Amicus Curiae Brief — California, et al., Petitioners v. Texas, et al.

i

Nos. 19-840, 19-1019

In the

Supreme Court of the United States

CALIFORNIA, et al.,

Petitioners/Cross-Respondents,

v.

TEXAS, et al.,

Respondents/Cross-Petitioners.

On Writs of Certiorari to the United States

Court of Appeal for the Fifth Circuit

BRIEF OF AMICUS CURIAE CENTER

FOR CONSTITUTIONAL JURISPRUDENCE

IN SUPPORT OF

RESPONDENTS/CROSS-PETITIONERS

JOHN C. EASTMAN

Counsel of Record

ANTHONY T. CASO

Claremont Institute’s Center for

Constitutional Jurisprudence

c/o Dale E. Fowler School of Law

Chapman University

One University Drive

Orange, CA 92866

(877) 855-3330

jeastman@chapman.edu

Counsel for Amicus Curiae

i

QUESTIONS PRESENTED

1. Whether at least one respondent has standing to

challenge the constitutionality of Congress’s ongoing command to buy health insurance.

2. Whether Congress may command Americans to obtain health insurance in the absence of any revenue producing penalty for failing to do so.

3. Whether, considering the 2017 Congress’s decision

to eliminate any penalty yet leave intact both the

mandate and the inseverability clause, any provisions of the ACA remain operative.

