Fitness, Arts, Entertainment and Sports

The sentence is a statement of fact, and it is false for every one of the six quarters. For the second quarter of 2020 the orders were the closure orders of every State and the District naming this industry's facilities (Ex. NY-010; Ex. CT-004; Ex. MI-005; Ex. CO-004; Ex. WA-009; Ex. TX-003; Ex. FL-008; Illinois Executive Order 2020-10; Ex. OR-007; Virginia Executive Order 53; Ex. MA-008; Ex. NC-004), the stay-at-home orders of forty-two jurisdictions (Ex. LAW-201) and the gaming regulators' closures (Ex. IL-059; Ex. IN-083; Ex. MO-026; Ex. MD-035; Ex. NV-004). For the third quarter of 2020 they were the capacity orders of every reopened jurisdiction and the re-closures of Arizona, California, New Jersey, New York and Michigan (Ex. AZ-022; the State Public Health Officer's order of July 13, 2020; Ex. SEC-17-013; Ex. NY-110; Ex. MI-044). For the fourth quarter of 2020 they were the winter re-closures and re-caps of twenty-two States and the District and the re-tightening orders of nine more (Ex. MI-062; Ex. MN-032; Illinois Executive Order 2020-73; Ex. WA-047; Ex. OR-035; California's Regional Stay at Home Order; Ex. PA-028; Ex. MA-040; Colorado's Second Amended Public Health Order 20-36; Ex. NV-030). For the first quarter of 2021 they were the winter orders and their stepped successors, in force in thirty-seven jurisdictions on March 31, 2021 (Ex. MET-LA-014; Ex. MI-064; Ex. MN-037; Ex. NY-042; Ex. SEC-17-026; Ex. MA-045). For the second quarter of 2021 they were the capacity orders that ran to their stepped expiry between April 6 and July 6, 2021 (New York Executive Order 202.108; Ex. MA-048; Ex. NJ-050; Ex. WA-101; Ex. OR-043; New Mexico's Public Health Order of June 30, 2021; Ex. RI-047). For the third quarter of 2021 they were the sixty-odd instruments of the third-quarter-2021 section, subpart (B): Hawaii's caps (Ex. HI-025), Key to NYC (Ex. MET-NYC-017), San Francisco's order (Ex. MET-SFO-011), New Orleans's rule (Ex. MET-MSY-029), Safe Access O'ahu (Ex. MET-HNL-035), the Pasadena and Los Angeles County mega-event orders (Ex. MET-LA-054; Ex. MET-LA-056; Ex. MET-LA-019), Nevada's Directives 047, 049 and 050 (Ex. NV-041; Ex. NV-043; Ex. NV-044), Washington's orders (Ex. WA-078; Ex. WA-084; Ex. WA-085), the statewide face-covering and exposure-control orders of Louisiana, Oregon, Illinois, New Mexico and the District (Proclamation 137 JBE 2021; Ex. OR-048; Executive Order 2021-20; the Public Health Order of August 17, 2021; Ex. DC-057), the federal conveyance, entry and border orders (Ex. FED-020; Ex. FED-052; Ex. FED-207; Ex. FED-234) and the local face-covering and exposure-control orders of more than twenty jurisdictions. The Service's own guidance lists a mayor's closure order, a shelter-in-place proclamation and a curfew as governmental orders; the plaintiff in Stenson Tamaddon told the Ninth Circuit that "[a] network of more than 4,200 orders at the state and local level limited most businesses"; and the Department of Health and Human Services' own dataset records 4,218 of them.²³⁷ The letter does not say what record the Service consulted; whatever it was, it was not the public record. The sentence describes a period that did not occur.

