The Volokh Conspiracy
Mostly law professors | Sometimes contrarian | Often libertarian | Always independent
[Note: This post was coauthored with Professor Josh Blackman.] In an earlier post, Josh noted that Texas v. U.S. reminded him of the film Groundhog Day: "the same script repeats itself over and over again, in slightly different contexts." Indeed, questions Chief Justice Roberts and Justice Kagan asked in 2012 augured, with a remarkable degree of clarity, two issues presented in Texas v. U.S. First, is the mandate separate from the penalty? Second, would someone who is subject to the mandate, but not the penalty, have standing? Josh covered the arguments about these issues on pp. 176-184 of his 2012 book, Unprecedented. Read those pages first, then come back to this post. Still didn't click? Then-Judge Kavanaugh makes a cameo. Go on, click. We'll wait.
Welcome back. On Monday, March 26, 2012, Greg Katsas (now a judge on the D.C. Circuit) argued before the Supreme Court on behalf of NFIB concerning the Anti-Injunction Act question presented. Most people focused on the second day, which considered the constitutional basis of the mandate. However, the first day proved to be the most pivotal for the saving construction. More importantly, for our purposes, it was also a critical day for the issue of standing.
Justice Kagan raised this issue during oral argument in a way that affects the standing issue in Texas. She asked:
Justice Kagan: Mr. Katsas, do you think a person who is subject to the mandate but not subject to the penalty would have standing?
This question, with precision, addresses the facts presented in Texas: the private plaintiffs are subject to the mandate, but do not have to pay a penalty for going uninsured. But, as Justice Kagan's question shows, this dynamic is not new. Indeed, even in 2012, there were some people who were subject to the mandate, but were statutorily exempt from having to pay the penalty: (1) individuals who could not afford coverage, (2) taxpayers with income below the filing threshold, (3) members of Indian tribes, (4) people with short gaps in coverage, and (5) those who have "suffered a hardship" as defined by the Secretary.
Katsas answered that for such people, the mandate standing by itself still causes an injury-in-fact.
Mr. Katsas: Yes, I think that person would, because that person is injured by compliance with the mandate.
Justice Kagan: What would that look like? What would the argument be as to what the injury was?
Mr. Katsas: The injury—when that person is subject to the mandate, that person is required to purchase health insurance. That is a forced acquisition of an unwanted good. It's a classic pocketbook injury.
Consider the declarations of the two private plaintiffs from NFIB, Mary Brown and Kaj Ahlburg. Mary Brown, for example, wrote that she "will be harmed if I am required to obtain and maintain such insurance, which I neither need nor want, or to pay the prescribed penalties for non-compliance." Starting in 2014, the payment of the penalty could have caused a separate Article III injury.
But when the case was being litigated, the penalty had not yet been assessed. Rather, standing was premised on the mandate. Brown wrote, "to comply with the individual insurance mandate, and well in advance of 2014, I must now investigate whether and how to rearrange my personal finance affairs." She added, "in order to comply with the individual mandate I believe that I would have to plan and take appropriate action before 2014 so as to meet its requirements if I am to avoid being penalized for not comply when this requirement becomes effective."
As a general matter, a Plaintiff only has standing to challenge a specific provision of law that provision injures her. The overbreadth doctrine in the First Amendment context serves as an exception to this general rule. It allows persons whose speech may constitutionally be restricted by a statute, and who therefore are not injured, to challenge the statute on the ground that it also reaches the protected speech of others. Ordinarily, however, if you are not injured by a particular provision, you lack standing to challenge it.
