How NFIB V. Sebelius affects the constitutional gestalt.

AuthorSolum, Lawrence B.
PositionIII. Direct Legal Effects: The Mandate and Stare Decisis B. Vertical Stare Decisis 2. Vertical Stare Decisis Effects of All the Opinions Under the Narrowest Grounds Rule through Conclusion, with footnotes, p. 28-58

There is another basis for the contention that the Commerce Clause reasoning in Parts III-A and III-D in Justice Roberts's opinion was necessary to the result in NFIB. What was the result? One way to characterize the result is that the Court upheld the individual mandate, but that characterization is only approximately correct. We can be more precise. What the Court actually did was to uphold the penalty provisions that enforced the individual mandate. It did this by adopting a saving construction of Section 5000A that negates the command (the mandate to purchase insurance) by construing the penalty as a tax (which does not create a legal obligation to purchase insurance). That there is a difference between the two is absolutely clear from the following two hypotheticals:

Hypothetical One: Suppose that Congress had enacted a statute that explicitly stated that the penalty provisions were valid only if they enforced a legal obligation to purchase insurance.

Had Section 5000A been written this way, it would have been struck down because the saving construction would have been unavailable. Now consider the second hypothetical:

Hypothetical Two: Suppose that Justice Roberts had concluded that the Commerce Clause did support the individual mandate as a legal obligation.

In that case, he would not have adopted the saving construction of Section 5000A and would instead have concluded that a legal obligation to purchase insurance (enforceable by a financial penalty or, hypothetically, by imprisonment) was within the scope of congressional power. The juxtaposition of the two hypotheticals makes it clear that the Commerce Clause reasoning was required to reach the precise result reached in NFIB.

But there is a counter-argument. One might argue that the difference between a saving construction that upholds the penalty as a tax but negates the legal obligation is merely formal because the saving construction is functionally equivalent to the result of a decision that upheld the legal obligation and the tax under the Commerce Clause. This argument can be elaborated via the "bad man" theory articulated by Justice Holmes. (108) From the perspective of the bad man, the only thing that matters is the penalty. The bad man does not care about obligations; he cares about consequences.

Of course, this move does not end the argument. The bad man theory of the nature of law is controversial, to say the least. (109) Alternative views of the nature of law contend that legal obligations can have motivational force that is independent of legally prescribed rewards and punishments. These are deep waters, and the debates concerning the nature of law and their relationship to the bad man theory cannot be resolved in this essay. This much is clear: to the extent that the argument against viewing the Commerce Clause reasoning as part of the holding rests on the correctness of some version of the bad man theory, it cannot command consensus support among legal theorists or judges.

Even if one accepts the bad man theory, there is a strong argument that Justice Roberts's saving construction would (at least in some circumstances) make a difference to someone motivated only by rewards and punishments. Consider the following hypothetical:

Hypothetical Three: Suppose that Congress amends the ACA, eliminating the financial penalty enforced by the Internal Revenue Service and substituting a criminal penalty enforced by the Department of Justice. The criminal penalty is then challenged in a district court, and the plaintiff argues that NFIB is controlling and that the criminal penalty is invalid.

Given this hypothetical, the bad man argument would no longer be available as the basis for the contention that there is no difference between Justice Roberts's saving construction and a decision that plainly upheld the mandate itself (and not just the penalty). The narrowest grounds rule would then come into play, (110) and Justice Roberts's reasoning that the tax power holding depends on the Commerce Clause holding, in conjunction with the joint dissent of Justices Kennedy, Scalia, Thomas, and Alito, would then operate with the doctrine of vertical stare decisis to bind the district court. Hypothetical Three strongly suggests that NFIB should be given vertical stare decisis effect, albeit an effect that is limited to relevantly similar mandates enforced by criminal penalties (or fines that are unambiguously not taxes). This idea might be expressed as follows: Justice Roberts's opinion does not uphold the "individual mandate" (the requirement to purchase insurance); instead, it upholds the penalty, not as an enforcement provision, but instead and soley as a tax.

