1 TONY WEST IAN HEATH GERSHENGORN LAURA E. … · Brown & Williamson Tobacco Corp., ... Thomas v....

1 TONY WEST Assistant Attorney General 2IAN HEATH GERSHENGORN

3 Deputy Assistant Attorney General LAURA E. DUFFY

4 United States Attorney JENNIFER R. RIVERA 5Director

6 SHEILA M. LIEBER Deputy Director

7 ETHAN DAVIS JOEL McELVAIN 8JUSTIN M. SANDBERG

9 Attorneys U.S. Department of Justice 10 Civil Division, Federal Programs Branch 20 Massachusetts Ave., NW, Room 7332 11Washington, DC 20001

12 Telephone: (202) 514-2988 Fax: (202) 616-8202 13 Email: [email protected]

14Attorneys for the Defendants

15IN THE UNITED STATES DISTRICT COURT 16 FOR THE SOUTHERN DISTRICT OF CALIFORNIA

17STEVE BALDWIN and PACIFIC )

18 JUSTICE INSTITUTE, ) Case No. 3:10-cv-01033-DMS-WMC ) 19

Plaintiffs, ) Memorandum of Points and Authorities in 20 ) Opposition to Plaintiffs Motion for

v. ) Preliminary Injunction and in Support of 21 ) Defendants Motion to Dismiss

KATHLEEN SEBELIUS, in her official ) 22capacity as Secretary of the United States ) Date: July 16, 2010

23 Department of Health and Human Services, ) Time: 1:30 p.m. et al., ) Courtroom: 10

24 ) The Honorable Dana M. Sabraw Defendants. ) 25

26

27

28

Case 3:10-cv-01033-DMS -WMC Document 24 Filed 06/25/10 Page 1 of 63

10cv1033

mailto:[email protected]

1 Table of Contents 2 INTRODUCTION ...........................................................................................................................1 3 BACKGROUND .............................................................................................................................5 4 A. Statutory Background ..............................................................................................5

5 B. Current Proceedings .................................................................................................8

6 C. Applicable Standards ...............................................................................................8

7 ARGUMENT...................................................................................................................................9 8

I. Plaintiffs Challenges to the Employer Responsibility Provision and the Minimum 9Coverage Provision Fail.......................................................................................................9

10A. The Court Lacks Jurisdiction Over These Claims. ............................................10

111. Plaintiffs Lack Standing Because Neither the Employer

12 Responsibility Provision nor the Minimum Coverage Provision Takes Effect Until 2014. ............................................................................10 13

14 2. Plaintiffs Claims Are Unripe. ...................................................................13

15 3. The Anti-Injunction Act Bars Plaintiffs Claims. .....................................13

16

B. The Comprehensive Regulatory Measures of the ACA Fall Within

17 Congresss Article I Powers...................................................................................14

18 1. Congresss Authority to Regulate Interstate Commerce Is Broad ..............14

19

2. The ACA Regulates the Interstate Markets in Health Insurance

20 and Health Care Services. ..........................................................................17

21 3. The Employer Responsibility and Minimum Coverage Provisions

Regulate Activity That Substantially Affects Interstate Commerce ..........19 22

23 4. The Provisions Are Integral Parts of the Larger Regulatory Scheme

and Are Necessary and Proper to Congresss Regulation of Interstate 24 Commerce ..................................................................................................22

255. The Provisions Are Valid Exercises of Congresss Independent

26 Power under the General Welfare Clause. .................................................26

27

II. Mr. Baldwins Direct Tax and Origination Clause Claims Should Be Dismissed. ...........29

28

A. Mr. Baldwin Cannot Prevail on His Direct Tax Claim. ........................................30

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1B. Mr. Baldwin Cannot Prevail on His Origination Clause Claim. ............................33 2

3 III. The Claims under the Due Process Clause, Federal Rule of Evidence 501,

and California Rule of Evidence 992 Are Meritless. .........................................................37

4IV. Mr. Baldwin Cannot Prevail on His Claim that the ACA Violates Equal Protection. ......40 5

6 V. The Executive Order Is Not a Line Item Veto. ..................................................................43

7 VI. Plaintiffs Claims Regarding Section 1552 Are Baseless. .................................................45

8

VII. Plaintiffs Are Not Entitled to a Preliminary Injunction. ....................................................46

9

10 A. Plaintiffs Make No Showing That They Would Be Irreparably

Harmed in the Absence of Emergency Relief. .......................................................46 11

B. The Balance of the Equities and the Public Interest Weigh Strongly 12 Against Granting Preliminary Relief. ....................................................................47

13

CONCLUSION ..............................................................................................................................48 14

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TABLE OF AUTHORITIES

Cases:

Abbott Labs. v. Gardner, 387 U.S. 136 (1967) .................................................................................................................13

Allen v. Wright, 468 U.S. 737 (1984) .................................................................................................................42

Alsea Valley Alliance v. Dept. of Commerce, 358 F.3d 1181 (9th Cir. 2004) .................................................................................................47

American Trucking Assns., Inc. v. City of Los Angeles, 559 F.3d 1046 (9th Cir. 2009) .........................................................................................4, 9, 47

Armstrong v. United States, 759 F.2d 1378 (9th Cir. 1985) .................................................................................................35

Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) ...............................................................................................................9

Barr v. United States, 736 F.2d 1134 (7th Cir. 1984) .................................................................................................14

Bartley v. United States, 123 F.3d 466 (7th Cir. 1997) ...................................................................................................14

Bennett v. Spear, 520 U.S. 154 (1997) .................................................................................................................46

Boating Indus. Assns. v. Marshall, 601 F.2d 1376 (9th Cir. 1979) .................................................................................................42

Bob Jones Univ. v. Simon, 416 U.S. 725 (1974) ...........................................................................................................14, 28

Boday v. United States, 759 F.2d 1472 (9th Cir. 1985) .................................................................................................35

Bolling v. Sharpe, 347 U.S. 497 (1954) .................................................................................................................41

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Buckley v. Valeo, 424 U.S. 1 (1976) .....................................................................................................................29

Caribbean Marine Servs. Co. v. Baldrige, 844 F.2d 668 (9th Cir. 1998) ...................................................................................................47

Carroll v. Nakatani, 342 F.3d 934 (9th Cir. 2003) ...................................................................................................45

Charles C. Steward Mach. Co. v. Davis, 301 U.S. 548 (1937) .................................................................................................................26

Citizens United v. FEC,

130 S. Ct. 876 (2010) .................................................................................................................11

Clinton v. New York, 524 U.S. 417 (1998) .................................................................................................................45

Daniel v. Paul, 395 U.S. 298 (1969) .................................................................................................................22

Doe v. United States, 419 F.3d 1058 (9th Cir. 2005) .................................................................................................44

Eisner v. Macomber, 252 U.S. 189 (1920) ...........................................................................................................32, 33

FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000) .................................................................................................................29

Flint v. Stone Tracy Co., 220 U.S. 107 (1911) .................................................................................................................34

Get Outdoors II, LLC v. City of San Diego, 506 F.3d 886 (9th Cir. 2007) ...................................................................................................12

