Justice Alito's Questions in California v. Texas Explain The Likely Aftermath Of a Dismissal on Standing Grounds

Finding that the state plaintiffs and the private plaintiffs lack standing will not settle the constitutionality of the ACA.

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On Tuesday, the Supreme Court heard oral arguments in California v. Texas. I previously wrote about the merits question. Here, I will focus on the standing question. Specifically, what would happen if the Court held that neither the individual plaintiffs nor the state plaintiffs have standing? (I'll presume general familiarity with the case, which I discussed in the Amicus brief I filed for the Cato Institute.)

At first glance, this standing holding may seem like the easiest way to get rid of this case. The individual plaintiffs are not injured by a mandate without a penalty, and the state plaintiffs are not subject to the mandate at all. Easy, right? Not quite.

There are two general postures in which a statute can be challenged. The traditional posture is that a plaintiff seeks a declaration that a law is unconstitutional. Here, the Plaintiff must assert that the statute causes an Article III injury. Generally, the government must take some sort of enforcement action to cause that injury. There is a second, less common posture: the government tries to enforce a statute against a person, and she raises as a defense that statute is unconstitutional. For example, in Bond v. United States, the defendant argued that his prosecution was invalid because a chemical weapons treaty violated the principles of federalism. In this case, Article III standing was obvious because the government sought to prosecute Bond with the statute.  I'll call the first path the offensive posture and the second path the defensive posture.

In California v. Texas, even if the Court holds that the plaintiffs lack standing to challenge the ACA in an offensive posture, a defendant in another case could challenge the ACA in the defensive posture. Justice Alito developed this point out in questions to three of the advocates.

First, consider Justice Alito's colloquy with California Solicitor General Michael Mongan. Texas and other states argued that they incurred certain costs because of the ACA's mandate. For example, the law requires Texas to "calculate Medicaid eligibility" using a new method. And this new method "has greatly increased the number of persons on Medicaid in Texas . . . by about 100,000 persons." Was this cost enough for Article III standing, Alito asked? Mongan replied that these ancillary costs would not be enough. Texas would have to claim an "injury by the provision that they actually allege is unconstitutional." That is, the individual mandate. An injury stemming from the Medicaid provision, Mongan argued, would not provide standing to challenge the mandate.

Justice Alito seemed to disagree. He observed "there is logic to [Texas's] theory of standing." He asked, "why is it conceptually unsound?" Later, Alito asked what "consequences would follow" if Texas did not follow the ACA's method for calculating Medicaid eligibility. Mongan responded that "the federal government could bring some sort of enforcement proceeding against them."

Justice Alito posed another hypothetical. Texas argues that the ACA requires Texas to submit certain reports to the Internal Revenue Service. Assume Texas refused to do so. What are the consequences if the "IRS attempted to assess penalties on state employers for failing to comply with the reporting requirements"? In that situation, could Texas argue that it is not required to follow the reporting requirements, because those requirements "can't be severed from the individual mandate"? Mongan responded that "it's possible" this argument could be raised "as a defense in response" to an enforcement action. But the facts here were different. Texas cannot "establish an Article III injury" based on the individual mandate. 

Second, consider Justice Alito's colloquy with Don Verrilli, the lawyer for the House of Representatives. (Verrilli had argued NFIB v. Sebelius as Solicitor General in 2012). Justice Alito asked about a "very simple statute." The law has "two provisions, (a) and (b)." The plaintiff is "hurt by (b)" but is "not hurt by (a)." And "(a) is unconstitutional." This statute has an inseverability clause that "says if (a) falls, (b) falls too." Justice Alito did not ask whether provision (b) would fall. He asked a different question. "Under those circumstances, would [the plaintiff] lack [Article III] standing to challenge (a)?" Verrilli acknowledged that the Plaintiff in this hypothetical would likely have standing. He said, "that hypothetical definitely tests the limits of our objection to standing through inseverability." Given a "statute like that," he said, "it would be hard to maintain [our] position." In other words, the Plaintiff would likely have standing to challenge (a) and (b).

This concession was significant. Verrilli seemed to suggest that in some cases, a plaintiff injured by (b) would still have standing to challenge (a) if there was a clear inseverability provision. Congress cannot create Article III standing by a statute. Either the Plaintiff suffers an injury in fact, or she does not. Regardless of whether statute has a clear inseverability clause, the Article III analysis would be the same. 

Third, Acting Solicitor General Wall referred to Alito's question during a colloquy with Chief Justice Roberts. He asked the Chief to consider a statute that has a "clearly racially discriminatory provision and an express inseverability clause." Under California's theory, the "plaintiffs regulated by that statute couldn't challenge it." Wall said, "And that doesn't seem right to us. The plaintiffs here have an Article III injury." Wall posed a very similar response to Justice Kagan. What if you had a statute "with an express inseverability provision and an obvious constitutional problem, like racial discrimination." This statute was an "obvious . . . legal nullity." But no one could challenge the statute until the government racially discriminated against a person. "As an Article III standing matter, that doesn't seem right."

