Clerk of the Superior Court

*** Filed ***

11/09/2020 8:00 AM
SUPERIOR COURT OF ARIZONA
MARICOPA COUNTY

CV 2020-010282 11/04/2020

CLERK OF THE COURT

HON. PAMELA GATES S. Ortega
Deputy

JAVIER AGUILA, et al. ILAN WURMAN

v.

DOUG DUCEY, et al. BRETT W JOHNSON

GREGORY W FALLS
BRUNN W ROYSDEN III
ANNI L FOSTER
COLIN PATRICK AHLER
CRAIG A MORGAN
KATLYN J DIVIS
JUDGE GATES

RULING

Plaintiffs request the following relief:

 In their Corrected First Amended Complaint for Declaratory and Injunctive Relief,
Plaintiffs’ first claim for relief seeks an order pursuant A.R.S. § 12-1831 and Rule 57
of the Arizona Rules of Civil Procedure declaring that Executive Order 2020-43 and
all related executive orders are illegal and void because A.R.S. § 26-303(E)(1) violates
the non-delegation doctrine.

 In their second claim for relief, citing the same legal authority, Plaintiffs seek a
declaration that Executive Order 2020-43 and all related executive orders are illegal
and void because the orders or A.R.S. § 12-303(E) as applied violates the privileges
and immunities clause of Article II, Section 13 of the Arizona Constitution.

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 In Plaintiffs’ third claim for relief, Plaintiffs request a declaration that Executive Order
2020-43 and all related executive orders are illegal and void because the orders violate
the due process provision of Article II, Section 4 of the Arizona Constitution.

 In Plaintiffs’ fourth and final claim, Plaintiffs request that the court enjoin Defendants
from: 1) ordering Plaintiffs to shut down their businesses or otherwise citing them for
violating executive orders; 2) treating Plaintiffs differently from their series 3, 11, 12,
13, 14, 18, and 19 competitors; and 3) continuing to grant the privilege of off-premises
sale of beer, wine, and spirituous liquor to their competitors in violation of Arizona
law.

Defendants filed motions to dismiss. Plaintiffs filed a cross-motion for summary judgment.
The court grants Defendants’ Motion to Dismiss Plaintiffs’ claim that A.R.S. § 26-303(E)(1)
violates the non-delegation doctrine. The court also grants Defendants’ Motion to Dismiss
Plaintiffs’ claim that Executive Order 2020-43 and all related orders violate the due process
provision of Article II, Section 4 of the Arizona Constitution.1

The court also conducted an evidentiary hearing on Plaintiffs’ request for a preliminary
injunction. After considering the evidence and testimony, the court grants Plaintiffs’ request for a
preliminary injunction, in part. The court finds the following severable provision in Executive
Order 2020-09 exceeds the delegation of power under A.R.S. § 26-303(E):

[I]n counties of the State with confirmed cases of COVID-19, the Arizona
Department of Liquor Licenses and Control and any Arizona Peace Officer,
Standards and Training Board certified law enforcement officer shall not enforce
provisions of the series 12 liquor license that prohibits the sale by restaurants of
beer, wine, and spirituous liquor off-premises . . .

Plaintiffs’ other claims for preliminary injunctive relief are denied.

1. Governor Ducey’s Motion to Dismiss and the Agency Defendants’ Joinder.2

When reviewing a motion to dismiss under Rule 12(b)(6) of the Arizona Rules of Civil
Procedure, the court must evaluate whether the Plaintiffs sufficiently stated a claim upon which
relief can be granted, assuming the truth of all well-pled factual allegations and indulging all

1
The court finds the defects in stating a claim for relief cannot be cured by amendment.
2
Although the Agency Defendants joined in Governor Ducey’s Motion to Dismiss, they also
requested dismissal on a separate and distinct basis, which is addressed on pages 7-8 of this ruling.
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reasonable inferences from those facts. See Coleman v. City of Mesa, 230 Ariz. 352, 356 ¶ 9
(2012).

A. The Legislature’s Grant of Temporary Emergency Management

Power to the Governor Under A.R.S. § 26-303(E)(1) Does Not Violate
the Non-Delegation Doctrine.

The Arizona Constitution states:

The powers of the government of the state of Arizona shall be divided into three
separate departments, the legislative, the executive, and the judicial; and, except as
provided in this constitution, such departments shall be separate and distinct, and
no one of such departments shall exercise the powers properly belonging to either
of the others.

See Ariz. Const. Art. III. In Mecham v. Gordon, 156 Ariz. 297, 300 (1988), the Arizona Supreme
Court acknowledged that “[n]owhere in the United States is this system of structured liberty more
explicitly and firmly expressed than in [the] Arizona [Constitution].”

Although the non-delegation doctrine prohibits the complete transfer of the legislature’s
lawmaking power to any other body or branch of government, the legislature may delegate its
“powers . . . within proper standards fixed by the legislature . . . .” State v. Ariz. Mines Supply Co.,
107 Ariz. 199, 205 (1971); see also Marshall Field & Co. v. Clark, 143 U.S. 649, 693-94
(1892)(“The true distinction . . . is between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and conferring authority or discretion as to
its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the
latter no valid objection can be made.”); State v. Prentiss, 163 Ariz. 81, 84-85 (1989)(“[S]eparation
of powers does not require a ‘hermetic sealing off’ of the three branches of government.”); State
v. Donald, 198 Ariz. 406, 416 (App. 2000) (noting that separation of powers is “preserved not by
mechanistic formulas, but by ad hoc determinations focused on insuring sufficient checks and
balances to preserve each branch’s core functions.”). One question before the court is whether
A.R.S. § 26-303(E)(1) is an unconstitutional delegation of lawmaking power or whether the statute
contains sufficient limits and standards to guide and constrain the delgee’s use of authority. The
court finds that A.R.S. § 26-303(E)(1) is neither an unconstitutional abdication nor an
impermissibly broad and unconstrained delegation of legislative power. To the contrary, when the
statutory framework is viewed as a whole, the legislative delegation of police powers in A.R.S. §
26-303(E)(1) provides a sufficient basic standard regarding how and when a governor may
exercise emergency management powers. The delegation of power also includes checks and
limitations on the governor’s authority.

