came to a close, while others were planning for some level of lockdown including eviction moratoriums well into 2021. Most governmental or quasi-governmental actors nonetheless continued their own moratoriums, which generally are still in place today, but coverage was not universal and therefore state law remained a relevant data point, especially in the commercial context.

In “redder” and less populous states, evictions were generally allowed to restart earlier as a matter of state law, while in “bluer” and often more populous states the moratoriums remained in place indefinitely. See, e.g., California AB 3088, Connecticut Executive Order 9E, Hawaii (through court rules), Illinois Executive Orders 59 and 72, New York Orders 202.66 and 202.70, Oregon Executive Order 20-13 (and extensions). In each case, these large blue states passed eviction moratoriums through one mechanism or another that extended into or well into 2021.

Effective September 4, 2020, the Centers for Disease Control and Prevention (CDC), acting pursuant to its authority under Section 361 of the Public Health Service Act, ordered a national eviction moratorium. 85 FR 55292-97. The moratorium covered substantially all properties (residential and commercial) and could conceivably apply to most people but subject to a required affidavit stating that the person was unable to pay and that an eviction would render them homeless. In many of the “redder” states, the CDC was the main or even the only available eviction protection.

The CDC claimed authority for the moratorium under 42 USC § 264(a) which empowers the United States Department of Health and Human Services (HHS) to “make and enforce such regulations as [] are necessary to prevent the introduction, transmission, or spread of communicable diseases.” The statute goes on to specify this may empower HHS (of which CDC is a part) to order “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 [the HHS Secretary’s] judgment may be necessary.” The CDC argued that the eviction moratorium was within its power as an “other measure[].”

What Happened

On March 29, 2021, the CDC announced the extension of the eviction moratorium through June 30, 2021. On the same day, the Sixth Circuit issued its ruling in Tiger Lily, LLC v. U.S. Dept. of Housing and Urban Development, et al., No. 21-5256 (on appeal from No. 2:20-cv-02692 in the Western District of Tennessee). The lower court declared the CDC moratorium “ultra vires; and is unenforceable in the Western District of Tennessee.” The government moved to stay that ruling pending appeal, but the Sixth Circuit denied the government’s motion on the basis that the government was unlikely to succeed on the merits.

The Court held that “other measures” was a “kind of catchall provision” that must be interpreted in light of the surrounding words which clearly allow for intrusive inspection or sanitation requirements, but not the broad-based economic moratorium the CDC ordered.

The government argued (i) that the CDC is empowered to enforce quarantines, and (ii) that Congress statutorily blessed the moratorium through Jan. 31, 2021, at least, and therefore signaled its approval that CDC acted within its authority in September 2020. The Sixth Circuit rejected both arguments, however, holding that not even the quarantine provisions are expansive enough to cover a blanket eviction ban, and Congress’ blessing to the extent it mattered at all expired without renewal and was therefore unable to serve as a basis for CDC authority now.

Why It Matters

The Sixth Circuit’s holding comes as the first opinion at the federal circuit level, but it is not the first ruling against the CDC moratorium. The Eastern District of Texas (No. 6-20-cv-00564, Feb. 25, 2021) and Northern District of Ohio (No. 5:20-cv-2407, March 10, 2021) have likewise issued rulings to similar effect on various grounds. On the other hand, courts in the Western District of Louisiana (No. 3:20-cv-1455, Dec. 22, 2020) and Northern District of Georgia (1:20-cv-3702, Oct. 29, 2020) rejected similar challenges and sided with the government.

Our prediction is that most residential tenants in most jurisdictions will continue to have the protection of a CDC-like moratorium at least through June 30, 2021 as announced earlier this week. While the statutory basis for the CDC’s action may be tenuous at best, many states and localities effectively adopted the same policies as their own laws, even the “redder” ones. States and localities can rely on the authority to do so as granted by their general police power while the federal government cannot. The state and local rules are therefore more likely to survive challenge. While there will undoubtedly be at least some residents evicted who might otherwise have had CDC protection as a result of Monday's ruling, we think the interlocking web of private voluntary eviction moratoriums, state and local law (whether similar in spirit or identical to the CDC rule), and policies of governmental and quasi-governmental agencies that sponsor many of the applicable loans will lead to relatively few such evictions as a result of the ruling.

That said, the problem for landlords and tenants alike continues to be that they have to navigate through cumbersome and complicated moratoriums and orders at the federal, state, and local levels just to understand their rights and obligations. And those protections are ever-changing as evidenced by Monday's ruling limited to the Sixth Circuit states (and even within those, with unequal and unpredictable application). On a national level, such changes are occurring on a near daily basis.

Manatt has been closely tracking eviction moratoria nationwide and its attorneys have worked with many landlords and tenants responding to these difficult and complicated circumstances. While we expect that this situation will only get more complicated as the various federal, state and local tenant-protective actions expire and new ones are passed, the options available to landlords and tenants will continue to be jurisdiction dependent.

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