Monday, June 28, 2021

Standing: A Doctrine Like No Other

 By Eric Segall

There is one constitutional law doctrine that rears its ugly head across the spectrum of controversial issues. It has played a role in civil rights cases, environmental cases, privacy cases, free speech controversies, separation of powers disputes, and in numerous other areas of constitutional law. It is also the one doctrine that virtually all commentators, left, right, and middle believe is singularly incoherent. That doctrine is standing, and it is a doctrine like no other.

The week before last, the Supreme Court used standing to reject yet another challenge to the Affordable Care Act. The Justices held that neither the states nor the individual plaintiffs in California v. Texas satisfied the all too familiar three part test that the Court has used for the last fifty years to determine standing: every plaintiff in federal court must suffer a personal injury caused by the defendant that can be redressed by a favorable court ruling. In a previous post, I documented the incoherence of the personal injury prong of the standing test (that prong was used by the Court on Friday of last week to deny standing to plaintiffs who were quite obviously injured under federal fair credit reporting laws). In this post, I address the causation prong, which was the one at issue in the ACA case.

The Court in California ruled that, even though the states challenging the ACA had alleged sufficient injuries, they could not prove that the government caused their injuries and therefore failed the second part of the test. This causation prong of the standing test has caused enormous confusion over the years for the simple reason that, in any sane world, causation would be a question on the merits, not a threshold jurisdictional issue. 

The states in California argued that the individual mandate section of the ACA was rendered unconstitutional in 2017 when Congress reduced the penalty for not buying health insurance to zero. They then claimed that this now unconstitutional provision could not be severed from the rest of the law, which contained other sections that cost the states money. This kind of wallet injury usually satisfies the injury prong of the standing test and it did here too. But the Court held that the states' financial injuries were not caused by the section of the law they claimed was unconstitutional, and thus they had no standing. Earlier, Mike discussed this holding at length and found the reasoning a bit obscure. I'll go further and say the opinion was simply wrong, not because it violated precedent (it did and it didn't, which is part of the problem) but because the Court's entire jurisprudence concerning the causation requirement should be revisited.

Once a court concludes that a plaintiff has suffered a legally cognizable injury, whether or nor that injury was caused by the defendant is quite obviously a question of fact. As long as the plaintiff pleads a non-frivolous connection between her injuries and the defendant's conduct, whether the conduct caused the injuries should be determined on the merits, not as a question of standing. 

The Court has issued egregiously bad and inconsistent opinions over the years because of the Justices' failure to realize that causation is normally a question of fact. For example, in Allen v. Wright, the issue was whether parents of black school children had standing to file a class action challenging how the IRS was enforcing its statutory and constitutional obligations to deny tax exempt status to private schools that discriminated on the basis of race. The parents claimed that by not denying tax exemptions to racially discriminatory private schools, the IRS was furthering "white flight," leading to more segregated public schools. The Court held that plaintiffs had alleged sufficient injuries but dismissed the case for lack of standing because the plaintiffs could not show the government caused those injuries. Justice O'Connor writing for the Court said the following:

The diminished ability of respondents' children to receive a desegregated education would be fairly traceable to unlawful IRS grants of tax exemptions only if there were enough racially discriminatory private schools receiving tax exemptions in respondents' communities for withdrawal of those exemptions to make an appreciable difference in public school integration. . .  It is, first, uncertain how many racially discriminatory private schools are in fact receiving tax exemptions. Moreover, it is entirely speculative . . . whether withdrawal of a tax exemption from any particular school would lead the school to change its policies. It is just as speculative whether any given parent of a child attending such a private school would decide to transfer the child to public school as a result of any changes in educational or financial policy made by the private school once it was threatened with loss of tax-exempt status. It is also pure speculation whether, in a particular community, a large enough number of the numerous relevant school officials and parents would reach decisions that collectively would have a significant impact on the racial composition of the public schools.

This paragraph ignores the fact that the plaintiffs were prepared to answer all of the raised questions at trial but never had the chance because the Court dismissed the case on standing grounds. Whether or not the IRS's non-enforcement of the law led to more segregated schools is by its very nature a question of fact. We know this because, in addition to common sense, in a prior case, Coit v. Green, the NAACP had proven at trial a direct connection between the IRS's granting of tax exemptions to racially discriminatory private schools in Mississippi and increased segregation of that state's public schools. The Court in Allen could have overruled that case but instead Justice O'Connor said the following:

[T]he facts in the Coit case are sufficiently different from those presented in this lawsuit that the absence of standing here is unaffected by the possible propriety of standing there. In particular, the suit in Coit was limited to the public schools of one State. Moreover, the District Court found, based on extensive evidence before it . . . that large numbers of segregated private schools had been established in the State for the purpose of avoiding a unitary public school system; that the tax exemptions were critically important to the ability of such schools to succeed; and that the connection between the grant of tax exemptions to discriminatory schools and desegregation of the public schools in the particular State was close enough to warrant the conclusion that irreparable injury to the interest in desegregated education was threatened if the tax exemptions continued.

There are significant problems with this analysis. The Allen Court held that the plaintiffs could not sufficiently prove for standing purposes the proposition that the granting of tax exemptions to racially discriminatory private schools threatened integrated public schools because, in a previous case, other plaintiffs, after being given the opportunity at trial, proved exactly that proposition for the schools of one state. As the dissent in Allen pointed out, the majority's discussion of Coit "stretches the imagination beyond its breaking point."'

