Several media accounts have described Judge Kavanaugh’s concurring opinion in Seven-Sky v. Holder (2011) as a vote to uphold the constitutionality of the ACA. This is not correct. Rather, the opinion involved a fairly intricate application of the Tax Anti-Injunction Act. Perhaps more importantly, the opinion elucidates Judge Kavanaugh’s views on, in his own words, “courts of judicial restraint.” In my first book, Unprecedented: The Constitutional Challenge to Obamacare, I discussed Judge Kavanaugh’s opinion, as well as that of Judge Sutton in Thomas Moore Law Center v. Obama (2011). Because this issue is suddenly timely, I reproduce those chapters (starting on p. 150) in their entirety to provide full context about Seven-Sky. I’ve also uploaded the transcript of the Seven-Sky oral argument.
A Capital Case
Before the ACA made its way to One First Street NE, it had one final pit stop to make in Washington, D.C., about half a mile down Constitution Avenue at the E. Barrett Prettyman U.S. Courthouse. There the D.C. Circuit Court of Appeals would be the final arbiter to weigh in on the ACA before the Supreme Court took over.
The D.C. Circuit held oral argument on September 23, 2011. The panel was loaded with two conservative all-stars: Judges Laurence Silberman and Brett Kavanaugh. Silberman, who had been appointed by President Reagan, was seen as a possible candidate for the Supreme Court in the late 1980s and early 1990s. He had delighted conservatives with his significant opinion in Parker v. District of Columbia, finding that the Second Amendment protects an individual right to keep and bear arms. The Supreme Court would agree with Silberman the next year in District of Columbia v. Heller. Paul Clement had clerked for Silberman before clerking for Justice Scalia. Kavanaugh served as senior counsel to President George W. Bush before being appointed to the D.C. Circuit at the young age of forty-one. Like Sutton, Kavanaugh consistently “fed” clerks to the justices of the Supreme Court and was viewed as a possible Supreme Court nominee in a Romney administration. The third jurist was Judge Harry Edwards, a well-respected and distinguished Carter appointee. Randy Barnett praised the “intellectual fire power of the panel.”
For the first time, Neal Katyal did not present the government’s case at a court of appeals. This time, the briefs were signed by Solicitor General Donald Verrilli.
Beth Brinkmann would argue this case for the United States. Unlike her predecessor, Katyal, Brinkmann evaded any effort to identify a limiting principle. Her strategy was a dry run for Verrilli’s approach before the Supreme Court.
When Judge Silberman asked,“Let’s go right to what is your more, most difficult problem: what limiting principle do you articulate?” Brinkmann answered, “Certainly, here, Your Honor, this is a regulation of economic activity, it’s the means by which people finance their health care services, and it is using insurance, which is the customary means.” Silberman interrupted. “Counsel, you’re telling me what the facts of this case [are], but you know the difficult question for you is what kind of mandate . . . could Congress come up with under the Commerce Clause which would be unconstitutional? What kind of requirement that persons buy services or products would be unconstitutional?”
Following the office’s new strategy, Brinkmann avoided answering the question directly. “Well, certainly it would depend. . . . ” Frustrated, Silberman cut her off midsentence: “Just give me an example. Give me an example.” She wouldn’t. Silberman pressed. “Is it you’re unwilling to give me any example of a mandate that would be unconstitutional?” If so, he continued, did that “then feed into your opponent, who says you have no limiting principle?” Brinkmann replied, “Far from it, Your Honor. Not at all. I think it’s difficult.” She stuck closely to her plan.
Like Silberman, Kavanaugh was also concerned about the limiting principle. “Another major concern I have . . . is in 220 years, with a whole lot of laws and a lot of crises, Congress has never once mandated a purchase.” But even when Silberman asked Brinkmann again, “Give me an example of something that would be unconstitutional,” she didn’t answer the question. Brinkmann wasn’t unprepared—she simply did not have the authority to answer that query.
Brinkmann’s evasiveness was a preview of what her new boss, Solicitor General Verrilli, would do at the Supreme Court. Her circuitous answers were not sloppy—rather, they were part of a con- certed effort not to identify the limiting principle. The arguments at the D.C. Circuit were a walk-through—a moot court, if you will—for the Supreme Court. Ilya Shapiro “cautiously predict[ed] a 2–1 ruling in favor” of striking the mandate.
