Reply Brief — Pennsylvania Professional Liability Joint Underwriting Association, Petitioner v. Josh Shapiro, Governor of Pennsylvania, et al.

No. 24-1028

In the Supreme Court of the United States

________________

PENNSYLVANIA PROFESSIONAL LIABILITY JOINT

UNDERWRITING ASSOCIATION,

v.

Petitioner,

JOSH SHAPIRO, GOVERNOR OF PENNSYLVANIA,

ET AL.,

________________

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Third Circuit

________________

REPLY BRIEF FOR PETITIONER

________________

KATHERINE C. YARGER

SCOTT A. KELLER

LEHOTSKY KELLER COHN LLP Counsel of Record

700 Colorado Blvd. # 407 STEVEN P. LEHOTSKY

Denver, CO 80206

SHANNON G. DENMARK

LEHOTSKY KELLER COHN LLP

KEVIN J. MCKEON

200 Massachusetts Ave. NW

DENNIS A. WHITAKER

Suite 700

MELISSA A. CHAPASKA

Washington, DC 20001

HMS LEGAL LLP

(512) 693-8350

501 Corporate Cir.

scott@lkcfirm.com

Suite 302

Harrisburg, PA 17011

Counsel for Petitioner

TABLE OF CONTENTS

Table of Authorities .................................................... ii

I.

The circuit split is real, as is the broader

confusion it implicates......................................... 2

II. The decision below was wrong. ........................... 7

III. The

question

presented

has

broad

constitutional importance. ................................ 11

IV. This case is an ideal vehicle. ............................. 13

Conclusion................................................................. 14

(i)

ii

TABLE OF AUTHORITIES

Page(s)

Cases

Arroyo-Melecio v. Puerto Rican Am. Ins. Co.,

398 F.3d 56 (1st Cir. 2005) ............................. 3, 4

Asociación de Subscripción Conjunta del

Seguro de Responsabilidad

Obligatorio v. Flores Galarza,

484 F.3d 1 (1st Cir. 2007) ......................... 2, 4, 12

Biden v. Nebraska,

600 U.S. 477 (2023) ........................................... 11

Ill. Clean Energy Cmty. Found. v. Filan,

392 F.3d 934 (7th Cir. 2004) ....... 2, 3, 4, 5, 10, 12

Kansas v. Glover,

589 U.S. 376 (2020) ........................................... 11

Lebron v. Nat’l R.R. Passenger Corp.,

513 U.S. 374 (1995) ............................................. 8

Okla. Statewide Charter Sch. Bd. v.

Drummond,

Nos. 24-394 & 24-396, 2025 WL 1459364

(U.S. May 22, 2025) ........................................... 11

Pearson v. Callahan,

555 U.S. 223 (2009) ........................................... 12

PPL Corp. v. Commissioner,

569 U.S. 329 (2013) ............................................. 3

iii

PPL Corp. v. Commissioner,

665 F.3d 60 (3d Cir. 2011)................................... 3

Royal Canin U.S.A., Inc. v. Wullschleger,

604 U.S. 22 (2025) ............................................... 3

Tex. Catastrophe Prop. Ins. Ass’n v. Morales,

975 F.2d 1178 (5th Cir. 1992) ..................... 2, 3, 4

Trs. of Dartmouth Coll. v. Woodward,

17 U.S. (4 Wheat.) 518 (1819) ................... 1, 7, 10

Wullschleger v. Royal Canin U.S.A., Inc.,

75 F.4th 918 (8th Cir. 2023) ............................... 3

Statutes & Rules

26 U.S.C. § 501(c)(6) ................................................. 2

Other Authorities

Florida Guaranty Funds and Associations,

MyFloridaCFO, https://perma.cc/P29PL3EB .................................................................. 12

U.S. Amicus Br., Okla. Statewide Charter

Sch. Bd. v. Drummond,

Nos. 24-394 & 24-396, 2025 WL 819548

(U.S. Mar. 12, 2025) .................................... 1, 7, 8

Welcome/History of HPIA, HPIA,

https://perma.cc/H82D-QYTG ........................... 12

The Third Circuit’s opinion centered on this

Court’s 200-year-old opinion in Trustees of Dartmouth

College v. Woodward, 17 U.S. (4 Wheat.) 518 (1819).