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In A.R.S. § 26-303(E), the legislature granted the governor certain powers in two types of
emergencies: 1) a state of war emergency; and 2) a state of emergency. During a state of
emergency, the legislature delegated to the governor complete authority over all agencies of the
state government and the right to exercise, within the area designated, all police power vested in
the state by the constitution and laws of this state in order to effectuate the purposes of Chapter 2,
Title 36. See A.R.S. § 26-303(E)(1).

The first basic standard fixed by the legislature in A.R.S. § 26-303(E)(1) is the limitation
on when the governor may exercise the delegated emergency management powers. The statute
provides that the governor’s delegated powers under A.R.S. § 26-303(E) only exist during a “state
of emergency.” A “state of emergency” is defined as “the duly proclaimed existence of conditions
of disaster or of extreme peril to the safety of persons or property within the state caused by air
pollution, fire, flood or floodwater, storm, epidemic, riot, earthquake, or other causes, except those
resulting in a state of war emergency, which are or are likely to be beyond the control of the
services, personnel, equipment and facilities of any single county, city or town, and which require
the combined efforts of other political subdivision.” A.R.S. § 26-301(15).

In addition to providing a definitional constraint to what constitutes a state of emergency,

the legislature also expressly reserved the power to terminate a “state of emergency” declared by
the governor.3 See A.R.S. § 26-303(F)(“The powers granted the governor by this chapter with
respect to a state of emergency shall terminate when the state of emergency has been terminated
by proclamation of the governor or by concurrent resolution of the legislature declaring it at an
end.”); see also Worthington v. Fauver, 440 A.2d 1128, 1141 (N.J. 1982)(concluding in part that
because the legislature “retain[ed] the power to . . . take away executive power” and “enact
legislative solutions to the current problem,” “there is no reason to believe that the executive orders
have impaired its essential functions.”). Plaintiffs acknowledge that when the pandemic was first
emergent and its magnitude was unknown, A.R.S. § 26-303 permitted the Governor to close
businesses to ensure time to arrange and deploy emergency services. However, Plaintiffs argues
that like a hurricane, “after the hurricane comes and goes, the state of emergency must end.” See
Plaintiffs’ Post-Hearing Preliminary Injunction Brief at 5. Certainly, some emergent conditions
have a clear start and end. However, the absence of a specific timeframe for the duration of the
state of emergency does not render A.R.S. § 26-303(E) violative of the non-delegation doctrine.
State of emergency is clearly defined in the statute, and the declared state of emergency may be
terminated by proclamation of the governor or by concurrent resolution of the legislature. See
A.R.S. § 36-303(F).

3
The court does not find the legislature’s right to declare a state of emergency terminated to
constitute an impermissible legislative veto.
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To further assess the line of demarcation between a constitutionally permissible grant of

authority and an illegitimate delegation of legislative power, this court analyzes the distinction
between Arizona Supreme Court decisions finding constitutional and unconstitutional delegations
of legislative power. Compare State v. Marana Plantations, Inc., 75 Ariz. 111, 114 (1953) with
State v. Arizona Mines Supply Co., 107 Ariz. 199, 205 (1971).

In 1953, the Arizona Supreme Court evaluated the delegation of legislative authority to the
State Board of Health that allowed the Board of Health to enact any rule and regulation that was
promotive of public health. See Marana Plantations, 75 Ariz. at 114. The Arizona Supreme Court
held this broad and unrestrained grant of power constituted an unconstitutional relinquishment of
the legislature’s power. Id. By contrast, nearly two decades later in Arizona Mines, the Arizona
Supreme Court upheld a legislative delegation of power that included a basic standard of necessity.
See Arizona Mines, 107 Ariz. at 205. The delegation at issue in Arizona Mines permitted the agency
to enact rules and regulations that were necessary to prevent the introduction of a crop pest or
disease in the state and to prevent the progation or dissemination from one locality to another. Id.

Like the delegation of legislative power in Arizona Mines, the statutory framework of the
Emergency Management Act4 establishes an adequate standard of necessity limiting the
governor’s exercise of emergency management powers under A.R.S. § 26-303(E)(1). Arizona
Mines, 107 Ariz. at 205 (holding that standards do not need to be set forth in express terms if the
standards can be reasonably inferred from the statutory scheme as a whole and that when dealing
with the question of standards, a court is not confined to the specific terms of the particular section
in question, but must examine the entire act in the light of its surroundings and objectives). The
Act defines “emergency management” as “the preparedness, response, recovery and mitigation
activities necessary to respond to and recover from disasters, emergencies or contingencies.” See
A.R.S. § 26-301(6). The Act defines “recovery” as “short term activities necessary to return vital
systems and facilities to minimum operating standards and long term activities required to return
life to normal or improved levels” and “mitigation” as “measures taken to reduce the need to
respond to a disaster and to reduce the cost of disaster response and recovery” See A.R.S. § 26-
301(11) & (13). The Act defines “preparedness” as “actions taken to reduce the need to respond
to a disaster and to reduce the cost of disaster response and recovery” and “response” as “activities
that are designed to provide emergency assistance, limit the primary effect, reduce the probability
of secondary damage, and speed recovery operations.” See A.R.S. § 26-301(12) & (14).

