Tuesday, March 23, 2010

Rule 11?

Here is the complaint filed by 13 states today challenging the HCR Act.  I have only glanced through about half of it, but this does not get past the Rule 12 stage.  Unfortunately, the defense side is the United States, so it's very unlikely that the U.S. will seek Rule 11 sanctions (and generally the standard for sua sponte Rule 11 sanctions is higher).  Nevertheless, there is no way this suit can succeed under existing precedent or through any reasonable extension of the law.  The complaint is really not a complaint but a political opposition to the act with lots of grandstanding and assertions that actually have no legal basis.  Just as an example, I cannot distinguish HCR's state spending requirements from the alcohol consumption age limits imposed under National Highway Spending. 

There's this gem from Paragraph 46:  "Although the federal government currently contributes 67.64 percent of every dollar Florida spends on Medicaid, that percentage is artificially and temporarily raised because of federal stimulus outlays."  Would you like a permanent stimulus Florida? 

Anyway, even if one opposed the HCR, I think a reasonable mind would have to read this complaint as meritless and the quintessential plea for legislation from the bench.

Edit:  And to piggy back on Carbolic's updated post on Prof. Liu, you can get a preview of tomorrow's hearing by reviewing the transcript of Mr. John G. Roberts' nomination to the D.C. Circuit.   Just cross out the D and replace it with an R, and vice versa.  I'll be damned if Jeff Sessions does not sound like Ted Kennedy tomorrow.  [Use the CTRL F search function to find the relevant portions.]


Blogger Carbolic said...

The main constitutional attack on the Health Care bill was supposed to be to the "deem and pass" method. Since the House voted for the bill using the conventional method, that cricitism is now moot.

I agree that the complaint borders on frivilous. They are basically trying to argue that it is unconstitutional for the federal government to make changes to a popular federal spending program.

This brief was drafted with the assistance of two Baker Hostetler partners. But the firm's name is notably absent from the brief. I wonder if that is intentional.

In any case, as one journalist has noted, the signatories of this complaint have permanently lost their privilege of complaining about activist judges.

3/23/2010 11:17 AM  
Anonymous Anonymous said...

Liu even made it onto drudge!

3/23/2010 12:52 PM  
Anonymous Anonymous said...

There is nothing frivolous about the complaint. The individual mandate raises a colorable question concerning the "class of activities" Congress has chosen to regulate -- doing nothing. Whether doing nothing with respect to the purchase of insurance from a private entity has a substantial effect on IC is an open question. The unprecedented nature of this compulsion raises a serious issue of the scope of the commerce power. If one takes constitutional structure seriously, as the Court should, the commerce power cannot be so broad as to constitute a general police power. If the mandate is beyond Congress's regulatory power, it is highly plausible to treat the tax as the sort of penalty that is a disguised regulation and hence beyond congressional power. Though old and discredited by today's generation, Bailey v. Drexel Furniture has never been overruled. It is just that the occasions for its use have not been present until, perhaps, now. It is also credible to claim that the mandate tax, even if valid, is a direct tax that must be apportioned by population. Finally, the requirement that states provide insurance exchanges is applicable only to the states and triggers a viable question of whether this constitutes commandeering of the state legislature or conscription of state administrators in violation of NY v. US and Printz.
These claims may lose; it may even be likely that they will lose, but they are not frivolous. t

3/23/2010 3:02 PM  
Blogger Carbolic said...

1. "If the mandate is beyond Congress's regulatory power, it is highly plausible to treat the tax as the sort of penalty that is a disguised regulation and hence beyond congressional power."

This is simply untrue. See U.S. v. Butler, 297 U.S. 1 (1936)("The power to tax and spend is a separate and distinct power; its exercise is not confined to the fields committed to Congress by the other enumerated grants of power, but it is limited by the requirement that it shall be exercised to provide for the general welfare of the United States.")

2. Bailey (a case from 1922) is no longer good law. Not only was it superceded by Butler, but it rested on the premise that the Commerce Clause doesn't grant Congress the power to regulate labor. Needless to say, that argument doesn't work anymore.