Golden Gate Rest. Ass'n v. City & County of San Francisco, 512 F.3d 1112 (9th Cir. 2008) .................................................................................................48

Gonzales v. Raich, 545 U.S. 1 (2005) ............................................................................................................. passim

Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9 (D.D.C. 2001) .............................................................................................13

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Harris v. IRS, 758 F.2d 456 (9th Cir. 1985) ...................................................................................................35

Heart of Atlanta Motel v. United States, 379 U.S. 241 (1964) .................................................................................................................22

Helvering v. Davis, 301 U.S. 619 (1937) .................................................................................................................27

Hodel v. Va. Surface Mining & Reclamation Ass'n, 452 U.S. 264 (1981) .................................................................................................................26

Hollander v. Inst. for Research on Women & Gender at Columbia Univ., 2009 WL 1025960 (S.D.N.Y. 2009) ........................................................................................41

Hosp. Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738 (1976) .................................................................................................................18

Hylton v. United States, 3 U.S. (3 Dall.) 171 (1796) ..........................................................................................31, 32, 33

In re Madison Guar. Savings and Loan Ass'n, 173 F.3d 866 (D.C. Cir. 1999) .................................................................................................40

In re Navy Chaplaincy, 534 F.3d 756 (D.C. Cir. 2008) .................................................................................................47

Joint Stock Society v. UDV North America, Inc., 266 F.3d 164 (3d Cir. 2001).....................................................................................................42

Jones v. United States, 529 U.S. 848 (2000) .................................................................................................................16

Knowlton v. Moore, 178 U.S. 41 (1900) ...................................................................................................................32

Lee v. City of Los Angeles, 250 F.3d 668 (9th Cir. 2001) ...................................................................................................16

License Tax Cases, 72 U.S. (5 Wall.) 462 (1867) .....................................................................................................2, 26

Lincoln Fed. Labor Union v. Nw. Iron & Metal Co., 335 U.S. 525 (1949) .................................................................................................................38

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Lochner v. New York, 198 U.S. 45 (1905) ...........................................................................................................2, 4, 38

Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ..................................................................................................... 10-13, 46

M'Culloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819) .................................................................................................25

McConnell v. FEC, 540 U.S. 93 (2003) ...................................................................................................................11

Millard v. Roberts, 202 U.S. 429 (1906) ...........................................................................................................36, 37

Moon v. Freeman, 379 F.2d 382 (9th Cir. 1967) ...................................................................................................30

Murphy v. IRS, 493 F.3d 170 (D.C. Cir. 2007) .................................................................................................33

NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937) .....................................................................................................................19

Nebbia v. New York, 291 U.S. 502 (1934) .................................................................................................................38

Neighbors of Cuddy Mountain v. Alexander, 303 F.3d 1059 (9th Cir. 2002) .................................................................................................46

Nelson v. Sears, Roebuck & Co., 312 U.S. 359 (1941) .................................................................................................................28

Newdow v. Rio Linda Union Sch. Dist., 597 F.3d 1007 (9th Cir. 2010) .................................................................................................42

Nunez v. United States, 546 F.3d 450 (7th Cir. 2008) ...................................................................................................46

Pac. Ins. Co. v. Soule, 74 U.S. (7 Wall.) 433 (1868) ...................................................................................................33

Plyler v. Doe, 457 U.S. 217 (1982) .................................................................................................................43

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Pollock v. Farmers' Land & Trust Co., 158 U.S. 601 (1895) .................................................................................................................32

Rainey v. United States, 232 U.S. 310 (1914) .................................................................................................................35

Sabri v. United States, 541 U.S. 600 (2004) .................................................................................................................26

Scott v. Pasadena Unified Sch. Dist., 306 F.3d 646 (9th Cir. 2002) ...................................................................................................11

Simmons v. United States, 308 F.2d 160 (4th Cir. 1962) ...................................................................................................28

Smelt v. County of Orange, 447 F.3d 673 (9th Cir. 2006) .............................................................................................11, 44

Sonzinsky v. United States, 300 U.S. 506 (1937) .................................................................................................................28

South Carolina v. Block, 717 F.2d 874 (4th Cir. 1983) ...................................................................................................30

South Dakota v. Dole, 483 U.S. 203 (1987) .................................................................................................................27

Spenceley v. MD Anderson Cancer Center., 938 F. Supp. 398 (S.D. Tex. 1996) ..........................................................................................42

Springer v. United States, 102 U.S. 586 (1881) .................................................................................................................32

Steel Co. v Citizens for a Better Environment, 523 U.S. 83 (1998) .....................................................................................................................9

Summers v. Earth Island Institute, 129 S. Ct. 1142 (2009) ...............................................................................................................1

Texas Office of Pub. Utility Counsel v. F.C.C., 183 F.3d 393 (5th Cir. 1999) ...................................................................................................35

Texas v. United States, 523 U.S. 296 (1998) ...........................................................................................................13, 45

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Thomas v. Mundell, 572 F.3d 756 (9th Cir. 2009) .......................................................................................42, 44, 46

Thomas v. Union Carbide Agr. Products Co., 473 U.S. 568 (1985) .................................................................................................................13

Twin City Bank v. Nebeker, 167 U.S. 196 (1897) .....................................................................................................35, 36, 37

Tyler v. United States, 281 U.S. 497 (1930) .............................................................................................................3, 31

U.S. Philips Corp. v. KVC Bank N.V., 590 F.3d 1091 (9th Cir. 2010) ...................................................................................................9

Union Elec. Co. v. United States, 363 F.3d 1292 (Fed. Cir. 2004)..........................................................................................32, 33

United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1 (2008) .....................................................................................................................14

United States v. Comstock, 130 S. Ct. 1949 (2010) .......................................................................................................25, 26

United States v. Darby, 312 U.S. 100 (1941) .................................................................................................................18

United States v. Kahriger, 345 U.S.22 (1953) ....................................................................................................................28

United States v. Lopez, 514 U.S. 549 (1995) ...........................................................................................................16, 17

United States v. Mfrs. Nat'l Bank of Detroit, 363 U.S. 194 (1960) .............................................................................................................3, 31

United States v. Morrison, 529 U.S. 598 (2000) .................................................................................................................17

United States v. Munoz-Flores, 495 U.S. 385 (1990) ...........................................................................................................35, 36

United States v. Oakland Cannabis Buyers' Coop., 532 U.S. 483 (2001) .................................................................................................................48

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1 United States v. Sanchez, 340 U.S. 42 (1950) .............................................................................................................26, 28 2

3 United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533 (1944) ...........................................................................................................18, 24

4United States v. Stewart, 5

451 F.3d 1071 (9th Cir. 2006) .................................................................................................16 6

United States v. Virginia, 7 518 U.S. 515 (1996) .................................................................................................................43 8

United States v. Wrightwood Dairy Co., 9 315 U.S. 110 (1942) .................................................................................................................26

10 Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (1976) .....................................................................................................................39 11

12 Valley Forge Christian Coll. v. Americans United, 454 U.S. 464 (1982) .......................................................................................................1, 42, 45 13