The sole basis for Brown's Article III injury was the mandate–not the penalty. Indeed, the government's motion to dismiss in NFIB argued that the private Plaintiffs lacked standing because "the minimum coverage provision . . . will not take effect until 2014 [4 years later] and it is entirely speculative whether the individual plaintiffs will be injured" (page 22) by "the provision." DOJ did not mention in its discussion of standing the role that the penalty, which also would not be collected until 2014, played in the standing analysis. The District Court agreed with the Plaintiffs' arguments. Judge Vinson ruled that Brown and Ahlburg showed they had an injury "because of the financial expense [they would] definitively incur under the Act in 2014," and they needed "to take investigatory steps and make financial arrangements now to ensure compliance then." Once again, there was no discussion of the penalty.
The private plaintiffs maintained this posture throughout the litigation. Their Supreme Court brief explained: "Here, likewise, Private Respondents are not preemptively defending against the 'penalty' that § 5000A(b) would impose [in 2014] if they were to violate the mandate, but instead are attacking § 5000A(a)'s unconditional legal "[r]equirement" to purchase insurance in the first place."
Indeed, the penalty could not provide the injury-in-fact because the Plaintiffs never planned to pay the penalty. Why? Brown and Ahlburg were "law-abiding citizens who intend to comply with the mandate unless it is invalidated." That is why they challenged the mandate–the penalty could never injure them!
Earlier in the argument, Greg Katsas elaborated on this theme in a colloquy with Chief Justice Roberts:
Chief Justice Roberts, Jr.: Why would you have a requirement that is completely toothless? You know, buy insurance or else. Or else what? Or else nothing.
Critics of the Texas litigation likewise routinely describe the mandate as "toothless." Katsas replied in much the same way that the Texas plaintiffs respond.
Mr. Katsas: Because Congress reasonably could think that at least some people will follow the law precisely because it is the law.
Indeed, in support of this claim, the NFIB brief cited the 2008 Congressional Budget Office report, which found that "many individuals . . . would comply with a mandate, even in the absence of penalties, because they believe in abiding by the nation's laws." (Josh discussed that CBO report here.) The brief added, "That finding readily confirms the common-sense proposition that the interest of law-abiding citizens [like Brown and Ahlburg] in challenging burdensome legal requirements exists independently of the sanction that would be imposed for non-compliance." (This argument is precisely the same argument that the Texas plaintiffs advance.)
Some critics, both then and now, think that Katsas's argument was wrong–maybe even silly. During oral argument, Chief Justice Roberts seemed genuinely skeptical. But in his written opinion, Roberts put his skepticism aside. Though he did not directly address the standing question, he had to accept NFIB's position to reach the merits of the challenge to § 5000A(a). Otherwise, the Plaintiffs would have lacked standing to challenge the mandate, and only the mandate in 2010 when the case was filed. But he did not dismiss the case due to a lack of standing. Part III.A of his opinion is necessarily premised on the fact that people are injured by a purchase mandate that has no collateral consequences.
In Part III.A, Chief Justice Roberts concluded that the mandate to purchase insurance cannot be supported by Congress's powers under the Commerce and Necessary and Proper Clauses. That is, he rejected the government's argument that "Congress may order individuals to buy health insurance because the failure to do so affects interstate commerce, and could undercut the Affordable Care Act's other reforms."
However, in this section–which stretches nearly ten pages in length–Chief Justice Roberts makes no mention whatsoever of the penalty. He also does not discuss what would be the crux of Part III.C: that there were no "no legal consequences" for going uninsured. In Part III.A, Roberts necessarily assumes–contrary to the Solicitor General's representation–that under the natural reading of the statute, it is unlawful to go uninsured, even if there are no collateral consequences for doing so other than being a law breaker.
Greg Katsas, arguing on behalf of NIFB, operated on the presumption that this mandate would induce some people to purchase insurance. We read Part III.A of the Chief Justice's opinion as consistent with Katsas's legal argument in NFIB: the mandate and the penalty are separate legal provisions. That is, the mandate stands alone as a command to buy insurance–not having insurance would be unlawful–regardless of whatever collateral legal consequences may follow from engaging in this unlawful (in)activity. And that mandate, by virtue of its enactment, is unconstitutional.