The legislature granted the governor broad authority and discretion to permit efficient
administration and to carry out the policies of the legislature during a state of emergency.
Although the language of A.R.S. § 26-303(E) is broad, it is not unconstitutional. The court finds
that the statutory framework viewed as a whole provides a sufficient basic standard regarding how

4
A.R.S. §§ 26-301 through 320.
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and when the governor may exercise delegated police powers for emergency management.
Therefore,

IT IS ORDERED granting Defendants’ Motion to Dismiss Plaintiffs’ first claim for relief
which requested an order pursuant A.R.S. § 12-1831 and Rule 57 of the Arizona Rules of Civil
Procedure that declared Executive Order 2020-43 and all related executive orders illegal and void
because A.R.S. § 26-303(E)(1) violates the non-delegation doctrine.

B. Assuming the Truth of All Well-Pled Factual Allegations and Indulging

All Reasonable Inferences From Those Facts, Plaintiffs Stated a Claim
for Relief Under Article II, Section 13 of the Arizona Constitution.

The court looks to the pleadings when adjudicating a Rule 12(b)(6) motion. If matters
outside the pleadings are considered, the motion to dismiss must be treated as one for summary
judgment. See Ariz. R. Civ. P. 12(d). However, a complaint’s exhibits or public records regarding
matters referenced in a complaint are not “outside the pleading” and thus, the court may consider
such documents without converting a Rule 12(b)(6) motion to dismiss into a summary judgment
motion. See Coleman, 230 Ariz. at 356; see also Strategic Dev. & Constr. Inc. v. 7th & Roosevelt
Partners, LLC, 224 Ariz. 60, 63 ¶ 10 (App. 2010).

In ruling on this motion to dismiss, the court considered the exhibits to the complaint and
public records regarding matters referenced in the complaint, including the executive orders and
the August 10, 2020 Guidelines issued by ADHS for the eventual reopening of businesses ordered
closed by Executive Order 2020-43. See Defendant Governor Ducey’s Motion for Judicial Notice
at 2 ¶ II(A)(1). Because the court did not rely on extraneous material, it did not convert the motion
to dismiss to one for summary judgment.

When considering a motion to dismiss, the court assumes the truth of all the well-pled
factual allegations and indulges all reasonable inferences from those facts. When applying that
legal standard, the court finds that Plaintiffs claim for relief under Article II, Section 13 of the
Arizona Constitution survives the pending motion to dismiss. In part, Plaintiffs allege the
Governor is exceeding the power delegated to him under A.R.S. § 26-303(E) and that he is issuing
executive orders that are arbitrarily discriminating against similarly situated businesses. See
Corrected First Amended Complaint at ¶ 57, 126-27(alleging that the distinctions between series
6 and 7 licensees and other liquor licensees have no connection to public health). Plaintiffs also
allege that ADHS Guidelines make it “virtually impossible for most of the Plaintiffs to open.” See
id. at ¶ 52.

IT IS ORDERED denying Defendants’ Motion to Dismiss Plaintiffs’ claim for relief under
Article II, Section 13 of the Arizona Constitution.
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C. Assuming the Truth of All Well-Pled Factual Allegations and Indulging

All Reasonable Inferences From Those Facts, Plaintiffs Fail to State a
Claim for Relief Under Article II, Section 4 of the Arizona Constitution.

Plaintiffs claim Governor Ducey’s Executive Order 2020-09 deprived Plaintiffs of their
exclusive ability to sell alcohol for consumption off-premises. A threshold requirement to a
substantive or procedural due process claim is the Plaintiffs’ showing of a liberty or property
interest protected by the Constitution. Aegis of Ariz., LLC v. Town of Marana, 206 Ariz. 557, 568-
69 ¶¶ 44-45 (App. 2003). A liquor license is a privilege subject to the police power of the state
and not a property right in the constitutional sense of the term. Hooper v. Duncan, 95 Ariz. 305,
308 (1964). Plaintiffs do not have a protected property interest in having an exclusive right to sell
liquor for off-premises consumption. Plaintiffs have failed to state a claim under Article II, Section
4 of the Arizona Constitution. Therefore,

IT IS ORDERED granting Defendants’ Motion to Dismiss Plaintiffs’ third claim for relief,
requesting a declaration that Executive Order 2020-43 and all related executive orders are illegal
and void because the orders violate the due process provision of Article II, Section 4 of the Arizona
Constitution.

D. Assuming the Truth of All Well-Pled Factual Allegations and Indulging

All Reasonable Inferences From Those Facts, Plaintiffs’ Claim for
Injunctive Relief Sufficiently States a Claim for Relief.

In Plaintiffs’ claim for injunctive relief, they request that the court enjoin Defendants from:
1) ordering Plaintiffs to shut down their businesses or otherwise citing them for violating executive
orders; 2) treating Plaintiffs differently from their series 3, 11, 12, 13, 14, 18, and 19 competitors;
and 3) continuing to grant the privilege of off-premise sale of alcohol to their competitors in
violation of Arizona law. As noted above, when considering a motion to dismiss, the court assumes
the truth of all the well-pled factual allegations and indulges all reasonable inferences from those
facts. When applying that legal standard, the court finds that Plaintiffs’ fourth claim for relief
survives Defendants’ Motion to Dismiss.

IT IS ORDERED denying Defendants’ Motion to Dismiss Plaintiffs’ claim for injunctive

relief.

