Arizona Court of Appeals Division One holds that a municipality cannot establish irreparable harm by relying on a potential financial penalty or assessment.

In 2006, state voters passed Proposition 202, which authorized municipalities to set a minimum wage that exceeds the one set by the State. In 2016, a city raised its minimum wage through its own voter initiative. Three years after that, the State passed a new law that authorized the State to collect yearly assessments from municipalities that charge higher minimum wage. Under that statute, state agencies are to submit yearly cost estimates that are attributable to a city’s higher minimum wage.

Several state agencies calculated their increased costs due to the City’s higher minimum wage to be roughly $1.1 million. Shortly after that, the state legislature passed a bill directing the Department of Administration to assess that amount against the city. The city filed a lawsuit against the Department, arguing that assessment violated the Voter Protection Act. The city sought a preliminary injunction, arguing that the assessment would prevent it from investing in critical infrastructure projects. The trial court granted a preliminary injunction in favor of the City finding that they established they would suffer irreparable harm.

The Department of Administration appealed, arguing that the City had failed to establish irreparable harm. The Court of Appeals agreed and reversed the trial court. It explained that the harm was not irreparable because assuming the assessment was unlawful, the State could be forced to repay the city later. The Court further explained that the city would not be able to reliably include the contested amount in its budget—even if the injunction was granted. The Court also noted that the trial court did not make factual findings necessary to support the conclusion that the City’s programs would suffer if there was no injunction.

The Court of Appeals vacated the injunction because it concluded there was no irreparable harm, declined to consider the merits of the appeal, and remanded.

Judge Howe authored the opinion; Judges Williams Gass concurred.

Posted by: John Bullock