Tag: amicus briefs

Cato’s Final Obamacare Brief — on the Individual Mandate — Joined by 16 Other Groups and 333 State Legislators

With the scheduled three days of oral argument six weeks away, Cato filed its fourth and final Supreme Court amicus brief in the Obamacare saga, this time on the most critical issue: the constitutionality of the individual mandate. Alongside Pacific Legal Foundation, Competitive Enterprise Institute, 14 other organizations, and a bipartisan group of 333 state legislators, we urge the Court to affirm the Eleventh Circuit’s ruling that the mandate exceeds Congress’s power to regulate interstate commerce.

Under modern doctrine, regulating intrastate economic activity can be a “necessary” means of carrying out Congress’s regulatory authority (as that term is understood under the Necessary and Proper Clause) if, in the aggregate, it has a substantial effect on interstate commerce. But the obvious corollary is that regulating non-economic activity cannot be “necessary,” regardless of its economic effects. And a power to regulate inactivity – to compel activity – is even more remote from Congress’s commerce power.

The government characterizes not being insured as the activity of making an “economic decision” of how to finance health care services, but the notion that probable future participation in the marketplace constitutes economic activity now pushes far beyond existing precedent. Further, that definition of “activity” leaves people with no way of avoiding federal regulation; at any moment, we are all not engaged in an infinite set of activities. Retaining the categorical distinction between economic and non-economic activity limits Congress to regulating intrastate activities closely connected to interstate commerce – thus preserving the proper role of states and preventing Congress from using the Commerce Clause as a federal police power.  The categorical distinction also provides a judicially administrable standard that obviates fact-based inquiries into the purported economic effects and the relative necessity of any one regulation, an exercise for which courts are ill-suited.

Finally, the mandate violates the “proper” prong of the Necessary and Proper Clause in that it unconstitutionally commandeers the people – and in doing so, circumvents the Constitution’s preference for political accountability. The Constitution permits Congress to intrude on state and popular sovereignty only in certain limited circumstances: when doing so is textually based or when it relates to the duties of citizenship. For example, Congress may require people to respond to the census or serve on juries. In forcing people to engage in transactions with private companies, the individual mandate allows Congress and the president to evade being held accountable for what would otherwise be a tax increase. In improperly commandeering citizens to engage in economic activity, the mandate obscures Obamacare’s true costs and thus avoids the political accountability and transparent budgeting that the Constitution demands.

The mandate is thus neither a necessary nor proper means for carrying into execution Congress’s power to regulate interstate commerce. Upholding it would fundamentally alter the relationship of the federal government to the states and the people; nobody would ever again be able to claim plausibly that the Constitution limits federal power.

Obamacare Challenge Not Barred By a Weird Technicality

Cato’s third Supreme Court brief in the Obamacare litigation concerns the issue of whether the federal tax Anti-Injunction Act prevents federal courts from timely reviewing Congress’s most egregious attempt to exceed its power to regulate interstate commerce. The AIA bars courts from enjoining “any tax” before that tax is assessed or collected.

One would think that such a law would have no application to the penalty that enforces the individual health insurance mandate, which is not a tax but rather a punishment for not complying with the mandate. Accordingly, most of the courts to consider the issue have found the AIA to be inapplicable to individual mandate challenges. Moreover, the government itself has long conceded that the AIA does not bar these suits.

A Fourth Circuit majority and the dissenting Judge Brett Kavanaugh in the D.C. Circuit, however, reached a contrary conclusion, reasoning that the AIA applies to all exactions assessed under the Internal Revenue Code, including “penalties.” Out of an abundance of caution, and because the AIA may be a jurisdictional bar, the Supreme Court appointed an amicus curiae to argue for the position that the AIA bars these suits.

The plaintiffs here — the 26 states, the National Federation of Independent Business, and several individuals — have advanced several strong arguments for why the AIA doesn’t apply. Cato’s brief expands on one of those arguments: that the words “any tax” in the AIA do not include “penalties” simply because they may be codified in the Code.

First, we demonstrate that the Supreme Court has always held that “taxes” and “penalties” are not interchangeable for AIA purposes. Second, we show that, with one exception, all of the cases cited in the amicus briefs filed by two former IRS commissioners, Mortimer Caplin and Sheldon Cohen — which appear to have heavily influenced the Fourth Circuit and Judge Kavanaugh — concerned penalties that were statutorily defined as taxes. This refutes the commissioners’ erroneous claim that those cases concerned penalties that were not defined as taxes. As we say in our brief, “the influence of Amici Caplin & Cohen’s [D.C. Circuit] brief is surpassed only by its misdirection.” The one exception is the Mobile Republican case (Eleventh Circuit 2003), which we explain is properly understood as applying the AIA to penalties that enforce substantive tax provisions.

