Updated: Fourth Circuit vacates Virginia Obamacare decision for lack of jurisdiction

September 08, 2011 | By PACIFIC LEGAL FOUNDATION

Author: Timothy Sandefur

This morning, the Fourth Circuit Court of Appeals issued a 33 page decision reversing Judge Henry Hudson’s decision that found the Individual Mandate unconstitutional. The Court of Appeals didn’t reach the merits of the case, but held that the state lacked standing to bring the suit. Pacific Legal Foundation filed a brief arguing that the state did have standing, and pointing out that, among other things, the case of McCulloch v. Maryland—among the most famous Supreme Court decisions of all time, and one that’s crucial precedent in evaluating the constitutionality of the Individual Mandate—was brought in a very similar way to this case.

In that case, Maryland passed a tax on the National Bank, and then sued to enforce it against the federal government; the Supreme Court allowed this procedure and upheld the constitutionality of the National Bank. In this case, Virginia passed a Health Care Freedom Act, protecting an individual’s right not to be forced to buy health insurance, and filed suit to enforce it against the federal government. The Court of Appeals, however, did not comment on our brief or refer to McCulloch. It held that

A state has no interest in the rights of its individual citizens sufficient to justify such an invasion of federal sovereignty…. [T]he mere existence of a state law like the [Virginia Health Care Freedom Act] does not license a state to mount a judicial challenge to any federal statute with which the state law assertedly conflicts. Rather, only when a federal law interferes with a state’s exercise of its sovereign “power to create and enforce a legal code” does it inflict on the state the requisite injury-in-fact.

Obviously, we disagree with that view. States have an interest in the rights of individual citizens—a right that is incorporated into the Constitution by the Tenth Amendment. And states may defend their sovereign authority to defend individual rights by filing suit against the federal government—just as they may sue to defend their sovereign authority to set the drinking age, or to set the rules for state elections, or to pass laws protecting wildlife.

In the Fourth Circuit’s view, however, those examples are different because in such cases, the state was “regulat[ing] behavior or provid[ing] for the administration of a state program….  The state statutes in each of these cases reflect the ‘exercise of [a state’s] sovereign power over individuals and entities within the relevant jurisdiction.’” The Health Care Freedom Act, on the other hand, “regulates nothing and provides for the administration of no state program.” Now, that’s certainly true, but the authority reserved to states under the Tenth Amendment—sovereignty that the Constitution explicitly recognizes and that is akin to the sovereign interests states have been allowed to defend in other cases—is not limited to the administration of state programs. The Tenth Amendment says that Virginia and/or the American people retain any “powers not delegated to the United States by the Constitution, nor prohibited by it to the States.” In other words, there’s no explicit limit on the powers reserved to the states—the way there are limits on the powers given to the federal government (in the form of the limited, enumerated powers). The Fourth Circuit, by limiting the judicially cognizable sovereignty of the states to “regulations” and the “administration of state programs” has inserted a limit on state power that is contrary to the text and the original meaning of the Constitution. There is no constitutional basis for limiting state power under the Tenth Amendment to deny it authority to enact declaratory statutes, a procedure well known to the framers of the Constitution, supported by a long constitutional tradition, and central to the state-federal balance that was forseen in the Federalist, among other places.

This confusion is largely the consequence of the Supreme Court’s decision in Massachusetts v. Mellon, a confused and confusing precedent that the Court tried to clarify in subsequent decisions, but that really needs further discussion. As the late Professor David Currie pointed out, that decision was really a political question doctrine decision if anything, and not a standing decision—and one that radically undermines the crucial role of states in lawfully resisting unconstitutional federal action.

It seems likely that the U.S. Supreme Court will be asked to review this case, just as it’s already been asked to review the Sixth Circuit decision in Thomas More Law Center v. Obama, and just as it’s certain to be asked soon to review the Eleventh Circuit’s decision in Florida v. HHS. For those keeping track, there are now three [two] cases still waiting for Court of Appeal decisions: we’re still waiting for the Fourth Circuit to decide the other Obamacare appeal it heard on the same day as the Virginia case; that’s Liberty University v. Geithner. It and Seven-Sky v. Holder, which is scheduled for oral argument before the D.C. Circuit in a few weeks, are now the main focus of attention. There is one other appeal pending—the Eighth Circuit review of a case in Missouri—but it’s not likely to play a major role in heading to the Supreme Court.

Update: The Court has also issued a decision in Liberty University, holding that the court lacks jurisdiciton to review the Individual Mandate under the Anti-Tax Injunction Act. We will have more on this shortly