In both cases, the plaintiffs should have had standing because their injuries were exactly the same. Whether the plaintiffs in Allen could have proven at trial that what happened in Coit in Mississippi also happened on a national scale could not be known until discovery, cross-motions for summary judgment, and then trial if necessary. But they were denied that opportunity by the Court treating a question of fact as a question of jurisdiction.

To make matters worse, when the Court wants to hear a case where the connection between causation and injury is unclear, the Justices will define the alleged injury in a way that makes the causation issue moot. For example, in many of the Court's affirmative action cases, it is unclear at best whether the plaintiff challenging the racial preference at issue would actually have received the sought after benefit even without the racial preference. In Associated General Contractors v. City of Jacksonville, a trade association challenged a minority set aside program for city contracts. The association did not allege that any of its members had ever bid on a project that was denied because of the set aside or even that its members would have had a bid accepted but for the set aside. Without such an allegation, the plaintiffs could not show that the set aside was the proximate cause of their monetary injuries since they might not have had their bids accepted even if the set aside did not exist. 

But the Court wanted to hear the case, so it magically recharacterized the plaintiffs' injuries from economic loss to the deprivation of the "right" to compete on a racially neutral basis for all city contracts. That sleight of hand mooted the causation prong since, obviously, the set aside did make it harder for the white firms to compete for city contracts on a racially neutral basis. 

I agree that the white contractors should have had standing, but not because they suffered some kind of psychic discomfort because of the set aside but because whether they would have been able to successfully get a city contract but for the set aside is a question of fact they could try to prove at trial. But by changing the injury from monetary loss to some kind of intangible psychic harm, the Court avoided the real causation issue in the case.

In Allen, the Court could have characterized the plaintiffs' injuries as the incremental loss of the possibility of their children obtaining a desegregated public school education because the IRS made it easier for racially discriminatory private schools to exist. There was no dispute, as Justice Stevens said in dissent, that the tax exemptions made private school tuition at allegedly racially discriminatory private schools cheaper and that when the price of something goes down, more people will buy it. Instead, the Court required as a standing matter that the plaintiffs provide all the specific details of which private schools would lower their tuition and what effect that would have on public school desegregation. But the Court did not require such details in the Jacksonville litigation and numerous other affirmative action cases. The problem with the Court's doctrine is not that Jacksonville and other similar cases were wrongly decided but rather that the Court often manipulates the causation prong depending on whether the Justices want to hear the case on the merits.

The incoherence of the causation prong is easy to see by looking at California v. Texas. The states alleged that the ACA's mandate was unconstitutional (it wasn't but that was their claim), and that it could not be severed from the rest of the law (it could be but again that was the allegation) and therefore the entire law should be struck down. There is no question that, if the plaintiffs' allegations were true, their injuries were caused by the existence of what they alleged was an unconstitutional law. I rarely quote Justice Alito but here his dissent was spot on. He said that the states:

contend that the individual mandate is unconstitutional because it does not fall within any power granted to Congress by the Constitution. Second, they argue that costly obligations imposed on them by other provisions of the ACA cannot be severed from the mandate. If both steps of the States’ argument that the challenged enforcement actions are unlawful are correct, it follows that the Government cannot lawfully enforce those obligations against the States.

The majority tried to escape this obvious conclusion by saying that the plaintiffs must show that the very provision they are challenging caused their injuries, and here the mandate could not cause them injury because it was unenforceable. But as Alito observed, that has never been the law. Plaintiffs must show that the defendants' conduct caused their injuries, and here the states could easily show all kinds of monetary injuries due to their their obligations under the ACA. If the whole ACA were declared unconstitutional, those injuries would quite obviously go away. 

The Court has allowed states to sue the federal government on many occasions where the causation prong was much less clear than it was in California v. Texas. For example, Massachusetts was allowed to challenge the EPA's decision not to regulate greenhouse gases when it alleged that the EPA's failure to do so would in the long run cause its coastline to recede. In other words, Massachusetts sued the EPA over climate change. When and whether the EPA's actions would actually hurt the Massachusetts coast was and is wildly speculative. But that issue is a merits question, so the Court properly found standing. The same should have happened in Allen, California, and numerous other cases where the Court improperly denied standing based on the second prong of the test.

The Court's error in California can be seen by comparing the case to Duke Power v. Carolina Environmental Study Group. In this case, environmental groups and individuals living near the site of a proposed nuclear power plant challenged a provision of federal law that limited the liability of nuclear power companies in case of an accident. The plaintiffs, of course, had not yet been injured by that provision as there had not been completion of the plant, much less a nuclear accident, much less a limit on liability. The plaintiffs' alleged injuries were environmental damage to nearby lakes. Those kinds of injuries are commonly recognized by the Court but here they were unrelated to the allegedly unconstitutional limit on liability. But the Court wanted to hear the case so it found that the plant would not be finished but for the statutory limit on liability and therefore the plaintiffs satisfied the causation prong of the standing test. Then, of course, the Court upheld the limit on liability.

I am not suggesting that Duke Power was wrongly decided but that it shows how the Justices will manipulate the causation prong of standing doctrine to reach whatever result the Justices want for that particular case, leading to inconsistent results and incoherent doctrine. Much of this confusion could be avoided if the Court would see the causation prong of the standing test for what it truly is: a question that should be decided by the trier-of-fact, not a threshold jurisdictional or standing issue. To put is as simply as possible, once a plaintiff shows personal injury, her standing should be recognized by the Court. If her allegations of causation are baseless as a matter of law, then the case should be dismissed for failure to state a claim not for lack of standing. If adopted, those rules would make the doctrine that is like no other a little bit less awful. But I won't hold my breath.