So too do Respondents’ oppositions. As the Solicitor

General recently argued in this Court, however, one

cannot ignore the cases this Court has decided since

Dartmouth. Those cases, the Solicitor General

explained, make clear that a “key consideration” in

identifying governmental entities is “control[] by the

State.” U.S. Amicus Br., Okla. Statewide Charter Sch.

Bd. v. Drummond, Nos. 24-394 & 24-396, 2025 WL

819548, at *4 (U.S. Mar. 12, 2025). Respondents fail to

acknowledge, let alone address, the Solicitor General’s

position that governmental control is “critical.” Id. at

*21. And because this Court ultimately affirmed that

case by an equally divided Court, it could not provide

needed guidance on the issue.

But this case presents an ideal vehicle to do so.

Petitioner JUA does not seek to “supplant” or “modify

the Dartmouth College analysis.” Gov.BIO.16, 19.

Rather, JUA seeks this Court’s guidance on how to

resolve recurring issues splitting the circuits that

have developed from Dartmouth and its progeny.

Certiorari is warranted. Respondents’ attempt to

write off the square 3-1 circuit split as the product of

factual differences is belied by the reasoning of the

cases themselves. None of the distinctions

Respondents draw mattered to the legal analysis. The

Third Circuit’s misapplication of this Court’s

precedents

contradicts

Dartmouth,

see

NELF.Amicus.4-14, as well as more recent cases cited

by the Solicitor General making clear that

(1)

2

governmental control is a key consideration in

differentiating private and governmental entities.

And Respondents say nothing about the federal

government recognizing JUA as a distinct entity from

the Commonwealth by granting it 26 U.S.C.

§ 501(c)(6) status. See Pet.6. Respondents try to

minimize Pennsylvania’s $300 million taking as low

“stakes” and a “one-off.” Legis.BIO.23. But the circuit

split demonstrates that States have tried this sort of

money grab before—and presumably will be

empowered to do so again if the Third Circuit’s

blueprint stands. See Pet.4; AMA.Amici.18. And

Respondents’ sole vehicle argument is misguided. The

fact that this case raises federal constitutional

questions is a vehicle feature—not a bug. This Court

should grant certiorari and provide the much-needed

guidance it was not able to provide in Drummond.

I.

The circuit split is real, as is the broader

confusion it implicates.

A. Respondents do not dispute that the First,

Fifth, and Seventh Circuits all held that entities that

were privately funded, privately controlled, and

performed a private function were private. See

Asociación de Subscripción Conjunta del Seguro de

Responsabilidad Obligatorio v. Flores Galarza, 484

F.3d 1, 20 (1st Cir. 2007); Tex. Catastrophe Prop. Ins.

Ass’n v. Morales, 975 F.2d 1178, 1182 (5th Cir. 1992);

Ill. Clean Energy Cmty. Found. v. Filan, 392 F.3d 934,

936-38 (7th Cir. 2004). The Third Circuit here,

meanwhile, determined that such an entity was

governmental. App.4a-5a. Nor do Respondents dispute

that the First, Fifth, and Seventh Circuits—like the

3

Solicitor General—emphasized the absence of

governmental control in their analysis. See ArroyoMelecio v. Puerto Rican Am. Ins. Co., 398 F.3d 56, 62

(1st Cir. 2005); Morales, 975 F.2d at 1182; Filan, 392

F.3d at 937-38. The Third Circuit here, meanwhile,

ignored the absence of governmental control. App.28a35a. Put simply, the Third Circuit’s decision cannot be

reconciled with the decisions of the First, Fifth, and

Seventh Circuits.

Respondents nonetheless dispute the existence of

this split for two reasons, both of which are

unpersuasive.