There is yet another reason to reject the bad man argument. Ultimately, the bad man is interested in predictions about what the Court will do. As we have already seen, if one adopts a strongly realist understanding of the doctrine of stare decisis, then the formalities do not matter at all. If holdings are just our best predictions of what courts will do, then we determine the holdings of the United States Supreme Court by the rule of five: the holding of a case is determined by counting votes. On that strongly realist conception, the key fact about NFIB would be that five members of the Court endorsed an understanding of the Commerce Clause that would invalidate the individual mandate, to the extent that its validity depends on that clause.

Recall that the role of the bad man theory in our present discussion is to undermine the argument that there is a difference between Justice Roberts's saving construction of the individual mandate and an alternative outcome in which the individual mandate was upheld without a saving construction. The realist theoretical underpinnings of the bad man theory undermine the realist argument that the Commerce Clause reasoning is unnecessary to the decision because legal obligations collapse into the rewards and punishments that enforce them. The application of the rule of five to Hypothetical Three makes this clear: given the current composition of the Court, the best prediction is that the Court would strike down an attempt by Congress to attach direct criminal penalties to the ACA.

Moreover, from the perspective of a realist, we might ask what the lower courts are actually likely to do with Commerce Clause arguments that cite Part III-B of Justice Roberts's opinion and the joint dissent by Justices Kennedy, Scalia, Thomas, and Alito. Given the highly convoluted nature of the theoretical arguments and the uncertain state of stare decisis doctrine, one might believe that different lower court judges are likely to reach different results on the stare decisis question, depending on their view of the merits of the Commerce Clause issue or even their view of the desirability of the statutory provision that is the subject of a Commerce Clause challenge. That is, from the realist perspective, one effect of NFIB is to enable litigators to cite the opinion of Justice Roberts and the joint dissent of Justices Kennedy, Scalia, Thomas, and Alito as binding authority (and in the alternative as persuasive authority (111)). Of course, judges who disagree with these five Justices may reject the argument that the authority is binding and find the arguments unpersuasive. Likewise, judges who agree with Roberts and the authors of the joint dissent may accept the argument that NFIB is binding on the Commerce Clause issue and also find the reasoning persuasive. This fact will become important when we consider the indirect effects of NFIB. From the realist perspective, the Commerce Clause reasoning of these five Justices creates an opening for constitutional contestation.

Have the lower courts treated NFIB as binding authority on the Commerce Clause issue? It is too early to draw conclusions from the handful of reported decisions. In United States v. Henry, (112) the Ninth Circuit noted the existence of a controversy concerning the question of whether the Commerce Clause reasoning in NFIB was holding or dicta. (113) In United States v. Cabrera-Gutierrez, the same circuit rejected a challenge to the Sex Offender Registration and Notification Act based on the theory that it constituted an "individual mandate," but did not comment on the status of the commerce clause discussion in Sebelius. (114) In United States v. Rose, the Sixth Circuit treated the commerce clause discussion in NFIB as a holding, stating "The Court determined that the mandate 'cannot be sustained' under Congress's Commerce Clause power because it forces into commerce individuals who have elected to refrain from such commercial activity, which goes beyond Congress's Commerce Clause powers." (115) In United States v. Robbins, the Second Circuit assumed (arguendo) that the the activity-inactivity distinction from NFIB was controlling but found that the challenged statute did regulate "activity" and hence was within Congress's Commerce Clause power. (116)

Further, a number of district court opinions seem to assume that Justice Roberts's Commerce Clause reasoning in NFIB does provide a holding. In United States v. Moore, (117) the Eastern District of Washington issued an opinion that was far from clear, but on its surface the opinion seems to read NFIB as creating a rule placing regulation of "compelled" activity outside the Commerce Clause. (118) The District of South Carolina in McElveen v. Mike Reichenbach Ford Lincoln, Inc. (119) characterized NFIB as holding that "because the Commerce Clause permits power over 'activity,' it does not support the individual mandate in the Affordable Care Act because it would permit Congress to regulate inactivity rather than existing commercial activity." (120) In United States v. Williams, (121) the Southern District of Florida stated "the Court [in NFIB] found Congress's attempt to require everyone to buy health insurance exceeded its power under the commerce clause ...,"...

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