The D.C. Circuit’s opinion was released on November 8, 2011, one week before the Supreme Court would grant review of the Florida case. In a shocking development, all three judges voted to uphold the mandate, though for different reasons.
Judge Silberman, joined by Judge Edwards, decided that Congress had the authority under its commerce powers to enact the mandate. Unlike Judge Sutton, Silberman thought he was “obliged to confront the gravamen of appellants’ argument as to the scope of the Commerce Clause.” He rejected the challengers’ argument that the mandate was unprecedented. “The mandate, it should be recognized, is indeed somewhat novel, but so too, for all its elegance, is appellants’ argument.” Further, Silberman would not read an activity requirement into the Supreme Court’s cases. “In short, we do not believe these cases endorse the view that an existing activity is some kind of touchstone or a necessary precursor to Commerce Clause regulation.”
Verrilli’s strategy not to provide a limiting principle had proved successful. Silberman wrote, “We acknowledge some discomfort with the Government’s failure to advance any clear doctrinal principles limiting congressional mandates that any American purchase any product or service in interstate commerce.” But he was not discomforted enough to strike down the law. Instead, Silberman stressed that Congress should receive the benefit of the doubt. “We are obliged— and this might well be our most important consideration—to presume that acts of Congress are constitutional.” This strategy would prove decisive to Chief Justice Roberts.
Judge Kavanaugh did not join Silberman’s opinion. Instead, he wrote a sixty-five-page opinion that argued that the court could not even decide this case—his opinion intentionally did not resolve the case on the merits.
Kavanaugh’s opinion was premised on an 1876 law called the Anti-Injunction Act (AIA) as applied to an arcane section of the tax code. Even though the government did not rely on this provision of the tax code, Kavanaugh still applied it. In fact, his highly technical analysis came out of left field (or is it right field?). No one anticipated it. During the oral argument, Judge Edwards asked Brinkmann if she had read the obscure provision that Judge Kavanaugh was asking about, and would ultimately hang his opinion on: “You haven’t read it yet, have you?” Brinkmann, who had been involved with the litigation since March 2010, replied, “No.” Judge Silberman asked her to “read it, please.” Kavanaugh joked in his opinion, “The Tax Code is never a walk in the park.”
The purpose of the Anti-Injunction Act is to prevent taxpayers from challenging a tax in court before it is assessed. Instead, they must first pay a tax under protest and challenge it after the fact by seeking a refund. The penalty under the ACA would not be assessed until 2014. In the district court, the government used the AIA as a defense. If the AIA applied, the challengers would have to wait until the tax was assessed in 2014 before challenging it. Almost every court had rejected this notion, finding that the mandate was not a “tax,” as defined by the AIA.
When Neal Katyal had assumed control of the case, he abandoned this losing position. Judge Silberman wrote of this change in his opinion: “Earlier in this litigation, the Government argued that the Anti-Injunction Act barred this suit because the shared responsibility payment is a ‘tax.’ . . . The Government has since abandoned that position.” Likewise, as Judge Motz noted for the Fourth Circuit Court of Appeals,“Both the Secretary and plaintiffs contend that the AIA does not bar this action.” Judge Kavanaugh counted ten district courts in which the government argued that the “Anti-Injunction Act barred these cases.” No one, not even the president, wanted to delay this case until 2014—when he might no longer be in office, Judge Kavanaugh reasoned. Katyal explained that the administration “changed its mind about the Anti-Injunction Act . . . presumably because of an understandable policy desire to have courts resolve the constitutional question about the individual mandate sooner rather than later.” He concluded, “We don’t think AIA applies, even if it is favorable to the government.”
One lawyer for the challengers told me that it was “remarkable” that the government conceded that the Anti-Injunction Act did not apply. It was “pretty powerful” for the government to abandon the AIA issue, as the federal government had a strong “institutional interest in having it apply.” Indeed, internally many in the Treasury Department vigorously opposed this decision. Former commissioners of the Internal Revenue Service filed a brief with the D.C. Circuit arguing that the AIA should apply. The “government saying it does not apply, and you should reach the merits” now, was significant. The administration “wanted a decision sooner rather than later.” They simply did not want to wait.
Yet Katyal’s choice put the government in an awkward position. Like Janus, he was looking both ways, and arguing simultaneously that the mandate was not a tax for purposes of the Anti-Injunction Act, and that it was a tax for purposes of the Constitution’s taxing power.
