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CHIEF JUSTICE ROBERTS: We will hear argument this morning
in Case Number 11-398, Department of Health and Human Services v.
Florida. MR. LONG: Mr. Chief Justice, and may it please
the Court: The Anti-Injunction Act imposes a "pay first,
litigate later" rule that is central to Federal tax assessment
and collection. The Act applies to essentially every tax penalty
in the Internal Revenue Code. There is no reason to think that Congress
made a special exception for the penalty imposed by section 5000A.
On the contrary, there are three reasons to conclude
that the Anti-Injunction Act applies here. First, Congress directed that the section
5000A penalty shall be assessed and collected in the same manner as taxes.
Second, Congress provided that penalties are included in taxes
for assessment purposes. And, third, the section 5000A penalty bears
the key indicia of a tax. Congress directed that the section 5000A penalty
shall be assessed and collected in the same manner as taxes.
That directive triggers the Anti-Injunction Act,
which provides that "no suit for the purpose of restraining the assessment or
collection of any tax may be maintained in any court by any person."
JUSTICE SCALIA: Well, that depends, as the government points out,
on whether that directive is a directive to the Secretary of the Treasury
as to how he goes about getting this penalty, or rather a directive to him and to the courts.
All of the other directives there seem to me to be addressed to the Secretary.
Why should this one be directed to the courts? When you say "in the same manner,"
he goes about doing it in the same manner, but the courts simply accept that --
that manner of proceeding but nonetheless adjudicate the cases.
LONG: Well, I think I have a three-part answer to that, Justice Scalia. First, the text does
not say that the Secretary shall assess and collect taxes in the same manner; it just
says that it shall be assessed in the same manner as a tax, without addressing any party
particularly. SCALIA: Well, he's assessing and collecting
it in the same manner as a tax. LONG: Well, the assessment -- the other two
parts of the answer are, as a practical matter, I don't think there's any dispute in this
case that if the Anti-Injunction Act does not apply, this penalty, the section 5000A
penalty, will as a practical matter be assessed and collected in a very different manner from
other taxes and other tax penalties. There are three main differences. First, when
the Anti-Injunction Act applies, you have to pay the tax or the penalty first and then
litigate later to get it back with interest. Second, you have to exhaust administrative
remedies. Even after you pay the tax, you can't immediately go to court. You have to
go to the Secretary and give the Secretary at least 6 months to see if the matter can
be resolved administratively. And, third, even in the very carefully defined situations
in which Congress has permitted a challenge to a tax or a penalty before it's paid, the
Secretary has to make the first move. The taxpayer is never allowed to rush into court
before the tax -- before the Secretary sends a notice of deficiency to start the process.
Now, if -- if the Anti-Injunction Act does not apply here, none of those rules apply.
And that's not just for this case; it will be for every challenge to a section 5000A
penalty going forward. The taxpayer will be able to go to court at any time without exhausting
administrative remedies; there will be none of the limitations that apply in terms of
you have to wait for the Secretary to make the -
JUSTICE KENNEDY: Why will the administrative remedies rule not be applicable, exhaustion
rule not be applicable? LONG: Well, because if the Anti-Injunction
Act doesn't apply, there's no prohibition on courts restraining the assessment or collection
of this penalty, and you can simply - KENNEDY: Well, but courts apply the exhaustion
rule. I mean, I know you've studied this. I'm just not following it. Why couldn't the
court say, well, you haven't exhausted your remedies; no injunction?
LONG: Well, in -- you could do that, I think, as a matter of -- of common law or judicially
imposed doctrine, but in the code itself, which is all -- I mean, the Anti-Injunction
Act is an absolutely central statute to litigation -
KENNEDY: Yes. Yes. LONG: -- about taxes. And the code says -- first
it says you must pay the tax first and then litigate. So, that's the baseline. And then,
in addition, it says you must -- I mean, it's not common law; it's in the code -- you must
apply for a refund, you must wait at least 6 months. That's -- many of these provisions
are extremely specific, with very specific time limits.
ROBERTS: They would apply even if the rule is not jurisdictional. The only difference
would be that the court could enforce it or not enforce it in particular cases, which
brings me to the Davis case, which I think is your biggest hurdle. It's a case quite
similar to this in which the constitutionality of the Social Security Act was at issue, and
the government waived its right to insist upon the application of this Act.
Of course, if it's jurisdictional, you can't waive it. So, are you asking us to overrule
the Davis case? LONG: Well, Helvering v. Davis was decided
during a period when this Court interpreted the Anti-Injunction Act as simply codifying
the pre-statutory equitable principles that usually, but not always, prohibited a court
from enjoining the assessment or collection of taxes. So, that understanding, which is
what was the basis for the Helvering v. Davis decision, was rejected by the Court in Williams
Packing and a series of subsequent cases -- Bob Jones. And so, I would say, effectively, the
Davis case has been overruled by subsequent decisions of this Court.
JUSTICE GINSBURG: Mr. Long, why don't we simply follow the statutory language? I know that
you've argued that the Davis case has been overtaken by later cases, but the language
of the Anti-Injunction Act is "no suit shall be maintained." It's remarkably similar to
the language in -- that was at issue in Reed Elsevier: "No civil action for infringement
shall be instituted." And that formulation, "no suit may be maintained," contrasts with
of the Tax Injunction Act, that says the district court shall not enjoin. That Tax Injunction
Act is the same pattern as 2283, which says "courts of the United States may not stay
a proceeding in State court." So, both of those formulas, the TIA and the "no injunction
against proceedings in State court" are directed to "court." The Anti-Injunction Act, like
the statute at issue in Reed Elsevier, says "no suit shall be maintained." And it has
been argued that that is suitor-directed in contrast to court-directed.
LONG: Right. Well, I mean, this Court has said several times that the Tax Injunction
Act was based on the Anti-Injunction Act. You're quite
right, the language is different; but we submit that the Anti-Injunction Act itself, by saying
that no suit shall be maintained, is addressed to courts as well as litigants. I mean, after
all, a case cannot go from beginning to end without the active cooperation of the court.
GINSBURG: But how is that different from "no civil action for infringement shall be instituted"
-- "maintained and instituted"? Anything turn on that?
LONG: Well, it's -- I mean -- perhaps a party could initiate an action without the act of
cooperation of the court, but to maintain it from beginning to end, again, requires
the court's cooperation. And even if -- I mean, if the Court were inclined
to say as an initial matter, if this statute were coming before us for the first time today,
given all of your recent decisions on jurisdiction, that you might be inclined to say this is
not a jurisdictional statute, a lot of water has gone over the dam here. The Court has
said multiple times that this is a jurisdictional statute. Congress has not disturbed those
decisions. To the contrary - JUSTICE SOTOMAYOR: Counsel -
JUSTICE ALITO: Well, the Court said that many times, but is there any case in which the
result would have been different if the Anti-Injunction Act were not viewed as jurisdictional but
instead were viewed as a mandatory claims-processing -
LONG: There's - ALITO: -- rule.