The statute does not contain the word "essential." No closure order of March 2020 classed a gym, studio, theater, cinema, live venue, bowling center, arcade or amusement park as essential; the Notice's own first example of a qualifying order is a list of those categories closed as non-essential.²³⁸ Where a facility remained open under a capacity, class, amenity, distancing, reservation, spectator or face-covering condition, the Notice's own Q&A-11 says that an employer permitted to operate "may be considered to have a partial suspension of operations" where the order limits a portion of its operations, and Tri-State holds that a "partial suspension" is "a temporary delay, interruption, or termination of a portion an employer's business."²³⁹ A gym at twenty-five percent with its locker rooms closed, a theater at fifty seats per screen, a league without spectators and a park at fifteen percent were open in part and suspended in part, and the part suspended is the part the order named. The designation is the premise of the conditions the orders imposed, not an answer to them.

The statute says nothing of the source or addressee of the order; it describes the order by its subject ("commerce, travel, or group meetings") and its cause (COVID-19), and it adds "(for commercial, social, religious, or other purposes)" to make the breadth of the object explicit.²⁴⁰ The Notice's own list of governmental orders includes "[a] State's emergency proclamation that residents must shelter in place for a specified period" and "[a]n order from a local official imposing a curfew on residents."²⁴¹ The United States told the District Court what the qualifying instruments are:

orders, proclamations, or decrees from the Federal government or any State or local government

Doc. 44 at 12

and told the Ninth Circuit that "a business may be suspended 'due to' a government order addressing a third party."²⁴² A stay-at-home order is an order limiting travel and group meetings in terms; the commerce it limited was this industry's, whose product is the presence of the public it confined. The orders also answer the position in its own vocabulary: every closure order of March 2020 was addressed to the business by name, and every capacity, class, spectator, vaccination-proof and face-covering order of the later quarters was addressed to the business, enforced against the business and imposed on the business a duty to exclude. The position is a reading Congress did not write, the Notice's own list contradicts and the United States has disclaimed.

"Comparable operations" and "telework" appear in Q&A-15 and Q&A-16 of the Notice and nowhere in the statute, which asks whether the operation was partially suspended.²⁴³ The product of this industry is presence: a class taught in a room, a film projected to an audience, a game played before a crowd, a ride operated for a queue, a lane bowled, a museum walked. A streamed class is not the operation of a studio ordered closed; a virtual gala is not the operation of a performance venue; a parking-lot workout is not the operation of a gym at twenty-five percent with its amenities closed. The Notice itself says that where a closure causes the employer to suspend operations "for certain purposes, but not others," the employer "may be considered to have a partial suspension," and the United States so represented to the District Court.²⁴⁴ The telework mandates catalogued under the administrative function above moved the box office and the league office out of their premises by compulsion, and that compelled removal is itself a partial suspension of the administrative function; the floor, the stage, the field and the lane admit of no remote operation at all. The position adds words to the statute, and adding words is "Congress's province."²⁴⁵

Q&A-13 reaches, by its terms, only an employer that "suspends some or all of its operations because its customers are subject to a government order requiring them to stay at home or otherwise causing a reduction in demand." It has no application to an employer whose own facility, class, performance, game or attraction was closed or capped by order, which is every employer in this industry in every quarter.²⁴⁶ Where the order was addressed to the customer, it was an order "limiting commerce, travel, or group meetings" in terms, and the Notice lists it as a qualifying order; the customer exclusion as broadened on March 1, 2021 ("or otherwise causes a reduction in demand") appeared after the wages of every 2020 quarter had been paid.²⁴⁷ The vaccination-proof orders of 2021 Q3 were addressed to the "covered entity," barred it from admitting a class of persons, compelled it to verify, post and record, and fined it; Tri-State holds that an order that "required Plaintiff to only employ vaccinated individuals" caused changes that "were not voluntary."²⁴⁸ The position mistakes the addressee of the order for its object, and the statute is concerned only with the object.

Q&A-14 reaches only a suspension "not due to a governmental order." A change made because an order required it is not voluntary; Tri-State so held of the hospital's protocols, and the court refused the argument that the employer would have made the changes regardless because "[s]ick patients and employees alone did not require additional protocols" and on that theory "there are not many businesses or any business that would be eligible under the ERC at all."²⁴⁹ No gym chose twenty-five percent occupancy; no theater chose fifty seats per screen; no league chose to play without spectators; no venue in New York City chose to verify vaccination at its door under a $1,000 fine. But for the orders, and the standing law to which those orders gave their COVID-19 content, none of those changes would have been made.

