If you read the decision (https://ww3.ca2.uscourts.gov/decisions/isysquery/797361df-8d...), it almost entirely focuses on CDL not being legal in general rather than bringing up IA's "National Emergency Library" program. One illustrative quote:

"IA maintains that it delivers each Work “only to one already entitled to view [it]”―i.e., the one person who would be entitled to check out the physical copy of each Work. But this characterization confuses IA’s practices with traditional library lending of print books. IA does not perform the traditional functions of a library; it prepares derivatives of Publishers’ Works and delivers those derivatives to its users in full. That Section 108 allows libraries to make a small number of copies for preservation and replacement purposes does not mean that IA can prepare and distribute derivative works en masse and assert that it is simply performing the traditional functions of a library. 17 U.S.C. § 108; see also, e.g., ReDigi, 910 F.3d at 658 (“We are not free to disregard the terms of the statute merely because the entity performing an unauthorized reproduction makes efforts to nullify its consequences by the counterbalancing destruction of the preexisting phonorecords.”)."