First, Respondents suggest that there is no split

because the Third Circuit did not say there is a split.

Gov.BIO.13; Legis.BIO.24. But lower courts often

create splits without declaring they are doing so—

including the Third Circuit. Compare, e.g., PPL Corp.

v. Commissioner, 569 U.S. 329, 334 (2013) (granting

certiorari “to resolve a Circuit split”), with PPL Corp.

v. Commissioner, 665 F.3d 60 (3d Cir. 2011) (not

acknowledging split); and Royal Canin U.S.A., Inc. v.

Wullschleger, 604 U.S. 22, 30 (2025) (“grant[ing]

certiorari to resolve [a] Circuit split”), with

Wullschleger v. Royal Canin U.S.A., Inc., 75 F.4th 918

(8th Cir. 2023) (not acknowledging split). That is no

reason to deny certiorari, and lower courts cannot

insulate their opinions from this Court’s review by

refusing to acknowledge a circuit split.

Second, Respondents argue that the cases on the

other side of the split involved “fundamentally

different entities and are, therefore, easily

4

distinguishable.” Gov.BIO.12; see Legis.BIO.24-29.

But the thin distinctions Respondents draw make no

difference to these decisions’ legal analysis, as the

district court correctly recognized. See App.167a

(“[W]e disagree with the General Assembly’s assertion

that these factual distinctions are dispositive.”). 1

Respondents attempt to distinguish the First

Circuit’s case in Asociación and Fifth Circuit’s case in

Morales on the ground that the members of the private

entities in those cases shared in the entities’ profits

and losses. 2 Gov.BIO.13-15; Legis.BIO.25-27. But as

the district court here recognized, that fact was not

“dispositive.” App.167a. “No decision” supports

Respondents’ “contention that an entity’s public or

private status turns on for-profit versus nonprofit

nature.” Id.; see Filan, 392 F.3d at 936-38 (deeming a

nonprofit entity private). Rather, what mattered to

the First and Fifth Circuits was that the entities were

privately funded (like JUA), privately controlled (like

JUA), and exercised a private function (like JUA). See

Pet.18-22, 24.

The Legislative Respondents are therefore wrong to assert

that the district court was “align[ed] with the Third Circuit’s

analysis” in distinguishing the cases on the other side of the split.

Legis.BIO.24 n.8.

1

Respondents also attempt to distinguish the First Circuit’s

Arroyo-Melecio case on the ground that the insurance

association’s “private status was undisputed.” Legis.BIO.26. But

the insurance association’s status was very much disputed in

Asociación, which deemed the association private. 484 F.3d at 20.

2

5

Respondents attempt to distinguish the Seventh

Circuit’s Filan case on the ground that “Illinois did not

create the environmental trust” but merely authorized

its creation. Gov.BIO.15; see Legis.BIO.28 n.10. That

ignores the Seventh Circuit’s statement that

“‘authorized’ []realistically mean[s] … ‘commanded’[]

the company to establish the plaintiff foundation.”

Filan, 392 F.3d at 935. In other words, the State’s

involvement in the creation of the foundation was

“coercive.” Id. at 937. In any event, the Seventh

Circuit made crystal clear that the level of state

involvement in an entity’s creation was not dispositive

in its analysis. Id. at 936. What mattered was instead

that the foundation was privately funded (like JUA)

and privately controlled (like JUA). Id. at. 937-38. 3

Each of these distinctions makes no legal

difference. Like JUA here, the entities in the First,

Fifth, and Seventh Circuit cases were privately

funded, privately controlled, and performed a private

function. See Pet.23. That is what matters under this

Court’s precedents. See infra pp.7-10; Pet.32-33.

B. Respondents do not dispute that courts take

differing approaches to assessing the line between

private and governmental entities in various

constitutional contexts. See Pet.24-28. Respondents

Respondents also attempt to distinguish Filan by

suggesting that “the funds originated as … private property.”

Legis.BIO.28. The same is true of JUA, which “undisputed[ly]”

never “dr[ew] on the public fisc.” App.31a

3

6

deem this confusion irrelevant for two primary

reasons. Neither has merit.