2. The Agency Defendants’ Motion to Dismiss.

In addition to joining in Governor Ducey’s Motion to Dismiss, the Agency Defendants

requested that the court dismiss Plaintiffs’ action because the Corrected First Amended Complaint
failed to allege a claim against the Agency Defendants. Plaintiffs’ Corrected First Amended
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Complaint alleged that the Agency Defendants are responsible for implementing the executive
orders at issue. To the extent Plaintiffs assert that the executive orders violate Article II, Section
13 of the Arizona Constitution, the action would also lie against the enforcement authorities. 5

Assuming the truth of all well-pled factual allegations and indulging all reasonable
inferences from those facts, the court denies the Agency Defendants’ Motion to Dismiss. See
Coleman, 230 Ariz. at 356 ¶ 9.

IT IS ORDERED denying the Agency Defendants’ Motion to Dismiss.

3. Plaintiffs’ Cross-Motion for Summary Judgment.

At oral argument Plaintiffs arguably withdrew their cross-motion for summary judgment.
However, because the withdrawal was not unequivocal, the court consider the cross-motion a
pending motion. “The court shall grant summary judgment if the moving party shows that there
is no genuine dispute as to any material fact and the moving party is entitled to a judgment as a
matter of law.” Ariz. R. Civ. P. 56(a). Here, Plaintiffs failed to establish that they are entitled to
judgment as a matter of law on their claim for relief under Article II, Section 13 of the Arizona
Constitution. Therefore,

IT IS ORDERED denying Plaintiffs’ Cross-Motion for Summary Judgment.

4. Plaintiffs’ Request for Preliminary Injunction.

After ruling on the motions, remaining before the court are:

1) Plaintiffs’ second claim for relief, seeking a declaration that Executive Order 2020-43
and all related executive orders are illegal and void because the orders or A.R.S. §12-
303(E) as applied violates the privileges and immunities clause of Article II, Section
13 of the Arizona Constitution; and

2) Plaintiffs’ claim for injunctive relief pursuant A.R.S. §12-1801 requesting that the court
enjoin Defendants from a) ordering Plaintiffs to shut down their businesses or

5
The Agency Defendants assert in their response to Plaintiffs’ cross-motion for summary
judgment that Plaintiffs’ cross-motion fails because the Agency Defendants are nonjural.
Although the Agency Defendants may have a viable argument if asserted in a motion to dismiss,
the argument was not asserted in a motion seeking relief. Instead, the argument was set forth in a
responsive pleading arguing the nonjural status as a basis for the court to deny Plaintiffs’ cross-
motion for summary judgment. Of note, this defect can be cured.
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otherwise citing them for violating executive orders; b) treating Plaintiffs differently
from their series 3, 11, 12, 13, 14, 18, and 19 competitors; and c) continuing to grant
the privilege of off-premises sale of alcohol to their competitors in violation of Arizona
law.

Following the preliminary injunction evidentiary hearing, the parties stipulated to the
admission of certain exhibits. Consistent with the parties’ agreement,

IT IS ORDERED admitting the following exhibits as part of the record in the preliminary
injunction evidentiary hearing: Exhibits 2, 3, 7, 8, 11, 12, 13, 14, 16, 17, 18, 19, 21, 22, 23, 24,
25, 26, 27, 28, 30, 31, 32, 33, 34, 35, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 51, 52, 53, 54, 56, 58,
59, 60, 65, 66, 67, 68, 69, 70, 72, 73, 75, 76, 77, 78, 79, 80, 82, 83, 84, 95, 96, 100, 101, 102, 103,
104, 105, 106, 107, 108, 109, 110, 111, 112, 114, 117, 118, 119, 120, 121, 124, 125, 127, 128,
129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147,
148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166,
167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178, 179, 180, 181, 182, 183, 184, 185,
186, 187, 188, 189, 190, 191, 192, 193, 195, 196, 197, 198, 199, 200, 201, 202, 203, 204, 206,
208, 210, 213, 217, 218, 219, 220, 221, and 222.

IT IS FURTHER ORDERED admitting the following exhibits over Defendants’ objection:

 Exhibit 49 is admitted; however, the statements in Exhibit 49 are not received to prove
the truth of the matter asserted. Rather, the document is received to show that the
request was made to ADHS.

 Exhibit 50 is admitted; however, the statements in Exhibit 50 are not received to prove
the truth of the matter asserted. Rather, the document is received to show that the
request was made to ADHS.

IT IS FURTHER ORDERED sustaining Plaintiffs’ hearsay objections to the following

exhibits: 115, 116, 122, 123, 126, 205, 207, 209, 211, 212, 214, 215, 216, and 223.

The position of Defendants is best summarized as follows:

 Governor Ducey asserts that his executive orders are within his authority under A.R.S.
§ 26-303(E). Governor Ducey also contends that his executive orders do not violate
Article II, Section of 13 of the Arizona Constitution because the challenged orders do
not limit a fundamental right or affect a suspect class, and thus, the challenged
executive orders may permissibly discriminate against certain businesses because the

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challenged orders have a legitimate purpose and a reasonable basis for the
discrimination.

 ADHS joins Governor Ducey’s arguments and also claims that it did not violate Article
II, Section 13 of the Arizona Constitution because it issued Guidelines to mitigate the
spread of COVID-19 that did not treat series 6 and 7 licensees differently than other
liquor licensees, but rather, obligated all licensees to comply with Guidelines and file
an attestation regarding COVID-19 mitigation requirements.

 ADLLC joins Governor Ducey’s arguments and also asserts that it did not violate
Article II, Section 13 of the Arizona Constitution because it equally enforces the
Guidelines against all liquor licensees without consideration of the type of license a
business holds.

