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Federal Tax

District Court Finds Covid Proxy Voting Rule Unconstitutional

Checkpoint Federal Tax Update Staff  

· 5 minute read

Checkpoint Federal Tax Update Staff  

· 5 minute read

A Texas federal district court has found that the Covid-era proxy voting rule is an unconstitutional violation of the Constitution’s Quorum Clause. This could have implications for the SECURE 2.0 Act. (Texas v Garland, 2024 WL 814498)

The Court specifically enjoined the enforcement of the Pregnant Workers Fairness Act (PWFA, 42 U.S.C. §§ 2000gg et seq.) against the State of Texas finding that the House passed the Consolidated Appropriations Act with proxy votes that did not meet the requirements of the Quorum Clause.


The Constitution’s Quorum Clause (Article I, Section 5, Clause 1) says that “Each House shall be the Judge of the Elections, Returns and Qualifications of its own Members, and a Majority of each shall constitute a Quorum to do Business; but a smaller Number may adjourn from day to day, and may be authorized to compel the Attendance of absent Members, in such Manner, and under such Penalties as each House may provide.”

The House, though, in 2020 created a rule that permitted non-present members to be included in the quorum count and vote by proxy.

It was with proxy votes by non-present member that the PWFA was passed in 2022 as part of the Consolidated Appropriations Act of 2023 (the Act, PL 117-328).

Texas brought suit to enjoin the enforcement of the PWFA but not the entire Act because it only had standing to bring suit against the PWFA.

The court found that while “[it] finds that the passage of the Consolidated Appropriations Act violated the Constitution, Texas does not seek an injunction of-and the Court does not enjoin-the entire Act. Rather, the Court enjoins only the application of the Pregnant Workers Fairness Act against Texas.” It reasoned that “[b]ased on the Quorum Clause’s text, original public meaning, and historical practice, the Court concludes that the Quorum Clause bars the creation of a quorum by including non-present members participating by proxy.”

CAA Tax Provisions.

What does this have to do with tax? Besides the PWFA, the CAA included the SECURE 2.0 Act. The SECURE 2.0 Act focuses on retirement tax issues. Among the key retirement provisions in the SECURE 2.0 Act are: expanding automatic enrollment in retirement plans; increasing the age for the required beginning date for mandatory distributions; a higher catch-up limit to apply at age 60, 61, 62, and 63; and the elimination of the additional tax on corrective distributions of excess contributions.

For an executive summary of the SECURE 2.0 Act, see Checkpoint Exclusive: Executive Summary of the SECURE 2.0 Act.

Effect of Rest of CAA.

The court was clear that its ruling applied only to the PWFA and only to Texas. But the court was also clear that it found that the entire CAA was passed in an unconstitutional manner.

The court did not enjoin the entire CAA because the plaintiff in this case, the State of Texas, only had standing (that is to say, it only had a sufficient connection to and harm from the PFWA portion of the CAA to support its participation in the case) to challenge the PFWA.

Potentially, a district court could follow the reasoning in this case and enjoin enforcement of the SECURE 2.0 Act if that case was brought by a plaintiff with proper standing.

That potential has to be tempered by the fact that district court decisions generally are not binding, even on other courts in the same district. (See, e.g., Threadgill v. Armstrong World Indus., 928 F.2d 1366, 1371 (3d Cir. 1991))

What’s next?

The court’s holding that the proxy voting rules are unconstitutional is one that other courts might disagree with.

Before any SECURE 2.0 Act challenges are brought, plaintiffs might want to wait to see how this case proceeds upon appeal.


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