If the mandate was a tax under the AIA, the case could not be heard until 2014. This is known as a “jurisdictional” rule, meaning that courts have no discretion—it cannot be heard early. The government did not want this to happen—it wanted the case to be heard right away—so the government waived the AIA argument and gave it up. (It is impossible for the government to waive a jurisdictional rule. By finding that the penalty was not a tax for purposes of the AIA, the Court did not need to reach the issue of the government’s waiver.) However, in order for the AIA not to apply, the mandate could not be a tax. So long as the mandate was not a tax, the suit could be brought before 2014. What complicated this situation was the government’s simultaneous assertion that the mandate was a tax, for purposes of Congress’s broad power to lay and collect taxes. But if the mandate was not a tax, the government could not rely on the taxing power to support it. This head-scratching contradiction would be fully explored at the Supreme Court. If you’re confused, don’t worry—Chief Justice Roberts would untie this Gordian knot.
Kavanaugh concluded, “In any event, in my judgment, the relevant prudential considerations favor our waiting until 2014.” Kavanaugh looked beyond the upcoming presidential election. “If we do not decide the constitutional issue now, we may never have to decide it.”
Judicial Restraint
Both Judges Sutton and Kavanaugh found ways to uphold the ACA while avoiding the constitutional question and to send this dispute back to the elected branches of government. Both opinions evinced the principles of judicial restraint. Rather than engaging the constitutional issues, Kavanaugh’s and Sutton’s opinions chose to avoid them. Both sought to avoid deciding the constitutional issue today, and either require the suits to be brought in the future or, even better, place their hope in the political process to fix the mess. But they reached these conclusions in different ways.
Judge Kavanaugh expressed his sentiments of restraint during argument, tempering the “notion that [judges] all feel powerful.” He stated, “You know, we’re courts of judicial restraint. It’s a delicate act to declare an Act of Congress unconstitutional.” Kavanaugh harkened back to the New Deal clash between the Supreme Court and President Roosevelt—opposition that led Roosevelt to threaten “packing the Court” with justices of his choosing. In the future, “there could be a lot of that going on, depending on the constitutionality and the policy judgments, but why should a court get in the middle of that and risk being another 1935 situation where you’re in the middle of a change going on in how commerce is thought of in terms of the Government?” DOJ lawyers would often speak of a “sense of historical déjà vu” with the New Deal.
During oral argument in the Sixth Circuit, Judge Sutton also expressed his preference for allowing the law to go into effect before a court considered its constitutionality. Under this approach,“We don’t have to reach that issue today.” His approach allowed for “judicial restraint,” so we only “reach the hardest issues when we really have to reach them. . . . We can answer that some other day.” Sutton wrote, “Nothing prevents such individuals from bringing as-applied challenges to the mandate down the road.”
Sutton took a very humble posture in his opinion, noting that it was “not the job of a middle-management judge to abandon the distinction between taxes and penalties.” Sutton was “mindful that we at the court of appeals are not just fallible but utterly non-final in this case.” He was invoking the famous maxim from Justice Robert Jackson about the Supreme Court: “We are not final because we are infallible, but we are infallible because we are final.”
Sutton preferred to wait. “Time assuredly will bring to light the policy strengths and weaknesses of using the individual mandate as part of this national legislation, allowing the people’s political representatives, rather than their judges, to have the primary say over its utility.” In an article, Judge Sutton reiterated the sentiment. “In close cases, it thus makes sense for courts to err on the side of democracy— to allow the elected branches of government to monitor, adjust to, and ultimately solve, as best they can, difficult social and economic problems.”
A year earlier, at the 2010 Federalist Society National Lawyers Convention, when Sutton had moderated a panel on Obamacare with Cuccinelli and Rosen, he had said, presciently,“We can be principled in advocating for judicial restraint.” His opinion fulfilled that aspiration. Obamacare opponents were not so sanguine about Sutton’s opinion. Ilya Shapiro wrote that “it is shocking that an avowed constitutionalist like Judge Sutton” would uphold the law in the manner he did. . . . If the [Supreme] Court joins the Sixth Circuit and goes there, it would mean putting the final nail in federalism’s coffin.” Over cocktails at the Madison Club reception during the following Federalist Society National Lawyers Convention, the two reached a rapprochement.