LONG: There -- there are certainly a number of cases where the Court dismissed saying
it is jurisdictional. As I read the cases, I don't think any of
them would necessarily have come out differently, because I don't think we had a case where
the argument was, well, you know, the Government has waived this, so, you know, even -- if
it's not jurisdictional - ALITO: Well, the clearest -- the clearest
way of distinguishing between the jurisdictional provision and a mandatory claims processing
rule is whether it can be waived and whether the Court feels that it has an obligation
to raise the issue sua sponte. Now, if there are a lot of cases that call
it jurisdictional, but none of them would have come out differently if the Anti-Injunction
Act were simply a mandatory claims processing rule, you have
that on one side. And on the other side, you have Davis, where
the Court accepted a waiver by the Solicitor General; the Sunshine Anthracite coal case,
where there also was a waiver; and, there's the Williams Packing case, which is somewhat
hard to understand as viewing the Anti-Injunction Act as a jurisdictional provision.
The Court said that there could be a suit if there is no way the Government could win,
and the Plaintiff would suffer irreparable harm. Now, doesn't that sound like an equitable
exception to the Anti-Injunction Act? LONG: No, I think the -- I think the best
interpretation of the Court's cases is that it was interpreting a jurisdictional statute.
And, indeed, in Williams Packing, the Court said it was a jurisdictional statute.
But, again, even if you have doubt about simply the cases, there is more than that because
Congress has -- has not only not disturbed this Court's decision stating that the statute
is jurisdictional, they've passed numerous amendments to this Anti-Injunction Act.
ROBERTS: Well, it seems you can't separate those two points. The idea
that Congress has acquiesced in what we have said only helps you if what we have said is
fairly consistent. And you, yourself, point out in your brief that we've kind of gone
back and forth on whether this is a jurisdictional provision or not. So, even if Congress acquiesced
in it, I'm not sure what they acquiesced in. LONG: Well, what you have said, Mr. Chief
Justice, has been absolutely consistent for 50 years, since the Williams Packing case.
The period of inconsistency was after the first 50 years, since the statute was enacted
in 1867. And there was a period, as I said, when the Court was allowing extraordinary
circumstances exceptions and equitable exceptions, but then, very quickly, it cut back on that.
And since -and since Williams Packing, you have been utterly consistent -
JUSTICE KAGAN: Well, even since Williams Packing, there was South Carolina v. Regan. And that
case can also be understood as a kind of equitable exception to the rule, which would be inconsistent
with thinking that the rule is jurisdictional. LONG: Well, again, I mean, I think the best
understanding of South Carolina v. Regan is not that it's an equitable exception, but
it's the Court interpreting a jurisdictional statute as it would interpret any statute
in light of its purpose, and deciding in that very special case, it's a very narrow exception,
where the - SOTOMAYOR: Mr. Long, in Bowles, the Court
looked to the long history of appellate issues as being jurisdictional, in its traditional
sense, not as a claim processing rule, but as a pure jurisdiction rule, the power of
the Court to hear a case. From all the questions here, I count at least
four cases in the Court's history where the Court has accepted a waiver by the Solicitor
General and reached a tax issue. I have at least three cases, one of them just mentioned
by Justice Kagan, where exceptions to that rule were read in.
Given that history, regardless of how we define jurisdictional statutes versus claim processing
statutes in recent times, isn't the fairer statement that Congress has accepted that
in the extraordinary case, we will hear the case?
LONG: No. No, Justice Sotomayor, because in many of these amendments which have come in
the '70s and the '90s and the 2000s, the Congress has actually framed the limited exceptions
to the Anti-Injunction Act in jurisdictional terms.
And it has written many of the express exceptions by saying notwithstanding Section 7421 -
SOTOMAYOR: But doesn't that just prove that it knows that the Court will impose a claim
processing rule in many circumstances, and so, in those in which it specifically doesn't
want the Court to, it has to be clearer? LONG: Well, but Congress says, notwithstanding
7421, the Court "shall have jurisdiction to restrain the assessment and collection of
taxes in very limited" - SOTOMAYOR: Could you go back to the question
that Justice Alito asked? Assuming we find that this is not jurisdictional, what is the
parade of horribles that you see occurring if we call this a mandatory claim processing
rule? What kinds of cases do you imagine that courts will reach?
LONG: Right. Well, first of all, I think you would be saying that for the refund statute,
as well as for the Anti-Injunction Act -- which has very similar wording, so if the Anti-Injunction
Act is not jurisdictional, I think that's also going to apply to the refund statute,
the statute that says you have to first ask for a refund and then file, you know, within
certain time -- so it would be -- it would be both of those statutes. And, you know,
we are dealing with taxes here, if people -
SOTOMAYOR: That wasn't my question. LONG: I'm sorry.
SOTOMAYOR: My question was, if we deem this a mandatory claim processing rule -
LONG: Right. SOTOMAYOR: -- what cases do you imagine courts
will reach on what grounds? Assuming the Government does its job and comes in and raises the AIA
as an immediate defense - LONG: Well, that's -
SOTOMAYOR: -- where can a court then reach the question, despite -
LONG: That would certainly be the first class of cases, it occurs to me, where, if the Government
does not raise it in a timely way, it could be waived. I would think plaintiffs would
see if there was some clever way they could get a suit going that wouldn't immediately
be apparent that - SOTOMAYOR: Assumes the lack of competency
of the Government, which I don't, but what other types of cases?
SCALIA: Mr. Long, I don't think you are going to come up with any, but I think
your response is you could say that about any jurisdictional rule. If it's not jurisdictional,
what's going to happen is you are going to have an intelligent federal court deciding
whether you are going to make an exception. And there will be no parade of horribles because
all federal courts are intelligent. So it seems to me it's a question you can't
answer. It's a question which asks "why should there be any jurisdictional rules?" And you
think there should be. LONG: Well, and, Justice Scalia, I mean, honestly,
I can't predict what would happen, but I would say that not all people who litigate about
federal taxes are necessarily rational. And I think there would be a great -
JUSTICE BREYER: I just don't want you to lose the second half of your argument. And we have
spent all the time so far on jurisdiction. And I accept, pretty much, I'm probably leaning
in your favor on jurisdiction, but where I see the problem is in the second part, because
the second part says "restraining the assessment or collection of any tax."
