Affordable Care Act

Fifth Circuit Adds New Wrinkle to Texas ACA Case

What If the Fifth Circuit Concludes It Lacks Jurisdiction to Consider the Appeal?

|The Volokh Conspiracy |

On July 9, the U.S. Court of Appeals for the Fifth Circuit is scheduled to hear oral argument in the appeal of Texas v. U.S., the ambitious lawsuit seeking to use Congress's decision to zero-out the individual mandate penalty as a basis for invalidating the entire Affordable Care Act (ACA). As regular readers know, I'm not much a fan of this suit, and think the district court's decision should eventually be overturned. (Additional prior posts on this litigation and other ACA issues may be found here.)

Today, the U.S. Court of Appeals for the Fifth Circuit issued an order adding an interesting wrinkle to the case. Specifically, the Fifth Circuit asked the parties to address reasons why the court might not have jurisdiction to hear an appeal of the district court's ruling that the entire Affordable Care Act is unlawful.

Here, in relevant part, is the text of the order:

Dear Counsel:

Please file simultaneous supplemental letter briefs (limited to 15 pages) within seven days addressing:

(1) Whether or not the state intervenors and the U.S. House of Representatives have standing to intervene in this appeal, see, e.g., Va. House of Delegates v. Bethune-Hill, No. 18-281 (U.S. June 17, 2019), and whether the interventions were timely as to all issues, including whether the U.S. House of Representatives' intervention was timely as to both orders of the district court;

(2) Whether or not, if none of the intervenors have standing, there is a live case or controversy between the plaintiffs and the federal defendants given their positions on appeal, see United States v. Windsor, 570 U.S. 744 (2013); and

(3) What the appropriate conclusion is if the federal defendants' change in position has mooted the controversy and no other defendant has standing to appeal. See, e.g. U.S. Bancorp Mort. Co. v. Bonner Mall P'ship, 513 U.S. 18 (1994); United States v. Munsingwear, Inc., 340 U.S. 36 (1950).

The attorneys should also be prepared to address these questions at oral argument.

Here are some preliminary thoughts about this order and what could happen next. First and foremost, it's totally normal for courts to be concerned about whether they have jurisdiction to hear a case. (Indeed, courts may be more inclined to focus on such questions when the stakes of the underlying case are high.) This case has an unusual history, so it's understandable that it could raise interesting jurisdictional issues (such as the one Sam Bray flagged).

The reason for the Fifth Circuit's inquiry is that the Justice Department is no longer defending the ACA. After mounting a partial defense of the law and then losing in the district court, the Department of Justice decided to change its position and is no longer challenging the district court decision. That means there is no Defendant-Appellant in the case. Instead, defense of the law (and the primary challenge to the district court's decision) is coming from a group of states that sought to intervene and, as of January, the U.S. House of Representatives. If neither has standing, there may be no basis for an appeal.

There are plenty of reasons to question the House of Representatives' standing, not the least of which are their late entry into the litigation and the Supreme Court's recent Bethune-Hill decision mentioned in the order — but one would think the Intervenor states' standing is solid. After all, states that support the ACA have much more to lose from invalidation of the entire ACA than Texas had to lose from Congress's decision to zero out the mandate penalty. However weak one thinks the standing claim of intervenor states might be, that of the plaintiff states was weaker—at least as an initial matter. One wrinkle here is that the district court decision only granted declaratory relief, raising the possibility that the intervening states will not have standing unless and until the district court grants the plaintiff states a remedy.

All that said, what happens if the Fifth Circuit decides neither the House nor the Intervenor States have standing? In that case, there would be a strong argument that there is no longer a case or controversy—i.e. that the case has become moot—and therefore the court would lack jurisdiction over the appeal. Were the Fifth Circuit to reach this conclusion, it would then have another decision to make.

If the Fifth Circuit concludes it lacks jurisdiction to hear the appeal, it would basically have two choices: 1) Leave the district court decision in place, or 2) Vacate the district court decision. Under the Munsingwear doctrine, the standard practice is to vacate the judgment, so as not to leave in place a decision that was rendered moot before the losing party had sufficient opportunity to appeal. Under later cases, however (such as Bancorp, cited in the Fifth Circuit order), this general rule does not apply when mootness is the result of the voluntary actions of the parties. The primary reason for this is that courts are reluctant to let parties seek to vacate an adverse lower court judgment by seeking to moot the case.

How does Munsingwear apply here? That's a good question. On the one hand, the mootness would be the result of the Justice Department's voluntary decision to embrace the district court's decision. On the other hand, one could argue that the Justice Department's decision not to defend the ACA—and post-decision change of policy—is precisely the sort of strategic behavior that the Munsingwear doctrine and its exceptions are designed to prevent.

One last point. Should the Fifth Circuit decide the case is moot and that it should leave the district court decision in place, it would not be the end of the matter. The district court only provided declaratory relief to the plaintiff states, so the question of whether they are entitled to any form of injunctive relief, such as an order barring enforcement or implementation of the ACA, has yet to be decided. Presumably, if the intervenors lack standing to challenge the existing order, one would expect that intervenor states would have little difficulty establishing standing to challenge an order enjoining operation of the ACA.

At least, this is how I see the issues at the moment (though if there are appellate procedure mavens who think I'm missing something I would like to hear it).