To obtain a preliminary injunction, Plaintiffs must show 1) a strong likelihood of success

on the merits, 2) the possibility of irreparable harm in the absence of injunctive relief, 3) the
balance of hardships favors Plaintiffs, and 4) public policy favors granting the injunctive relief.
See Shoen v. Shoen, 167 Ariz. 58, 63 (App. 1990). Courts apply a sliding scale to assess these
factors. See Smith v. Ariz. Citizens Clean Elections Comm’n, 212 Ariz. 407, 410-411 ¶¶ 9-10
(2006). This scale requires either 1) probable success on the merits and the possibility of
irreparable injury, or 2) the presence of serious questions and the balance of hardships tips sharply
in Plaintiffs’ favor. See TP Racing, LLP v. Simms, 232 Ariz. 489, 495 ¶ 21 (App. 2013). Under
this sliding scale, the less the irreparable harm, the greater the showing of a strong likelihood of
success on the merits must be. Smith, 212 Ariz. at 411.

First, the court evaluates Plaintiffs’ claim that Executive Order 2020-43 and all related
executive orders are outside the delegated authority of A.R.S. § 26-303(E)(1). To assess the
boundaries of the Governor’s authority under A.R.S. § 26-303(E), the court looks at the statutory
language in view of the text of the entire statute. Nicaise v. Sundaram, 245 Ariz. 566, 568 ¶11
(2019). Critical to the court’s analysis is the scope of the legislature’s grant of authority to the
governor during a state of war emergency6 versus during a state of emergency.

Under A.R.S. § 26-303, the authority transferred to the governor during a state of war
emergency is particularly broad in scope and notably limited in duration. For example, A.R.S. §
26-303 includes a provision similar to A.R.S. 26-303(E), which delegates to the governor during
a state of war emergency, “complete authority over all agencies of the state government” and

6
State of war emergency is defined as the condition which exists immediately whenever this nation
is attacked or upon receipt by this state of a warning from the federal government indicating that
such an attack is imminent. See A.R.S. § 26-303(16).
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allows the governor to “exercise all police power vested in the state by the constitution and laws
of this state in order to effectuate the purposes of [Chapter 2, Title 36].” See A.R.S. § 26-303(B).
However, the legislature also granted the governor additional authority during a state of war
emergency, unambiguously giving the governor express authority to suspend the provisions of any
statute prescribing the procedure for conduct of state business or the orders or rules of any state
agency, if the governor determines and declares that strict compliance with the provision of any
such statute or order or rule would in any way prevent, hinder, or delay mitigation of the effects
of the emergency. See A.R.S. § 26-303(A)(1). Notably, the broad transfer of power to the
governor during a state of war emergency terminates if the legislature is not in session and the
governor has not issued a call for immediate special session of the legislature for the purpose of
legislating on subjects relating to such state of war emergency within twenty-four hours after the
beginning of the state of war emergency. See A.R.S. § 26-303(C).

Unlike the delegation of authority during a state of war emergency, the Governor’s powers
during a state of emergency do not allow him to suspend the law if he determines strick compliance
with the law would prevent, hinder, or delay mitigation of the emergency. Instead, the Governor’s
powers during a state of emergency are more circumscribed, and the duration of his authority is
less exactingly restricted. See In re Estate of Winn, 225 Ariz. 275, 278 ¶ 13 (App. 2010)(The
breadth of [one statute] demonstrates that the legislature knows how to authorize [an item] when
it chooses to do so.”).

Arizona Revised Statutes § 26-303(E) establishes the breadth of the governor’s delegated
authority during a state of emergency: the governor has complete authority, within the area
designated, over all agencies of the state government and the right to exercise all police power
vested in the state by the constitution and laws of this state to effectuate the purposes of Chapter
2, Title 36. See A.R.S. § 26-303(E)(1). The governor’s powers in a state of emergency are limited
to those that effectuate the purpose of Chapter 2, Title 36. As discussed above, the court finds the
purpose of the Emergency Management Act includes “emergency management” defined as
preparedness, response, recovery and mitigation activities that are necessary to respond to and
recover from disasters, emergencies, or contingencies. See A.R.S. § 26-301(6)(emphasis added).

The court also finds that A.R.S. § 26-303(E) limits the governor’s powers to those police
powers vested in the state by the constitution and the laws of the state. In other words, during a
state of emergency, the governor may not exercise his police power in violation of the constitution
or in violation of existing law. An interpretation of A.R.S. § 26-303(E) that allows the governor
during a state of emergency to make new laws or violate existing laws, even if necessary to respond
to or recover from a disaster, emergency, or contingency, would create an unconstitutional
delegation of lawmaking power. See Marshall Field & Co. v. Clark, 143 U.S. 649, 693-94
(1892)(the attempt to delegate the power to make the law and determine what it shall be is a
violation of the separation of powers). When alternative constructions of a statute are available,
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the court should choose the construction that avoids constitutional difficulty. Slayton v. Shumway,
166 Ariz. 87, 92 (1990); see also State ex rel. Montgomery v. Kemp, 249 Ariz. 320, 459
(2020)(“We presume a statute is constitutional and, where possible, construe it to it to preserve its
constitutionality.”)