Veazie Bank v. Fenno, 1475 U.S. (8 Wall.) 533 (1869) .............................................................................................32, 33

15Vukasovich, Inc. v. Commissioner, 16 790 F.2d 1409 (9th Cir. 1986) .................................................................................................33

17Washington v. Glucksberg,

18 521 U.S. 702 (1997) .............................................................................................................3, 38

19

Weinberger v. Romero-Barcelo, 20 456 U.S. 305 (1982) .................................................................................................................48

21 West Coast Hotel Co. v. Parrish, 300 U.S. 379 (1937) .................................................................................................................38 22

23 Wickard v. Filburn, 317 U.S. 111 (1942) ......................................................................................................... passim

24

25Constitution and Statutes:

26U.S. Const. art. I, 2, cl. 3 .......................................................................................................15, 31

27U.S. Const. art. I, 7..................................................................................................................3, 34

28U.S. Const. art. I, 8, cl. 1 .............................................................................................................26

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1 U.S. Const. art. I, 8, cl. 3.............................................................................................................15 2 U.S. Const. art. I, 8, cl. 18.............................................................................................................2 3 U.S. Const. art. I, 9, cl. 4.............................................................................................................31 4

U.S. Const. art. VI, cl. 2.................................................................................................................40 5

U.S. Const. amend. XVI .......................................................................................................... 31-33

6

5 U.S.C. 704 ...............................................................................................................................46 7

8 5 U.S.C. 706(2) ...........................................................................................................................47

9 26 U.S.C. 4980B .........................................................................................................................28 10

26 U.S.C. 4980D.........................................................................................................................28 11

26 U.S.C. 4980H(d) ....................................................................................................................14 12

26 U.S.C. 5000A(a) ..............................................................................................................27, 34 13

14 26 U.S.C. 5000A(b)(1)..........................................................................................................27, 34

15 26 U.S.C. 5000A(b)(2)................................................................................................................27 16

26 U.S.C. 5000A(c)(1)(2) .....................................................................................................27, 33

17

26 U.S.C. 5000A(d) ....................................................................................................................22 18

19 26 U.S.C. 5000A(e) ....................................................................................................................22

20 26 U.S.C. 5000A(e)(1)................................................................................................................33 21

26 U.S.C. 5000A(e)(2)................................................................................................................27 22

26 U.S.C. 5000A(g)(1)................................................................................................................14 23

26 U.S.C. 5000A(g)(2)................................................................................................................27 24

25 26 U.S.C. 6671(a) .......................................................................................................................14

26 26 U.S.C. 7421(a) .......................................................................................................................13 27

26 U.S.C. 9801............................................................................................................................18 28


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1 26 U.S.C. 9803............................................................................................................................18 2

28 U.S.C. 2201(a) .......................................................................................................................14 3

4 29 U.S.C. 1181(a) .......................................................................................................................18

5 29 U.S.C. 1182............................................................................................................................18 6

42 U.S.C. 300gg..........................................................................................................................18 7

42 U.S.C. 300gg-1 ......................................................................................................................18 8

42 U.S.C. 1395dd........................................................................................................................19 9

10 42 C.F.R. 50.301 .........................................................................................................................44

11 42 C.F.R. 50.302 .........................................................................................................................44 12

42 C.F.R. 50.303 .........................................................................................................................44 13

42 C.F.R. 50.304 .........................................................................................................................44 14

42 C.F.R. 50.306 .........................................................................................................................44 15

16 Pub L. No. 93-406, 88 Stat. 829 (1974).........................................................................................18

17 Pub. L. No. 99-272, 100 Stat. 82 (1985)........................................................................................18 18

Pub. L. No. 104-191, 110 Stat. 1936 (1996)..................................................................................18 19

Pub. L. No. 104-191, 110 Stat. 1979 (1996)..................................................................................18 20

21 Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010)

22 1001...............................................................................................................................7, 12

1002...................................................................................................................................2723 1201...............................................................................................................................7, 23

24 1311.....................................................................................................................................6

1331.....................................................................................................................................6

25 3504...................................................................................................................................40

3509(a)-(g) ........................................................................................................................4126 1401-02 ...............................................................................................................................7

27 1421.....................................................................................................................................6

1501...................................................................................................................7, 30, 37, 48

28 1501(a) ........................................................................................................................29, 47

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1 1501(a)(2)(A)..............................................................................................6, 18, 19, 21, 24

1501(a)(2)(B) ......................................................................................................................52 1501(a)(2)(E) ......................................................................................................................5

3 1501(a)(2)(F)...................................................................................................2, 5, 7, 20, 22

1501(a)(2)(G)......................................................................................................................5

4 1501(a)(2)(H)..........................................................................................................7, 23, 24

1501(a)(2)(I) .............................................................................................................3, 7, 24 5 1501(a)(2)(J) .....................................................................................................................25

6 1501(b)..................................................................................................................26, 27, 36

1513...................................................................................................................6, 12, 27, 37

7 1513(d)(2)(A)....................................................................................................................11

1552.............................................................................................................................46, 478 2001.....................................................................................................................................7

9 10106...................................................................................................................................7

10106(a) .................................................................................................................... passim10 10503(a) ........................................................................................................................... 44

10503(b)(1) ...................................................................................................................... 44 11

12 Pub. L. No. 111-152, 124 Stat. 1029 (Mar. 30, 2010):

13 1002............................................................................................................................... 7, 27

2303................................................................................................................................ 7, 44 14

15 Legislative Materials: 16 47 Million and Counting: Why the Health Care Market Is Broken: Hearing Before the S.

17 Comm. on Finance, 110th Cong. (2008)..................................................................................21

18 Congressional Budget Office, 2008 Key Issues in Analyzing Major Health Insurance Proposals (Dec. 2008) ..................................................................................................... passim 19

20 Congressional Budget Office, The Long-Term Budget Outlook (June 2009)..................................5

21 155 Cong. Rec. E1819 (statement of Rep. Maloney) ....................................................................43

22

Council of Economic Advisers, The Economic Case for Health Care Reform

23 (June 2009).......................................................................................................................19, 20

24 Council of Economic Advisers, The Economic Report of the President

(Feb. 2010)..............................................................................................................................20 25

26 The Economic Case for Health Reform: Hearing Before the H. Comm. on the Budget, 111th Cong. 5 (2009)...............................................................................................................18

27

Health Reform in the 21st Century: H. Comm. on Ways and Means,28 111th Cong. (2009) ............................................................................................................20, 24

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2 H.R. Rep. No. 111-443 (2010) ...................................................................................................6, 20

3

H.R. 3962, 111th Cong. (2009) .....................................................................................................34 4

Letter from Douglas W. Elmendorf, Director, CBO to the Hon. Nancy Pelosi, Speaker,

5 U.S. House of Representatives (Mar. 20, 2010) ......................................................................8

6

Joint Comm. on Taxation, 111th Cong., Technical Explanation of the Revenue

7 Provisions of the Reconciliation Act of 2010, as amended, in Combination with the

Patient Protection and Affordable Care Act (Mar. 21, 2010) .............................................28

