What the Supreme Court Got Right (and Justice Alito Got Wrong) in the Texas ACA Decision

A slightly deeper dive into today's California v. Texas decision rejecting the effort to turn constitutional litigation into a game of Jenga.

This morning, the Supreme Court handed down its long awaited decision in California v. Texas, holding 7-2 that neither the state nor individual plaintiffs had standing to challenge the constitutionality of an individual mandate that lacks any enforcement mechanism and thus lacks any practical effect. As I noted in this morning's post, the ultimate outcome was not particularly surprising -- that Texas would lose, and lose badly, was never much in doubt -- but a seven-justice majority agreeing to resolve the case on standing in an opinion by Justice Stephen Breyer (who is anything but a hawk on standing) was something few expected.

None of this to say the Court was wrong. To the contrary, the Court's majority was absolutely correct to conclude that the plaintiffs could not satisfy the requirements of Article III to bring this suit. As I had argued from the very beginning of this litigation, it is difficult to conceive how anyone can challenge a provision of federal law that has no legal or practical effect. The individual mandate, stripped of a tax penalty, is unenforced and unenforceable. It neither imposes a legal obligation nor threatens a practical consequence to anyone. Therefore, it cannot be the source of a cognizable injury, nor can any of the real harms that the state or individual plaintiffs suffer due to the ACA be traced to this provision.

Article III standing has three elements. 1) An injury-in fact that is (2) fairly traceable to the allegedly unlawful conduct that 3) is likely to be redressed by the requested relief. In ruling against the plaintiff's Justice Breyer's opinion for the Court focused on the second of these elements (supplemented by a brief discussion of the third).

As Breyer summarized: "Neither the individual nor the state plaintiffs have shown that the injury they will suffer or have suffered is 'fairly traceable' to the 'allegedly unlawful conduct' of which they complain." In other words, whatever costs the individual and state plaintiffs faced due to the ACA, none of these burdens were in any way related to (let alone caused by) the existence of an unenforced and unenforceable provision declaring that individuals must obtain qualifying health insurance. Nor could the individual plaintiffs claim that a failure to purchase health insurance would result in any consequence, as there is no longer any penalty for failing to purchase health insurance.

This is basic standing doctrine. If you want to challenge a government command, you must show that failure to heed the government's command will cost you in some way. Tthe plaintiffs failed to cite to a single case to the contrary -- as Justice Breyer noted somewhat pointedly in his opinion -- likely for the simple reason that there is none.  Further, the individual plaintiffs could not show how their alleged injury would be redressable by a favorable court judgment, for a declaration that the mandate is unconstitutonal would not provide them any relief from the actual injury they claimed to suffer.

Justice Breyer then explains why the state plaintiffs fare no better. While the states could identify multiple ways in which various provisions of the ACA impose costs on them, they could not identify any way in which these costs are fairly traceable to the existence of the individual mandate. (And, it should be clear, the state plaintiffs had no argument that these other provisions are unconstitutional.) This was a problem for the states because standing is not dispensed in gross. Rather, as the Court explained in Davis v. Federal Election Commission (among many other cases) "a plaintiff must demonstrate standing for each claim he seeks to press and for each form of relief that is sought." And this was a standard the states  could not meet.

Notably, Justice Breyer did not address the question of whether the states' standing claims should have received "special solicitude" under Massachusetts v. EPA. I hope that this is because (as Ilya suggested earlier today) that the Court is moving away from that part of the Massachusetts holding, but it would have been nice to say so. Justice Alito was entirely correct to complain (citing Massachusetts among other cases) that the Court does not always give state standing claims the most exacting scrutiny. Justice Alito was wrong, however, to suggest that all those bad turns merited another.

Justice Thomas' separate concurrence stressed that the Court's outcome represented nothing more than a faithful and straight-forward application of standing doctrine to the claims pressed by the plaintiffs. As Thomas explained:

The Constitution gives this Court only the power to resolve "Cases" or "Controversies." Art. III, §2. As everyone agrees, we have interpreted this language to require a plaintiff to present an injury that is traceable to a particular "unlawful" action. Ante, at 5, 11, 14–16; post, at 9–10 (ALITO, J., dissenting). And in light of the specific theories and arguments advanced in this suit, I do not believe that the plaintiffs have carried this  burden. As the majority explains in detail, the individual plaintiffs allege only harm caused by the bare existence of an unlawful statute that does not impose any obligations or consequences. Ante, at 5–10. That is not enough. The state plaintiffs' arguments fail for similar reasons. Although they claim harms flowing from enforcement of certain parts of the Act, they attack only the lawfulness of a different provision. None of these theories trace a clear connection between an injury and unlawful conduct.

As Justice Thomas noted, Justice Alito "does not contest" this analysis. Rather, the basis of Justice Alito's dissent is that the state plaintiffs could show standing-by-inseverability. Basically, the idea here is that one can challenge the constitutionality of a statute based on unconstitutional provision A if one is injured by cost-imposing provision B, even if A imposes no injury at all, so long as A and B are inseverable. And, because Court's are to assess standing on the basis of what the plaintiffs allege, the mere claim that A and B are inseverable should be enough to satisfy Article III. The problem, according to both the majority and Justice Thomas, is that this claim was not squarely pressed before the Court (even though it had been raised earlier in the litigation, and I addressed it in this post from 2018 and again last year).

The argument for standing-by-inseverability is clever, and not wholly without theoretical foundation, but it lacks precedent and would completely undercut Article III limits on standing where large regulatory statutes are concerned. Standing simply cannot work the way that Justice Alito wants it to. Were claimed inseverability enough to satisfy Article III, it would become child's play to challenge every provision of every major federal law so long as some constitutional infirmity could be located somewhere within the statute's text. Don't like some provision of Dodd-Frank? Simply find some provision buried in the law that might be constitutionally vulnerable, claim its inseverable from the provision that actually causes you injury and the standing problem is solved.

