Scholl v. Mnuchin

Background

Colin Scholl and Lisa Strawn brought a class action against Steven Mnuchin, Charles Rettig, the U.S. Department of the Treasury, the U.S. Internal Revenue Service, and the United States. The lawsuit challenged a policy withholding economic impact payments from incarcerated people solely because of their incarcerated status. The court previously granted part of the original plaintiffs’ summary-judgment motion, entered a permanent injunction against that policy, declared the policy void, and certified the class. The court stated that the only remaining step in the original case was entry of final judgment.

Jamal Morton and Araclis Ayala, described as incarcerated individuals in the U.S. Virgin Islands and Puerto Rico, moved to intervene under Federal Rule of Civil Procedure 24. They also sought to represent a subclass of incarcerated residents of U.S. territories and possessions who otherwise qualified for payments but did not receive them. They argued that their interests were not adequately represented because the CARES Act contains separate provisions concerning payments involving territories and possessions, and because Treasury had entered into plans with territorial tax authorities.

Intervention ruling

The court denied intervention as of right under Rule 24(a)(2). It found that the motion was untimely because the case had reached an advanced stage: the court had already ruled on summary judgment, entered a permanent injunction, and the defendants’ appeals had been dismissed. The court also found that the proposed intervenors’ first asserted interest—receiving payments despite incarceration—had already been adequately represented in the case. Their separate interest concerning the CARES Act’s treatment of territories and possessions, however, had not been litigated in this action and was not related to the original plaintiffs’ claims.

The court declined to address the remaining requirements for intervention as of right because the proposed intervenors had failed to establish timeliness and a sufficiently related protectable interest. The court also denied permissive intervention under Rule 24(b). It found no common legal or factual question that remained to be decided in the nearly completed case, and concluded that adding the territory-related claims would transform the action into a second lawsuit and unduly delay adjudication of the original parties’ rights.

Civil-contempt motion and disposition

The court’s conclusion states: “the court DENIES plaintiff-intervenors’ motion to intervene and DENIES AS MOOT their motion for civil contempt.” The opinion noted that the federal government had informed counsel that it would amend its agreements with the territories and possessions to allow payments to incarcerated individuals, and that the proposed intervenors acknowledged the plans would be amended. The court therefore denied the contempt motion as moot. Judge Phyllis J. Hamilton signed the order.