Simply stated, in Part III.A of the controlling opinion, the only possible basis for the private plaintiffs' standing was the injury caused by the mandate, and the mandate alone–that is, by making it unlawful to be uninsured. In Part III.A, the plaintiffs' standing to challenge the requirement was not made to turn on any injury inflicted by the penalty.
Indeed, because the provisions were separate, standing to challenge § 5000A(b) would not have enabled the plaintiffs to piggyback a challenge § 5000A(a). Parties need an independent basis to challenge distinct portions of the law. It was the legal requirement or duty to have insurance, not the penalty for failing to insure, that imposed a burden in the business owners represented by NFIB.
Stated differently, standing to challenge the penalty would not have allowed the plaintiffs to challenge the mandate as a separate legal requirement. Part III.A of Roberts's opinion only works if Katsas was correct, and the "forced acquisition of an unwanted good," in the absence of a penalty, was an injury in fact. Roberts, implicitly at least, adopted NFIB's theory of standing: the mandate cause an injury in fact.
How does this history affect the current litigation? The private plaintiffs in NFIB and the private plaintiffs in Texas assert the same injury. The first Texas plaintiff, John Nantz, declared, "I value compliance with my legal obligations … [t]he repeal of the associated health insurance tax penalty did not relieve me of the requirement to purchase health insurance." The second plaintiff, Neill Hurley, added, "I continue to maintain minimum essential health coverage because I am obligated to comply with the [ACA's] individual mandate."
The Texas plaintiffs suffer an injury-in-fact for the same reason that the NFIB plaintiffs suffered an injury-in-fact: the mandate imposes a legal obligation to purchase insurance, without regard to any collateral legal consequences. Indeed, the Texas plaintiffs have a far more imminent injury in fact: they need to maintain insurance now, whereas the NFIB plaintiffs had to make financial arrangements in the present to purchase insurance in the future.
Chief Justice Roberts's recent decision in the census case may also bear on this analysis. A recent 28(j) letter by the private plaintiffs in Texas explains why:
But the Court held that plaintiff states had "met their burden of showing that third parties will likely react in predictable ways to the citizenship question, even if they do so unlawfully." Slip op. 10. Similarly, here, Individual Plaintiffs' purchase of minimum essential coverage is a likely and predictable reaction to 26 U.S.C. § 5000A(a)'s legal command. Indeed, if the "predictable effect of Government action" (slip op. 11) on private decisionmakers is sufficient to establish traceability for standing even when those decisions are unlawful, the Individual Plaintiffs' lawful decisions to comply with the individual mandate are an even more likely and predictable reaction. The Court relied on evidence introduced at trial that "noncitizen households have historically responded to the census at lower rates than other groups." Slip op. 10. Likewise, plaintiffs' briefs point to similarly objective evidence in the form of two CBO reports (from 2008 and 2017) concluding that some individuals will comply with the mandate absent penalties.
We recognize that the other elements of the standing inquiry may be different in Texas, but Part III.A of NFIB resolved the injury-in-fact question for Nantz and Hurley.
The penalty, however, was important for two other aspects of NFIB. First, if the penalty was in fact a tax, then the Anti-Injunction Act (AIA) provided a statutory bar: suits to enjoin the collection of that revenue could not be filed until the tax was assessed in 2014. The Court agreed with the Solicitor General, and ruled that the penalty, at least for purposes of the AIA, was not a tax. Yet, once the Court cleared the AIA's statutory jurisdictional hurdle, the Plaintiffs would still need to prove that they suffered an injury-in-fact. In 2012, the only possible injury was preparing to comply with the mandate.