Fourth, consider Justice Alito's colloquy with Texas Solicitor General Kyle Hawkins. (Hawkins clerked for Alito). Justice Alito asked Hawkins what would happen if Texas failed to "calculate eligibility based on modified adjusted income." Hawkins replied that "the federal government could bring some action against" Or Texas could be sued by a person who becomes ineligible for Medicaid under the ACA. Justice Alito asked whether "the Affordable Care Act set out any penalties for failing to" perform the correct calculations. Hawkins wasn't sure if the ACA provided any penalty for failing to perform calculations. But the IRS could enforce penalties for failing to comply with the reporting requirements. For example, Texas submitted the form, but did not complete it correctly.

Justice Alito shifted his questioning. He said the "failure to comply" with the reporting requirements "would [result in] a penalty under the Internal Revenue Code, which this Court has suggested is a tax for purposes of the Anti-Injunction Act." Alito asked how there would be standing in light of the Anti-Injunction Act. Hawkins maintained that the Article III injury does not flow from the penalty. Rather, the injury flows from having to prepare the reports. The ACA's "reporting requirement itself inflicts a pocketbook injury on the states. Those forms don't produce themselves." And that "pocketbook injury itself is enough to satisfy Article III." Those injuries, Hawkins continued, "flow from the individual mandate itself and are traceable back to the mandate."

***

Let's combine the questions Justice Alito posed to Mongan, Verrilli, and Hawkins, as well as Wall's response to the Chief Justice. In the future, Texas could shift from the offensive posture to the defensive posture. In the future, Texas simply fail to comply with the IRS reporting requirement.  If the government takes some enforcement action, Texas would argue that (1) the individual mandate is unconstitutional, (2) the mandate cannot be severed from the remainder of the ACA, and therefore (3) the reporting requirements are also unconstitutional. In that case, there would be Article III standing.

And this argument would not be limited to Texas. If the government take an enforcement action against anyone for violating the ACA, the defendant could raise the same three defensive arguments: (1) the individual mandate is unconstitutional, (2) the mandate cannot be severed from the remainder of the ACA, and therefore (3) the particular provision of the ACA is also unconstitutional.

For example, imagine there is a False Claims Act case. The allegation is that someone violated some provision of the ACA. In response, the defendant raises the unconstitutionality of the ACA as a defense. At that point, the Court would have to adjudicate the constitutionality of the ACA. There would unquestionably be Article III standing.

***

If the Court dismisses the case for lack of standing, the controversy would linger. During that time, the fate of the ACA would remain in doubt. Dismissal does not provide an easy way out of this dispute.

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  1. Is there a “de minimis non curat lex” aspect of standing ?

    So, for example, if the 2017 Congress had reduced the penalty to one cent, there would still be an injury, or at least a potential injury if it was enforced. But it would be hard to say that the penalty retained its Robertsian status as a “tax”, since it would no longer be revenue raising (it would cost more than a cent per head to collect.)

    But would the triviality of the one cent penalty render it too small an injury to confer standing ?

  2. If the Court dismisses the case for lack of standing, the controversy would linger.

    But perhaps the Court might be more interested in providing a definitive answer to the question of standing, than a definitive answer to the question of the ACA.

    As far as the Justices are concerned, the question of standing reflects directly on their workload, and the workload of the federal courts generally. Give standing a rigorous pruning and the caseload falls.

    Whereas the ACA – that’s mehsville.

    1. As Justice Barrett mentioned, you can’t sue congress. The named defendants have to have caused the harm or threatened harm. A statute is implicated in the merits when it authorizes the defendants to do something and hence is relevant to determining if it’s lawful.

      But I would argue that the existence or non-existence of a statute, with narrow exceptions like the overbreadth doctrine, is completely irrelevant to whether a plaintiff has standing or not. Standing is generally determined by the defendants’ objective behavior, without regard to the existence of any laws on the books. It doesn’t generally matter whether their behavior is legal or legal. Those are all merits questions. What matters is whether they are doing something that, if illegal, would be harmful to the plaintiff.

      1. Statutes can be relevant to redressability. If a plaintiff’s claim has absolutely bo merit and it’s patently obvious, this could be characterized as a lack of redressability. But this is again an exception, not the general case.

  3. But perhaps the Court might be more interested in providing a definitive answer to the question of standing, than a definitive answer to the question of the ACA.

    Why. I mean, the case is laughable, and only found its way to the Court because of some irresponsibly partisan rulings by lower courts.

    Do we really need another bizarre theory to work its way from Texas through the Fifth Circuit so the Supreme Court can deal with it? How long does the farce go on?

    1. From which I deduce that you are more interested in the Court providing a definitive answer to the question of the ACA, than a definitive answer to the question of standing.

  4. If there were an enforcement action under some other provision of the ACA, that enforcement act would convey standing.