Now, here, Congress has nowhere used the word "tax." What it says is penalty. Moreover,
this is not in the Internal Revenue Code "but for
purposes of collection." And so why is this a tax? And I know you point
to certain sentences that talk about taxes within the Code -
LONG: Right. BREYER: -- and this is not attached to a tax.
It is attached to a health care requirement. LONG: Right.
BREYER: So why does it fall within that word? LONG: Well, I mean, the first point is -- our
initial submission is you don't have to determine that this is a tax in order to find that the
Anti-Injunction Act applies, because Congress very specifically said that it shall be assessed
and collected in the same manner as a tax, even if it's a tax penalty and not a tax.
So that's one - BREYER: But that doesn't mean the AIA applies.
I mean -- and then they provide some exceptions, but it doesn't mean the AIA applies.
It says, "in the same manner as." It is then attached to Chapter 68, when that -- it references
that as "being the manner of." Well, that it's being applied -- or if it's being collected
in the same manner as a tax doesn't automatically make it a tax,
particularly since the reasons for the AIA are to prevent interference with revenue sources.
And here, an advance attack on this does not interfere with the collection of revenues.
I mean, that's -- you have read the arguments, as have I. But I would like to know what you
say succinctly in response to those arguments. LONG: So, specifically on the argument that
it is actually a tax, even setting aside the point that it should be assessed and collected
in the same manner as a tax, the Anti-Injunction Act uses the term "tax"; it doesn't define
it. Somewhat to my surprise, "tax" is not defined anywhere in the Internal Revenue Code.
In about the time that Congress passed the Anti-Injunction Act, "tax" had a very broad
definition. It's broad enough to include this exaction, which is codified in the Internal
Revenue Code. It's part of the taxpayer's annual income tax return. The amount of the
liability and whether you owe the liability is based in part on your income. It's assessed
and collected by the IRS. SCALIA: There's at least some doubt about
it, Mr. Long, for the reasons that Justice Breyer said, and I thought that we had a -- a
principle that ousters of jurisdiction are narrowly construed;
that, unless it's clear, courts are not deprived of jurisdiction. And I find it hard to think
that this is clear. Whatever else it is, it's easy to think that it's not clear.
LONG: Well, I mean, the Anti-Injunction Act applies not only to every tax in the code
but, as far as I can tell, to every tax penalty in the code. And -
GINSBURG: Mr. Long, you said before -- and I think you were quite right -- that the Tax
Injunction Act is modeled on the Anti-Injunction Act. And, under the Tax Injunction Act, what
can't be enjoined is an assessment for the purpose of raising revenue. The Tax Injunction
Act does not apply to penalties that are designed to induce compliance with the law, rather
than to raise revenue. And this is not a revenue-raising measure because, if it's successful, they
-- nobody will pay the penalty, and there will be no revenue to raise.
LONG: Well, in Bob Jones the Court said that they had gotten out of the business of trying
to determine whether an exaction is primarily revenue-raising or primarily regulatory. And
this one certainly raises -- is expected to raise very
substantial amounts of revenues, at least $4 billion a year by the -
SOTOMAYOR: But Bob Jones involved a statute where it denominated the exaction as a tax.
LONG: That's - SOTOMAYOR: Here we have one where the Congress
is not denominating it a -- as a tax; it's denominating it as a penalty.
LONG: That's -- that's absolutely right, and that's obviously why -- if it were called
a tax, there would be absolutely no question that the Anti-Injunction Act applies.
SOTOMAYOR: Absolutely. But even the section of the code that you referred to previously,
the one following 7421, the AIA, it does very clearly make a difference -- 7422 -- make
a difference between tax and penalties. It's very explicit.
LONG: Yes, that's -- it does; that is correct. And there are many other places in the code
where tax is - BREYER: The best collection I've found in
your favor, I think, is in Mortimer Caplin's brief on page 16, 17. He has a whole list.
All right. So -- I got my law clerk to look all those up. And it seems to me that they
all fall into the categories of either, one, these are penalties that were penalties assessed
for not paying taxes; or, two, they involve matters that were called by the court taxes;
or, three, in some instances they were deemed by the code to be taxes.
Now, what we have here is something that's in a different statute that doesn't use the
word "tax" once except for a collection device, and, in fact, in addition, the underlying
AIA reason, which is to say to the Solicitor General: We don't care what you think; we,
in Congress, don't want you in court where the revenue of a state -- Tax Injunction Act
-- or the revenue of the federal government is at stake, and, therefore, you can't waive
it. Now, I got that. Here it's not at stake, and
here there are all the differences I just mentioned. So, I ask that because I want to
hear your response. LONG: Well, I mean, there are penalties in
the Internal Revenue Code that you really couldn't say are related in any -- in any
close way to some other tax provision. There's a penalty -- it's discussed in the briefs
-- for selling diesel fuel that doesn't comply with EPA's regulations, you know. So, there
are all kinds of penalties in the code, and I think it's -that you could rely upon.
KAGAN: Mr. Long, aren't there places in this Act -- fees and penalties -- that were specifically
put under the Anti-Injunction Act? There's one on health care plans, there's one on pharmaceutical
manufacturers, where Congress specifically said the Anti-Injunction Act is triggered
for those. It does not say that here. Wouldn't that suggest that Congress meant for a different
result to obtain? LONG: Well, I mean, Congress didn't use the
language the Anti-Injunction Act "shall apply" -
KAGAN: No, but it -- it in section 9008 and in section 9010 -
LONG: Right. KAGAN: -- it specifically referred
LONG: Right. KAGAN: -- to the part of the code where the Anti-Injunction Act is.
LONG: Right, all of subtitle F, which picks up lots of administration and procedure provisions,
but those -- those are fees, and they're not -- Congress did not provide, you know, in
the sections themselves that they should be paid as part of a tax return. So they were
free-standing fees, and by using that subtitle F language, Congress plugged in a whole set
of rules for how to collect and administer the fees, and it went not just to assessment
and collection -- and the IRS has recognized this -- but to examination, privacy, a whole
series of additional things. So I think it would be a mistake to look at
that language and say, oh, here's Congress saying they want the Anti-Injunction Act to
apply. They're actually doing more than that. And, yes, I grant you, you could look at section
5000A, the individual coverage requirement, and say, well, they could have been clearer
about saying the Anti-Injunction Act applied, and that's certainly true, but, again, they
were trying to accomplish a lot. And it's -
KENNEDY: Maybe it's easier to talk about this case if we just forget the words "for the
purpose of restraining assessment and collection." In a sense, that brings the jurisdictional
question and Justice Breyer's question together. It seems to me -- maybe you could just comment
on that language. Is that sort of language usually contained in a jurisdictional provision?