Only one provision in the challenged executive orders is explicitly contrary to existing state
law. Arizona Revised Statutes § 4-205.02(C) expressly prohibits off-premises sale of alcohol for
series 12 licensees. See A.R.S. § 4-205.02 (“The holder of a restaurant license may sell and serve
spirituous liquors solely for consumption on the licensed premises.”)(Emphasis added). The
provision of the Executive Order 2020-09 that is inconsistent with the law is as follows:
“Beginning at 5:00 p.m. on Friday March 20, 2020 in counties of the State with confirmed cases
of COVID-19, the Arizona Department of Liquor Licenses and Control and any Arizona Peace
Officer, Standards and Training Board certified law enforcement officer shall not enforce
provisions of the series 12 liquor license that prohibits the sale by restaurants of beer, wine, and
spirituous liquor off-premises . . .” A provision that bars the enforcement of unlawful conduct is
contrary to state law and thus, exceeds the power delegated to the governor under A.R.S. § 26-
303(E). The court takes no position on whether the law should be changed to allow to-go alcohol;
it merely holds that action is outside the power delegated to the governor in A.R.S. § 26-303(E)
during a state of emergency because the action is contrary to current Arizona law. In entering this
order the court finds that Plaintiffs demonstrated a strong likelihood of success on the merits of
this claim. The court also finds the Governor’s immunity will likely preclude Plaintiffs from
collecting damages and the balance of hardships tips in favor of ensuring compliance with
separation of powers. If the legislature delegates power and the delegee acts beyond the authority
delegated, the action cannot stand. .cf Saguaro Healing LLC v. State, 249 Ariz. 362 ¶¶18-19
(2020). Therefore,

IT IS ORDERED granting Plaintiffs’ request for an preliminary injunction, in part, and

ordering that the following provision is no longer enforceable because it exceeds the delegation of
power under A.R.S. § 26-303(E):

[I]n counties of the State with confirmed cases of COVID-19, the Arizona
Department of Liquor Licenses and Control and any Arizona Peace Officer,
Standards and Training Board certified law enforcement officer shall not enforce
provisions of the series 12 liquor license that prohibits the sale by restaurants of
beer, wine, and spirituous liquor off-premises . . .7

7
In various pleadings, Defendants referenced other portions of Executive Order 2020-09 that may
benefit Plaintiffs and Plaintiffs referenced other executive orders that impose other restrictions or
limitations. None of those issues are before the court. Plaintiffs sought relief in four claims as
outlined above and the court has ruled on those claims.
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The court finds based on the evidence and testimony presented that the other restrictions
in the challenged executive orders are within the delegated authority of A.R.S. § 26-303(E).
Specifically, the court finds the restrictions are within the powers vested in the state by the
constitution and the laws of the state and constitute response, recovery, and mitigation activities
that are necessary to minimize the rapid spread of COVID-19 that threatens the health and safety
of individuals living in Arizona and to preserve the resources of Arizona’s health care system.

Plaintiffs argue that the challenged executive orders and August 10 ADHS Guidelines are
not within the Governor’s authority under A.R.S. § 26-303(E) because the orders and Guidelines
“are unrelated to services, personnel, equipment and facilities or to any emergent threat.” See
Plaintiffs’ Post-Hearing Preliminary Injunction Brief at 4. The court disagrees. The evidence and
testimony persuasively established that the actions taken to close businesses with the primary
purpose of selling and dispensing alcohol and the ongoing requirements associated with reopening
those businesses continue to be necessary mitigation activities.

The provision of Executive Order 2020-09 referenced above is severable from the balance
of the Executive Order 2020-09.

The next question is whether the challenged executive orders violate Plaintiffs’
constitutional rights under Article II, Section 13 of the Arizona Constitution. To prevail under
Plaintiffs’ claim that the executive orders issued within the parameters of the governor’s delegated
authority under A.R.S. § 26-303(E) violate Article II, Section 13 of the Arizona Constitution, the
court must find that the executive orders lack a rational basis. Big D Constr. Corp. v. Ct of App.,
163 Ariz. 560, 566 (1990).

A state may discriminate when done rationally and a reasonable basis exists for the
discrimination unless the challenged law limits a fundamental right or affects a suspect class.
Brazie v. Cannon & Wendt Elec. Co., 1 Ariz. App. 490, 493 (1965); Big D Constr., 163 Ariz. at
566. The challenged executive orders do not infringe upon a fundamental right or affect a suspect
class. Plaintiffs do not have a fundamental right to pursue a particular occupation or to operate a
particular business. See Caldwell v. Pima Cty., 172 Ariz. 352, 355 (App. 1991); Stanton v.
Superior Court, 55 Ariz. 514, 516 (1940)(“There is no inherent right in a citizen to . . . sell
intoxicating liquor by retail. It is not a privilege of a citizen of the state or of a citizen of the United
States.”)(superceded on other grounds). Moreover, Plaintiffs as holders of series 6 and 7 licenses
are not part of a suspect class. See Kahn v. Thompson, 185 Ariz. 408, 413 (App. 1995)(Suspect
classifications are afforded to “discrete and insular group[s] . . . in need of extraordinary
protections from the majoritarian political process.”)(internal markings and citation omitted).

The court uses a two-part test to determine whether a classification satisfies rational basis
review: 1) whether the challenged order has a legitimate purpose; and 2) if it is reasonable to
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CV 2020-010282 11/04/2020

believe that the classification will promote that purpose. Big D Constr., 163 Ariz. at 566. The
evidence established that the challenged orders were executed with the intended purpose of
preventing the spread of COVID-19, protecting the health and safety of individuals living in
Arizona, and preserving the resources of Arizona’s health care system. The orders had a legitimate
purpose. See Governale v. Lieberman, 226 Ariz. 443, 449 ¶ 17 (App. 2011)(recognizing that
promoting public health is a legitimate interest).