In short, the AIA cannot bar suits to enjoin the individual mandate penalty because that penalty neither is defined as a tax nor enforces a substantive tax provision.

Thanks very much to Cato legal associate Chaim Gordon for taking the lead in drafting this brief and helping me with this blogpost.

The ‘Law of Nations’ Is What It Was in 1789

One of our oldest laws, the Alien Tort Statute (1789), grants federal courts jurisdiction over lawsuits brought by aliens for actions “in violation of the law of nations.” Courts have differed in their method of interpreting this “law of nations” – an old way of saying “international law” – and thus in their decisions on what behavior violates it and the types of defendants who may be liable. Recent ATS litigation has thus ignited a debate over the role of judges in applying international law.

Kiobel v. Royal Dutch Petroleum presents the question of whether, under the ATS, the law of nations can be applied against an entity that is not a natural person: a corporation. In this case, 12 Nigerians sued Royal Dutch and its Shell subsidiaries, alleging that Nigerian soldiers committed human rights abuses on the companies’ behalf between 1992 and 1995, purportedly in response to demonstrations against oil exploration.

The district court dismissed most of the claims but let certain others proceed. The Second Circuit dismissed the case entirely, holding that the ATS’s jurisdictional grant does not extend to cases against corporations, which are not liable for crimes under the law of nations. The Supreme Court agreed to review the case.

Cato has now filed a brief arguing that the ATS must be interpreted in a manner consistent with Congress’s original jurisdictional grant. This interpretation, supporting the Second Circuit’s ruling, maintains the Constitution’s separation of powers – which gives Congress the power to determine the scope of federal courts’ jurisdiction. Allowing courts to expand their jurisdiction without Congress’s consent would create a “democracy gap” that would be particularly serious here, where the case involves issues of foreign affairs that are appropriately the province of the political branches.

The Supreme Court made clear in Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc. (1999) that evolving methods of interpreting international law do not inform the ATS’s jurisdictional reach, which has not changed since 1789. Nonetheless, lower courts are split on whether corporations may be liable for the sorts of violations at issue here, largely due to their varied interpretive methods.

In our brief, we urge the Court to clarify the proper method of interpreting the law of nations under the ATS. We argue that Judge José Cabranes, a leading international law jurist (and Justice Sonia Sotomayor’s mentor) who authored the Second Circuit’s Kiobel decision, set out the correct interpretive method in an earlier case, Flores v. Southern Peru Copper Corp. (2003). Judge Cabranes’s reasoning in Flores embodied both the guidance that the Supreme Court would give in Sosa v. Alvarez-Machain (2004) and the teachings of classical theorists like Grotius, by defining customary international law as “composed only of those rules that States [countries] universally abide by, or accede to, out of a sense of legal obligation and mutual concern.”

Judge Cabranes used as relevant evidence the States’ formal lawmaking actions, such as international conventions that “establish[] rules expressly recognized by the contesting states” and international custom where the States adhere “out of a sense of legal obligation.” He further acknowledged that the method used in 1789 to interpret what comprised the law of nations defined both the claims and the parties cognizable under international law. By looking to the proper sources, Judge Cabranes correctly concluded that corporations cannot be held liable for violations of international law for ATS purposes, and in so doing recognized the constitutional checks that prevent courts from expanding their own jurisdiction.

The Supreme Court will hear oral argument in Kiobel v. Royal Dutch Petroleum on February 28.

Thanks to legal associate Anastasia Killian for her help with this blogpost.

The First Amendment Protects Students’ Rights to Speak on Religious Subjects

If the First Amendment means anything, then school officials cannot prohibit students from handing out gifts with Christmas messages due to the religious content of those messages. Nonetheless, the Fifth Circuit held en banc that student speech rights are not “clearly established,” and that, therefore, two Plano, Texas officials could invoke qualified immunity to shield themselves from liability for doing so.

Yesterday Cato filed an amicus brief supporting the students’ request that the Supreme Court hear their case—our third brief in this long-running saga. We argue that educators have fair warning that viewpoint-based discrimination against student speech violates the First Amendment and thus may not invoke qualified immunity.

While the Fifth Circuit held that a constitutional right must have previously been defined with a “high degree of particularity” in a case that is “specific[ally] and factually analogous” to be clearly established, the Supreme Court has repeatedly said that neither “fundamentally similar” nor “materially similar” cases are required and that general statements of law can give fair warning. Indeed, if the Fifth Circuit’s qualified-immunity standard is upheld, it will be so difficult to establish fair warning for unconstitutional actions that qualified immunity will cease to be “qualified.”