I mean, you often don't know the purpose of a suit until after the thing is under way.
I can see it with malicious prosecution and some civil rights cases. Does it strike you
as somewhat unusual to have this provision in a jurisdictional case?
LONG: It does strike me, honestly - KENNEDY: Yes.
LONG: -- as a bit unusual, but this is an old statute. I mean, this -- the core language
is essentially unchanged since 1867, and it -- you know, I think that's part of the explanation
for it. And, again, it's, you know, become the center of a series of provisions that
very carefully control the circumstances in which litigation about federal taxes can take
place. GINSBURG: Mr. Long, there's another argument
that has been made that I would like you to address, and that is all this talk about tax
penalty -it's all beside the point because this suit is not challenging the penalty.
This is a suit that is challenging the must-buy provision, and the argument is made that,
if, indeed, "must-buy" is constitutional, then these complainants will not resist the
penalty. So, what they're seeking is a determination
that that the "must-buy" requirement, stated separately from the penalty, that "must-buy"
is unconstitutional. And, if that's so, that's the end of the case; if it's not so, they're
not resisting the penalty. LONG: Well, I think that argument doesn't
work for two reasons. I mean, first, if you look at the plaintiffs' own complaint, they
clearly challenge both the minimum coverage requirement and the penalty. At page 122 of
the Joint Appendix, they challenge the requirement that the individuals obtain health care coverage
or pay a penalty. ALITO: Well, why is that?
GINSBURG: If that's -- if that's the problem, it's easier to amend the complaint. They can
just take that out of the complaint. So, it can't turn on that.
LONG: Well -- and -- yes, I mean, it's -- or another complaint would be filed, but, still,
I think that's a serious problem. But even if they had filed a different complaint, I
don't think you -- in this case, I don't think you can separate the minimum coverage requirement
from the penalty because the penalty is the sole means of enforcing the minimum coverage
requirement. So, first, I mean, I think these plaintiffs
would not be satisfied if the Court were to render a judgment saying the minimum coverage
requirement is invalidated; the penalty, however, remains standing. Anybody who doesn't have
insurance has to pay the penalty. Then they'd have to pay a penalty
equal to the cost of insurance and they wouldn't even have insurance. So, I don't think that
would be - ALITO: Well, they say they want to obey the
law - LONG: Right.
ALITO: -- and they say that your argument puts them in the position of having to disobey
the law in order to obtain review of their claim. And what is your answer to that?
LONG: Well, I mean, first of all, I can't find that in the record, in their declarations.
don't see a statement that they will, you know, never incur a penalty under any circumstances.
But -- but even if that were so, what this Court has said in Americans United is the
Anti-Injunction Act bars any suit, not just to enjoin the collection of your own taxes,
but to enjoin the collection of anyone's taxes. And so even if it were really true that these
plaintiffs were not interested in the penalty and would never pay the penalty, if they were
to succeed in this case in striking down the minimum coverage requirement, the inevitable
result would be that the penalty would fall as well, because the Government couldn't collect
a penalty for failing to follow an unconstitutional requirement, and so it would
still be barred because it would be a suit that would prevent the collection of some
of the - ALITO: Well, let me take us back to Justice
Kennedy's question about the "for the purpose of" language. I take it you interpret the
statute to mean the following: "For the purpose of" means having the effect of. Is that correct?
LONG: Well, I mean, this Court in the Bob Jones case, where a similar kind of argument
was being made by the plaintiff in that case, said, you know, look, you know, where the
-- where it's inevitable that this is what the suit is about, they're sort of two sides
of the same coin, that clearly is a primary purpose of the suit. And it's -- and you can't
by clever pleading get away from that. That's just the nature of the situation.
KAGAN: But, Mr. Long, aren't you trying to rewrite the statute, in a way? The statute
has two sections. One is the you have to have insurance section and the other is the sanction.
The statute has two different sets of exceptions corresponding to those two different sections.
You are trying to suggest that the statute says: Well, it's your choice, either buy insurance
or pay a -- or pay a fee. But that's not the way the statute reads.
And Congress, it must be supposed, you know, made a decision that that shouldn't be the
way the statute reads, that it should instead be a regulatory command and a penalty attached
to that command. LONG: Well, I would not argue that this statute
is a perfect model of clarity, but I do think the most reasonable way to read the entire
statute is that it does impose a single obligation to pay a penalty if you are an applicable
individual and you are not subject to an exemption. And the reason I say that, if you look at
the exemptions from the penalty, the very first one is, you are exempt from the penalty
because you can't afford to purchase insurance. And it just doesn't seem reasonable to me
to interpret the statute as Congress having said, well, you know, this person is exempt
from paying a penalty because we find they can't afford to buy insurance, however they
still have a legal obligation to buy insurance. That just doesn't seem reasonable.
So I -- so I do think, although it's -- I certainly wouldn't argue it's clear -- that
that's the best way to understand the statute as a whole.
But again, I would say, you know, that's not essential to the question we're discussing
now of whether the Anti-Injunction Act applies. Again, you know, I think -
SOTOMAYOR: Could you tell me why you think the Solicitor General's reading creates a
problem? LONG: Well, in going back to -- so if the
result were to say simply, this is not -- oh, I'm sorry. The Solicitor General's reading.
So now it's not - SOTOMAYOR: That it is a jurisdictional bar,
but there's an exemption for those items that Congress has designated solely as penalties
that are not like taxes. LONG: Right. Well, I mean, I think the Solicitor
General's reading would probably create the fewest problems, as I understand it. I mean,
my -- my main objection to the Solicitor General's reading is I don't think it makes a whole
lot of sense. I mean, basically, the Solicitor General says every penalty in the Internal
Revenue Code, every other penalty in the Affordable Care Act is -
SOTOMAYOR: But that's not -- that's carrying it too far, because he says if a penalty is
designated as a tax by Congress, then it's subject to the AIA, and that's most of the
code, the tax code. And he says for those portions of the Affordable Care Act that designate
things as taxes, the AIA applies. So it's only -- and I haven't found another statute.
I'm going to ask him if there's another one. It's only for those statutes in which Congress
has designated something solely as a penalty. LONG: Right.
SOTOMAYOR: And not indicated that it is a tax.
LONG: Right. SOTOMAYOR: They don't fall within the AIA.
LONG: I think my -- my take on it is if you adopted the Solicitor General's approach,
there are probably three penalties for alcohol and tobacco-related offenses at 5114(c), 5684,
and 5761 that I think would be very difficult to distinguish from this one, and possibly
the 527(j) penalty for failure to disclose political contributions.
If there are no further questions, I would like to reserve my time.