ii

TABLE OF CONTENTS

QUESTIONS PRESENTED ....................................... i

TABLE OF AUTHORITIES...................................... iii

IDENTITY AND INTEREST OF

AMICUS CURIAE ...............................................1

SUMMARY OF ARGUMENT .....................................1

ARGUMENT ...............................................................2

I. The Individual Mandate Is an

Unconstitutional Exercise of Federal Power ... 2

II. The Respondents Have Article III Standing

to Assert Their Claims ..................................... 6

III.The Mandate Is Inseverable from the Rest

of the Affordable Care Act ................................ 9

CONCLUSION .......................................................... 12

iii

TABLE OF AUTHORITIES

Cases

Alaska Airlines, Inc. v. Brock,

480 U.S. 678 (1987)................................................ 10

Burwell v. Hobby Lobby Stores, Inc.,

573 U.S. 682 (2014)..................................................1

Little Sisters of the Poor Saints Peter & Paul Home

v. Pennsylvania, No. 19-431 (pending) ...................1

Lujan v. Defs. of Wildlife,

504 U.S. 555 (1992)..................................................6

M’Culloch v. Maryland,

17 U.S. (4 Wheat.) 316 (1819) .................................3

Massachusetts v. E.P.A.,

549 U.S. 497 (2007)..................................................6

Murphy v. NCAA,

138 S. Ct. 1461 ................................................. 11, 12

NFIB v. Sebelius,

567 U.S. 519 (2012).......................................... 1, 3, 5

Rumsfeld v. Forum for Acad. & Inst'l Rights, Inc.,

547 U.S. 47 (2006)....................................................7

Texas v. United States,

945 F.3d 355 (5th Cir. 2019) ................................. 10

United States v. Kahriger,

345 U.S. 22 (1953)....................................................5

Zubik v. Burwell,

136 S. Ct. 1557 (2016)..............................................1

iv

Statutes and Constitutional Provisions

26 U.S.C. § 36B.......................................................... 11

26 U.S.C. § 4980H ..................................................... 11

26 U.S.C. § 5000A(a) ...................................................8

26 U.S.C. § 5000A(c) ....................................................8

26 U.S.C. § 5000A(e) ...................................................8

42 § 300gg .................................................................. 11

42 § 300gg-14(a)......................................................... 11

42 U.S.C. § 1303 ..........................................................9

42 U.S.C. § 1396a(a)(10)(A)(i)(VIII) .......................... 11

42 U.S.C. § 18071 ...................................................... 11

42 U.S.C. § 18091 ...................................................... 10

42 U.S.C. § 18091(2) .............................................. 5, 12

42 U.S.C. § 18091(2)(C) ............................................. 11

U.S. Const. Art. I, § 7 ..................................................3

U.S. Const. Art. I, § 9 ..................................................4

Other Authorities

Congressional Budget Office, Key Issues In

Analyzing Major Health Insurance Proposals

(Dec. 2008) ...............................................................8

Klock, Mark, The Taxing Power of the Federal

Government and the General Welfare: What Are the

Limits in the Wake of NFIB v. Sebelius?,

76 U. Pitt. L. Rev. 325 (2015) ..................................4

v

Magarian, Gregory, Chief Justice Roberts’s

Individual Mandate: The Lawless Medicine of

NFIB v. Sebelius,

108 NW. U.L. Rev. Colloquy 15 (2013) ...................4

Petition for Writ of Certiorari, California et al. v.

Texas et al. (Dkt. No. 19-840) .......................... 5, 6, 7

Sandefur, Timothy, So It’s A Tax, Now What?: Some

of the Problems Remaining After NFIB v. Sebelius,

17 Tex. Rev. L. & Pol. 203 (2013) ............................4

Tau, Byron, “Flashback: Obama ‘absolutely’ rejected

mandate as a tax,” Politico.com (June 28, 2012) ....3

Tau, Byron, “Obama Campaign: It’s a penalty, not a

tax,” Politico.com (June 29, 2012) ...........................3

Rules

S. Ct. Rule 37.2 ............................................................1

S. Ct. Rule 37.6 ............................................................1

1

IDENTITY AND INTEREST OF

AMICUS CURIAE1

Amicus Center for Constitutional Jurisprudence

is the public interest law arm of the Claremont Institute, whose stated mission is to restore the principles

of the American founding to their rightful and preeminent authority in our national life, including the principle at issue in this case that Congress has been delegated only limited, enumerated powers. The Center

for Constitutional Jurisprudence has participated as

amicus curiae before this Court in several related

cases addressing the constitutionality of the Affordable Care Act, namely, NFIB v. Sebelius, 567 U.S. 519

(2012); Burwell v. Hobby Lobby Stores, Inc., 573 U.S.

682 (2014); Zubik v. Burwell, 136 S. Ct. 1557 (2016);

and Little Sisters of the Poor Saints Peter & Paul

Home v. Pennsylvania, No. 19-431 (pending).

SUMMARY OF ARGUMENT

In 2010, Congress passed the Affordable Care

Act, which included an individual mandate commanding all Americans to obtain health insurance or pay a

fine for noncompliance with the mandate. The constitutionality of the Act in general and the mandate in

particular was tenuous at best, and a majority of this

Court agreed that the mandate was not a valid exercise of Congress’s power under the Commerce Clause,

even as augmented by the Necessary and Proper

Clause. A different majority determined that the mandate could be treated as a tax, however, and held that

Pursuant to Rule 37.2, this brief is filed with the consent of all

parties. Pursuant to Rule 37.6, Amicus Curiae affirms that no

counsel for any party authored this brief in whole or in part, and

no person other than Amicus Curiae, its members, or its counsel

made a monetary contribution to its preparation or submission.

1

2

as a tax it was constitutionally permissible, despite

the fact that such a determination raised constitutional problems of its own.

Even that slim and constitutionally problematic

reed was eliminated in 2017, when Congress passed

the Tax Cut and Jobs Act. The TCJA amended the Affordable Care Act by removing the fine for noncompliance with the individual mandate but keeping the

mandate itself. Absent the fine, this Court’s prior determination that the mandate could be treated as a

tax is no longer sustainable, and the mandate itself is

therefore unconstitutional.

The continuing legal obligation to comply with

the mandate, even absent a penalty for failure, imposes financial obligations on both the individual and

State plaintiffs that are more than sufficient to confer

standing.

Finally, because Congress itself described the

mandate as “essential” to the overall statutory

scheme, the remainder of the Act must likewise be

deemed unenforceable.