First, the Legislative Respondents argue that

JUA “did not preserve” any argument about broader

confusion in the lower courts. Legis.BIO.22. This

argument is misguided. JUA’s observation about

broader confusion across various constitutional

doctrines is not a “claim[]” that can be waived.

Legis.BIO.29 (citation omitted). Rather, it is a reason

this Court’s discretionary review is warranted to

provide lower courts guidance that this Court was

unable to provide in Drummond. See Sup. Ct. R. 10.

Second, Respondents observe that the line

between private and governmental entities arises in

“different

legal

contexts.”

Legis.BIO.30;

see

Gov.BIO.19-20. True, but that is a cause of the

confusion, not any resolution to it. Respondents fail to

grapple with the fact that the question posed in each

of these constitutional contexts is the same: Is a

particular

entity

private

or

governmental?

Recognizing the similarity of the question, the

Governor below urged the district court to borrow the

standard from a different constitutional context. See

App.159a (“Governor Wolf rejoins that whether a

party asserts or disclaims constitutional liability is ‘an

empty distinction.’” (citation omitted)). The confusion

is undeniable, and this case is a good vehicle to begin

clearing it up.

*

*

*

7

In sum, this case presents both a 3-1 circuit split

as well as broader circuit confusion on this issue

across multiple constitutional doctrines. This Court

should grant review to resolve both.

II. The decision below was wrong.

Respondents wrongly suggest that JUA seeks to

“supplant” or “modify the Dartmouth College

analysis.” Gov.BIO.16, 19. JUA’s argument remains,

as it always has been, rooted firmly in Dartmouth.

Dartmouth recognized that the nature of the entity’s

“funds” is a key factor in determining whether an

entity is private or governmental. 17 U.S. (4 Wheat.)

at 632-33. Dartmouth also stressed the nature of the

entity’s function as another factor—whether it is

exercising “political power” or is involved “in the

administration of the government.” Id. at 629. And,

finally, Dartmouth took care to recognize that

Dartmouth’s trustees “were appointed by, and act

under,” the school’s private founder. Id. at 633.

Subsequent cases in related contexts have not

replaced this analysis but rather confirm its three key

components: whether an entity is privately funded,

whether an entity is privately controlled, and whether

an entity exercises a private function. See Pet.32-33.

This tracks the Solicitor General’s position.

Earlier this Term, the Solicitor General recognized

this Court’s precedents hold that a “key consideration”

in identifying governmental entities is “control[] by

the State.” U.S. Amicus Br., Drummond, Nos. 24-394

& 24-396, 2025 WL 819548, at *4. Respondents fail to

acknowledge, let alone address, the Solicitor General’s

8

position that government control is a “critical” factor

in determining whether an entity is private or

governmental. Id. at *21.

It is no mystery why. Respondents resist the

Solicitor General’s, and JUA’s, distillation of this

Court’s precedents because their argument fails under

it.

First, Respondents do not dispute that JUA’s

board is privately controlled. See Pet.7. Instead, the

Legislative Respondents suggest that “[i]t is hard to

see how this matters.” Legis.BIO.11 n.2. Yet the

Solicitor General just said this is a “key

consideration”—indeed, a “hallmark[]”—in the private

versus governmental analysis. U.S. Amicus Br.,

Drummond, Nos. 24-394 & 24-396, 2025 WL 819548,

at *20, 26. And this Court’s precedents make it easy to

see why. See, e.g., Lebron v. Nat’l R.R. Passenger

Corp., 513 U.S. 374, 399 (1995) (requiring that “the

Government … retains for itself permanent authority

to appoint a majority of the directors”). 4 The

Legislative Respondents’ reliance on vague assertions

of control effected through statute and JUA’s plan of

operations is also misguided. Legis.BIO.11 n.2 As JUA

explained, the control the Commonwealth exercises

over JUA differs little from the general regulatory

The Executive Respondents are therefore wrong to suggest

that Lebron supports their argument. Gov.BIO.19 n.9. JUA is

private under the Lebron analysis because, as JUA argued below

and the district court found, see App. 159a, the Commonwealth

did not “retain[] for itself permanent authority to appoint a

majority of [JUA’s] directors.” 513 U.S. at 399.

