Friday, June 18, 2021

Why Did the California v. Texas Majority Reject Standing-by-Nonseverability? Five Possibilities

 by Michael C. Dorf

Justice Breyer's majority opinion in California v. Texas rejected standing by the individual plaintiffs on relatively easy-to-understand grounds. They said the Affordable Care Act mandated them to purchase health insurance. The majority said that with the tax set to zero, there was no penalty or enforcement of any kind. The ruling that the individual plaintiffs lack standing was a no-brainer. After all, even when a law does clearly contain a penalty for violation, a plaintiff seeking injunctive or declaratory relief against its enforcement must show that there is a fair probability of enforcement in order to present a ripe case or controversy. Where there is not even a theoretical possibility of enforcement--because no enforcement mechanism--that's out of the question. The majority concluded that any injury the individual plaintiffs suffer in virtue of purchasing health insurance is thus not traceable to any action or potential action by any government official.

But what about the state plaintiffs like Texas? Justice Alito (joined by Justice Gorsuch) in dissent says that the ACA imposes all sorts of costs--and thus pocketbook injuries on states. The majority responds that those costs are imposed by provisions other than the individual mandate, and so any injury is not caused by the mandate. Justice Alito responds by saying that even if so, those other provisions are non-severable from the mandate, and so that gives rise to standing. Why does the majority reject standing-by-nonseverability?

The answer isn't entirely clear. I'll explore five possibilities.

(1) As Justice Alito laments, most of the majority's opinion addressing the state plaintiffs' lack of standing concerns the failure to produce adequate evidence of direct pocketbook injury to the state due to individuals signing up for health insurance as a consequence of the mandate without a penalty. The Court turns to standing-by-nonseverability only briefly, in Part II(B)(2) of the Breyer opinion. There, he strongly suggests that the provisions that impose costs on the states are in fact severable from the mandate.

"Nothing in the text of these [other] provisions," Justice Breyer writes, "suggests that they would not operate without" the mandate. Saying that the cost-imposing provisions would operate without the mandate is another way of saying that they're severable. If there's doubt about the point, Justice Breyer repeats it with respect to some other cost-imposing provisions, writing: "Again, the problem for the state plaintiffs is that these other provisions also operate independently of" the mandate.

So the hypothesis here is that the majority hasn't ruled out standing-by-nonseverability; it has merely found it irrelevant to the current case, where the injury-causing provisions are clearly severable.

The primary difficulty with this explanation is that at the very beginning of the majority opinion, Justice Breyer says that the Court "does not reach" severability. To be sure, there's a tiny bit of wiggle room in what he says, which is that the Court does "not reach these questions of the Act’s validity." Perhaps severability is not a matter of validity?

In context, that doesn't work. Justice Breyer identifies two questions the case presents: (a) whether the mandate is constitutional? and (b) whether it's severable? By saying the Court does not reach these questions, plural, he's clearly referring to both constitutionality and severability, even if in some contexts we might think of severability as different from validity.

Thus, if the Court's rejection of standing-by-nonseverability rests on a tacit holding of severability, that tacit holding contradicts the majority's express description of what it's doing in the case.

(2) Another possibility, one that might explain why the majority almost doesn't seem to understand, much less attack head on, the concept of standing-by-severability, is that the majority believes that the states' standing must--so to speak--stand or fall with the enforceability of the mandate. If there's no individual standing to challenge the mandate because there is no mandate, then there's also no enforceable unconstitutional provision from which the obligations that are imposed on the state can't be severed.

I think this may well be what the majority was thinking, but if so, it has roughly the same problem as (1). It tacitly decides a question the Court says it's not deciding--this time the substantive question of the constitutionality of the mandate. If there is no mandate, then the thing called a mandate can't be unconstitutional.

I should say that as a substantive matter, this is absolutely correct--and it's the basis for an argument that Marty Lederman and I offered in an amicus brief in the case. I'll elaborate more on the merits in a Verdict column next week explaining why Part III of Justice Alito's dissent (in which he and Justice Gorsuch say why they think the mandate is unconstitutional with a tax of $0) is wrong. But for now I'll simply stick with the observation that it would be strange to read the majority holding on standing as tacitly resting on a merits ruling that it purports to avoid.

