Volokh readers will remember when two widely-respected conservative Court of Appeals judges, Judge Easterbrook and Judge Posner were on a unanimous Seventh Circuit panel denying both the Due Process and Privileges or Immunities challenge to Chicago’s hand-gun ban. One year later, the Due Process challenge was upheld 5-4 in McDonald v. Chicago. My friend and current adversary, Walter Delliger said yesterday that the opinion by Judge Jeff Sutton to uphold the individual mandate “is a complete vindication of the constitutionality of the Affordable Care Act.” Not so fast. Sutton’s opinion was no surprise to anyone who was in the courtroom in Cincinnati. Nor would a contrary opinion have been surprising. Sutton was scrupulously critical of both sides that day. Indeed, his opinion shares the “on the one hand” and “on the other hand” character of his questioning. And it also bears some resemblance to Judge Easterbrook’s opinion in McDonald.
Given that Dellinger’s reaction is likely to be commonplace among the Act’s supporters, I thought it would be useful to offer a few observations about the Sixth Circuit decision generally and Judge Sutton’s opinion in particular. Although each of these points merit further thought and more extensive treatment, it is also useful to present them more succinctly as a list.
1. Yesterday’s decision was 2-1. The arguments in favor of the mandate that some find so persuasive were well presented by Judges Martin and Sutton. Yet they still failed to persuade Judge Graham. Unlike defenders of the ACA, no challenger has ever claimed that this case is a slam dunk for unconstitutionality, or that legal arguments supporting the ACA are frivolous. No challenger has ever predicted a unanimous Supreme Court decision. Just as the substance of Judge Martin’s opinion could well end up being adopted by a majority of justices, so too could Judge Graham’s analysis. (For reasons below, I do not believe the Judge Sutton’s opinion based as it is on a “Roach Motel” view of facial challenges is as likely to form the basis of a Supreme Court majority opinion, but elements of it could.) This case remains a very difficult challenge for the courts, and one which the Supreme Court will ultimately decide de novo. I do not believe that any of the justices on either side will be overly influenced by any of the lower court opinions, except as potential road maps to take them where they independently decide they want to go. In short, the Supreme Court justices decisions will be made according to their own jurisprudential commitments, not those of inferior court judges who are subject to different constraints and norms. And this will also be true if one appeals court strikes down the mandate – just as the opinions of two district court judges who held the mandate unconstitutional did not dictate the outcome in the Sixth Circuit.
2. Yesterday’s decision affirmed 2-0 the unprecedented nature of this power. Both Judge Sutton and Graham note that the power to impose economic mandates on the people is novel. (So far as I could tell, Judge Martin does not speak to the issue. He certainly cites no clear cut previous examples of such mandates.) Of course, it does not automatically follow from this that it is therefore unconstitutional, as evidenced by this 2-1 decision upholding the mandate. But, it reaffirms that the Court will have to let Congress go where it has not gone before. That continues to create a challenge for the law’s defenders, even under a “presumption of constitutionality.” As Judge Sutton wrote (citing Printz among other cases): “Legislative novelty typically is not a constitutional virtue. More than once, and quite often in separation-of-powers cases, the Court has said that a ‘[l]ack of historical precedent can indicate a constitutional infirmity’” in a congressional act.”
3. Yesterday’s decision rejected the tax power argument 2-0-1. A majority of the panel yesterday rejected the darling theory of the law professoriate (and I recently learned the SEIU) that the “penalty” enforcing the “individual responsibility requirement” or mandate is an exercise of the tax power. And Judge Martin expressly declined to reach the issue. Once again, the tax power theory went nowhere. I won’t rehearse all the reasons why the implications of this theory are too radical for any court to accept. But keep in mind that many of the same people who have been telling us that the Commerce Clause theory is a slam dunk, also endorse the tax power theory.
