Giving California v. Texas the Attention It Deserved

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The Supreme Court’s latest ACA case was properly dismissed, but a waste of time.

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California v. Texas was nonsense from day one, and the U.S. Supreme Court’s perfunctory dismissal of the case on standing grounds was an appropriate response. The Court’s 7-2 opinion was consistent with oral arguments in November 2020, where the Justices focused heavily on questions of legal standing.

Twenty states, led by Republican state attorneys generals or governors, filed this case in 2018, once again looking to the courts to dismantle the Patient Protection and Affordable Care Act (ACA). The states, joined by two individual plaintiffs, argued that when the U.S. Congress zeroed out the penalty for noncompliance with the individual mandate in the Tax Cuts and Jobs Act of 2017, they rendered the mandate no longer a tax—as the Court previously held in NFIB v. Sebelius—and thus now unconstitutional. And the unconstitutional mandate, they argued, was inseverable from the entire ACA, which should also be invalidated.

It was almost incomprehensible that the plaintiffs’ flimsy legal arguments would take them far. Whether a tax with zero penalty is still a tax at least provokes a moment or two of thought. In contrast, the idea that a mandate with zero penalty was inseverable from the rest of the ACA, and thus invalidates the entire law, was implausible.

When a statute is not explicit on severability, courts try to gauge what Congress intended. Here, the answer was obvious since Congress zeroed out the penalty and left the rest of the law in place––after members of Congress first tried to repeal the entire ACA but failed. The law had also been functioning just fine without the mandate in place, which is proof that the mandate is indeed severable functionally.

Perhaps the only more absurd aspect of the case was the Trump Administration’s inconsistent and confusing response to the litigation. The Justice Department under then-President Donald J. Trump eventually declined to defend the ACA at all, which prompted the seasoned lead Justice Department attorney on the case to resign, and 17 Democratic state attorneys general and the U.S. House of Representatives to intervene to defend the law.

Demonstrating that good legal arguments do not always prevail, federal district court Judge Reed O’Connor found in favor of the plaintiffs and ordered the entire law invalid in December 2018. Yet his opinion still seemed likely an anomaly. Then, the U.S. Court of Appeals for the Fifth Circuit kept the case alive, and the Supreme Court granted review, once again setting off endless speculation about the possible demise of the ACA.

In an appropriate end to this drama, the Supreme Court dismissed the case on standing grounds for failing to meet the case-or-controversy requirement in Article III of the U.S. Constitution. In effect, the 7-2 majority opinion rendered the challenge invalid from the start.

In an uncharacteristically brief opinion for any matter concerning the ACA, Justice Stephen Breyer could not have put it more plainly. He wrote that “neither the individual nor the state plaintiffs have shown that the injury they will suffer or have suffered is ‘fairly traceable’ to the ‘allegedly unlawful conduct’ of which they complain.” Justice Breyer goes on to explain that because the government cannot enforce the mandate, there is no plausible “government action that is causally connected to the plaintiffs’ injury.” And, he continues, there is thus no remedy the Court could provide to redress the alleged injuries.

Furthermore, Justice Breyer chastises the state plaintiffs for failing to provide any evidence to support their claim that the zeroed out mandate generated any costs for the states, and he wrote that costs imposed by other parts of the ACA are insufficient to create standing.

The lengthy dissent by Justice Samuel Alito, joined by Justice Neil Gorsuch, shows both how contentious the ACA and legal decisions about it remain and also what might have been.

After some hand-wringing about the Court’s alleged rescue of the ACA on multiple occasions, Justice Alito writes in support of standing on the basis of “inseverability.” The idea is that, if the mandate is plausibly inseverable from other parts of the law, and plaintiffs show harm from those other parts, they have standing to sue.

Justice Alito continues to write that a tax without penalty is not a tax, and thus the mandate is unconstitutional. Furthermore, the mandate is “inextricably linked” to various other provisions of the ACA that should not be enforceable against the plaintiff states. Justice Alito’s dissent, if the majority opinion, would have wreaked havoc.

The most compelling part of Justice Alito’s opinion is his claim that “the Court simply ducks the issue” of constitutionality by dismissing the case on the basis of standing, which is certainly correct. By deciding the case on procedural grounds, the Court avoids having to hash out the thornier substantive legal issues of constitutionality and severability.

In the end, Justice Breyer’s decision leaves the ACA fully intact, ending this latest saga. Yet, what I find frustrating, as a law professor and as a member of the legal bar, is how much time, energy, and attention a frivolous case such as California v. Texas has absorbed. It demanded numerous hours of investment by extremely talented lawyers. It took space and time on crowded federal court dockets. And, perhaps worst of all, it continued the churning discussion over the legitimacy of the ACA and its future.

Even as commentators exuberantly announce the solid grounds on which the ACA can advance, this case is almost surely not the last ACA-related challenge that the Supreme Court will decide. Maybe, however, it will be the last one that will so dramatically consume our attention.

Allison K. Hoffman

Allison K. Hoffman is a professor of law at the University of Pennsylvania Law School.

This essay is part of a nine-part series, entitled The Supreme Court’s 2020-2021 Regulatory Term.