4

9

authority it exercises over any other private insurer.

See Pet.6-7.

Second, Respondents do not dispute that all of

JUA’s funds stem from private insurance premiums.

See App.31a (“[I]t is undisputed that the JUA has not

drawn on the public fisc.”). Respondents bizarrely

suggest that the “General Assembly has always

considered the JUA a state instrumentality and the

funds maintained by the JUA state funds.” Gov.BIO.6;

see Legis.BIO.1. But for 42 years, the General

Assembly did not declare JUA or its surplus public in

any law—until it set its sights on JUA’s surplus. See

Pet.9-11. Respondents also suggest that “[n]o entity,

other than the Commonwealth, has an interest in the

JUA.” Gov.BIO.27; see Legis.BIO.2. But as JUA

already

explained,

that

incorrect

assertion

misunderstands JUA’s plan of operations and ignores

the interest JUA’s insureds have in payment of their

insurance claims from JUA’s funds. See Pet.35-36.

Third, Respondents do not dispute that JUA

provides private insurance to private parties. See

Pet.6-7. Respondents resist the private nature of this

function, characterizing JUA as “a governmental tool

the Commissioner could use to regulate the private

market.” Gov.BIO.23 (first emphasis added); see

Legis.BIO.1. That abstracted characterization just

obscures the reality that JUA “is, at its core, an

insurance company.” App.168a. Any business, if

subsequently imbued with governmental power, could

be used to regulate. But before Pennsylvania’s

attempted confiscation, JUA did not itself exercise any

10

“political power” or participate in “the administration

of the government”—nor does it currently. Dartmouth,

17 U.S. (4 Wheat.) at 629.

In the end, Respondents argue that JUA is a

governmental entity because (1) JUA “was created by

the General Assembly,” and (2) JUA plays an

“‘integral role in the administration of the

Commonwealth’s insurance market.’” Gov.BIO.11

(citation omitted). But neither of those features makes

an entity governmental under Dartmouth. Dartmouth

was clear that an entity is not governmental simply

because the State brought about its existence. 17 U.S.

(4 Wheat.) at 638-39. Otherwise, all corporations

would be governmental. See Pet.34. Dartmouth was

also clear that an entity is not governmental simply

because it serves “an object of national concern.” Id. at

634. Otherwise, all charitable entities would be

governmental. See Pet.29-30.

The Executive Respondents resist the first of

these instructions by suggesting that creation under

state statute and incorporation under state statute

are fundamentally different. Gov.BIO.25. They are

not. As the Seventh Circuit explained, “[t]he fact that

the state legislature authorized the creation of [an

entity] does not make [it] a state agency.” Filan, 392

F.3d at 936.

11

III. The

question

presented

constitutional importance.

has

broad

Respondents do not dispute that the question

presented bears on the ability of entities to vindicate

their constitutional rights. See Pet.37-38. Nor do

Respondents dispute the broad range of constitutional

rights the Third Circuit’s decision may prevent an

entity from vindicating—from rights under the

Takings Clause, Due Process Clause, Contract Clause,

and First Amendment (as here) to rights under the

Equal Protection Clause, Commerce Clause,

Guarantee Clause, and Supremacy Clause. See Pet.38.

Respondents instead attempt to diminish the

importance of this case in two ways, both of which fall

flat.

First, the Legislative Respondents suggest that

this is “an intensely fact-bound case in a specialized

area with no broader implications.” Legis.BIO.23.

According to the Legislative Respondents, it is not

worth this Court’s time to clarify the nature of a legal

analysis that involves a “fact-specific determination.”