(3) Justice Thomas offers a third possibility in his concurrence: The plaintiffs did not properly present standing-by-nonseverability to the Court. Thus, if the Court is to find standing-by-nonseverability, it should wait for a case in which the issue is clearly teed up and argued. The majority agrees.* Justice Alito argues with some force, however, that standing-by-severability is not a novel theory and was, in any event, raised by the plaintiffs in the courts below and fairly encompassed within the cert petition. He also warns that the majority's disposition will likely lead to yet another round of litigation. There may be good answers to these objections, but the majority doesn't articulate them.

(4) Justice Thomas also suggests that severability might be a remedial question, not a substantive merits question. However, on the strength of his concurrence in Murphy v. NCAA, Justice Thomas rejects the remedial possibility. He thinks that severing or not severing an unchallenged provision from a successfully challenged one provides no relief to the challenger and thus is not a permissible remedy. Thus, if severability is remedial, Justice Thomas says, it's not allowed. But if it's substantive, then it's not presented (per point (3).)

The difficulty with this explanation is that only Justice Thomas seems to endorse it. To be sure, the majority favorably cites Justice Thomas's Murphy concurrence, but only for the uncontroversial proposition that remedies "operate with respect to specific parties." On the broader point, as I discussed here when Murphy was decided, Justice Thomas's view, while interesting and plausible, is not generally the law. It's hard to see the majority's glancing reference to it as adopting it.

(5) Finally, let me suggest that there's a reason why the state plaintiffs don't get to argue against the mandate at which both the majority and Justice Thomas hint but neither expressly articulates in the terms I will: in general enjoining a nonseverable provision of a law that is unconstitutional on other grounds as applied to other parties violates the rule against third-party standing.

What's that? It's typically not enough for a plaintiff to point to a constitutional violation and some injury. The constitutional violation must be of or related to the plaintiff in some way.

Consider a schematic example. Let's say that the government wants to use its power of eminent domain to build a highway across my neighbor's property. My neighbor doesn't want to sell, so the government executes a forced sale for $100,000. I think the fair market value of the property is actually $150,000, so that the taking is "without just compensation" and is thus unconstitutional. The construction of a highway next door to what has been my meditation retreat will lower the value of my property, a clear pocketbook and thus Article III injury. Nonetheless, I cannot sue. Article III injury isn't enough. I need to overcome the general rule against third-party suits, that is, the general rule that a plaintiff must not only suffer Article III injury but that the wrongfulness of the defendant's conduct be the source of the injury.

There are exceptions to the rule against third-party standing. The most famous case is probably Craig v. Boren, in which the owner of a tavern was allowed to challenge a law drawing a distinction between young men and young women, even though the tavern owner was injured economically, not as a victim of sex discrimination. But that was allowed only because of an obstacle to the assertion of first-party claims: so little was at stake for the customers, who would likely age out of the disfavored category (18-20-year-old males) before the termination of litigation, that the Court lifted the ordinary bar on third-party standing.

There are other exceptions as well. For example, in free speech cases and some other cases (such as challenges to abortion restrictions), the Court sometimes allows so-called overbreadth challenges. There is a small but complex body of scholarship on when these and other facial challenges are allowed. Along with my casebook co-editor Richard Fallon of Harvard, my former colleagues Henry Monaghan and Gillian Metzger of Columbia, and various other scholars, I have contributed some work on this sometimes perplexing topic. And there's no doubt that severability figures into the calculus. But it has never been suggested that a simple allegation that some otherwise valid provision of law is nonseverable from some other, allegedly unconstitutional provision, suffices to lift the third-party standing ban.

Accordingly, although expressly invoked by none of the opinions, the ordinary rule against third-party standing and the lack of any recognized or otherwise plausible exception may provide the best explanation for the Court's rejection of standing-by-nonseverability. But, as I say, it's not raised by the majority or Justice Thomas. (The majority opinion includes the phrase "third party" in a few places but in the course of discussing traceability under Article III, not as a reference to the third-party standing doctrine.) Making matters worse, although Justice Thomas has argued to the contrary, the rule against third-party standing is usually thought to be prudential, rather than a matter of Article III; yet the Court clearly describes its holding as a matter of Article III standing. So my best explanation for the majority's rejection of standing-by-nonseverability really only fits Justice Thomas.