ARGUMENT

I.

The Individual Mandate Is an Unconstitutional Exercise of Federal Power

The federal government is “one of enumerated

powers;” it thus “can exercise only the powers granted

to it.” M’Culloch v. Maryland, 17 U.S. (4 Wheat.) 316,

405 (1819). In NFIB v. Sebelius, a majority of this

Court found that the Affordable Care Act was an unconstitutional exercise of power under the Commerce

Clause, even as augmented by the Necessary and

3

Proper Clause. NFIB, 567 U.S. at 520 (opinion of Roberts, C.J.); id. at 657 (joint dissent of Scalia, Kennedy,

Thomas, and Alito, JJ.). A different majority of the

Court nevertheless upheld the ACA as a valid exercise

of the federal government’s taxing power, despite the

fact that the Congress which adopted the Act and the

President who signed it disavowed claims that it was

a tax, both before and after the Court’s decision.

NFIB, 567 U.S. at 570; id. at 589 (Ginsburg, J., joined

by Breyer, Sotomayor, and Kagan, JJ., concurring in

Part III.C); see also, e.g., Byron Tau, “Obama Campaign: It’s a penalty, not a tax,” Politico.com (June 29,

2012);2 Byron Tau, “Flashback: Obama ‘absolutely’ rejected mandate as a tax,” Politico.com (June 28,

2012).3 This majority reached this conclusion only because it found that the penalty imposed for failure to

comply with the individual mandate had the “essential feature of any tax: it produce[d] at least some revenue for the Government.” Id. at 564.

The decision has been widely criticized as having

manufactured a taxing power foundation for the Affordable Care Act, which raised constitutional problems of its own, including that the bill did not originate in the House as required by Article I, Section 7,

or that it would be a direct tax that was not apportioned according to population as required by Article

I, Section 9. See, e.g., Mark Klock, The Taxing Power

of the Federal Government and the General Welfare:

What Are the Limits in the Wake of NFIB v. Sebelius?,

2 Available at https://www.politico.com/blogs/polit-

ico44/2012/06/obama-campaign-its-a-penalty-not-a-tax-127721.

3 Available at https://www.politico.com/blogs/politico44/2012/06/

flashback-obama-absolutely-rejected-mandate-as-a-tax-127545.

4

76 U. Pitt. L. Rev. 325, 355-56 (2015) (“the Chief Justice... argued that Congress has the power to impose a

not-apportioned tax for doing nothing. I believe this

portion of the opinion is unpersuasive, incomplete,

and without support from the Constitution”); Timothy

Sandefur, So It’s A Tax, Now What?: Some of the Problems Remaining After NFIB v. Sebelius, 17 Tex. Rev.

L. & Pol. 203, 237 (2013) (“NFIB... resulted in an illogical opinion that withdraws the Court from its

proper constitutional role, and does so solely as a function of political considerations”); Gregory Magarian,

Chief Justice Roberts’s Individual Mandate: The Lawless Medicine of NFIB v. Sebelius, 108 NW. U.L. Rev.

Colloquy 15, 35 (2013) (“The Chief Justice’s opinion

exemplifies lawless judicial decisionmaking, in both

the descriptive sense of failing to state or justify legal

conclusions and the normative sense of violating bedrock legal precepts”); see also NFIB, 567 U.S. at 669

(“rewriting [the mandate] as a tax in order to sustain

its constitutionality would force us to confront a difficult constitutional question: whether this is a direct

tax that must be apportioned among the States according to their population. Art. I, § 9, cl. 4. Perhaps

it is not (we have no need to address the point); but

the meaning of the Direct Tax Clause is famously unclear, and its application here is a question of first impression that deserves more thoughtful consideration

than the lick-and-a-promise accorded by the Government and its supporters.”).

But even that thin reed is no longer available.