Additionally, the evidence established that it is reasonable to believe that the order
temporarily closing series 6 and 7 licensees with the primary purpose of selling and dispensing
alcohol would promote the legitimate purpose of preventing the spread of COVID-19, protect the
health and safety of individuals living in Arizona, and preserve the resources of Arizona’s health
care system. The virus that causes COVID-19 spreads very easily between people through
respiratory droplets and aerosol transmission. The complexity in controlling the spread of the
virus is exacerbated by the transmission by asymptomatic individuals who spread the virus without
ever knowing they are contagious. When Governor Ducey executed Executive Order 2020-43,
Arizona had 73,908 diagnosed cases of COVID-19, including 1,588 deaths. See Executive Order
2020-52. The State was seeing an increase in the number of cases and hospitalizations. Id. By
July 23, 2020, when the Governor executed Executive Order 2020-52 extending Executive Order
2020-43, there had been 152,944 diagnosed cases of COVID-19, including 3,063 deaths. Id.
Arizona had a positivity rate above 10%. Id. Dr. Marjorie Bessel testified during this time period,
patients were brought to Maricopa County from around the State to receive treatment for COVID-
19 and hospitals were nearing capacity.

Certain businesses, including bars with the primary purpose of selling or dispensing alcohol
have been identified as likely high-risk environments for the spread of the virus. As support for
the high-risk label, experts cite the typical floor plan of bars, which is often inconsistent with social
distancing. The testimony of Ian Juul illustrated this point when he testified that his bar cannot
reach maximum occupancy under ADHS Guidelines due to the limited spacing inside the bar. To
ensure social distancing, his bar is limited to approximately 18% capacity. Robert Rosa testified
that profitable operation of his bar is dependent upon activities that typically involve mixing of
groups. See Rosa Depo. 43:14-49:5, 72:12-20.

In addition, Dr. Marjorie Bessel testified that poor ventilation and minimum windows
commonly exist in the businesses with the primary purpose of selling or dispensing alcohol. The
testimony further established that typical conduct of bar patrons creates an elevated risk for the
spread of COVID-19. For example, bar patrons often move between groups and tables, mixing
with other groups with whom they did not arrive. Also, bars are often loud, which causes
individuals to draw closer to hear one another and to speak louder, thus increasing the risk of
transmission. Furthermore, mask wearing is incompatible with drinking, and drinking alcohol
impairs decision-making. Alcohol consumption slows brain activity, reduces inhibition, and
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impairs judgment, which may result in a person forgetting to exercise precautions to reduce the
risk of spreading the virus. Some bars also provide a dance floor to patrons to mix with different
individuals and groups and when coupled with limited ventilation and turbulent airflow patterns
results in an environment where the respiratory droplets are more easily spread. Bars also tend to
attract a younger adult population, which currently represents a significant demographic carrying
COVID-19 in Arizona. Dr. Bessel also noted that contact at a bar does not consistently provide
sufficient information to allow effective contract tracing of a person testing positive for COVID-
19 who may have come into contact with many individuals unknown to him or her when visiting
a bar. See also Hearing Tr. at 153:15-154:1, 159:5-17, 162:3-10 (discussing the mixing of groups,
cramped indoor spaces with poor ventilation, fixed layout and high touch areas, intoxication, loud
ambient noise, inability to wear a mask, dancing, and patron age).

The COVID-19 pandemic has caused catastrophic loss. At the time Governor Ducey
executed Executive Order 2020-43, our health care system was near crisis. According to Dr.
Bessel, Arizona was the “hottest hotspot of COVID in the world which carried with it a significant
strain and stress on the citizens of our community as well as the health care delivery system.”
Hearing Tr. 177:20-178:3. Immediate mitigation measures were necessary to reduce the
exponential spread of COVID-19 and to ensure that the medical needs of our residents did not
exceed medical resources. Today, under current executive orders and Guidelines, all Plaintiffs
have reopened or have been given an opportunity to apply for permission to reopen. See Beard
Dep at 6:6-14; Juul Dep. at 15:15-19; Rosa Dep. at 7:2-20. The evidence established that the
presence of COVID-19 continues to spread in our community. The virus continues to negatively
impact the health and safety of individuals living in Arizona and it challenges the resources of
Arizona’s health care system. Dr. Christ testified that formulaic numeric benchmarks and
hospitalization rates are not the sole indicators of when the executive orders and Guidelines can
be repealed. Factors including access to a safe and effective vaccine, therapeutic treatments for
patients with COVID-19, the extent of the community spread, positivity rates, and the co-occurring
community spread of illness such as influenza that can deplete hospital resources are all relevant
factors for the Governor and ADHS to consider when determining the need for and duration of
necessary mitigation measures.

During the pendency of this case, evidence and argument frequently focused on unequal
enforcement and requirements in the Guidelines that obligated Plaintiffs to attest that they would
comply with mitigation measures as a condition of reopening. Plaintiffs asserted this requirement
constitutes a violation of Article II, Section 13 of the Arizona Constitution because non-series 6
and 7 licensees are not required to file a attestation because those business were not required to be
closed under Executive Order 2020-43. The court finds that the disparate treatment of businesses
identified in Executive Order 2020-43 does not violate Article II, Section 13 of the Arizona
Constitution.

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Moreover, the Agency Defendants presented evidence and testimony to establish the intent
to apply all Guidelines and impose sanctions for non-compliance with the Guidelines equally to
all liquor licensees. Dr. Christ testified that ADHS prepared and executed the August 10, 2020
Guidelines following a decision by this court in Mountainside Fitness Acquisitions LLC v. Douglas
Ducey, CV2020-093916. She testified that the Guidelines, including the requirement that all liquor
licensees, regardless of the series of license they held, were obligated to abide by ADHS
Emergency Measure 2020-02, including its applicable reopening and attestation requirements and
meet the applicable Requirements and Benchmarks. See Exhibit 9, n.1. Dr. Christ acknowledged
the inconsistencies and lack of clarity of the Guidelines. Although the Guidelines are rather
imprecise regarding the attestation requirement for businesses other than those subject to
Executive Order 2020-43, Dr. Christ’s credible testimony and the inclusion of footnote 1 in the
Guidelines demonstrates that ADHS intended its Guidelines apply to all liquor licensees.