The premise fails on the Notice's own terms and on the law that stood beneath the orders. The United States and the District Court have defined the excluded employer as one that chooses:

if a business has the capability to continue its operations in a modified manner but chooses not to, it is voluntarily suspending its own operations, not being ordered to do so

Doc. 49 at 17-18

No employer in this industry answered that description in any of the six quarters.²⁵⁰ The reopening orders permitted a gym, a studio, a theater or an arena to operate only on conditions with the force of law: fifty percent of listed occupancy and a face covering inside every commercial entity in Texas, "Mandatory Requirements" for every sports and entertainment venue in Ohio, operation "subject to the guidance promulgated by the Department of Health" in New York, and "All health clubs shall comply" in New Jersey.²⁵¹ The standing statutes commanded the same conduct independently: "Each person shall act responsibly to prevent and control communicable disease" (Ex. DUT-TX-001); no person having charge of a "place of public accommodation, amusement, resort, or trade" shall "negligently fail to take reasonable measures to protect the public from exposure to the contagion" (Ex. DUT-OH-007); every employer "shall furnish" a place of employment "free from recognized hazards" (Ex. DUT-FED-001), with each State's safe-workplace statute beside it (the standing-duties section above). The Texas and Arizona legislatures then fixed the standard of care as compliance with governmental standards, guidance and protocols, Texas for every action commenced on or after March 13, 2020 and Arizona retroactively to March 10, 2020 (Ex. DUT-TX-015; Ex. DUT-AZ-010); the other six left the standing statutes and the orders' own conditions to state it.²⁵² The safe-workplace statutes had no COVID-19 content until the health authorities said what a safe workplace required; the measures were taken because those directives defined the duty and would not have been taken without them. "Due to" is but-for causation, and the causation here runs from the command to the measure without an intervening choice. The Notice's own words confirm it: a modification "required by a governmental order as a condition of reopening a physical space for business or service to the public" is a partial suspension due to the order.²⁵³ A statute that commands conduct is an order from an appropriate governmental authority, and the Service's premise of an employer acting on no command fails wherever a command reached the employer; in this industry a command reached every employer in every jurisdiction in every quarter.

The ten percent figure is not in the statute; it appeared in the Notice on March 1, 2021; and the United States has represented to two federal courts what it is:

"[e]ffectively ... a safe harbor"; "not an eligibility requirement"; a line that "does not impose a threshold or place a limitation on receiving the credit"; "sufficient[,] though not necessary[,] conditions"; "a quintessential safe harbor"; "a safe harbor rather than a hard floor"; the Service "did not say that a taxpayer cannot qualify for the ERC if they have been impacted less than 10 percent."

Doc. 44 at 14, 28, 29-30; Br. for Appellees at 37-38, 49

The District Court accepted those representations and rested its judgment on them; Tri-State holds that the Notice "provides a method for the test to be met not as a requirement to meet the test" and that "more than nominal" is not "significant."²⁵⁴ This analysis holds the United States to that position.²⁵⁵ Measured against the United States' own safe harbor, the showing for this industry exceeds it many times over: the closures of 2020 Q2 suspended one hundred percent of every facility's operation; the capacity orders of the following quarters suspended fifty to ninety percent of its admissions; the class prohibitions suspended every class; the spectator prohibitions suspended every gate; and the vaccination-proof orders of 2021 Q3 closed the whole of every covered facility's admissions to the unvaccinated. A number that "isn't an eligibility requirement" cannot be the ground on which any employer's claim is decided.