With the passage of the Tax Cut and Jobs Act in 2017,

Congress repealed the penalty, stripping the mandate

of its revenue-producing feature. Without the revenue

production, however, the individual mandate no

5

longer has the “essential feature of any tax.” Yet without that “tax” hook, the Commerce Clause holding of

the other majority in NFIB is controlling: the individual mandate cannot be sustained as an exercise of the

power to regulate commerce among the States, even

as augmented by the Necessary and Proper Clause.

Petitioners nevertheless argue that the individual mandate can still be viewed as an exercise of Congress’s taxing power, “albeit one whose practical operation is currently suspended.” Petition for Writ of Certiorari, California et al. v. Texas at al., at 32 (Dkt. No.

19-840). Petitioners go so far as to argue that “there is

nothing unconstitutional about leaving [the individual mandate] on the books so that Congress can more

easily increase the amount of the tax again later if it

decides to do so.” Id. at 32-33. But the constitutionality of a law is not assessed by what it might become at

some point; it is assessed by how the law is written

currently.

Further, the taxing power is not so broad as to encompass every statute even marginally relating to a

tax. This is contrary to the majority opinion in NFIB,

which found that the “essential feature of any tax” is

revenue production. NFIB, 567 U.S. at 564 (citing

United States v. Kahriger, 345 U.S. 22, 28, n. 4 (1953)).

In Kahriger, the decision upon which the NFIB majority relied, the Court found that “regardless of its regulatory effect,” a wagering tax “produce[d] revenue”

and therefore was a valid exercise of the taxing power.

Kahriger, 345 U.S. at 28. The same cannot be said for

the mandate after the 2017 amendment; instead, the

mandate is now a regulation that produces no revenue. See 42 U.S.C. § 18091(2) (describing the mandate

6

as “an essential part of this larger regulation of economic activity” and “essential to creating effective

health insurance markets”) (emphasis added). The individual mandate is clearly a regulation, not a tax.

The individual mandate thus cannot be an exercise of the taxing power. And the Commerce and Necessary and Proper Clauses have already been held to

be constitutionally insufficient to support the individual mandate. Therefore, the mandate is not a law that

Congress had the constitutional power to enact.

II. The Respondents Have Article III Standing

to Assert Their Claims.

To establish Article III standing a “plaintiff must

have suffered an injury in fact—an invasion of a legally protected interest which is ... concrete and particularized.” Lujan v. Defs. of Wildlife, 504 U.S. 555,

560 (1992) (internal marks omitted). A state’s legal interest has been interpreted so broadly as to include

“all the earth and air within its domain.” Massachusetts v. E.P.A., 549 U.S. 497, 519 (2007). Thus, as Petitioners themselves concede, a “fiscal injury caused

by a federal statute or policy can of course be a basis

for state standing.” Pet. for Cert. at 30 (Dkt. No. 19840).

Respondents include two classes of plaintiffs that

each possess sufficient interests to confer standing.

There are individual plaintiffs who will suffer financial harm if the individual mandate commands them

to obtain insurance. And there are State plaintiffs

who will suffer the additional financial injury due to

individuals enrolling in state Medicaid and CHIP

plans to comply with the individual mandate. While

the grounds for standing are separate, each turns on

7

whether the individual mandate is a command to obtain insurance. Even so, “the presence of one party

with standing is sufficient to satisfy Article III’s caseor-controversy requirement.” Rumsfeld v. Forum for

Acad. & Institutional Rights, Inc., 547 U.S. 47, 53 n. 4

(2006).

Petitioners challenge whether Respondents suffered an injury that could give rise to Article III standing. They argue that there were no fiscal injuries because the amended individual mandate “encourages

Americans to buy health insurance but does not compel anyone to do anything.” Pet. for Cert. at 13 (Dkt.

No. 19-840). Quite frankly, Petitioners’ argument

treats a clear command of the law as merely hortatory

merely because it is not accompanied by a penalty, but

that is not the way law is supposed to work.