ROBERTS: Thank you, Mr. Long. General Verrilli.
VERRILLI: Mr. Chief Justice and may it please the Court:
This case presents issues of great moment, and the Anti-Injunction Act does not bar the
Court's consideration of those issues. That is so even though the Anti-Injunction Act
is a jurisdictional limit that serves what this Court described in Clintwood Elkhorn
as an exceedingly strong interest in protecting the financial stability of the Federal Government,
and even though the minimum coverage provision of the Affordable Care Act is an exercise
of Congress's taxing power as well as its commerce power.
Congress has authority under the taxing power to enact a measure not labeled as a tax, and
it did so when it put section 5000A into the Internal Revenue Code. But for purposes of
the Anti-Injunction Act, the precise language Congress used is determinative. And there
is no language in the Anti-Injunction Act -- excuse me, no language in section 5000A
of the Affordable Care Act or in the Internal Revenue Code generally that provides a textual
instruction that - ALITO: General Verrilli, today you are arguing
that the penalty is not a tax. Tomorrow you are going to be back and you will be arguing
that the penalty is a tax. Has the Court ever held that something that
is a tax for purposes of the taxing power under the Constitution is not a tax under
the Anti-Injunction Act? VERRILLI: No, Justice Alito, but the Court
has held in the license tax cases that something can be a constitutional exercise of the taxing
power whether or not it is called a tax. And that's because the nature of the inquiry that
we will conduct tomorrow is different from the nature of the inquiry that we will conduct
today. Tomorrow the question is whether Congress
has the authority under the taxing power to enact it and the form of words doesn't have
a dispositive effect on that analysis. Today we are construing statutory text where the
precise choice of words does have a dispositive effect on the analysis.
SOTOMAYOR: Well, General, you also have the Bailey child labor tax cases, because there
the Court said that the tax, which was a prohibitory tax alone, was a tax subject to the AIA, and
then it said it was beyond the Court's taxing power in a separate case, correct?
VERRILLI: Yes. I do think, Justice Sotomayor, that with respect to one of the arguments
that my friend from the NFIB has made in of the brief, that Bailey against George is a
significant problem because I think their argument on the constitutionality under the
taxing power is essentially that the Affordable Care Act provision is the same thing as the
provision that was held unconstitutional in Bailey against Drexel Furniture.
SOTOMAYOR: That's a different issue. The question Justice -
VERRILLI: But on the same day -right, but on the same day as Bailey against Drexel Furniture,
the Court issued Bailey against George, which held that the Anti-Injunction Act did bar
a challenge to that provision, even though the Court had concluded that it was invalid
under the tax power. So -- and I think the reason for that has
been -- is clear now after Williams Packing and Bob Jones, in that, in order to find that
the Anti-Injunction Act doesn't apply to something that otherwise would be a tax that triggers
it, you have to conclude essentially that there is no substantial argument that can
be made in defense of it as a tax. We don't have that here, so I don't think you can get
around the Anti-Injunction Act if the Court were to read
it, as the amicus suggest it should be read, on that theory, but -
GINSBURG: Mr. Verrilli, a basic question about your argument. If you are right about the
second part, that is, for purposes of the statute, the Anti-Injunction statute, this
penalty does not constitute a tax, then does the Court need to decide whether the Anti-Injunction
Act in other cases, where it does involve a tax, is jurisdictional?
VERRILLI: No. I apologize if I'm creating any confusion about that, Justice Ginsburg.
We think by far the better route here is to understand the statute as we have proposed
that it be construed as not applying here. From the perspective of the United States
-- and if I could, I'd like to take a minute on this -- the idea that the Anti-Injunction
Act would be construed as not being a jurisdictional provision is very troubling, and we don't
think it's correct. And I would, if I could, follow up on a question,
Justice Ginsburg, that you asked Mr. Long in terms of the language of the Anti-Injunction
Act, 7421(a), which can be found at page 16a of the appendix to our brief.
I'd ask the Court to compare that to the language of the very next provision in the code, which
is on the next page of our statutory appendix, 17a, which is the refund statute, which we've
talked about a little bit so far this morning, 7422(a).
The refund statute this Court held in Dolan was jurisdictional, and the Court in both
Dolan and Brockamp held that the statute of limitations that applies to the refund statute
cases is jurisdictional. The language in 7422(a) is virtually identical
to the language in 7421(a) - KENNEDY: That is correct, although in the
refund context, you have the sovereign immunity problem, in which we presume that has not
been waived. VERRILLI: Right. But I -- 7421(a)
KENNEDY: But you're - VERRILLI: -- and 7422(a) were the same -
KENNEDY: The language is quite parallel. VERRILLI: And, originally, they were the same
statutory provision. They were only separated out later. So, I do think that's the strongest
textual indication, Justice Ginsburg, that -that 7421(a) is jurisdictional.
KAGAN: General GINSBURG: But the question that I asked you
is, if you're right that this penalty is not covered by section 7421, if you're right about
that, why should we deal with the jurisdictional question at all? Because this statute, correct,
the way you're reading -read it, doesn't involve a tax that's subject to the Anti-Injunction
Act. VERRILLI: Yes, that is exactly our position.
And the reason we don't - GINSBURG: So -- so, you agree that we would
not -- if we agree with you about the correct interpretation of the statute, we need not
decide the jurisdiction. VERRILLI: There would be no reason to decide
the jurisdictional issue. KENNEDY: Don't you want to know the answer?
(Laughter.) VERRILLI: Justice Kennedy, I think we all
want to know the answer to a lot of things in this case. But -- but I do -- but I do
think that the prudent course here is to construe the statute in the manner that we read it.
KENNEDY: But you indicated -- there was a discussion earlier about why does the government
really care, they have competent attorneys, et cetera. But -- and you began your argument
by saying it would be very troubling to say that it's not jurisdictional.
I'd like you to comment on that. It's not for us to tell a party what's in its best
interests. It would seem to me that there might be some instances in which the government
would want to litigate the validity of a tax right away and would want to waive. But you
say it's -- that's not true; that it's very troubling.
VERRILLI: I think there are two problems. One is the problem that Justice Scalia identified,
that if it's not jurisdictional, then courts have authority to craft equitable exceptions.
And it may seem from where we stand now that that authority is or could be very, very tightly
cabined, but if -- if this Court were to conclude that it isn't jurisdictional, that does empower
courts to find other circumstances in which they might find it equitable to allow cases
to go forward in the absence of -- despite the existence of the Anti-Injunction Act.