8

S. Rep. No. 111-89 (2009) .............................................................................................................20 9

10

11 Miscellaneous:

12 Bruce Ackerman, Taxation and the Constitution, 99 Colum. L. Rev. 1, 8-13 (1999) .............31, 33

13

Erwin Chemerinsky, Constitutional Law 625 (3d ed. 2006) .........................................................39

14

Executive Order No. 13,535, 75 Fed. Reg. 15,599 (2010) ........................................................4, 43 15

Fed. R. Evid. 201 ...........................................................................................................................16 16

17 Vicki Lawrence MacDougall, Medical Gender Bias and Managed Care,

27 Okla. City U.L. Rev. 781, 800-818 (2002) .......................................................................43 18

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INTRODUCTION

Plaintiffs lack standing to invoke the jurisdiction of this Court over assorted claims that,

in any event, lack even a trace of legal substance. Plaintiffs have moved to enjoin

implementation of the Patient Protection and Affordable Care Act (ACA or the Act), even

though the key provisions that they challenge do not take effect until 2014. See Pub. L. No. 111

148, 124 Stat. 119 (Mar. 23, 2010), as amended by Health Care and Education Reconciliation

Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (Mar. 30, 2010). Plaintiffs predictions of

injury three and a half years from now are merely speculative. Nor can plaintiffs create standing

to challenge future government actions by disagreeing with them now. Additionally, with

respect to these key provisions and other parts of the law such as those providing a statutory

footing for womens health offices or requiring a statement on a website by Secretary Sebelius

plaintiffs identify no particularized harm. Their asserted harm appears instead to be an alleged

erosion of the rule of law. Pls. Br. Supp. Mot. Prelim. Inj. 3. But the assertion of an abstract

interest in a law-abiding government does not satisfy the basic constitutional requirement of

injury-in-fact, Valley Forge Christian Coll. v. Americans United, 454 U.S. 464, 482 (1982), or

differentiate them from everyone else who happens to share this mere generalized grievance[],

id. at 475. As the Supreme Court stated in Summers v. Earth Island Institute, 129 S. Ct. 1142,

1148 (2009), the role of courts under Article III of the Constitution is to redress or prevent

actual or imminently threatened injury to persons caused by private or official violation of law.

Except when necessary in the execution of that function, courts have no charter to review and

revise legislative and executive action. Plaintiffs ask the Court to ignore those limitations here.

Plaintiffs quest to revise legislative and executive action also fails on the merits.

Among other legal errors, plaintiffs invoke long-discredited Lochner-era understandings of

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congressional power, misread the Supreme Courts privacy cases, and confuse an executive order

for a line-item veto. Under modern jurisprudence, Congress acted well within its authority under

the Commerce Clause in adopting the employer responsibility provision which will direct large

employers to provide insurance coverage for their employees or pay a penalty and the

minimum coverage provision which will require individuals, with exceptions, to maintain a

minimum level of health care insurance coverage or pay a penalty. Congress understood, and

plaintiffs do not deny, that virtually everyone at some point needs medical services, which cost

money. The ACA regulates economic decisions about how to pay for those services whether

to pay in advance through insurance or to attempt to do so later out of pocket decisions that, in

the aggregate, without question substantially affect the vast, interstate health care market.

Gonzales v. Raich, 545 U.S. 1, 22 (2005).

More than 45 million Americans have neither private health insurance nor the protection

of government programs such as Medicaid. Many of these individuals are uninsured because

they cannot afford coverage. Others are excluded by insurers restrictive underwriting criteria.

Still others make the economic decision to forego insurance altogether. Foregoing health

insurance, however, is not the same as foregoing health care. When accidents or illnesses

inevitably occur, the uninsured still receive medical assistance, even if they cannot pay. As

Congress documented, the cost of such uncompensated health care $43 billion in 2008 alone

are passed on to the other participants in the health care market: health care providers, insurers,

the insured population, governments, and taxpayers. Pub. L. No. 111-148, 1501(a)(2)(F),

10106(a). Congress further determined that, without the minimum coverage provision, the

reforms in the Act, such as the ban on denying coverage and setting premiums based on pre

existing conditions, would not work, as they would amplify existing incentives for individuals to

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wait to purchase health insurance until they needed care, shifting even greater costs onto third

parties. Id. 1501(a)(2)(I), 10106(a). Congress thus found that the minimum coverage

provision is essential to creating effective health insurance markets in which improved health

insurance products that are guaranteed issue and do not exclude coverage of pre-existing

conditions can be sold. Id. Congresss authority under the Commerce Clause and the

Necessary and Proper Clause to adopt the minimum coverage provision is thus clear.

In addition, Congress has independent authority to enact this statute as an exercise of its

power under Article I, Section 8, to lay taxes and make expenditures to promote the general

welfare. License Tax Cases, 72 U.S. (5 Wall.) 462, 471 (1867). The employer responsibility

provision and the minimum coverage provision will raise substantial revenues, and both are

therefore valid under longstanding precedent, even though Congress also had a regulatory

purpose in enacting the provisions. It is equally well-established that a tax predicated on a

volitional event such as a decision not to purchase health insurance is not a direct tax

subject to apportionment under Article I, Sections 2 and 9. United States v. Mfrs. Natl Bank of

Detroit, 363 U.S. 194, 197-98 (1960); Tyler v. United States, 281 U.S. 497, 502 (1930).

Plaintiffs also assert that Congress violated the Origination Clause, U.S. Const. art. I, 7, in

enacting these provisions, but ignore the fact that the ACA did originate as a House bill.

Plaintiffs other claims fare no better. They contend that they have a fundamental right

not to buy health insurance. But the supposed right to forego insurance, and to shift ones

health care costs to third-parties, plainly is not deeply rooted in this Nations history and

tradition, nor is it a prerequisite to liberty. Washington v. Glucksberg, 521 U.S. 702, 721

(1997). Indeed, the Supreme Court long ago rejected the idea, embodied in Lochner v. New

York, 198 U.S. 45 (1905), and its progeny that commercial transactions are sacrosanct. Similarly

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meritless is the claim that Executive Order No. 13,535, 75 Fed. Reg. 15,599 (2010) which

addresses restrictions on abortion funding in the ACA acts as an unconstitutional line-item

veto. The order does not purport to negate any elements of the statute as a line item veto would.

Plaintiffs claims that the ACA violates equal protection by establishing womens health offices,

and that the ACA must be enjoined due to a supposed failure by the Secretary of Health and

Human Services to comply with a publication requirement, are likewise spurious.

Because plaintiffs claims should be dismissed, a fortiori, they cannot show a likelihood

of success on the merits, as they are required to do to obtain a preliminary injunction. American

Trucking Assns. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009). Nor do plaintiffs

even attempt to show a second element for such relief, that they will likely suffer irreparable

harm absent the entry of a preliminary injunction. Instead, they rely on standards that the Ninth

Circuit has cast aside as too lenient. Id. The final two elements the balance of the equities and

the public interest also weigh heavily against a preliminary injunction. Id. The ACA is an

important national legislative reform designed to make health insurance coverage more available

and affordable. In enacting the ACA, Congress sought to counter the adverse economic effects

and avoid the personal tragedies caused by the current lack of insurance coverage for millions of

Americans. The statute was the product of an intense and thorough national debate, and years of

careful deliberation by Congress. Yet plaintiffs ask this Court to set aside the democratic

judgment of the elected branches of government and substitute their own policy preferences.