While the removal of the penalty for noncompliance dramatically changes the constitutional foundation on which this Court previously upheld the mandate, it does not change the fact that the individual

mandate cannot be read any other way than as a command to obtain insurance, and that is true whether or

not a penalty is affixed for non-compliance. Congress

could have removed the individual mandate, or turned

it into a mere recommendation, but it did not. Reading

the individual mandate differently simply because

Congress eliminated the fine for noncompliance is inconsistent with the actual language of the statute.

The statute reads:

Requirement to maintain minimum essential

coverage.--An applicable individual shall for

each month beginning after 2013 ensure that

the individual, and any dependent of the indi-

8

vidual who is an applicable individual, is covered under minimum essential coverage for

such month.

26 U.S.C. § 5000A(a) (emphasis added).

The individual mandate’s command was, moreover, never dependent on the fine for noncompliance. If

it was, the period would have begun in 2014, the first

year that the fine for noncompliance was imposed. See

26 U.S.C. § 5000A(c) (phasing in the fine for noncompliance in 2014). But the mandate began in 2013, a

year before the fine for noncompliance began. This

demonstrates that the individual mandate was a command to obtain insurance from the outset, quite apart

from the existence of a penalty for noncompliance.

Further, the individual mandate never imposed a

penalty on certain classes of people. See 26 U.S.C. §

5000A(e)(1)-(5). In a report issued before the passage

of the ACA, the Congressional Budget Office stated

that “[m]any individuals” who are subject to the mandate, but are not subject to the penalty, will obtain

coverage in order to comply with the mandate “because they believe in abiding by the nation’s laws.”

Congressional Budget Office, Key Issues In Analyzing

Major Health Insurance Proposals (Dec. 2008),

https://tinyurl.com/CBO2008Report. This report implies that persons who were not subject to the fine for

noncompliance would nevertheless need to obtain

health insurance to comply with the individual mandate. This report also demonstrates fiscal injury suffered by persons merely because they were subject to

the individual mandate and not merely because they

could be fined for noncompliance.

9

The individual mandate was always a command

to purchase insurance, independent of the fine for

noncompliance. This command causes financial injury

to anyone who, in order to comply with the law, purchases insurance he would not otherwise have purchased. It also causes financial injury to States, which

bear some of the financial burden from a greater number of persons enrolling in government-run and government-funded insurance programs like Medicaid

and CHIP. Because the individual mandate causes financial injury, the respondents clearly had Article III

standing to challenge its constitutionality.

III. The Mandate Is Inseverable from the Rest of

the Affordable Care Act

In NFIB, the four Justices who would have held

the individual mandate to be unconstitutional proceeded to address whether, if the mandate were unconstitutional, it was severable from the remainder of

the Act. They determined it was not, stating that “all

other provisions of the [Affordable Care Act] must fall

as well.” NFIB, 567 U.S. at 691 (joint dissent). No

other Justice in NFIB indicated otherwise.4

The determination in the NFIB joint dissent is in

accord with this Court’s severability doctrine. When

evaluating severability, the Court looks to “whether

The NFIB majority that upheld the constitutionality of the

mandate did not need to, and therefore did not, address severability in the context of the mandate. Chief Justice Roberts did

address severability with respect to the Medicaid Expansion provision, which seven members of the Court held to be unconstitutional, but found that the Medicaid Expansion provision was severable based on a provision in the Medicaid Act not relevant to

the individual mandate. See NFIB, 567 U.S. at 586 (quoting 42

U.S.C. § 1303).

4

10

the statute will function in a manner consistent with

the intent of Congress.” Alaska Airlines, Inc. v. Brock,

480 U.S. 678, 685 (1987). “The inquiry is eased when

Congress has explicitly provided for severance by including a severability clause in the statute.” Id. at

686.

Instead of a severability clause applicable to the

individual mandate, the Affordable Care Act has what

amounts to an inseverability clause. The clause states

that “[the individual mandate] is an essential part of

this larger regulation of economic activity” and “essential to creating effective health insurance markets.”

42 U.S.C. § 18091(2)(I), (J) (emphasis added). The dissent in the court below argued that this is not an inseverability clause because it does not follow the form

set forth in the Senate Legislative Drafting Manual.