The masks-and-aisles sentence of Q&A-18 addresses "[m]odifications altering customer behavior (for example, mask requirements or making store aisles one way to enforce social distancing) or that require employees to wear masks and gloves while performing their duties."²⁵⁶ It does not address the modifications that governed this industry: occupancy caps of ten to fifty percent, class caps of ten, closed locker rooms, saunas, showers and child care, six to fourteen feet between exercisers, reservation-only entry, no spectators, no indoor performance, no live entertainment, plan approval for every tournament, attestation and inspection before reopening, and vaccination verification at every door. The same Q&A lists "limiting occupancy to provide for social distancing," "requiring services to be performed only on an appointment basis" and "changing the format of service" as compelled modifications, and Q&A-17 and Q&A-19 treat an employer whose workplace "may remain open for other limited purposes" or whose hours are limited as partially suspended.²⁵⁷ The sentence also appeared on March 1, 2021, after the wages of every 2020 quarter had been paid. And the face-covering orders of this industry were not the masks of a grocery aisle: they were workplace infection-prevention and exposure-control requirements imposed on the business, with a duty to post and to exclude and enforcement by fine, reaching every exerciser on a gym floor, every spectator in a stadium of five hundred and every patron of a theater, and each is a limitation on the commerce of a business whose product is exertion, performance and gathering. The position applies a sentence about aisles to orders that closed floors.

Q&A-10 says that a declaration "is not sufficient to rise to the level of a governmental order if it does not limit commerce, travel, or group meetings in any manner," and that a declaration that limits them "in a manner that does not relate to the suspension of an employer's operation" does not qualify.²⁵⁸ This analysis treats the declarations as the predicates they are and treats as orders the instruments issued under them: the closure, capacity, gathering, spectator, face-covering, vaccination-proof and quarantine orders of the layers and six-quarters sections, every one of which limited commerce, travel or group meetings in terms and related to the suspension of this industry's operations. Where a declaration itself limited commerce (Alabama's orders of the State Health Officer; Hawaii's supplementary proclamations; Georgia's executive orders; Honolulu's emergency proclamations), it is cited for its operative clauses. The position answers an argument this analysis does not make.

The Notice's Q&A-12 makes an employer eligible "because its operations have been suspended due to the governmental order that suspended operations of its supplier"; the United States told the Ninth Circuit that the rule "never even mentions a 'physical[ ] clos[ure]' order against the supplier" and told the District Court that the Notice contains no requirement that the employer "absolutely could not operate" without the supplier's product.²⁵⁹ The Chief Counsel memorandum that adds a "narrow, limited exception" and an alternate-supplier requirement "may not be used or cited as precedent," and Tri-State found its scenarios "not comparable or persuasive."²⁶⁰ This industry's suppliers were closed by order: the school districts and park districts whose gymnasiums, fields and pools house every youth league; the venues in the next State; the convention authorities that converted their halls; the State fair boards that cancelled their seasons; the film distributors whose slates were withdrawn as theaters closed by order in every State; the consulates that admitted foreign artists; the cruise lines under the Conditional Sailing Order; the child-care centers and schools that let the workforce work. Causation is but-for, and it runs through a counterparty as surely as through a premises.

The clause asks whether the operation was "fully or partially suspended during the calendar quarter due to orders," not whether an order was in effect during the quarter; "during the calendar quarter" modifies "suspended."²⁶¹ For every quarter through the second quarter of 2021 the premise is false in fact: orders were in force on the first and last day of each, as the six-quarters section states. For the third quarter of 2021 the premise is false in fact as well: the third-quarter-2021 section, subpart (B), names the instruments issued inside the quarter (Hawaii's caps of August 10; Key to NYC of August 17; San Francisco's order of August 20; New Orleans's rule of August 16; Safe Access O'ahu of September 13; Honolulu's event closures of September 22; the Pasadena and Los Angeles County mega-event orders of August 19-20 and September 15; Nevada's Directives of July 30, August 16 and September 2; Washington's orders of August 23 and September 13; the statewide face-covering and exposure-control orders of July 31, August 4, August 13, August 20 and August 30; the local face-covering and exposure-control orders of July 26 onward; the school orders of August and September; the TSA directive of September 14; the border notices of July 22, August 23 and September 22) and the instruments never lifted (the conveyance order; the entry proclamations; the sailing, testing and Title 42 orders; the OSHA standard; the State emergencies; the quarantine orders). And where this analysis relies on the continuing suspension the earlier orders caused, it does so on the orders' own step dates, on Tri-State's definition of a suspension as a "delay" and on the Notice's Q&A-22 and Q&A-16, not on any theory that an expired order suspended anyone by its own force.²⁶² The Chief Counsel memorandum's "residual delays" sentence asks the wrong question and "may not be used or cited as precedent."²⁶³ The position is answered by the calendar.