Notwithstanding the apparent strength of their convictions, plaintiffs are not entitled to second-

guess Congresss legislative assessment of the public interest. The Court should grant

defendants motion to dismiss and deny plaintiffs motion for a preliminary injunction, as it

denied their application for a temporary restraining order.

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BACKGROUND

A. Statutory Background

In 2009, the United States spent more than 17% of its gross domestic product on health

care, in a $2.5 trillion market. Pub. L. No. 111-148, 1501(a)(2)(B), 10106(a).

Notwithstanding these extraordinary expenditures, 45 million people an estimated 15% of the

population went without health insurance for some portion of 2009, and, absent the new

legislation, that number would have climbed to 54 million by 2019. Cong. Budget Office

(CBO), 2008 Key Issues in Analyzing Major Health Insurance Proposals 11 (Dec. 2008)

[hereinafter Key Issues]; see also CBO, The Long-Term Budget Outlook 21-22 (June 2009).

The record before Congress documents the staggering costs that a broken health care

system visits on individual Americans and the nation as a whole. The millions who lack health

insurance coverage still receive medical care, but often cannot pay for it. The costs of that

uncompensated care, $43 billion in 2008 alone, are shifted to providers, the insured population in

the form of higher premiums, to governments and to taxpayers. Pub. L. No. 111-148,

1501(a)(2)(F), 10106(a). But cost shifting is not the only harm imposed by the lack of

insurance. Congress found that the economy loses up to $207,000,000,000 a year because of

the poorer health and shorter lifespan of the uninsured, Pub. L. No. 111-148, 1501(a)(2)(E),

10106(a), and concluded that 62 percent of all personal bankruptcies result in part from medical

expenses, id. 1501(a)(2)(G), 10106(a). All these costs, Congress determined, substantially

affect interstate commerce. Id. 1501(a)(2)(F), 10106(a).

In order to remedy this enormous problem for the American economy, the Act

comprehensively regulates activity that is commercial and economic in nature: economic and

financial decisions about how and when health care is paid for, and when health insurance is

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purchased. Pub. L. No. 111-148, 1501(a)(2)(A), 10106(a). First, to address inflated fees and

premiums in the individual and small-business insurance market, Congress established health

insurance exchanges as an organized and transparent marketplace for the purchase of health

insurance where individuals and employees (phased-in over time) can shop and compare health

insurance options. H.R. Rep. No. 111-443, pt. II, at 976 (2010) (internal quotation omitted).

The exchanges will regulate premiums, implement procedures to certify qualified health plans,

coordinate participation and enrollment in health plans, and provide consumers with needed

information. Pub. L. No. 111-148, 1311.

Second, the Act builds on the existing system of health insurance, in which most

individuals receive coverage as part of their employee compensation. See CBO, Key Issues, at

4-5. It creates a system of tax incentives for small businesses to encourage the purchase of

health insurance for their employees, and imposes penalties on certain large businesses that do

not provide adequate coverage to their employees. Pub. L. No. 111-148, 1421, 1513. The

employer responsibility provision of Section 1513 of the Act will prevent employers who do not

offer health insurance to their workers from gaining an unfair economic advantage relative to

those employers who do provide coverage. H.R. Rep. No. 111-443, pt. II, at 985-86.

Third, the Act will subsidize insurance coverage for much of the uninsured population.

As Congress understood, nearly two-thirds of the uninsured are in families falling below 200

percent of the federal poverty level, H.R. Rep. No. 111-443, pt. II, at 978 (2010); see also CBO,

Key Issues, at 27, while 4 percent of those with income greater than 400 percent of the poverty

level are uninsured. CBO, Key Issues, at 11. The Act seeks to plug this gap by providing health

insurance tax credits and reduced cost-sharing for individuals and families with income between

133 and 400 percent of the federal poverty line, Pub. L. No. 111-148, 1401-02, and expands

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eligibility for Medicaid to individuals with income below 133 percent of the federal poverty level

beginning in 2014. Id. 2001.

Fourth, the Act will remove barriers to insurance coverage. As noted, it will prohibit

widespread insurance industry practices that increase premiums or deny coverage entirely to

those with the greatest need for health care. Most significantly, the Act will bar insurers from

refusing to cover individuals with pre-existing medical conditions. Pub. L. No. 111-148,

1201.1

Finally, the Act will require that all Americans, with specified exceptions, maintain a

minimum level of health insurance coverage, or pay a penalty. Pub. L. No. 111-148, 1501,

10106, as amended by Pub. L. No. 111-152, 1002. Congress found that this provision is an

essential part of this larger regulation of economic activity, and that its absence would

undercut Federal regulation of the health insurance market. Id. 1501(a)(2)(H), 10106(a).

That judgment rested on detailed Congressional findings. Congress found that, by significantly

reducing the number of the uninsured, the requirement, together with the other provisions of this

Act, will lower health insurance premiums. Id. 1501(a)(2)(F), 10106(a). Conversely,

Congress also found that, without the minimum coverage provision, the reforms in the Act, such

as the ban on denying coverage based on pre-existing conditions, would amplify existing

incentives for individuals to wait to purchase health insurance until they needed care, thereby

further shifting costs onto third parties. Id. 1501(a)(2)(I), 10106(a). Congress thus found that

the minimum coverage provision is essential to creating effective health insurance markets in

1 It will also prevent insurers from rescinding coverage for any reason other than fraud or misrepresentation, or declining to renew coverage based on health status. Id. 1001, 1201. And it will prohibit caps on the coverage available to a policyholder in a given year or over a lifetime. Id. 1001, 10101(a).

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which improved health insurance products that are guaranteed issue and do not exclude coverage

of pre-existing conditions can be sold. Id.

The CBO projects that by 2019, the reforms in the Act will reduce the number of

uninsured Americans by 32 million. Letter from Douglas W. Elmendorf, Director, CBO, to the

Hon. Nancy Pelosi, Speaker, U.S. House of Representatives 9 (Mar. 20, 2010) [hereinafter CBO

Letter to Rep. Pelosi]. It further projects that the Acts combination of reforms, subsidies, and

tax credits will reduce the average premium paid by individuals and families in the individual

and small-group markets. Id. at 15; CBO, An Analysis of Health Insurance Premiums Under the

Patient Protection and Affordable Care Act 23-25 (Nov. 30, 2009). And CBO estimates that the

interrelated revenue and spending provisions in the Act specifically including revenue from the

employer responsibility and minimum coverage provisions will yield net savings to the federal

government of more than $100 billion over ten years. CBO Letter to Rep. Pelosi at 2.

B. Current Proceedings

Plaintiffs filed suit on May 14, 2010, and sought a temporary restraining order and a

preliminary injunction. On June 10, 2010, the Court denied the TRO, concluding that there are

no allegations that plaintiffs will suffer any specific harm between now and the regularly

scheduled motion for preliminary injunction. TRO Order, June 10, 2010, at 3.