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  1. Could the fifth punt the case directly to SCOTUS on the grounds that the case (a state is a party to the case) falls under the Supreme Court’s original jurisdiction?

    1. No. 28 U.S.C. § 1251(b)(2), the Supreme Court’s original jurisdiction over cases between the state and federal governments is non-exclusive.

      28 U.S.C. § 1254(2) does allow circuit courts to certify questions to the Supreme Court in pending cases, although I can’t see any particular reason why they’d do so here.

  2. I’m not sure I follow your argument that DOJ’s decision not to pursue the appeal should mean the decision below should be vacated. Wouldn’t that effectively allow parties who lose in the trial court to automatically win on appeal, by filing an appeal and then abandoning it?

    1. “Under later cases, however (such as Bancorp, cited in the Fifth Circuit order), this general rule does not apply when mootness is the result of the voluntary actions of the parties. The primary reason for this is that courts are reluctant to let parties seek to vacate an adverse lower court judgment by seeking to moot the case.”

      My guess is the latter cases trigger when it becomes obvious that a party acted as it did specifically to moot the case.

      1. Which, I add, would not be the case here. The DOJ pulled out because the administration wants to undo the ACA.

  3. Common sense says a defendant can’t undo a loss by dropping its appeal and “mooting” the case by pausing its unlawful conduct. So does the law:

    “Where mootness results [because] . . . the losing party has voluntarily forfeited his legal remedy by the ordinary processes of appeal or certiorari, thereby surrendering his claim to the equitable remedy of vacatur[,] [t]he judgment is not unreviewable, but simply unreviewed by his own choice. . . . [T]he case stands no differently than it would if jurisdiction were lacking because the losing party failed to appeal at all.”

    U.S. Bancorp Mortgage Co. v. Bonner Mall P’ship, 513 U.S. 18 (1994). The idea that the DOJ made the ACA impervious to challenge by declining to defend it is wishful thinking.

    Labeling that as “strategic behavior” does not create a free pass out of the Bancorp rule. The fact that a losing defendant not only declines to appeal, but has a change of heart on the issues going forward, does not mean its unreviewed loss stops being a loss.

    1. Mootness only speaks to (3). The Fifth Circuit is hot on “case or controversy” standing under Article III standing, with (2). Regardless of mootness, if there’s no case or controversy, the Fifth Circuit doesn’t have jurisdiction to decide anything. The Plaintiff (Texas et al) sought overturn of the ACA. The Defendant (USA) requested the exact same relief (“For these reasons, this Court should hold that the ACA’s individual mandate will be unconstitutional as of January 1, 2019, and that the ACA’s guaranteed-issue and community-rating provisions are inseverable from the mandate.”)

      What else is there left for the Fifth Circuit to do? I don’t think it needs to vacate the lower court judgment, but US Bancorp certainly doesn’t require the Fifth Circuit to review.

      1. My objection was to vacating a defendant’s loss at the district court because the defendant dropped its appeal and said it would stop its unlawful conduct.

        The question of whether there is a live case or controversy allowing the appeal to continue if the intervenors lack standing is distinct, and I agree the answer to this is less obvious.

    2. I’m sorry, but I do not understand how people are upset at the justice department for not appealing. Isn’t that what they are supposed to do when they find themselves agreeing with the court’s decision? Isn’t that the HOPE of debate in general? That you change the mind of your opponent and that they agree with you?

      The idea that the DOJ should somehow lose or is negligent because they did not appeal a ruling that they decided that they agreed with is absurd.

      Now, I don’t see why the interveners should not get to take up the defense, either, as they are clearly affected by this. That is illogical on its face and just asking for abuse of the system.

      1. The adversarial system is not about a debate between the plantiff and the defense with each trying to convince the other.

        1. The argument that the courts are not a means of resolving disputes between parties is certainly a new one to me.

          Do you have much experience with the law?

  4. I no longer trust the Fifth Circuit to do anything here but pursue a simple agenda. They employed a similar strategy on an issue within my area of practice as they seem to be using here – when the federal agency declined to appeal an adverse ruling, no one else was allowed to intervene, so the decision (with purported national effect) was allowed to stand, notwithstanding the fact that no other circuit considering the same issue agreed with the Fifth. This effectively shielded the Fifth Circuit’s (frankly ridiculous as a matter of statutory interpretation) decision from any kind of appellate review.

    I am shocked that the Fifth Circuit wants to play this game. But it seems to me that they are.

  5. […] Center for Individual Rights. Conservative legal expert Jonathan Adler made a similar point in a post on the Volokh Conspiracy […]

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  10. If the Fifth Circuit finds the Defendants don’t have standing, can they appeal to SCOTUS or is the case remanded back to O’Connor? Likewise, if the Fifth finds the Plaintiffs don’t have standing, is the case vacated or does it also go back to O’Connor at that point?

  11. […] Fifth Circuit Adds New Wrinkle to Texas ACA Case—6/26/19 […]

  12. […] Last week, the Fifth Circuit asked the parties to Texas v. United States—the broadside challenge to the constitutionality of the Affordable Care Act—to submit letter briefs on whether anyone had standing to appeal. (Jonathan Adler has offered excellent analysis of that order here.) […]

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