4. The Court rejected the objections to standing 3-0. Some of the same folks who are so confidently opining on the scope of the commerce and tax powers – including the government – were also questioning the claimants’ standing to challenge the ACA. The court unanimously rejected their view and reached the merits.
5. Judge Martin accepted* the requirement the Congress must regulate activity [SEE CORRECTION BELOW]. Unlike the passage from Judge Sutton quoted by Orin, Judge Martin did not question the activity-inactivity distinction. “In applying this jurisprudence, our first duty is to determine the class of activities that the minimum coverage provision regulates.” And “[t]he minimum coverage provision regulates activity that is decidedly economic.” Later he writes, “far from regulating inactivity, the provision regulates active participation in the health care market.” For his Commerce Clause Analysis, he accepted the government’s characterization of the activity reached by the statute:
By regulating the practice of self-insuring for the cost of health care delivery, the minimum coverage provision is facially constitutional under the Commerce Clause for two independent reasons. First, the provision regulates economic activity that Congress had a rational basis to believe has substantial effects on interstate commerce. In addition, Congress had a rational basis to believe that the provision was essential to its larger economic scheme reforming the interstate markets in health care and health insurance.
In short, the majority accepts the “class of activities” framework that I have advanced since December of 2009, and found the “practice of self-insurance” to be the relevant activity. Having been advanced by the government, this theory of the relevant “class of activities” was neither new or surprising. The first step in any Commerce Clause analysis is to define the relevant “class of activities” and the litigants disagree about this definition.
[*UPDATE/CORRECTION: In editing Judge Martin’s opinion for the supplement to my casebook, I came across the following caveat, which detracts from my characterization of his opinion as “accepting” the requirement that Congress must regulate activity:
As long as Congress does not exceed the established limits of its Commerce Power, there is no constitutional impediment to enacting legislation that could be characterized as regulating inactivity. The Supreme Court has never directly addressed whether Congress may use its Commerce Clause power to regulate inactivity, and it has not defined activity or inactivity in this context. However, it has eschewed defining the scope of the Commerce Power by reference to flexible labels, and it consistently stresses that Congress’s authority to legislate under this grant of power is informed by “broad principles of economic practicality.” Lopez (Kennedy, J., concurring); see Wickard (explaining that Congress’s power cannot be determined “by reference to any formula which would give controlling force to nomenclature such as ‘production’ and ‘indirect’ and foreclose consideration of the actual effects of the activity in question upon interstate commerce.” . . . Thus, the provision is constitutional notwithstanding the fact that it could be labeled as regulating inactivity.).
Before and after this passage, Judge Martin adopts and employs the “class of activities” analysis without questioning it, and he then finds the existence of activity. In his very next sentence he writes the sentence I quoted above: “Furthermore, far from regulating inactivity, the minimum coverage provision regulates individuals who are, in the aggregate, active in the health care market.” But, despite the ambiguity created by his clear acceptance of the “class of activities” mode of analysis, I no longer think it accurate to claim that he “accepted” that Congress “must regulate activity.” It would be more accurate to say that “Judge Martin declined to uphold the law on the ground that Congress may regulate inactivity, preferring instead to find that Congress had indeed regulated activity in this case.” I regret the error.]
6. The use of “self-insurance” by the majority was problematic. Neither Judge Martin or Sutton spend much time explaining the concept of “self-insurance” upon which their opinions vitally depend. Wikipedia summarizes the conventional technical meaning of this activity: “Self insurance is a risk management method in which a calculated amount of money is set aside to compensate for the potential future loss.” In other words, companies “self-insure,” when instead of entering a risk pool provided by an “insurance” company, they create their own pool of funds from which to handle future losses. This is a genuine activity. Doing nothing and waiting to pay for something later – perhaps best called “self-financing” – is simply not the same thing. The key about “self-financing” is that it happens when you receive services and are called upon to pay. But this is not the class of activities defined by the statute. In this way, by misusing the term “self-insurance,” both judges convert inactivity into a “class of activities.” But that is merely semantic not substantive. It would only convince someone who really did not care whether Congress has the power to mandate activity or not. It would not convince anyone concerned about granting this new power to Congress. Judge Martin gives up considerable ground in a footnote, where he concedes: “We use the term self-insurance for ease of discussion. We note, however, that it is actually a misnomer because no insurance is involved, and might be better described as risk retention.” “Risk retention” is a somewhat more transparent way to describe doing nothing, but it is still seeking to use semantics to create a “class of activities” from nonactivity.