This is not how standing works, not how standing has ever worked, and would make a mockery of the notion that plaintiffs must demonstrate standing for each claim and relief sought. As the Court noted in Lewis v. Casey, "the actual injury requirement would hardly serve the purpose . . . of preventing courts from undertaking tasks assigned to the political branches[,] if once a plaintiff demonstrated harm from one particular inadequacy in government administration, the court were authorized to remedy all inadequacies in that administration."

This principle notwithstanding, Justice Alito claimed the Court had found standing-by-inseverabiltiy in prior cases, but the decisions he cite don't really make the case. If a plaintiff is harmed by provisions A & B of a statute, but only one is allegedly unconstitutional, it is no big deal for the plaintiff to have standing to challenge both. That's the scenario in most of the modern examples Justice Alito cites, but that was not the case here. (For more on why the Court's precedents do not support the theory or standing-by-inseverability, see pp. 75-77 of this Stanford Law Review article by Kevin Walsh.)

As a technical matter, the Court did not rule against standing-by-inseverability, so the claim could theoretically be revived in a subsequent case. If so, it is unlikely to go anywhere (for reasons I explained in this post). Not only is the theory hard to square with the theory and practice of standing doctrine, but operationalizing it in a future case will be hard to square with the declarations in Justice Breyer's California v. Texas opinion that the individual mandate imposes no cost or consequence on anyone. Claims in Justice Alito's dissent notwithstanding, it is hard to argue that an inoperative and ineffectual provision of law is essential to the operation of (let alone inseverable from) other provisions of the law.

Justice Alito's arguments for standing-by-inseverability are serious, if misguided. Some other parts of his opinion, on the other hand, are inexplicably shallow and poorly argued. Agree with him or not, Justice Alito's opinions are typically quite tightly argued. Part IV of his California v. Texas dissent simply is not.

On the merits of the case, Justice Alito concludes that the ACA provisions that burden states "are inextricably linked to the individual mandate" and are therefore inseverable. On what basis does Justice Alito reach this conclusion? The enacting Congress in 2010 made the individual mandate an essential part of the law's insurance market reforms, and this was fact was repeatedly acknowledged by the Justice Department and the Supreme Court in NFIB.

"Nothing that has happened" since NFIB calls for reconsidering the essential nature of the individual mandate, Justice Alito declares. Really? Nothing? Legislative revision of the law to render the mandate unenforced and unenforceable does not count? Apparently not, even though (as Justice Alito acknowledges in the very same paragraph) eliminating the mandate penalty "fundamentally changed the operation of the scheme Congress adopted."

Justice Alito goes farther to claim that the 2017 revisions to the ACA "cannot plausibly be viewed as the manifestation of a congressional intent to preserve the ACA in altered form." Why not? Because some members of Congress who voted to eliminate the tax penalty wished to repeal the ACA. That they lacked the votes for this outcome and thus, perhaps even if only as a matter of legislative necessity, left the rest of the ACA "in altered form" on the books does not count. It is odd enough that Justice Alito embraces this claim, particularly insofar as elevates imagined reconstruction of legislative intent over the content of the actual legislative enactment. It is odder still that a self-avowed textualist like Justice Gorsuch would endorse it.

Justice Alito also places great weight on the 2010 legislative findings, describing the law before the law was (in Justice Alito's words) "fundamentally changed," and drafted to protect an mandate-enforced-with-a-penalty from Commerce Clause challenge, to support the claim that Congress has instructed that the mandate be inseverable from the rest of the law. "It does not matter that this language appears in a section entitled 'findings' as opposed to a section entitled 'severability,'" Alito declares. This would be a plausible claim were it not completely contradicted by Congress's actual legislative practice.

As Abbe Gluck has shown, Congress is quite clear and consistent when it comes to inseverability clauses. "Congress's established drafting practices, and examples throughout the U.S. Code, make clear that when Congress actually writes an inseverability clause, it is unmistakably explicit about it and uses specific language absent from the ACA." In other words, to claim that the ACA's legislative findings are an inseverability clause, one has to ignore the actual language and context, consistent legislative practice, and what we know about the purposes for which those findings were drafted.

Justice Alito concludes:

No one can fail to be impressed by the lengths to which this Court has been willing to go to defend the ACA against all threats. A penalty is a tax. The United States is a State. And 18 States who bear costly burdens under the ACA cannot even get a foot in the door to raise a constitutional challenge. So a tax that does not tax is allowed to stand and support one of the biggest Government programs in our Nation's history. Fans of judicial inventiveness will applaud once again.

I share Justice Alito's frustrations with the legal legerdemain that has safe-guarded the ACA in prior cases, but it is misplaced here. The legal "inventiveness" in California v. Texas was to be found in the plaintiffs' clever arguments, and those judicial opinions that embraced them.

With the Court's dismissal of California v. Texas on jurisdictional grounds, the last universal challenge to the Affordable Care Act ends not with a bang, but a whimper. This is not the end of ACA litigation, however. Far from it. For reasons I've explained before, the ACA created a perfect storm for ongoing litigation, and ongoing litigation we will see. The difference, however, is that current and future cases will largely concern the administration and enforcement of the ACA, not its underlying architecture. Decisions by Treasury or HHS to implement the law in one way or another will provoke legal challenge, and some of those cases will find their way to One First Street. But these future cases will concern how the ACA operates, not whether it will operate at all. If the ACA is to be reformed or undone, that is a job for Congress. It is no longer a job for the courts.