Fifth Circuit Adds New Wrinkle to Texas ACA Case

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

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).