CDC Eviction and Foreclosure Moratorium Held Illegal

Today Judge Dabney Friedrich (a Trump appointee) ruled that the CDC's eviction and foreclosure moratorium exceeded the agency's statutory authority. This ruling has me wroth. It exemplifies the heartless disingenuousness of that masquerades as "textualism." Judge Friedrich treats the moratorium—an extraordinary response to extraordinary circumstances—as if it were a garden variety statutory interpretation exercise along the lines of "no vehicles in the park". Judge Friedrich looks at the statutory text and decides that it is "unambiguous," although the substance of her own analysis shows that it is anything but. And voila, that produces the result that the landlords and mortgagees get to create a public health risk by evicting tenants and mortgagors from their dwellings.

The relevant statutory provision authorizes the Surgeon General

to make and enforce such regulations as in his judgment are necessary to prevent the introduction, transmission, or spread of communicable diseases from foreign countries into the States or possessions, or from one State or possession into any other State or possession. For purposes of carrying out and enforcing such regulation, the Surgeon General 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.

Judge Friedrich sees the second sentence as limiting the first. I think that's a debatable reading. The first sentence is a very broad authorization and the second reads as clarifying exemplars, but not as a limitation on the first sentence. In particular, the words "and other measures, as in his judgment may be necessary" seems a very strong indication that the second sentence is not a limitation on the first. But Judge Friedrich reads "and other measures" as necessarily modifying acts taken to "animals or articles found to be so infected or contaminated as to be sources of dangerous infection to human beings." That just strikes me as textually wrong.  I think the second sentence reads that the SG may provide for (1) health measures related to infected animals or articles and (2) other measures that he thinks are necessary. In other words, "and other measures" is not tethered to animals and articles. Indeed, given the purpose of this statute—preventing the spread of communicable diseases—it seems strange read the power as limit the power to animals or articles. This isn't just a hoof-and-mouth statute.

What is so galling about the opinion is that Judge Friedrich is pretending to just engage in neutral text-driven reasoning. Judge Friedrich's interpretation of the statute is defensible, but so too is the reading advanced by the CDC (and my variant). It's not cut and dry. I do not think that in good faith it is possible to declare that there is only one plausible reading here. In such a situation one would think that there would be tremendous deference to the CDC given what's at stake. This isn't just about whether Ploni owe Almoni some money or not, but about human life. But Judge Friedrich clearly thinks that the property rights of landlords are more important than the health and safety not just of tenants who are behind on their rent (because of COVID), but all the rest of us.

Now there's already been some speculation about how the collapse of the moratorium (if affirmed) will lead to bankruptcy filings shooting up. I would be surprised for a simple reason: bankruptcy law currently lacks the tools to help renters and mortgagors. Let's start with renters. Bankruptcy is pretty worthless at helping renters keep their leases when they are behind on rent. To keep the lease the debtor has to cure the arrearage, which is the fundamental problem that has the debtor in bankruptcy in the first place.

As for mortgagors, they are unlikely to file unless they are facing an imminent foreclosure. That requires being at least 120 days delinquent. Now bankruptcy does enable a longer cure period for mortgage arrearages than for rent, but it's hard to cure 4+ months of missed mortgage payments, even if it is over 5 years. This is particularly true if the problem is that the homeowner has a reduced income and cannot afford the current mortgage payment because bankruptcy prohibits modification of the terms of the mortgage itself. 

My guess is that delinquent homeowners with equity will sell and the rest will eventually lose their homes, whether through foreclosure or short sales. I'm sure some will try the bankruptcy route and some might delay the inevitable with lender/servicer forbearance programs, etc. Indeed, those forbearance programs are likely to stretch out the time period when we see foreclosures rise. 

Bottom line, Judge Friedrich's opinion is going in the books as a strong contender for a McReynolds, the prize I give for the most heartless judicial opinion of the year.