Student speech rights were clearly established by the foundational student-rights case of Tinker v. Des Moines School District (1969), wherein the Court held that student speech cannot be suppressed unless the speech will “materially and substantially disrupt the work and discipline of the school,” subject to limited exceptions. Such exceptions include lewd or vulgar speech, or speech that may reasonably be viewed as advocating unlawful drug use. Certainly the student speech at issue here, which included Christmas greetings written on candy canes, and pencils and other small gifts with messages like “Jesus loves me, this I know, for the Bible tells me so,” does not fall under those exceptions.

We further argue that the same standard for determining whether a law is clearly established should determine whether a court can look to nonbinding precedent; if Supreme Court and relevant-circuit precedent is on point, courts should not look to authority from other jurisdictions. These standards maintain the proper balance between providing officials with fair notice of behavior that could result in civil liability and ensuring that individuals have legal recourse when their rights are violated.

The Supreme Court will decide later this winter whether to take the case, Morgan v. Swanson, and hear argument in the fall.

Thanks to Cato legal associate Anastasia Killian for her help with this post, and with our brief.

Supreme Court Rejects Texas Redistricting Maps, Showing That Modern Voting Rights Act Is Outmoded and Unworkable

Two weeks ago I wrote about the emergency appeal of Texas’s new redistricting maps that reached the Supreme Court last month and was argued early last week.  The state argued that the interim maps a three-judge district court in San Antonio drew didn’t defer sufficiently to the maps passed by the Texas legislature (which could not go into direct effect because they hadn’t been approved by either the Justice Department or a three-judge D.C. district court, per the requirements of Section 5 of the Voting Rights Act).  A group of challengers, meanwhile, claimed that Texas’s  maps discriminated against and diluted the voting strength of minorities in violation of the VRA’s Section 2.  Cato’s brief supported neither side but urged the Court to reconsider the constitutionality of the modern VRA altogether, not least because Sections 2 and 5 conflict with each other and with the Constitution.

Today, the Supreme Court unanimously overturned the San Antonio court’s maps because that court may not have used the “appropriate standards” in drawing its interim maps.  In a tight 11-page opinion, the Court made clear that, regardless of the legal ambiguities and other challenges the lower court faced, it still had to use the Texas legislature’s maps as a starting point and only deviate from them on districts where the Section 2 plaintiffs had a “likelihood of success on the merits” of their claims or where there was a “reasonable probability” of failing to get Section 5 approval.  Here’s the nut of the Court’s decision:

To the extent the District Court exceeded its mission to draw interim maps that do not violate the Constitution or the Voting Rights Act, and substituted its own concept of “the collective public good” for the Texas Legislature’s determination of which policies serve “the interests of the citizens of Texas,” the court erred.

That legal ruling is almost certainly correct – and in any event provides much-needed guidance for future such difficult situations – but may not change the ultimate result all that much because the district court most erred in explaining how it did it what it did rather than in doing it.  It even deferred significantly to the Texas maps after saying that it owed them no deference!

Unfortunately, the perfect storm that landed this case in the Supreme Court’s lap – no Section 5 “preclearance,” potentially viable Section 2 challenges, the need to have maps finalized quickly for the timely administration of primaries, the undesirability of having courts draw maps and the lack of clear rules of doing so – is not unique.  Justice Thomas is thus onto something when he reiterated today, in his separate concurrence, his long-held position that Section 5 is unconstitutional. 

But the problem is bigger than that: the Voting Rights Act as a whole has served its purpose but is now outmoded and unworkable – and consequently unconstitutional.  Section 2 requires race-based districting, even as Section 5, along with the Fourteenth and Fifteenth Amendments, seem to prohibit it.  For its part, Section 5 arbitrarily prevents common national redistricting standards.   These tensions cannot but produce chaotic proceedings like those here, which are replicated every redistricting cycle.   This state of affairs only serves to frustrate state legislatures, the judicial branch, and the voting public.

Put simply, the VRA’s success has undermined its continuing viability; courts and legislatures struggle mightily and often fruitlessly to satisfy both the VRA’s race-based mandate and the Fifteenth Amendment’s equal treatment guarantee.  Section 5’s selective applicability precludes the establishment of nationwide districting standards, confounding lower courts and producing different, often contradictory, treatment of voting rights in different states – in large part because Sections 2 and 5 themselves conflict with each other.

These difficulties – constitutional, statutory, and practical – disadvantage candidates, voters, legislatures, and courts, and undermine the VRA’s great legacy of vindicating the voting rights of all citizens.  While Perry v Perez may not have been the right vehicle for doing so because of exigencies involved in election administration, the Court should reconsider the constitutionality of the Voting Rights Act as presently conceived at the next available opportunity.