C. Applicable Standards

The Secretary moves to dismiss the complaint for lack of subject matter jurisdiction,

under Rule 12(b)(1), and for failure to state a claim upon which relief can be granted, under Rule

12(b)(6). Plaintiffs bear the burden to show jurisdiction under Rule 12(b)(1), and the Court

must determine whether it has jurisdiction before addressing the merits of the complaint. See

Steel Co. v Citizens for a Better Environment, 523 U.S. 83, 94-95 (1998). Under Rule 12(b)(6),

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[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory

statements, do not suffice. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).

This brief also responds to plaintiffs motion for a preliminary injunction. A preliminary

injunction is an extraordinary remedy meant simply to preserve the status quo until a court can

decide the merits. See U.S. Philips Corp. v. KVC Bank N.V., 590 F.3d 1091, 1094 (9th Cir.

2010). Even if the Court does not dismiss the complaint, plaintiffs could not obtain a

preliminary injunction unless they establish: (i) that they are likely to succeed on the merits, (ii)

that they will likely suffer irreparable harm in the absence of preliminary relief before a final

decision, (iii) the balance of equities tips in their favor, and (iv) the injunction is in the public

interest.2 American Trucking, 559 F.3d at 1052 (citing standard for preliminary injunctions).

Plaintiffs do not attempt to make this showing, erroneously relying on now-defunct cases

permitting preliminary relief based on the mere possibility of irreparable harm or on the

existence of serious questions going to the merits. See, e.g., id.

ARGUMENT

I. Plaintiffs Challenges to the Employer Responsibility Provision and the Minimum Coverage Provision Fail

Plaintiffs assert that the employer responsibility provision and the minimum coverage

provision exceed Congresss constitutional powers. This Court need not reach these questions,

for both the Pacific Justice Institute and Mr. Baldwin lack Article III standing; neither provision

will take effect until 2014. For the same reason, neither plaintiffs challenge is ripe for review.

Apart from these jurisdictional defects, the Anti-Injunction Act independently bars their suit. In

any case, their claims are meritless. Both provisions are justified under the Commerce Clause

2 Of course, the Court must first assure that it has jurisdiction when assessing the request for a preliminary injunction. Munaf v. Geren, 128 S. Ct. 2207, 2219-20 (2008).

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and the Necessary and Proper Clause and, independently, under Congresss power to tax and

spend for the general welfare.

A. The Court Lacks Jurisdiction Over These Claims

1. Plaintiffs Lack Standing Because Neither the Employer Responsibility Provision nor the Minimum Coverage Provision Takes Effect Until 2014

To have standing to sue, a plaintiff must have suffered an injury in fact an invasion of

a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent,

not conjectural or hypothetical. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)

(internal citations, quotation marks, and footnote omitted). Allegations of an injury at some

indefinite future time do not show an injury in fact, particularly where the acts necessary to

make the injury happen are at least partly within the plaintiffs own control. Lujan, 504 U.S. at

564 n.2. In these situations, the injury [must] proceed with a high degree of immediacy, so as to

reduce the possibility of deciding a case in which no injury would have occurred at all. Id.

Plaintiffs allegations fail this test. The apparent basis of the Pacific Justice Institutes

alleged standing is that it does not consent to being compelled, Dacus Decl. 8, to provide

qualifying health insurance to its employees or pay a penalty. Similarly, the apparent predicate

of Mr. Baldwins alleged standing is that he, too, does not consent to being compelled by the

Act to maintain health care insurance. Pls. Br. 7. Both plaintiffs insist that Congress and the

Presidents failure to pass constitutionally sound health care legislation undermines the rule of

law. Id. at 3. These allegations frame policy objections, not a particularized injury. The

consent of the governed derives from the democratic process. A citizen cannot manufacture

standing by withholding consent from a specific law enacted through the democratic process.

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And moral outrage, however profoundly and personally felt, does not endow [plaintiffs] with

standing to sue. Smelt v. County of Orange, 447 F.3d 673, 685 (9th Cir. 2006).

Aside from their unhappiness with this particular product of majority rule, plaintiffs do

not even try to show that either the employer responsibility provision or the minimum coverage

provision currently affects them at all. This is no surprise. Neither provision takes effect until

January 1, 2014. Even then, if plaintiffs are subject to the coverage provisions and elect not to

comply, the penalties would not be payable at least until the tax returns for that year are due, i.e.,

April 2015. This supposed injury is too remote temporally to support standing. McConnell,

540 U.S. 93, 226 (2003), overruled in part on other grounds by Citizens United v. FEC, 130 S.

Ct. 876 (2010).

It is no response that the employer responsibility provision and the minimum coverage

provision are certain to take effect in 2014. The mere existence of a statute, which may or may

not ever be applied to plaintiffs, is not sufficient to create a case or controversy within the

meaning of Article III. Scott v. Pasadena Unified Sch. Dist., 306 F.3d 646, 656 (9th Cir. 2002)

(internal quotation marks and citation omitted). The question is whether the statute will injure

the plaintiffs, and in this regard, the Institutes claim of injury is entirely speculative. The

employer responsibility provision applies only to an employer with at least 50 full-time

equivalent employees. Pub. L. No. 111-148, 1513(d)(2)(A). The Institute does not reveal how

many people it employs full-time although it appears to have a small staff and it is therefore

not clear whether the provision will even apply to it in 2014 or 2015. But even if the Institute

were to employ more than fifty people full-time in 2014, it might still satisfy the employer

responsibility provision. The Institute admits that it offers health insurance to its employees.

Compl. 27. That coverage may satisfy the employer responsibility provision when it goes into

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effect. Moreover, even if the Institute were a large employer and it were certain not to offer

sufficient coverage in 2014, it would not necessarily be subject to the penalty. The Institute does

not allege, and it is not possible to know now with certainty, that at least one of its full-time

employees would be eligible for a premium assistance tax credit or a cost-sharing reduction, and

that the employee would use the credit or reduction to purchase a qualifying health plan on an

exchange. These events are prerequisites for the Institute to be subject to the employer

responsibility penalty. Pub. L. No. 111-148, 1513.3

The possibility of injury to Mr. Baldwin in 2014 or 2015 is at least as speculative. Mr.

Baldwin does not disclose whether he currently has health insurance. If he does, that coverage

may satisfy the minimum coverage provision. Even if Mr. Baldwin does not have health

insurance now, his personal situation could change dramatically by 2014. He might satisfy the

minimum coverage provision by taking a job that offers health insurance as a benefit, or by

qualifying for Medicaid or Medicare, or by choosing to purchase insurance. Given his claim that

he experiences health issues relating to his prostate, Pls. Br. 7, Mr. Baldwin might well

benefit from the new provisions that prevent insurers from refusing to cover or charging higher

premiums to people with preexisting conditions. As of now, however, any harm that Mr.

Baldwin might suffer is remote rather than imminent, speculative rather than concrete, and at

least partly within [his] own control. Lujan, 504 U.S. at 564 n.2. He thus lacks standing.