And, second, although I certainly am not going to stand up here and disparage the attorneys
from the United States in the slightest, the reality is that if this isn't jurisdictional,
then it's -- the argument -- it's open to the argument that it's subject to
forfeiture by a simple omission in failing to raise it in an answer. And that -- and
that's a troubling prospect. KAGAN: General, can I ask -
GINSBURG: How likely is it - ROBERTS: Justice Ginsburg.
GINSBURG: How likely is it -- I mean, the government is going to be defending these
suits. How likely is it that the government will overlook the Anti-Injunction Act? It
seems to me that this is arming the government by saying it's waivable at the government's
option. VERRILLI: That's -- that is not our assessment
of the institutional interests of the United States, Justice Ginsburg. And we do think
that the -the right way to go in this case is to read the statute as not applying to
the minimum coverage provision of -of the Affordable Care Act.
ROBERTS: It was -- it was the calculation of the interests of the United States that
your predecessor made in the Davis case. There, the Solicitor General exercised the
authority that we sanctioned to waive the Anti-Injunction Act. And, of course, that
couldn't be done if it were jurisdictional. VERRILLI: That's true,
Mr. Chief Justice. Several points about that, though.
We do agree with Mr. Long's analysis that Davis occurred in -- during a time in -- in
which under the Standard Nut case, the Court had interpreted the Anti-Injunction Act as
doing no more than codifying the traditional equitable principles which allowed courts
discretion to conclude that in certain circumstances, a case could go forward.
Williams Packing repudiated that analysis, and Bob Jones v. Simon again repudiated that
analysis and said, no, we're no longer abiding by that. It is true that the Davis case has
not formally been overruled, but we do think it's fundamentally inconsistent with the Court's
understanding now of - BREYER: Davis was the case that -where a shareholder
sues the corporation. VERRILLI: Yes.
BREYER: And the remedy is that the corporation shouldn't pay the money to the tax authority.
Now, it's a little technical, but that isn't actually an injunction against the tax authority
collecting. He's not -- they're not restraining the collection of the tax. They're saying
to the taxpayer, don't pay it. VERRILLI: Yes. And -
BREYER: I don't know how far that gets you. VERRILLI: Well, in fairness, Justice Breyer,
the United States did intervene in the -- in the Davis case and was a party, and so -- not
as far as I'd like, I guess, is the answer. SCALIA: Don't do it again, because I think
that goes too far. I don't think that's restraining the collection of a tax. It's restraining
the payment of a tax. VERRILLI: Well -
SCALIA: You don't want to let that bone go, right?
(Laughter.) VERRILLI: Our view here is that it is jurisdictional.
Because it's jurisdictional as this Court understands jurisdiction now, it's not waivable.
And, therefore, we don't think that -- that that part of the Davis decision is good law.
KAGAN: General, can I ask you about Reed Elsevier? Justice Ginsburg suggested that the language
was very similar in Reed Elsevier as it is here, but there are even further similarities.
Reed Elsevier pointed out that the provision in question
wasn't in Title 28. Here, too, it's not in Title 28. In Reed Elsevier, it was pointed
out that the provision there had numerous exceptions to it. Here, too, there are numerous
exceptions that we find that have been created by the courts over the years.
In Reed Elsevier, the question was essentially one about timing. Come to court after you
file your registration. Here, too, the question is one about timing. Come to court after you
make -- after you pay your taxes. So, Reed Elsevier seems in multiple respects
on all fours with this case. Why is that wrong?
VERRILLI: I don't think so, Justice Kagan. First, we think -- I guess I'm repeating myself
and I apologize. But we think the closest analogue is the very next provision in the
United States Code, 7422(a), which this Court has held is jurisdictional, and is phrased
in exactly the same way as 7421(a). In fact, as I said, they were the same provision back
in the earlier days. That's the closest analogue. This isn't -- and it's actually 7422 that's
a statute that says do something first. But this statute is just a flat-out command that
no suit shall be maintained to restrain KAGAN: I take the point -GENERAL
VERRILLI: -- the assessment or collection. KAGAN: -- but if you would comment on the
similarities of Reed Elsevier to this case. How do you think it's different, at all?
VERRILLI: Well, because the -- I think the best answer to that is there are no magic
words, and that history and context matter, as the Court said in Henderson. And the history
and context here is that 7422 and 7421 function together to protect an exceedingly strong
interest that the Court has held with respect to 7422, sufficiently strong that it explains
the jurisdictional nature of that. The same interest applies here.
This isn't just a matter of do X and then you can -- and then you can come to court.
It's just a fundamentally different set of interests at stake.
So, we do think that that makes a big difference. And -
GINSBURG: Why isn't Reed Elsevier -- if you're dividing jurisdiction from claims processing
-- it says you have to register before you can sue. There are a lot of things you have
to do before you can sue. So, why isn't Reed Elsevier like you have to pay a filing fee
before you can file a complaint? VERRILLI: It is -- we do think it's very much
in that nature and different from this case, Your Honor.
And one way I think it's helpful to get at this is to look at the history. We've cited
a string of court of appeals cases in a footnote in our opening brief, and over time, it's
been very consistent that the courts of appeals have treated the Anti-Injunction Act as a
jurisdictional provision. Again, if the Court agrees with our statutory
construction, you don't need to reach this issue. But they have -- in fact, one of those
cases, the Hansen case, the district court in that case had dismissed the complaint under
Federal Rule of Civil Procedure 12(b)(6). The Court of Appeals vacated and sent it back
with instructions to dismiss under 12(b)(1), which is the subject matter jurisdiction provision.
So I do think that, to the extent this issue is before the Court, it is jurisdictional,
but it doesn't need to be before the Court because of the statutory construction argument
that we had offered. GINSBURG: On your statutory construction argument,
is there any other exaction imposed under the Internal Revenue Code that would not qualify
as a tax for Anti-Injunction Act purposes, or is 5000A just out there all by itself?
VERRILLI: It's not quite out there all by itself. There are other provisions that fall
outside of subchapter B of chapter 68 and, therefore, wouldn't be governed by the instruction
in Section 6671(a), which answers the question about the applicability of the Act for most
penalties. The ones that we've identified, and I may
be overlapping a little bit with Mr. Long here, one is 26
U.S.C. 857, which imposes certain penalties in connection with the administration of real
estate investment trusts. There are provisions that Mr. Long identified
in his brief, Sections 6038(a) through (c) of the Code, which impose certain penalties
with respect to reporting requirements for foreign corporations.
We have, in addition, in footnote 22 at page 36 of our brief, identified three provisions
that Mr. Long also identified about -- about alcohol and tobacco. Now -
SOTOMAYOR: Could we address, General, the question of whether there are any collateral
consequences for the failure to buy -- to not buy health insurance? Is the only consequence
the payment of the penalty? The private respondents argue that there are
other collateral consequences such as for people on probation who are disobeying the
law, if they don't buy health insurance, they would be disobeying the law and could be subject
to having their supervised release revoked. VERRILLI: Yes. That is not a correct reading
of the statute, Justice Sotomayor. The only consequence that ensues is the tax penalty.