Obamacare’s Medicaid Expansion Violates Federalism

Today Cato filed its second Supreme Court amicus brief in the Obamacare litigation, on the issue of whether the health care law’s Medicaid expansion is a proper exercise of the Constitution’s Spending Clause.

That is, states must now accept a comprehensive reorganization of Medicaid or forfeit all federal Medicaid funding—even though the spending power is circumscribed to preserve a distinction between what is local and what is national. If Congress is allowed to attach conditions to spending that the states cannot refuse in order to achieve an objective it could not outright mandate, the local/national distinction that is so central to federalism will be erased.

Joining the Center for Constitutional Jurisprudence, Pacific Legal Foundation, Rep. Denny Rehberg (chairman of the House Appropriations Subcommittee on Labor, Health & Human Services, Education, and Related Agencies), and Kansas Lt. Gov. Jeffrey Colyer (also a practicing physician) we argue that, in requiring states to accept onerous conditions on federal funds that it could not impose directly, the government has exceeded its enumerated powers and violated basic principles of federalism.

California is at risk of losing $25.6 billion in annual federal funding, for example, and together the states stand to lose more than a quarter trillion dollars annually. On average, states would have to increase their general revenue budgets by almost 40% in order to maintain their current level of Medicaid funding.

The 1987 case of South Dakota v. Dole, however, prohibits such a coercive use of the spending power and recognizes that “in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which ‘pressure turns into compulsion.’” Indeed, the states’ obligations, should they “choose” to accept federal funding and thus commit themselves to doing the government’s bidding, are far more substantial than those the Supreme Court invalidated in New York v. United States and Printz v. United States (which prohibit federal “commandeering” of state officials).

Moreover, the Congress that enacted the original Social Security Act, to which Medicare and Medicaid were added in the 1960s, recognized that social safety has always been the prerogative of the states and should continue to be done under state discretion. Medicaid itself was narrowly tailored to serve particularly needy groups.

In short, if Obamacare does not cross the line from valid “inducement” to unconstitutional “coercion,” nothing ever will. Just as the Commerce Clause is not an open-ended grant of power, the Spending Clause too has limits that must be enforced.

Obamacare at the Supreme Court: Can the Individual Mandate Be Severed?

The Obamacare litigation has arrived on the big stage: the Supreme Court. The first opportunity for those opposing the legislation to weigh in comes on the issue that will be the last one the Court considers, “severability.” That is, if the individual mandate is struck down as unconstitutional, what (if any) of the rest of the law must fall with it?

On one hand, even in the absence of a severability clause, the Court should avoid striking down an entire law when only one small part is declared unconstitutional, particularly if the remainder of the law is unrelated to the defective bit (imagine an omnibus spending bill). On the other, the Court cannot go provision-by-provision and execute some sort of judicial line-item veto (creating a new law completely unrecognizable from what Congress enacted).

Many think that the rules in this area are unclear, but the analysis boils down to two questions:

  1. Can the remainder “fully operate as law”?
  2. Would Congress have passed the remainder?

In our brief, joined by the Texas Public Policy Foundation and co-authored by Prof. Richard Epstein, we examine these questions with a focus on Titles I and II of the law, which contain all the key provisions relating to Obamacare’s fundamental transformation of the national health care system: the requirement that insurers cover people with preexisting conditions (“guaranteed issue”), the requirement that premiums be assessed by a “community rating” formula, the creation of state insurance exchanges, Medicaid expansion, premium supports, etc.

Put simply, knocking out the individual mandate renders this whole package inoperable; the brave new health care world would not work as a matter of basic economic principle. As policy experiments in various states have proven, without an individual mandate, guaranteed-issue and community-rating provisions foster a “death spiral” because healthy people wait until they get sick or injured before buying under-priced insurance that they cannot then be refused, causing premiums to increase and costs to explode. The individual mandate is thus so interwoven with other crucial provisions that it cannot be excised without destroying the entire Obamacare structure.

Appreciating this mechanism, the government has conceded that guaranteed-issue and community-rating are indeed inextricably tied to the individual mandate—it has to, given its constitutional claim that the mandate is a necessary means of implementing a lawful regulation of interstate commerce. But a close analysis of the law reveals that the interoperability goes much further. And Congress knew this; there is no way it would have otherwise passed this law.

Thus, to aid the plaintiffs’ arguments regarding broader non-severability, our brief shows that the individual mandate is so central to the overall legislation that if it falls, those key Titles I and II must go with it.

The Court will consider the severability question for 90 minutes on March 28, the last of the three consecutive days it hears oral argument in the Obamacare cases.