Of course, as we discussed in our previous post, the penalty played a second important role in the so-called saving construction. Specifically, in Part III.B of NFIB, Chief Justice Roberts turned to the government's alternate argument based on the taxing power: "Instead, the Government asks us to read the mandate not as ordering individuals to buy insurance, but rather as imposing a tax on those who do not buy that product." Chief Justice Roberts concluded that "[t]he most straightforward reading of the mandate is that it commands individuals to purchase insurance. After all, it states that individuals 'shall' maintain health insurance." However–and this is a huge however–the mandate can be read "as imposing a tax . . . for the reasons set forth below" in Part III.C.
Why is this framing of the alternate argument so critical? Because if the reasons "set forth in" Part III.C no longer hold, then the saving construction supported there is now inapplicable. And indeed, Josh explained here why the saving construction no longer holds. This conclusion is both obvious and well nigh undeniable: (a) a $0 mandate cannot raise revenue, so (b) the "penalty" cannot be upheld as a tax," therefore (c) Chief Justice Roberts's analysis in Part IIIA now applies full force. Namely, his acceptance of NFIB's argument that the standalone mandate is unconstitutional, regardless of the penalty. And the basis for standing in that portion of the opinion is the mandate, and the mandate alone.
Stated simply, Roberts's skeptical questions for Katsas in oral argument, which formed the basis of his saving construction in Part III.C, did not impact, in the least, his Commerce and Necessary and Proper Clause analysis in Part III.A (which we discussed in our previous post). This subtle point–which affects both the standing and merits question–has been lost in virtually all of the discourse about NFIB, and Texas.
This conclusion brings us to Judge O'Connor's analysis. He wrote:
Despite the Intervenor Defendants' logical gymnastics, the undisputed evidence in this case suggests the Individual Mandate fixes an obligation. The Individual Plaintiffs assert they feel compelled to comply with the law. Pls.' App. Supp. Prelim. Inj., Ex. A (Nantz Decl.) ¶ 15, ECF No. 41 ("I value compliance with my legal obligations . . . [t]he repeal of the associated health insurance tax penalty did not relieve me of the requirement to purchase health insurance"); Pls.' App. Supp. Prelim. Inj., Ex. B (Hurley Decl.) ¶ 15, ECF No. 41 ("I continue to maintain minimum essential health coverage because I am obligated to comply with the [ACA's] individual mandate").
Judge O'Connor accurately restated Judge Katsas's argument on behalf of NFIB. Although Chief Justice Roberts asked questions about this position during oral argument, in Part IIIA of his written opinion, he assumed that Katsas's analysis was valid. Judge O'Connor continues:
This should come as no surprise. "It is the attribute of law, of course, that it binds; it states a rule that will be regarded as compulsory for all who come within its jurisdiction." . . . But the fact that many individuals will no longer feel bound by the Individual Mandate does not change either that some individuals will feel so bound—such as the Individual Plaintiffs here—or that the Individual Mandate is still law.
Judge O'Connor's ruling, on both injury-in-fact and the constitutionality of the mandate, is completely consistent with NFIB. Indeed, these topics are closely related. If the mandate does create a legal requirement, then it also creates an injury-in-fact. Under Part III.A of NFIB, the mandate performed both functions in 2012, and still performs both functions today.
Let's sum up this series of blog posts. Texas v. U.S. raises three challenges to the ACA:
- the constitutionality of the individual insurance "requirement" or mandate, after the "penalty" cum tax has been set at $0;
- whether the mandate, without a penalty, creates an injury-in-fact; and
- whether the "requirement," if now unconstitutional, is severable from the rest of the ACA.
In these blog posts we have defended the correctness–or at minimum the reasonableness–of Judge O'Connor's rulings on the first two of these issues: after passage of the TCJA, the individual insurance requirement or mandate is unconstitutional, and in NFIB the Court assumed that the mandate, standing by itself, imposes an Article III injury-in-fact. The third issue is distinct from these two questions.
Of course, we can be completely right about the first two of these questions, and the remainder of ACA would still be constitutional if the individual insurance mandate can be severed from the rest of the Act. But the severability question is only reached and answered correctly if the first two questions are correctly resolved first.