3. The direct tax requirement was negated by the Sixteenth Amendment in 1913.

4. States are not required to set up insurance exchanges; it's merely an additional condition to receive federal Medicare funding. The Supreme Court has clearly held that the federal government can set conditions on the receipt of federal spending.

If these are the only arguments, then the complaint is frivolous.

P.S. Isn't selective service registration a precedent for Congress "regulat[ing] doing nothing?"

3/23/2010 4:04 PM  
Blogger Dan said...

Good example with selective service, Carbolic. That one has eluded me for a while.

Great post, Armen.

I did a run and gun analysis of this a while ago, when Orrin Hatch and the Funky Bunch wrote an op ed about it, so I don't have much to add. Obviously, I also think this thing is a ridiculous political ploy, not a lawsuit.

3/23/2010 4:15 PM  
Blogger Carbolic said...

Two things I thought funny from page 4:

1. Opposing federal health care by arguing that states could not possibly consider withdrawing from Medicaid. (What happened to all that anti-socialism posturing?)

2. Blaming the federal government for the balanced budget provision in Florida's state constitution.

3/23/2010 4:49 PM  
Anonymous Anonymous said...

if Congress is mandating something it's never mandated before, and if the Constitution doesn't squarely give Congress the power to do it, why is it frivolous to argue it exceeds Congress's power? i'd say the odds of winning are quite small, but the argument isn't frivolous.

and is there something wrong with citizens and states being able to petition the courts for redress of grievance on novel issues and challenge the federal government? or should we shut that down?

3/23/2010 4:59 PM  
Anonymous Anonymous said...

1) The mandate is not an exercise of the spending power, and thus Butler is not apropos. Besides Butler did not overturn Bailey.
2) The principle of Bailey -- that a tax that is designed to regulate and nothing more is invalid if Congress lacks independent regulatory authority -- is still good law. The specific circumstance in which Bailey was applied is no longer good law.
3) The 16th Amendment abolished the direct tax requirement for the income tax only. Read the Amendment. This is not a tax on incomes, but in essence a capitation tax.
4) You may be correct about the insurance exchanges, although my understanding is that it is an independent obligation because the exchanges are to be available to all people who are not insured through their employers, and that includes lots of people ineligible for Medicaid.
5)Selective Service is not an exercise of the commerc power, but of the power to provide armed services.
6) Happy to straighten out your thinking anytime.

3/23/2010 4:59 PM  
Blogger Armen said...

How is a tax on income not an income tax when it taxes income? I still can't get past that one.

As for the novel theories in federal court, you can present novel theories all you want, but you better have a basis in law and fact. Also, does this mean there's now a moratorium on conservatives whining about "trial lawyers?" Funny how the same people scoff at the "McDonalds Coffee" case as the beacon of lawsuits run amok (but in reality it was a meritorious case), yet stand by complaints a notch above the birther suits.

3/23/2010 5:07 PM  
Blogger Armen said...

I don't have the time to dig into this to flush out my arguments, but until 1964, Congress had not exercised its commerce clause powers to mandate something it had not mandated before (the equal treatment of races, ethnicities, sexes, etc.). Does that mean the Civil Rights Act is unconstitutional? It's "mandating" freedom loving business owners to not exclude employees or customers on account of race, etc. So? Where does that leave us? Looking past the rhetoric, the opposition is nothing more than an awkward consortium of long discredited pre-Depression era philosophies. It sort of reminds me how the Volokh Conspiracy guys always yearn for the days before Lochner, except now they just frame the wishful thinking in terms of Kelo takings or more recently the HCR. I mean regardless of the target, the underlying arguments haven't been viable for 70+ years.

3/23/2010 5:48 PM  
Blogger Carbolic said...


1. I don't really know how to respond to your first two points, other than repeating the quote from Butler. The mandate is an exercise of Congress's power to tax. As the quote indicates, the Supreme Court held in 1936 that the power to tax is not limited by other Congressional powers. Hence, To the extent that Bailey held otherwise, Bailey was overturned. The Supreme Court doesn't have to specifically mention a case in order to overturn it.