    If that occurred, the Supreme Court could easily hold that, assuming hypothetically that the provision is unconstitutional, it is clearly severable from the enforcible provision, so there is no need to decide the constitutional question in an enforcement action on the other provision. That is, they could decide severability, a statutory matter, without reaching the constitutional question, using an approach similar to the one recently used in Hernandez v. Mesa.

    I think a supermajority of the court is unwilling to let standing based on a clearly constitutional provision of a complex act support an unfettered roving inquiry into any and all other provisions of the act absent an express unseverability clause. As Roberts and Kavanaugh put it, Congress generally prefers a scalpel to a bulldozer, and constitutional adjudication is not a game of gotcha against Congress.

  5. Congress cannot create Article III standing by a statute.

    I am not sure this is right in the sense Prof. Blackman means.

    Congress certainly cannot provide that a person with no Art. III standing has standing.

    But statutes can do things that satisfy the elements of Art. III standing and thus effectively confer standing.

  6. Despite Mr. Blackman’s attempt to resuscitate a doomed case against ACA, a ruling of lack of standing should end this farcical attempt to deny Congress’s ability to regulate health care.

    See, if there is no standing because there is no injury, then no one has standing. As to the claim that states have standing because other provisions than the mandate burden them, get real. The states, thanks to Roberts can opt out of the law with respect to Medicaid, and any other burdens are inconsequential.

    Mr. Blackman makes the best case possible for conservatives to end the law and restrict health care access to low income adults, children, and others but in the end he fails, not because of his abillities but because he is playing a losing hand. We need to end this charade and move on.

  7. It seems that both sides of the PPACA dispute are indeed at the point of asking “How long does the farce go on?” and it is certainly true that “dismissal does not provide an easy way out of this dispute.”

    Grudgingly, most now admit that the PPACA farce began as a result of legislative misbehavior unlikely to be repeated: Gruber and Jost have been discredited and the votes of appointees no longer tip the scales. I agree that “We need to end this charade [of the PPACA] and move on,” yet the zombie PPACA still meanders through taxpayers’ wallets, robbing from workers to pay for the “choices” of Portland addicts and others who lounge in the safety hammock.

    So how do we put ourselves out of our PPACA misery? Or is the fear of bringing health care matters before the legislature as great as the fear of recounting “clearly decisive” votes? My sarcasm boils over: why should an obviously troublesome and defective statute be allowed to linger forever on the docket?!

    1. Grudgingly, most now admit that the PPACA farce began as a result of legislative misbehavior unlikely to be repeated: Gruber and Jost have been discredited and the votes of appointees no longer tip the scales.

      WTF are you talking about?

  8. I hate to agree with Justice Roberts. This is a decision for the legislature, not for a court. I suggest, Health Savings Accounts for all. From birth, everyone gets $3500 or another amount deposited every year into an account invested in an Index Fund, with no decision making by the holder allowed. Then provide government coverage with a $50000 deductible for catastrophic care. That attaches the money to the person, not to a state. The person does the prior authorizations. If the person dies healthy at 90, the heirs get the $2 million. If sick, get healthy, save your own money. Imagine the treatment you would get walking into a doctor’s office waving a checkbook, and not the nightmare of Medicaid.

  9. I’m not sure the simplified versions map one-to-one with the more complex statutes found in reality. But let’s assume they do for a moment. Consider this statute. Section One: In light of the deficit facing this State, effective five years after the enactment of this statute into law, there is hereby imposed a one-time tax of one percent on the net worth of any person then residing in this state. Section Two: With respect to Homer Simpson of Springfield the rate of the tax imposed by Section One shall be five percent rather than one percent. Section Three: Section One and Two are inseverable.

    Simpson dies in a freak accident a year after the statute is enacted (the death has nothing to do with trying to evade the tax), his estate is settle by year three, and his heirs move out of the state by that year in any event. Meanwhile, the State’s budget deficit having gotten even worse in the interim, in year four the State amends section One to provide that the tax rate shall be three percent. Does someone who has to pay that tax have standing to challenge section One on the ground that Section Two is inseverable and unconstitutional? Would it matter if the amendment provided that the tax rate would be 5%? Or 6%

    1. I think the answer to your question is easy — no standing to challenge Section 2.

      Slightly harder is what happens if Homer is alive and challenges it? I would think that the right result would be that the law would be unconstitutional as applied to Homer. Then, since the court could not simply strike Section 2 and enforce Secton 1 against Homer, Homer does not have to pay any tax at all. Consequently, any other citizen could challenge on Equal Protection grounds, and even on a rational basis analysis, the law would be held completely unenforceable.

  10. The faster this case is dismissed the better.

  11. Severability is weird…because its obviously against the spirit of the Constitution and all lawmaking-related horse trading to ever sever parts of bills. Everything is a negotiated compromise.

    Imagine a DACA bill that also has wall funding. SCOTUS finds some part of the DACA portion that violates some part of the Constitution. How does it make sense to cancel one without the other? It was clearly a horsetrade.

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