7. The swing vote depended on a “Roach Motel” theory of facial challenges. According to Judge Sutton’s view of facial challenges, the mandate is constitutional as applied to anyone who already has insurance. Having once voluntarily chosen to get insurance, they can be mandated never to stop. Like the Roach Motel, once citizens check into the health insurance market, they can never check out. This implication of Judge Sutton’s analysis is a sign of its weakness, and why it won’t be adopted the Supreme Court. Ilya and Jonathan have already ably explained some of the substantive difficulties with this approach. But the key is that his view of facial challenges was crucial to his decision, because it allowed him to avoid the hardest issues posed by the mandate: compelling citizens into a market – here the insurance market – who are not currently in that market. (I realize that the government claims the “relevant market” is the health care market, but this rewriting of the statute has other problems.) If Judge Sutton is right about “facial challenges,” and Judge Martin and others are right about the unavailability of “as applied challenges” after Raich (as I think they are), then there is really no justiciable way to adjudicate whether Congress has exceeded its Commerce Clause powers. Here is the basic logic:
“Facial” challenges will be denied so long as there are any constitutional applications of the law.
But, so long as Congress can reach a “class of activities,” the courts will not carve out subclasses in an “as applied” challenge to see if they may be beyond Congress’s power.
This would be a radical conclusion I doubt the Supreme Court will adopt. By the time it reaches the Supreme Court, Judge Sutton’s analysis of facial challenges will have been thoroughly vetted. In the end, the choices for the justices will be between something like Judge Martin’s opinion or Judge Graham’s. The “center” will not hold.
8. Judge Sutton’s Challenge to the Supreme Court. In McDonald, Judge Easterbrook protested that it was not for an “inferior” judge to extrapolate from recent Due Process Clause cases to strike down a handgun ban given Nineteenth Century cases refusing to extend protection of the Second Amendment to the states. Judge Sutton does the reverse. His opinion concedes that this claim of power goes beyond anything the Constitution or Supreme Court has previously upheld. “The Court, for one, has never considered the validity of this type of mandate before, at least under the commerce power. . . . Not only has the Court never crossed this line, neither has Congress. . . .” One might have imagined that, at this point, an inferior court judge might well have stopped and ruled for the challenger. Instead, Judge Sutton engages in extrapolation from “the language and direction of the Court’s precedents. . . .” In other words, he engages in just the form of extrapolation that Judge Easterbrook eschewed. His predictive approach to stare decisis closely resembles that which has been articulated here by Orin. To which Judge Graham offered his own prediction:
Notwithstanding Raich, I believe the Court remains committed to the path laid down by Chief Justice Rehnquist and Justices O’Connor, Scalia, Kennedy, and Thomas to establish a framework of meaningful limitations on congressional power under the Commerce Clause. The current case is an opportunity to prove it so.
Indeed, Judge Sutton issues his own poignant challenge to the Supreme Court:
The Supreme Court can decide that the legend of Wickard has outstripped the facts of Wickard — that a farmer’s production only of more than 200 bushels of wheat a year substantially affected interstate commerce. . . . A court of appeals cannot. The Supreme Court can decide that Raich was a case only about the fungibility of marijuana, . . . not a decision that makes broader and more extravagant assertions of legislative power more impervious to challenge. A court of appeals cannot.
Whether or not an inferior court may, the Supreme Court not only can, but must decide these questions. And so it will. About a year from now.