And the -- we have made a representation, and it was a carefully made representation,
in our brief that it is the interpretation of the agencies charged with interpreting
this statute, the Treasury Department and the Department of Health and Human Services,
that there is no other consequence apart from the tax penalty.
And I do think, if I could talk for a couple of minutes about the argument that was discussed
as to whether this can be conceived of as a suit just challenging the requirement, which
is entirely stand-alone based on inferences drawn from the exemptions. I really don't
think that's right. And if I could spend a minute on it, I think it's important.
The exemptions in section 5000A, it is true that there are two categories of exemptions.
There are exemptions to the penalty and exemptions to the subsection (a) requirement. But the
-- but I think, not only as a practical matter, but I think there's a textual indication and
even as a legal matter, they are -- they both function as exceptions to the requirement.
First, as a practical matter, one of those exemptions is a hardship exemption. And if
the Court will just bear with me for one minute here, it's at page 11A of the appendix to
our brief. It provides that a person can go to the Secretary of HHS and obtain a hardship
exemption for -- which would, as a formal matter here, excuse compliance with the penalty.
It seems to me to make very little sense to say that someone who has gone to an official
of the United States and obtained an exemption would, nonetheless, be in a position of being
a law breaker. We think another way in which you can get
to the same conclusion slightly differently is by considering the provision on the prior
page, 10A, which is 5000A -- 5000A(e)(3), members of Indian tribes.
Members of Indian tribes are exempt only from the penalty as a formal matter under the structure
of the statute here; but, the reason for that is because members of Indian tribes obtain
their healthcare through the Indian Health Service, which is a clinic-based system that
doesn't involve insurance at all. It's an entirely different system.
They were taken out of this statute because they get their healthcare through a different
system. And it doesn't make any sense to think that persons getting their health care through
the Indian Health Service are violating the law because -- exempt only from the penalty,
but still under a legal obligation to have insurance, when the whole point of this is
that they're supposed to be in a clinic-based system.
SOTOMAYOR: Is your whole point that this was inartful drafting by Congress, that, to the
extent that there is an exemption under the penalty, it's an exemption from the legal
obligation? VERRILLI: I guess what I would say about it,
Your Honor, is that the way in which this statute is drafted doesn't permit the inference
that my friends from the NFIB are trying to draw from it.
And there is an additional textual indication of that, which one can find at page 13 of
our reply brief. This is a provision that is 42 U.S.C. A, section 18022(e). This is
a provision that provides for a certification that certain individuals can
get. And it's the paragraph starting with the words "other provisions," contains the
quote. And it says, an individual with a certification
that the individual is exempt from the requirement under section 5000A, by reason of section
5000A(e)(1) of such code, is entitled to a certificate that allows for enrollment in
a particular program for this category of people.
But you can see here, Congress is saying it's an exemption under 5000A(e)(1), which is the
exemption from the penalty, and not the underlying requirement is, as Congress says, an exemption
from the requirement of section 5000A. ALITO: Subsection A says directly, "an applicable
individual shall ensure that the individual has the minimum essential coverage." And you
are saying it doesn't really mean that, that if you're not subject to the penalty, you're
not under an obligation to maintain the minimum essential coverage?
VERRILLI: That's correct. And we think that is what Congress is saying, both in the provision
I just pointed to, Your Honor, and by virtue of the fact -- by virtue of the way the exemptions
work. I just think that's the -- reading this in context, that is the stronger reading of
the statute. ROBERTS: It makes it easy for the Government
to drop the other shoe in the future, right? You have been under the law subject to this
mandate all along. You have been exempt from the penalty, so all they have to do is take
away the penalty. VERRILLI: I don't -- I don't think so, Mr.
Chief Justice. I don't think it makes it easy for the Government in the future. We think
this is the fairest reading of the statute, that the -- that the -you cannot infer from
the fact that someone is exempt from the penalty, that they are still under an obligation to
have insurance. That's just not the fairest reading of the statute.
KAGAN: Could I - ALITO: I'm sorry, go ahead.
KAGAN: The nature of the representation you made, that the only consequence is the penalty,
suppose a person does not purchase insurance, a person who is obligated to do so under the
statute, doesn't do it, pays the penalty instead, and that person finds herself in a position
where she is asked the question, have you ever violated any federal law, would that
person have violated a federal law? VERRILLI: No. Our position is that person
should give the answer "no." KAGAN: And that's because -
VERRILLI: That if they don't pay the tax, they violated a federal law.
KAGAN: But as long as they pay the penalty -
VERRILLI: If they pay the tax, then they are in compliance with the law.
BREYER: Why do you keep saying it's a tax? VERRILLI: If they pay the tax penalty, they're
in compliance with the law. BREYER: Thank you.
VERRILLI: Thank you, Justice Breyer. BREYER: The penalty.
VERRILLI: Right. That's right. ALITO: Suppose a person who has been receiving
medical care in an emergency room -- has no health insurance but, over the years, goes
to the emergency room when the person wants medical care -goes to the emergency room,
and the hospital says, well, fine, you are eligible for Medicaid, enroll in Medicaid.
And the person says, no, I don't want that. I want to continue to get -- just get care
here from the emergency room. Will the hospital be able to point to the mandate and say, well,
you're obligated to enroll? VERRILLI: No, I don't think so, Justice Alito,
for the same reason I just gave. I think that the -- that the answer in that situation is
that that person, assuming that person -- well, if that person is eligible for Medicaid, they
may well not be in a situation where they are going to face any tax penalty and therefore
- ALITO: No, they are not facing the tax penalty.
VERRILLI: Right, right. ALITO: So the hospital will have to continue
to give them care and pay for it themselves, and not require them to be enrolled in Medicaid.
VERRILLI: Right. ALITO: Will they be able to take this out
and say, well, you really should -- you have a moral obligation to do it; the Congress
of the United States has said, you have to enroll? No, they can't say that?
VERRILLI: I do think it's -- I think it's certainly fair to say that Congress wants
people in that position to sign up for Medicaid. I think that's absolutely right. And I think
the statute is structured to accomplish that objective; but, the reality still is that
the only consequence of noncompliance is the penalty.
SOTOMAYOR: General, but I thought the people who were eligible for Medicaid weren't subject
to the penalty. Am I wrong? I could be just factually wrong.
VERRILLI: Well, it all -- the penalty is keyed to income.