The gross-receipts test is the second of two independent routes to eligibility, and this analysis relies on the first. Congress wrote a percentage into the gross-receipts clause and none into the Suspension Clause, and Tri-State holds that the gross-receipts prong shows "an employer may be economically affected without any partial or full suspension of trade or business operations due to a government order," which "does not make the Gross Receipts Test superfluous with the plain language interpretation of 'partial suspension' but instead logical within the scope of the act."²⁶⁴ The Service's own Q&A-13 says that an employer whose operations are suspended due to an order is eligible whether or not it also meets the gross-receipts test. The Census Bureau's measure of this industry's second quarter of 2020, a 51.2 percent fall in revenue from the preceding quarter and 56.5 percent from the prior year, is recited here as a fact about the period, not as the ground of eligibility.²⁶⁵ The position answers a prong not relied on.

Every instrument relied on in this analysis carries an operative clause and an enforcement clause: executive orders under emergency-powers statutes with misdemeanor penalties; health officers' orders under communicable-disease statutes with fines, license suspension and closure; gaming regulators' orders under gaming statutes; departmental sector rules that carried the force of the executive order that authorized them and were enforced by the licensing and inspection powers of the issuing department (New York's interim guidance under Executive Order 202.6 and its successors; Connecticut's sector rules under Executive Order 7ZZ; Ohio's mandatory requirements as Director's orders; Washington's requirements under the proclamations; Kentucky's Healthy at Work requirements under the Cabinet's orders); federal orders under 42 U.S.C. § 264, 49 U.S.C. § 114(l)(2), 8 U.S.C. § 1182(f), 19 U.S.C. § 1318(b) and 29 U.S.C. § 655(c) with civil and criminal penalties.²⁶⁶ Where an instrument was advisory this analysis says so and does not rely on it: the Allegheny County Stay-at-Home Advisory of November 18, 2020, Cuyahoga County's face-covering advisory of August 4, 2021, the Columbus indoor face-covering advisory of August 5, 2021, the regional recommendation of the Puget Sound health officers of July 26, 2021 and the President's Guidelines are each described as what they are.²⁶⁷ The New Orleans "Guidelines" were adopted by Public Health Advisory under La. R.S. 29:727 with a $500 fine and six months' confinement and enforced from August 23, 2021 by license suspension; the label on a document does not fix its legal character, and the Notice itself says that whether an instrument is a governmental order "is determined without regard to the level of enforcement."²⁶⁸ The position is answered by the enforcement clauses.

Agreed, and applied. In March 2020 an "order" was "a command, direction, or instruction" given by an authority, and a "decree" or "proclamation" its formal cousin; the dictionaries of the month of enactment are in the Library.²⁶⁹ Every instrument relied on here is a command of an authority with power over its subject: a governor's executive order, a health officer's order, a mayor's emergency executive order, a county judge's order, a board of health's regulation, a gaming commission's order, a proclamation of the President, an order of the CDC, a security directive of the TSA, a notification of the Department of Homeland Security, a rule of a State health authority, an administrative order of a court. The ordinary meaning of "order" does not carry the glosses the Service attaches to it (directed at the business; not a declaration; not guidance; not a customer order), each of which is answered above. Each of these instruments commanded, and each was enforced; that is the ordinary meaning of "order," and it is satisfied on every page of the Library.

The Service is free to disagree about the weight of these instruments. It is not free to say they did not exist.