2. [Armen's point on income tax.]

3. I don't know the details on the insurance exchanges. I imagine that the bill says that you have to include certain individuals IF you have an exchange.

4. The basis of Selective Service registration requirement is irrelevant. You said it was unprecedented for Congress to regulate doing nothing. If an adult male doesn't register, he faces five years' imprisonment. Which is much more severe than an additional tax!

5. Looking forward to further straightening.

3/23/2010 6:04 PM  
Anonymous Anonymous said...

1) It's not a tax on income. It's a flat tax on any person who has failed to comply with the mandate, but if you happen to have enough income, the amount of the tax is tied to your income. That latter gimmick enables its drafters to claim that it's really an income tax, but the base tax reveals that it is basically a head tax.
2) Congress's use of its commerce power in 1964 to enact the Civil Rights Act is a materially different. No one claims that Congress cannot use its commerce power to compel people to do things; the compulsion in the Civil Rights Act is directed toward commercial activities that, taken in the aggregate, have a substantial effect on IC. That conclusion is much more debatable when Congress compels people to engage in commercial activity in the first place. The activity Congress has chosen to regulate is much more like that in Lopez. In Lopez it was a non-commercial, intrastate activity; here it is a non-commercial, intrastate absence of activity.

3/23/2010 6:05 PM  
Blogger Armen said...

Your number 1 sounds like something I've heard before...from conservatives. Oh what oh what could it be? Oh. A consumption tax.

As for number 2, I really wish healthcare was non-commercial. But the suggestion is laughable on its face. Indeed it's laughable on the face of the complaint where Florida complains about the additional (I guess non-economic, non-commercial) spending.

3/23/2010 6:11 PM  
Anonymous Anonymous said...

Herewith further straightening:
1) The mandate is a command enforced by a fine denominated as a tax. Butler involved a linked taxation and spending scheme, stricken because the taxation and spending was determined to be a pretextual exercise of the tax/spending power that was beyond Congress's power to regulate interstate commerce. Of course, the application of that principle in Butler is no good today because we now conclude that Congress had the regulatory authority Butler said it did not have. The principle of Butler survives, however, as Justice O'Connor noted in South Dakota v. Dole. Moreover, if you place such faith in the quote from Butler, why then did the Butler court strike down the AAA? Your interpretation makes no sense in light of the Court's actual ruling in Butler.
2) The basis for Selective Service is highly relevant. Congress only has certain enumerated powers, so it matters a great deal what power Congress relies on to enact legislation. The mandate is a purported exercise of the commerce power, and Congress has never used the commerce power in this fashion. The fact that Congress has a different and more extensive power it can use to draft people is what distinguishes the draft from the mandate.
3) What did you learn from Constitutional Law?

3/23/2010 6:17 PM  
Anonymous Anonymous said...

The mandate is not a regulation of health care, although it is incorporated in extensive regulation of the commercial activity of health care. Your best argument (why do I make the arguments you should be making?) is that the mandate is an integral part of a comprehensive statute that regulates the indisputably commercial and interstate activity of health care and health insurance. You might cite Scalia's concurrence in Gonzales v. Raich for this proposition. There, I did your work for you.

3/23/2010 6:22 PM  
Blogger Armen said...

You didn't do the work for me. The Raich arguments would assume a degree of seriousness to the allegations in this complaint that are, quite clearly, unwarranted.

3/23/2010 6:30 PM  
Anonymous Anonymous said...

I don't see how you can call it frivolous and sanctionable under FRCP 11 when FRCP 11 permits "nonfrivolous argument[s] for extending, modifying, or reversing existing law or for establishing new law." Unless you are a member of the fringe on the flag crowd, if you are upfront about your legal contentions, I do not see how you can call any principled legal position impermissible under FRCP 11. The New Deal cases overruled tons of precedence. Yes, they are the law of the land now, but that certainly does not mean that asking for them to be reversed is frivolous.

3/23/2010 7:53 PM  
Blogger Armen said...