In addition, Director Cocca testified that under the terms of the executive orders all liquor
licensees are obligated to comply with the August 10, 2020 Guidelines and failure to comply
equally subjected liquor licensees to sanctions as identified in the executive orders. Executive
Order 2020-43 states that the order allows law enforcement and other regulatory agency, pursuant
their regulatory authority to take immediate enforcement action against any business that fails to
follow any guidance issued by ADHS relating to COVID-19 for the protection of the public health,
safety and welfare up to and including summary suspension for any license that business holds.
See Exhibit 4(emphasis added); see also Exhibit 5 (imposing limitations on restaurants and stating
that in addition to penalty and enforcement provided by A.R.S. §§ 26-316 and 317, failure to
comply with this order and any other guidance issued by ADHS related to the precautions to
mitigate the spread of COVID-19 shall constitute a public nuisance dangerous to the public health).

When applying the rational basis test and weighing the evidence and testimony, the court
finds the restrictions on series 6 and 7 licensees with the primary purpose of selling and dispensing
alcohol do not violate Article II, Section 13 of the Arizona Constitution. Therefore, on Plaintiffs’
claim that the executive orders violate Article II, Section 13, the court finds the presence of no
serious question regarding the probability of success on the merits. The court now turns to whether
Plaintiffs, including the Testifying Plaintiffs demonstrated irreparable injury.

Plaintiffs assert two forms of irreparable injury: 1) constitutional harm; and 2) a risk of
business closure under Executive Orders 2020-43, 2020-52 and related orders. The court finds
Plaintiffs are unlikely to succeed on their claim of constitutional harm. Regarding the second
claim of injury, the court finds that the Testifying Plaintiffs established injury related to their initial
closure under Executive Order 2020-43. However, Plaintiffs, including the Testifying Plaintiffs
did not show existing or prospective irreparable injury.

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Ian Juul testified that Mooney’s Irish Pub closed following issuance of Executive Order
2020-43. Mooney’s Irish Pub reopened its on-premise operations on August 22, 2020. Mr. Juul
testified that he believes some of his regular patrons moved to other bars during the shutdown and
have failed to return to his business. Mr. Juul testified that his business has modified its operations
to serve food and they are working to build a new customer base despite the challenges of lower
demand for in-person food and alcohol service and the reduction in tourists visiting Sedona where
his business is located.

Robert Rosa’s 44 Sports Grill also closed following the issuance of Executive Order 2020-
43 and reopened on August 28, 2020. Mr. Rosa testified that his business is losing significant
sales by being unable to draw their usual customers who are unable to play parlor games at 44
Sports Grill. See Rosa Dep. 70:1-18; 72:12-20. Mr. Rosa testified he believes patrons are taking
their business to other liquor licensees. The evidence and testimony established that like 44 Sports
Grill, Mr. Rosa’s liquor-license-holding-competitors are not allowed to have dancing, parlor
games, or an environment free from restrictions on occupancy and face coverings. Competitors’
failure to comply with applicable Guidelines does not constitute a basis for the court to find
irreparable injury.

Monica Beard’s Maverick Inn reopened its on-premise operations on September 25, 2020.
Ms. Beard testified that she believes she is losing potential customers and goodwill because
customers are going to other places such as the American Legion, the Eagles, and Disabled
American Veterans because those private clubs offer parlor games, allow dancing, and do not
require patrons to wear face coverings. See Beard Dep. 7:12-8:3, 55:5-16, 55:18-56:22, 57:4-
57:258 and Declaration Exhibit 77 ¶ 3. The evidence and testimony established that private clubs
as described by Ms. Beard are not exempt from complying with ADHS Guidelines and do not
serve as a basis to find irreparable injury.

The court heard no credible testimony to support that the Plaintiffs’ reductions in profit or
goodwill arise from continued restrictions that are different than the restrictions of other liquor
licensees. In denying Plaintiffs’ remaining request for injunctive relief the court finds that the
balance of hardships and public interest in mitigating the spread of COVID-19 tips sharply in favor
of upholding Executive Orders 2020-43 and the related executive orders.

IT IS ORDERED denying Plaintiffs’ request to issue a preliminary injunction, enjoining

Defendants from ordering Plaintiffs to shut down their businesses or otherwise citing them for
violating executive orders.

8
The court sustains the hearsay objection to the testimony on page 55:3-8.
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IT IS FURTHER ORDERED denying Plaintiffs’ request to issue a preliminary injunction,

enjoining Defendants from treating Plaintiffs differently from their series 3, 11, 12, 13, 14, 18, and
19 competitors.

IT IS FURTHER ORDERED denying any request for attorney’s fees and costs requested
in connection with the issuance of a preliminary injunction as requested in the various pleadings.

Pursuant to Rule 65 of the Arizona Rules of Civil Procedure, the court may issue a
preliminary injunction only if the movant gives security in such amount as the court considers
proper to pay the costs and damages sustained by any party found to be wrongfully enjoined. See
Ariz. R. Civ. P. 65(c)(1). The court finds the state will not sustain costs of damages associated
with the preliminary injunction granted herein. Therefore, no bond is ordered.

LET THE RECORD REFLECT that the courtroom clerk may dispose of the exhibits that
were not offered or received in evidence (Plaintiffs’ Exhibits 57, 74, 85-94 and Defendants’
exhibits 115, 116, 122, 123, 126, 211, 212, 214-216, and 223).

Docket Code 926 Form V000A Page 18