Michael Carvin, lead counsel for the NFIB, had worked with Sutton while he was an attorney at Jones Day. Carvin recalled that Sutton was “not a [Justice Antonin] Scalia type of a conservative,” but “more of a [Justice] Lewis Powell type of a guy.” In right-wing circles, those are fighting words. Powell was a moderate Nixon appointee who voted in favor of abortion rights, affirmative action, and other progressive issues. Even in his time at the Supreme Court, Sutton was pulled between those two poles. Sutton was hired to clerk for the then-retired Powell but would often be detailed to the chambers of Justice Scalia. One longtime Supreme Court follower told me that “Sutton’s opinion was written as memo to John Roberts of why you need to uphold the mandate.” Yet no other judge would adopt Judge Sutton’s reasoning.
Kavanaugh also articulated his vision of restraint. “To be clear, federal courts do not wait to decide constitutional cases simply because of the possibility of congressional change to the legislation or presidential non-enforcement of what the President concludes is an unconstitutional law. Delay on that basis would constitute judicial abdication, not judicial restraint. But the discussion here has been addressing the question whether there are compelling prudential considerations that would justify overriding the limits of the Anti-Injunction Act and deciding this case now.”
Kavanaugh, however, made a point in passing that was not lost on the solicitor general. A statute similar to the one Congress enacted, but without the individual mandate, said the judge, would be absolutely constitutional. Kavanaugh reasoned that a “minor tweak to the current statutory language would definitively establish the law’s constitutionality under the Taxing Clause (and thereby moot any need to consider the Commerce Clause).”
By “eliminat[ing] the legal mandate language”—that is, by deleting a single sentence—the statute would be transformed from a command on people to purchase insurance to a mere tax on those who do not have insurance. The former was of dubious constitutionality, but the latter would be well within Congress’s powers. Kavanaugh was echoing Justice Stone’s whisper to Frances Perkins, “The taxing power of the Federal Government, my dear, the taxing power is sufficient for everything you want and need.” Like Frances Perkins before him, the solicitor general listened carefully.
Simply eliminating one sentence—the mandate—would save the law. With an assist from Judge Kavanaugh, the solicitor general ad- vanced this very argument at the Supreme Court.
Update: In response to several questions about the relationship between Seven-Sky and NFIB, I post here excerpts from later chapters:
The Changing of the Generals
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Third, Verrilli prepared for a fallback argument in the event the Court rejected the leading commerce clause position. After arriving at the office, the solicitor general thought that the government’s tax- ing power argument had not been made as well as it could be. One government attorney characterized the taxing power argument as “just going through the motions,” almost as if “we didn’t really believe it. This could be a ground on which the statute was upheld.” The D.C. Circuit Court of Appeals’ order requesting additional briefing from the government on the taxing issue underscored that the Solicitor General’s office wasn’t “conveying enough in [its] briefs.” The sentiment grew that the taxing argument was merely being raised to “preserve it,” but that it “wasn’t integral to the analysis.”
The decision to take a second look at the taxing power came from the top. One reporter who covers the Supreme Court told me that Verrilli personally “insisted on pushing” it. Of course, the “obvious problem” was that the word “tax” was not in the individual mandate provision. The word used was “penalty.” “Apart from that,” I was told by a senior DOJ official with no irony, that the tax argument “had a lot going for it.” Judge Kavanaugh’s opinion convinced the Solicitor General’s office that the “tax argument might be a more conservative and judicially restrained basis to act to uphold as a tax.” The “nomenclature was the only serious impediment to winning.” Despite this problem, the solicitor general believed that characterizing the mandate as a choice between maintaining insurance and paying a tax was not only a way of avoiding a serious constitutional question, but indeed the best reading of the law. Though it “wasn’t ideal,” the government determined that it “could manage” this argument. And the key to solving that problem of nomenclature fell directly on the shoulders of Donald Verrilli, with Judge Kavanaugh being credited with the “assist.” In what should be a permanent exhibit in the Washington Museum of Doublespeak, Verrilli persuasively argued that the mandate was, at the same time, not a tax and a tax.
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Day One: Tomorrow It’s A Tax, But Today It’s Not
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The hardest part of the theory was persuading the Court that de- spite two years of litigation over the individual mandate, there was in fact no mandate and no punishment for failing to comply with the provision. To Verrilli, the health care law did not compel people to buy insurance. Rather, the law only required that those who did not buy insurance to pay a tax. Such a law could more easily be justified by the taxing power. The only problem with this argument was that it did not reflect the statute that Congress wrote. This construction effectively read several words out of the ACA.