Legis.BIO.23 (citation omitted). If that were true, this

Court would never grant review in a case to decide

whether an entity is private or governmental. But this

Court frequently grants review in such cases,

including recently. See, e.g., Okla. Statewide Charter

Sch. Bd. v. Drummond, Nos. 24-394 & 24-396, 2025

WL 1459364 (U.S. May 22, 2025); Biden v. Nebraska,

600 U.S. 477, 489-94 (2023). And it also frequently

grants review to clarify constitutional legal principles

implicating undisputed facts in other contexts, as well.

See, e.g., Kansas v. Glover, 589 U.S. 376, 381 (2020)

12

(deciding “whether the facts known to Deputy Mehrer

at the time of the stop gave rise to reasonable

suspicion”); Pearson v. Callahan, 555 U.S. 223, 227

(2009) (deciding whether “petitioners are entitled to

qualified immunity”).

Granting review here would plainly have “broader

implications.” Legis.BIO.23. Many types of entities

may fall near the dividing line between private and

governmental. That includes entities in fields and

industries ranging from energy to education to

healthcare. See Pet.37 (citing cases). And it also

includes other statutorily created insurance

associations in other States. 5 One need look no further

than the cases on the other side of the split to see that

the Commonwealth’s money grab here was not “a oneoff situation.” Legis.BIO.23; see Asociación, 484 F.3d

at 9; Filan, 392 F.3d at 935.

Second, the Legislative Respondents assert that

the “stakes are not high” here. Legis.BIO.34. But JUA

stands to lose $300 million of its funds. See App.3a.

That is more than just “some” money. Legis.BIO.34.

The stakes are high both for JUA in this case, and for

other entities who will fall victim to governments

trying to appropriate their millions in future cases.

See,

e.g.,

Welcome/History

of

HPIA,

HPIA,

https://perma.cc/H82D-QYTG (Hawaii Property Insurance

Association created by the Hawaii Legislature); Florida

Guaranty

Funds

and

Associations,

MyFloridaCFO,

https://perma.cc/P29P-L3EB (Florida Life and Health Insurance

Guaranty Association created by the Florida Legislature).

5

13

IV. This case is an ideal vehicle.

Respondents identify no vehicle problem that

would prevent this Court from resolving the question

presented. Their responses confirm that this case is an

ideal vehicle. The Executive Respondents underscore

that the question presented was thoroughly briefed

over the course of “six years of extensive appellate

litigation.” Gov.BIO.10. And the Third Circuit’s

decision marked a stark departure from cases that

have been on the books for “several decades.”

Gov.BIO.13.

The only vehicle argument Respondents can

muster is an oblique warning that this Court should

not “make the same mistake” as the Pennsylvania

Supreme Court and grant review of a question that

will later be dismissed “‘as having been improvidently

granted.’” Gov.BIO.20 (quoting App.46a). But that

argument fundamentally misunderstands the nature

of this Court’s review of federal constitutional issues.

The Pennsylvania Supreme Court dismissed the

certified question as improvidently granted because

the question of JUA’s status as a private or

governmental entity “‘is one of federal law’” that “is

not … moored in … current state law jurisprudence.”

App.44a-45a (citation omitted). This Court, of course,

has full jurisdiction to decide federal constitutional

questions. There is no possibility this Court will “make

the same mistake” as the Pennsylvania Supreme

Court. Gov.BIO.20. This case presents an important

federal question ripe for this Court’s review.

14

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

SCOTT A. KELLER

Counsel of Record

STEVEN P. LEHOTSKY

SHANNON G. DENMARK

LEHOTSKY KELLER COHN LLP

200 Massachusetts Ave. NW

Suite 700

Washington, DC 20001

(512) 693-8350

scott@lkcfirm.com

KATHERINE C. YARGER

LEHOTSKY KELLER COHN LLP

700 Colorado Blvd. # 407

Denver, CO 80206

KEVIN J. MCKEON

DENNIS A. WHITAKER

MELISSA A. CHAPASKA

HMS LEGAL LLP

501 Corporate Cir., Suite 302

Harrisburg, PA 17011

Counsel for Petitioner

JUNE 2025