3 The Institute cannot improvise standing to challenge the employer responsibility provision by listing other provisions that go into effect sooner, such as the requirement that certain insurers allow children to remain on their parents policies until age 26. See Pub. L. No. 111-148, 1001. The Institute does not and cannot assert that these provisions are unconstitutional. (See Pls. Br. 11.) And it cannot leverage its injuries under certain, specific provisions to state an injury under the [law] generally. Get Outdoors II, LLC v. City of San Diego, 506 F.3d 886, 892 (9th Cir. 2007). Rather, a plaintiff must meet[] the Lujan requirements for each of the provisions it wishes to challenge. Id.

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2. Plaintiffs Claims Are Unripe

For similar reasons, plaintiffs challenges to both the minimum and employer

responsibility provisions are not ripe for review. The ripeness inquiry evaluate[s] both the

fitness of the issues for judicial decision and the hardship to the parties of withholding court

consideration. Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967). This case instead involves

contingent future events that may not occur as anticipated, or indeed may not occur at all,

Thomas v. Union Carbide Agr. Prods. Co., 473 U.S. 568, 580-81 (1985), and that do not cause a

hardship with a direct effect on the day-to-day business of the plaintiffs, Grand Lodge of

Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 17-18 (D.D.C. 2001) (quoting Texas v.

United States, 523 U.S. 296, 301 (1998)). Plaintiffs challenges are unripe because no injury

could occur before 2014, and plaintiffs have not shown that one will occur even then.

3. The Anti-Injunction Act Bars Plaintiffs Claims

In addition, the Anti-Injunction Act, 26 U.S.C. 7421(a), bars plaintiffs claims. They

specifically allege that the penalties under the employer responsibility and minimum coverage

provisions are unconstitutional taxes, see Compl. 109, and they seek to restrain their

assessment and collection. Plaintiffs claim by its terms thus come within the Anti-Injunction

Act, which bars a suit for the purpose of restraining the assessment or collection of any tax . . .

in any court by any person, whether or not such person is the person against whom such tax was

assessed. 26 U.S.C. 7421(a).

Even if plaintiffs did not so explicitly bring their claims within the scope of the Anti-

Injunction Act, that statute would still bar the relief they seek. Whether or not the penalties here

are labeled a tax, they are, with exceptions not material, assessed and collected in the same

manner as other penalties under the Internal Revenue Code, 26 U.S.C. 4980H(d),

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5000A(g)(1), and, like these other penalties, fall within the bar of the Anti-Injunction Act. 26

U.S.C. 6671(a); see, e.g., Barr v. United States, 736 F.2d 1134, 1135 (7th Cir. 1984) (per

curiam) (Section 6671 provides that the penalty at issue here is a tax for purposes of the Anti-

Injunction Act.). That result is consistent with the purpose of the Anti-Injunction Act, to

preserve the Governments ability to collect such assessments expeditiously with a minimum of

preenforcement judicial interference and to require that the legal right to the disputed sums be

determined in a suit for refund. Bob Jones Univ. v. Simon, 416 U.S. 725, 736 (1974).

Under the Anti-Injunction Act, as well as the Declaratory Judgment Act,4 district courts

lack jurisdiction to order abatement of a tax liability except in a validly-filed claim for refund.

See Bartley v. United States, 123 F.3d 466, 467 (7th Cir. 1997). These limitations apply even

where, as here, plaintiffs raise a constitutional challenge to a statute that imposes a penalty.

United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 10 (2008). The Anti-Injunction Act

therefore defeats plaintiffs attack on the employer responsibility or minimum coverage

penalties.

B. The Comprehensive Regulatory Measures of the ACA Fall Within Congresss Article I Powers

Even if this Court had subject matter jurisdiction and could reach the merits of plaintiffs

constitutional challenges to the Act, they would still fail.

1. Congresss Authority to Regulate Interstate Commerce is Broad

The Constitution grants Congress power to regulate Commerce . . . among the several

States, U.S. Const., art. I, 8, cl. 3, and to make all Laws which shall be necessary and proper

to the execution of that power, id. cl. 18. This grant of authority is expansive. Congress may

4 The Declaratory Judgment Act, 28 U.S.C. 2201(a), similarly provides district courts with jurisdiction to grant declaratory relief except with respect to Federal taxes.

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regulate the channels of interstate commerce; it may regulate and protect the instrumentalities

of interstate commerce, and persons or things in interstate commerce; and it may regulate

activities that substantially affect interstate commerce. Raich, 545 U.S. at 16-17. The question

is not whether any one persons conduct affects interstate commerce, but whether Congress

rationally concluded that the class of activities, taken in the aggregate, substantially affects

interstate commerce. Raich, 545 U.S. at 22; see also Wickard v. Filburn, 317 U.S. 111, 127-28

(1942). In other words, [w]here the class of activities is regulated and that class is within the

reach of federal power, the courts have no power to excise, as trivial, individual instances of the

class. Raich, 545 U.S. at 23 (citation and quotation omitted).5

In exercising its Commerce Clause power, Congress may reach even wholly intrastate,

non-commercial matters when it concludes that doing so is necessary to a larger program

regulating interstate commerce. Raich, 545 U.S. at 18. Thus, when a general regulatory statute

bears a substantial relation to commerce, the de minimis character of individual instances arising

under that statute is of no consequence. Id. at 17 (internal quotation omitted). See also id. at 37

(Scalia, J., concurring in the judgment) (noting that Congresss authority to make its regulation

of commerce effective is distinct from its authority to regulate matters that substantially affect

interstate commerce); United States v. Stewart, 451 F.3d 1071, 1076-77 (9th Cir. 2006).

In assessing congressional judgments on these issues, the Courts task is a modest one.

Raich, 545 U.S. at 22. The Court need not itself measure the impact on interstate commerce of

the subject of Congresss regulation, nor need the Court itself calculate how integral a particular

5 Plaintiffs rely on United States v. McCoy, 323 F.3d 1114 (9th Cir. 2003), as support for their claim that Congress lacked the Commerce Clause authority to enact the ACA. (Pls. Br. 29-30.) But they fail to acknowledge that McCoy has been overruled. United States v. Gallenardo, 579 F.3d 1076, 1081 (9th Cir. 2009) (applying Raich to uphold ban on child pornography produced for personal use).

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provision is to a larger regulatory program. The Courts task instead is simply to determine

whether a rational basis exists for [Congresss] conclusions. Id. (quoting United States v.

Lopez, 514 U.S. 549, 557 (1995)). Under rational basis review, this Court may not second-guess

the factual record upon which Congress relied.6

Raich and Wickard v. Filburn, 317 U.S. 111 (1942), illustrate the breadth of the

Commerce power and the deference accorded Congresss judgments. In Raich, the Court

sustained Congresss authority to prohibit the possession of home-grown marijuana intended

solely for personal use; it was sufficient that the Controlled Substances Act regulates the

production, distribution, and consumption of commodities for which there is an established, and

lucrative, interstate market. Raich, 545 U.S. at 26. Similarly, in Wickard, the Court upheld a

penalty on wheat grown for home consumption despite the farmers protests that he did not

intend to put the commodity on the market. It was sufficient that the existence of homegrown

wheat, in the aggregate, could suppl[y] a need of the man who grew it which would otherwise

be reflected by purchases in the open market, thus undermining the efficacy of the federal price

stabilization scheme. Wickard, 317 U.S. at 128. Thus, in each case, the Court sustained

Congresss power to regulate even individuals who claimed not to participate in interstate

commerce, because these regulations were components of broad schemes regulating interstate

commerce.