Verrilli pushed back against any questions about the mandate and rejected any assertions that it was an “entirely stand-alone” requirement to buy insurance. As the government noted in its brief, citing the opinion of Judge Kavanaugh from the D.C. Circuit,“To the extent the constitutionality of [the act] depends on whether [the minimum coverage provision] creates an independent legal obligation [a mandate], the Court should construe it not to do so.” In other words, in order to save the ACA, the Court should read the mandate to not be an actual mandate
Here is the quoted section from Solicitor General Verrilli’s brief:
It is beyond dispute that the taxing power would permit Congress to create incentives for the purchase of health insurance by “impos[ing] a lower tax rate on people with health insurance than those without it.” Thomas More, 651 F.3d at 550. Similarly, the taxing power “readily” permits Congress to impose a “[t]ax on individuals without acceptable health care coverage.” Seven-Sky, 661 F.3d at 49-50 (citation omitted) (Kavanaugh, J., dissenting). In Judge Kavanaugh’s view, “[t]he only reason the current statute may not suffice under the Taxing Clause”—a question he did not ultimately decide—“is that Section 5000A arguably does not just incentivize certain kinds of lawful behavior but also mandates such behavior.” Id. at 48 (citing 26 U.S.C.A. 5000A(a)) (footnote omitted). To the extent that the provision means that “a citizen who does not maintain health insurance might be acting illegally,” Judge Kavanaugh reasoned, it might be outside Congress’s tax power. Id. at 48-49.
Even in Judge Kavanaugh’s view, however, a “minor tweak to the current statutory language would defini- tively establish the law’s constitutionality under the Taxing Clause.” Seven-Sky, 661 F.3d at 48. He suggested, for example, that
Congress might retain the exactions and payment amounts as they are but eliminate the legal mandate language in Section 5000A, instead providing some- thing to the effect of: “An applicable individual with- out minimum essential coverage must make a pay- ment to the IRS on his or her tax return in the amounts listed in Section 5000A(c).”
Id. at 49.
In fact, no “minor tweak to the current statutory language” (Seven-Sky, 661 F.3d at 48 (Kavanaugh, dissent- ing)) is required because Section 5000A as currently drafted is materially indistinguishable from Judge Kavanaugh’s proposed revision. Statutory provisions “must be read in * * * context and with a view to their place in the overall statutory scheme.” FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000) (quoting Davis v. Michigan Dep’t of the Treasury, 489 U.S. 803, 809 (1989)). When understood as an exercise of Congress’s power over taxation and read in the context of Section 5000A as a whole, subsection (a) serves only as the predicate for tax consequences imposed by the rest of the section. It serves no other pur- pose in the statutory scheme. Section 5000A imposes no consequence other than a tax penalty for a taxpayer’s
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Perhaps the only pundit who realized the ingenuity of Verrilli’s strategy was Harvard Law School professor Larry Tribe—the same professor Kagan had exchanged celebratory emails with on the day the law was enacted. On Thursday, March 29, 2012, in his “Think- ing About the Constitution” class for Harvard undergraduates, Tribe made prescient comments. . . . Tribe went on to comment on the solicitor general’s response to Roberts’s question: “What if somebody for example is on probation, and is asked, ‘Have you violated any federal law lately?’ could the person truthfully answer, ‘No, I haven’t,’ even though the person didn’t purchase the required insurance but merely paid the penalty?”
The Solicitor General said, “I assure the Court”—and he’s in a position to do so given his pivotal place in the Justice Depart- ment and in the government—“I assure the Court that any- one who pays the penalty when required will not be deemed a lawbreaker from the perspective of the United States government.” Well, given that assurance, it becomes considerably more plausible to see the law being upheld under the taxing power, as Judge Kavanaugh suggested it would be [as] if the law were interpreted this way. Kavanaugh is in the D.C. Circuit in the case that I emphasized earlier. So that’s one straw in the wind that I think is sort of more or less overlooked in the media discussions but that I think could be very important.
Tribe nailed it less than twenty-four hours after the arguments concluded and before the justices even met at the pivotal conference. But for the moment, it would be one of Tribe’s former constitutional law students who reveled in the spotlight.