That's not to say that the other Justices in the majority are wrong to reject standing-by-nonseverability, much less that the case is wrongly decided. It is only to say that none of the plausible justifications for rejecting standing-by-nonseverability is fully persuasive and fits all that well with everything Justice Breyer says (and fails to say) in his majority opinion. But there are worse sins than being right without a full explanation. Like being wrong--about which more on Justice Alito next week.


* NB: An earlier version of this blog post asserted incorrectly that the majority did not say whether it endorsed the waiver argument discussed in point (3). I somehow missed the majority's statement to that effect:

the federal respondents raised for the first time a novel alternative theory of standing on behalf of the individual plaintiffs in their merits brief. (The dissent, alone, puts forward a similar novel theory on behalf of the state plaintiffs.) That theory was not directly argued by the plaintiffs in the courts below, see 945 F. 3d, at 385–386, and n. 29, and was nowhere presented at the certiorari stage. We accordingly decline to consider it.

I don't have a good explanation for my oversight. Mea culpa.


Jason S. Marks said...

I am not sure the majority missed the standing issue as you suggest. The legality of the ACA has been resolved in NFIB and King; those issues are res judicata and may not be relitigated. All that is before the Court is whether the new actions of the TCJA that eliminate the penalty impose an actual injury in fact to the plaintiff states. When so understood, all of what Justice Alito raises is really a rehash of what he refers to as Acts I and II of the trilogy, which again are res judicata. The Court took this case only to decide if the TCJA in some way now invalidates the whole ACA. I suppose one could argue this is a "new" challenge to the entirety of the Act, but I still think the standing requirement imposes on the states proof of harm attached to the new legislation, not the old legislation. In that case, the only out of pocket harm I see left to assert would be the increase in Medicaid recipients (which is a stretch). Without a mandate, people do not need to buy insurance and no one will really know because the IRS is not asking. Does that create an incentive to opt into some form of insurance? I would say the reverse is true -- by removing the penalty, those without insurance would stay away from insurance. If people do not go to the marketplace they would have to go to Medicaid so the argument goes. But in reality, people who cannot afford insurance would already go to Medicaid. If they show up at the ER without insurance, they will be treated and their economic status will result in a bill to Medicaid. If they can afford insurance but took the risk of not ending up in the hospital, they will get billed, not the state. If the status quo had been no insurance, I do not see a traceable cause between no incentive to buy insurance and more Medicaid reimbursement.

A more interesting question you did not address: all of the states who are plaintiffs rejected Medicaid expansion money offered as part of the Act. If they in fact created the conditions for spending more money, how can their own poor choices be the basis for standing?

Joe said...

Prof. Segall and others have written critical analysis on how standing is not consistently applied. So, especially for a pragmatic justice like Breyer, it's hard to be fully sure how much "law" compels the result really.

If one wants to be theoretical here, you would conceive of some really law abiding types -- maybe with strong religious beliefs or something about integrity -- and they see a mandate for insurance. "Well," they say, "I need to get insurance!" They don't need a tax penalty to pressure them.

[btw even if there is no tax penalty, the mandate can be constitutional as not only an "eat your vegetables" sort of thing, but as a placeholder if the government later on feels a tax is necessary and doesn't want to start from scratch].

This gets them involved in the insurance market and state exchanges. Maybe, their financial situation changes, and already getting insurance, they sign up for Medicaid. The mandate is some fashion changes the equation and increases state costs somewhat.

Breyer even references a governmental report that opens the possibility (I saw reference to it in one of the blog analysis of this issue too) used by the plaintiffs, but he basically says there isn't really enough evidence for it. But, after you had a case earlier this term where a $1 or something might be enough for standing, I can see enough there if the litigants did a better job or if the Court actually wanted it. Liberals also in some other case might want loose standing rules.

I will leave it to others to hypothesize some more ala the blog post -- it's a useful law professor type thought exercise that can make on think about the issues.

Asher Steinberg said...

The Lea article that both Thomas and Alito cites anticipates and rejects your third-party concern, but in a fashion that seems to depend on an idiosyncratic theory of what inseverability is about (namely, that Congress would have wanted a provision to become ineffective if some other provision *is invalid*, making the question of validity of the latter an element of interpreting the former, not that Congress would have wanted a provision to become ineffective if some other provision should be invalidated, i.e., if its enforcement is enjoined).