Raich came after the Courts decisions in United States v. Lopez, 514 U.S. 549 (1995),

and United States v. Morrison, 529 U.S. 598 (2000), and thus it highlights the central focus and

limited scope of those decisions. Unlike Raich, and unlike this case, neither Lopez nor Morrison

6 This Court accordingly may consider that record in its review of this motion to dismiss. See Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001); see also FED. R. EVID. 201 advisory committees note.

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involved regulation of economic activity. And neither case addressed a measure that was

integral to a comprehensive scheme to regulate activities in interstate commerce. Lopez was a

challenge to the Gun-Free School Zones Act of 1990, a brief, single-subject statute making it a

crime for an individual to possess a gun in a school zone. Raich, 545 U.S. at 23. Possessing a

gun in a school zone is not an economic activity. Nor was the prohibition against possessing a

gun an essential part of a larger regulation of economic activity, in which the regulatory

scheme could be undercut unless the intrastate activity were regulated. Id. at 24 (quoting

Lopez, 514 U.S. at 561). Likewise, the statute at issue in Morrison simply created a civil remedy

for victims of gender-motivated violent crimes. Id. at 25. Gender-motivated violent crimes are

not an economic activity either, and the statute at issue focused on violence against women, not

on any broader regulation of economic activity.7

2. The ACA Regulates the Interstate Markets in Health Insurance and Health Care Services

Regulation of a $2.5 trillion interstate market that consumes more than 17.5% of the

annual gross domestic product is well within the compass of congressional authority under the

Commerce Clause. Pub. L. No. 111-148, 1501(a)(2)(B), 10106(a). It has long been

established that Congress has power to regulate insurance, see United States v. South-Eastern

Underwriters Assn, 322 U.S. 533, 553 (1944), and health care services, see Hosp. Bldg. Co. v.

Trs. of Rex Hosp., 425 U.S. 738, 743-44 (1976). Congress has repeatedly exercised its power

over health insurance by, among other measures, providing directly for government-funded

7 In addition to Lopez and Morrison, plaintiffs rely on Jones v. United States, 529 U.S. 848 (2000), which, in their view, holds that Congress has no power to make a federal crime of arson. (Pls. Br. 15.) Plaintiffs misread this case, too. Jones interpreted a statute, premised on the Courts understanding that Congress had not intended in that statute to invoke its full authority under the Commerce Clause. 529 U.S. at 854.

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health insurance through the Medicare Act, and by adopting over more than 35 years numerous

statutes regulating the content of policies offered by private insurers.8

Plaintiffs challenge two aspects of the latest reforms the potential penalties for certain

large employers that fail to provide qualifying coverage to their employees, and the minimum

coverage provision. Plaintiffs challenge to the employer responsibility provision is spurious. A

law that regulates the terms of employment, including the terms by which an employer sponsors

health insurance for its employees, on its face regulates interstate economic matters. For that

reason, it has been settled for decades that such regulation is within Congresss Commerce

Clause authority. See, e.g., United States v. Darby, 312 U.S. 100, 118 (1941) (upholding Fair

Labor Standards Act); NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 (1937) (upholding

National Labor Relations Act).

Plaintiffs challenge to the minimum coverage provision also fails. That provision

regulates decisions about how to pay for services in the interstate health care market. These

decisions are quintessentially economic, and they, too, fall within the traditional scope of the

Commerce Clause. As Congress recognized, decisions about how and when health care is paid

8 In 1974, Congress enacted the Employee Retirement and Income Security Act, Pub L. No. 93-406, 88 Stat. 829 (ERISA), which establishes federal requirements for health insurance plans offered by private employers. A decade later, Congress passed the Consolidated Omnibus Budget Reconciliation Act of 1985, Pub. L. No. 99-272, 100 Stat. 82 (COBRA), which allows workers and their families who lose their health benefits under certain circumstances the right to continue receiving certain benefits from their group health plans for a time. In 1996, Congress enacted the Health Insurance Portability and Accountability Act, Pub. L. No. 104-191, 110 Stat. 1936 (HIPAA), to improve access to health insurance by, among other things, generally prohibiting group plans from discriminating against individual participants and beneficiaries based on health status, requiring insurers to offer coverage to small businesses, and limiting the pre-existing condition exclusion period for group plans. 26 U.S.C. 9801-03; 29 U.S.C. 1181(a), 1182; 42 U.S.C. 300gg, 300gg-1. HIPAA added similar requirements for individual insurance coverage to the Public Health Service Act. Pub. L. No. 104-191, 111, 110 Stat. 1979. The ACA builds on these and other laws regulating health insurance.

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for, and when health insurance is purchased are economic and financial and therefore

commercial and economic in nature. Pub. L. No. 111-148, 1501(a)(2)(A), 10106(a).9

3. The Employer Responsibility and Minimum Coverage Provisions Regulate Activity That Substantially Affects Interstate Commerce

Congress needed no extended chain of inferences to determine that decisions about how

to pay for health care, particularly decisions about whether to obtain health insurance or to

attempt to pay for health care out of pocket, in the aggregate substantially affect the interstate

health care market. Individuals who forego health insurance coverage do not thereby forego

health care. To the contrary, many of the uninsured will receive treatments from traditional

providers for which they either do not pay or pay very little, which is known as uncompensated

care. CBO, Key Issues, at 13; see also Council of Economic Advisers (CEA), The

Economic Case for Health Care Reform 8 (June 2009) (submitted into the record for The

Economic Case for Health Reform: Hearing Before the H. Comm. on the Budget, 111th Cong. 5

(2009). This country guarantees a minimum level of health care. The Emergency Medical

Treatment and Active Labor Act, 42 U.S.C. 1395dd, for example, requires hospitals that

participate in Medicare and offer emergency services to stabilize any patient who arrives,

regardless of whether he has insurance or otherwise can pay for that care. CBO, Key Issues, at

13. In addition, most hospitals are nonprofit organizations that have some obligation to provide

care for free or for a minimal charge to members of their community who could not afford it

otherwise. Id. For-profit hospitals also provide such charity or reduced-price care. Id.

Uncompensated care, however, is not free. In the aggregate, that uncompensated cost

amounted to $43 billion in 2008, or about five percent of overall hospital revenues. CBO, Key

9 Although Congress is not required to set forth particularized findings in support of an invocation of its commerce power, when, as here, it does so, courts will consider congressional findings in [their] analysis. Raich, 545 U.S. at 21.

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Issues, at 114. Public funds subsidize these costs. Through programs such as Disproportionate

Share Hospital payments, the federal government paid tens of billions of dollars in

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