Well that just means we have a different view of what we consider frivolous doesn't it? I think challenging 70 years of precedent and the constitutionality of nearly the bulk of the people-facing side of the federal government is frivolous.

Is that colored by my inconsequential armchair quarterbacking? Probably. Would I sanction the Attorneys General if I were an Article III judge? Probably not.

3/23/2010 8:08 PM  
Blogger Carbolic said...

1. As North Dakota v. Dole demonstrates, the Supreme Court cites Butler for the principle that, through the Taxing and Spending Clause, Congress can achieve "objectives not thought to be within Article I's 'enumerated legislative fields.'"

2. In doing so, the Supreme Court has ignored the restrictive elements of Butler (like the actual holding), despite of the dicta in Justice O'Connor's dissent.

4. How can Butler be cited for an abstract principle that seemingly inverts the actual holding in that case? Ask Renquist. Anyway, that's the way the Supreme Court has treated Butler.

5. You said that there was no precedent for regulations against "doing nothing." Selective Service is one such regulation. You didn't limit your question to the Commerce Clause.

6. Although we all have been colloquially talking about the tax as a "mandate," it's actually more of an incentive--as the Selective Service comparison makes clear.

3/23/2010 8:10 PM  
Blogger Armen said...

That last point has been driving me nuts because I haven't seen the Democrats hammer it home. As a single tax-payer who rents, I am being punished for refusing to get married or own a home. And frankly the punishment is pretty astronomical compared to anything in the HCR. REVOLT!!!

3/23/2010 8:18 PM  
Anonymous Anonymous said...

So Armen, was Ernesto Miranda's lawyer subject to Rule 11 sanctions because s/he sought a holding which was contrary to over a century of law? How about the lawyers behind the Heller effort, who were facing contrary precedent from the 1930's?

3/23/2010 8:49 PM  
Blogger Armen said...

I'm not sticking to my guns or anything, but at least come up with a better counterargument. Miranda? A state criminal case that rose to the SCOTUS on appeal? What does Rule 11 have to do with that? Heller might work if there were literally dozens of Supreme Court cases declining to find that the 2nd Amendment is an individual right and Heller sued to reverse that.

I mean if conflating 70 years of precedent with 70 year old tangential precedent is the best you can throw at me, I feel rather good.

3/23/2010 10:36 PM  
Blogger McWho said...

I don't see this whole Rule 11 discussion as particularly relevant. Rule 11 is only really for lawyers who say "Case A says Y" when in reality "Case A says Z" or "Case A says not Y."

Arguing that the law should be different is not sanctionable. Maybe if a SCOTUS opinion last year refuted it on nearly identical grounds. Otherwise? Not really.

3/24/2010 10:05 AM  
Blogger Dan said...

I kind of thought Armen was being facetious with the Rule 11 talk. The larger point is that this complaint stands little to no chance of success (it seems conservative and liberal posters here agree on that), yet it is somehow dominating coverage of conservative opposition to the bill. I guess they're running out of options...

3/25/2010 11:31 PM  
Blogger James said...

For what it's worth, Washington signed into law a bill in 1792 that required men between the ages of 18 and 45 to buy a gun.

3/26/2010 4:33 PM  
Blogger Carbolic said...

That's really interesting, James. Is there a site with more information on that?

3/27/2010 12:56 PM  
Blogger James said...


3/28/2010 6:25 PM  
Blogger Carbolic said...

Interesting. Though of course, that act operated under the war powers of Congress and the President, as opposed to the commerce clause.

3/29/2010 8:08 AM  
Anonymous Anonymous said...

The argument that people without health insurance are people in a class of activity called "doing nothing" isn't supportable.

Every moment they are uninsured has them shifting the risk of their potential health care costs to Society under the Emergency Medical Treatment and Active Labor Act (See Wikipedia).

While there may be issues that I don't at the moment see, requiring people to assume responsibility for themselves isn't a tax even if meeting that responsibility requires them to make a regular payment to the Federal Government.

2/06/2011 5:26 PM  

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