See Texas v. United States, 945 F.3d 355, 420 (5th Cir.

2019). The guidance that one house of Congress set

out for itself in that manual is not binding even on

that house, of course, much less on the whole Congress

or on this Court. But this case does not involve a

“form” inseverability clause. Rather, the statute contains findings that describe the mandate, and no other

provision of the Act, as “essential.” Thus, those findings by Congress that the mandate is “essential” to the

overall statutory scheme should be treated as an inseverability clause when, as should be the case here, the

mandate is deemed invalid.

Even if the Court declines to read 42 U.S.C.

§ 18091(2) as an inseverability clause, the Court

should still find the rest of the ACA inseverable from

the mandate. In a recent opinion analyzing severability, the Court found a statute prohibiting the licensing

11

and authorization of sports betting operations unconstitutional. See Murphy v. NCAA, 138 S. Ct. 1461

(2018). The Court found that if the prohibition on licensing and authorization of sports betting operations

was struck down while a prohibition on the operation

of sports betting operations in the same statutory

scheme was left standing, “the result would be a

scheme sharply different from what Congress contemplated.” Id. at 1483. The Court also found that the provisions were “meant to work together.” Id. at 1482.

Thus, the Court reasoned that the provisions were inseverable and struck down the entire statutory

scheme. Id. at 1484.

Like the statutory scheme in Murphy, the Affordable Care Act has many provisions that were “meant

to work together.” See NFIB, 567 U.S. at 696 (joint

dissent) (quoting, e.g., 42 U.S.C. § 18091(2)(C)) (“In at

least six places, the Act describes the Individual Mandate as working ‘together with the other provisions of

[the Affordable Care Act]’”). Congress included many

regulations in the Affordable Care Act that addressed

the fiscal consequences of the mandate. See 42 U.S.C.

§ 1396a(a)(10)(A)(i)(VIII) (expanding Medicaid); see

also 26 U.S.C. § 36B & 42 U.S.C. § 18071 (implementing federal subsidies); 26 U.S.C. § 4980H (requiring

employer with at least 50 employees to provide health

insurance or pay a financial exaction); 42 §§ 300gg300gg-4 (community rating provisions); 42 § 300gg14(a) (allowing dependent children up to age 26 to

stay on their parents plans). For instance, the community rating provision establishes community premium

rates and prevents insurers from offering different

premiums based on characteristics like medical history or gender. 42 §§ 300gg-300gg–4. All these provisions (at least in theory) worked together with the

12

mandate to create affordable health insurance so that

persons who in the past would have had to pay very

large premiums could afford to comply with the mandate. The intent was that all of these provisions were

created specifically to allow the mandate to function.

See NFIB, 567 U.S. at 694-96 (joint dissent) (“Congress did not intend to establish the goal of near-universal coverage without regard to fiscal consequences”).

Even if 42 U.S.C. § 18091(2) is not an inseverability clause, therefore, it is at the very least strong evidence that the ACA without the mandate would be a

“scheme sharply different from what Congress originally contemplated.” See Murphy, 138 S. Ct. at 1483.

This, combined with the Affordable Care Act’s many

provisions addressing the fiscal impact of the mandate, proves that Congress’s intent when passing the

Affordable Care Act revolved around its most essential provision: the mandate. Thus the Affordable Care

Act must be struck down in entirety

CONCLUSION

The Court should affirm in part the Fifth Circuit’s

judgment and hold that the individual mandate as

currently constituted is unconstitutional, and then affirm the district court’s holding that the remainder of

the statute is not severable from the mandate.

13

July 2020

Respectfully submitted,

JOHN C. EASTMAN

Counsel of Record

ANTHONY T. CASO

The Claremont Institute’s Center

for Constitutional Jurisprudence

c/o Chapman University

Fowler School of Law

One University Drive

Orange, CA 92866

(877) 855-3330

jeastman@chapman.edu

Counsel for Amicus Curiae