SOTOMAYOR: Yes. VERRILLI: And the -- it's keyed to a number
of things. One is are -- are you making so little money that you aren't obligated to
file a tax return. And if you're in that situation, you're not subject to the penalty. It's also
if the cost of insurance would be more than 8 percent of your income, you aren't subject
to the penalty. So, there isn't necessarily a precise mapping
between somebody's income level and their Medicaid eligibility at the present moment.
That will depend on where things are and what the eligibility requirements are in the State.
SOTOMAYOR: But those people below VERRILLI: But, as a general matter, for people
below the poverty line, it's almost inconceivable that they're ever going to be subject to the
penalty, and they would, after the Act's Medicaid reforms go into place, be eligible for Medicaid.
BREYER: So, is your point that the tax -- what we want to do is get money from these people.
Most of them will bet -- get the money by buying the insurance, and that will help pay.
But if they don't, they're going to pay this penalty, and that will help, too. And the
fact that we put the latter in brings it within the taxing power. But as far as this Act is
concerned, about the injunction, they called it a penalty and not a tax for a reason. They
wanted it to fall outside that - VERRILLI: Yes.
BREYER: -- it's in a different chapter, et cetera.
Is that what the heart of what you're saying? VERRILLI: That's the essence of it. They called
it a penalty. They didn't give any other textural instruction in the Affordable Care Act or
in the Internal Revenue Code that that penalty should be treated as a tax
ROBERTS: Well, except you - VERRILLI: -- for Anti-Injunction Act purposes.
ROBERTS: You agree with Mr. Long, isn't -- I mean, I thought you just agreed with Justice
Breyer that one of the purposes of the provision is to raise revenue.
VERRILLI: It will -- well, it will raise revenue. It has been predicted by the CBO that it will
raise revenue, Your Honor. But even though that's the case -- and I think that would
be true of any -- of any penalty, that it will raise some revenue, but even though that's
the case, there still needs to be textual instruction in the statute that this penalty
should be treated as a tax for Anti-Injunction Act purposes, and that's what's lacking here.
ALITO: After this takes effect, there may be a lot of people who are assessed the penalty
and disagree either with whether they should be assessed the penalty at all or with the
calculation of the amount of their penalty. So, under your interpretation of the Act,
all of them can now go to court? None of them are barred by the Anti-Injunction Act?
VERRILLI: Those are two different things, Justice Alito. I think for reasons that Justice
Kennedy, I think, suggested in one of his questions to Mr. Long, all of the other doctrines,
exhaustion of remedies and related doctrines, would still be there, and the United States
would rely on them in those circumstances. And -- and so, I don't think the answer is
that they can all go to court, no. SOTOMAYOR: Well, why isn't -
ALITO: Two former -- two former commissioners of the IRS have filed a brief saying that
your interpretation is going to lead to a flood of litigation. Are they wrong on that?
VERRILLI: Yes. We don't -- you know -- we've taken this position after very careful consideration,
and we've assessed the institutional interests of the United States, and we think we're in
the right place. SOTOMAYOR: But tell me something, why isn't
this case subject to the same bars that -that you list in your brief? The Tax Court, at
least so far, considers constitutional challenges to statutes. So, why aren't we -- why isn't
this case subject to a dismissal for failure to exhaust?
VERRILLI: Because we don't -because the exhaustion would go to the individual amount owed, we
think, and that's a different situation from this case. If the Court has no further questions.
ROBERTS: Thank you, General. VERRILLI: Thank you.
ROBERTS: Mr. Katsas. KATSAS: Mr. Chief Justice, and may it please
the Court: Let me begin with the question whether the Anti-Injunction Act is jurisdictional.
Justice Ginsburg, for reasons you suggested, we think the text of the Anti-Injunction Act
is indistinguishable from the text of the statute that was unanimously held to be non-jurisdictional
in Reed Elsevier. That statute said no suit shall be instituted. This statute says no
suit shall be maintained. No - GINSBURG: They are different things.
SOTOMAYOR: Big difference, though - GINSBURG: This says "immediately" -- the Reed
Elsevier statute says immediately after instituted unless a copyright is registered.
KATSAS: Unless the copyright is registered. And this goes -- this goes to the character
of the lawsuit. The statute in Reed Elsevier says register your copyright and then come
back to court. GINSBURG: So, why isn't that like a filing
fee? Before you can maintain a suit for copyright infringement, you have to register your copyright?
KATSAS: It -- it's a precondition to filing suit. The -- the analogous precondition here
is pay your taxes and then come back to court. The point is -
SOTOMAYOR: No, that -- that's not true. The suit here has nothing to do with hearing the
action. It has to do with the form of relief that Congress is barring. It's not permitting
-- it is not a tax case; you can come in afterwards. It's not permitting the court to exercise
what otherwise would be one of its powers. KATSAS: It has to be the same challenge, Justice
Sotomayor, or else South Carolina v. Regan would say the Anti-Injunction Act doesn't
apply. You are right that once you file -- once you pay your taxes and then file the refund
action, the act of filing the taxes converts the suit from one seeking prospective relief
into one seeking money damages. And in that sense, you could think of the statute as a
remedial limitation on the courts. But whether you think of it as an exhaustion
requirement or a remedial limitation, neither of those characterizations is jurisdictional.
In Davis v. Passman you said that a remedial limitation doesn't go -
SOTOMAYOR: It does seem strange to think of a -- a law that says no court can entertain
a certain action and give a certain remedy as merely a claim-processing rule. What the
-- the court is being ousted from -- from what would otherwise be its power to hear
something. KATSAS: The suit is being delayed, I think
is the right way of looking at it. The jurisdictional apparatus in the district court is present.
Prospective relief under 1331, money damages action under 1346. If the Anti-Injunction
Act were jurisdiction-ousting, one might have expected it to be in Title 28 and to qualify
those statutes and to use jurisdictional limits. SOTOMAYOR: So, how do you deal with this case
and our Gonzalez -- our recent Gonzalez case, where we talked about -
KATSAS: Right. SOTOMAYOR: -- the language of the COA statute
that no appeal will be heard absent the issuance of?
KATSAS: Gonzalez -- Gonzalez v. Thaler rests on a special rule that applies with respect
to appeals from one Article III court to another. That's -- that explains Gonzalez, and it explains
Bowles before it. You have five unanimous opinions in the last
decade in which you have strongly gone the other direction on what counts as jurisdictional.
SOTOMAYOR: There is an argument that we should just simply say that Bowles applies only to
appeals, but we haven't said that. KATSAS: No, you came very close. In Henderson,
Justice Sotomayor, you said that Bowles, which is akin to Thaler, is explained by the special
rule and understandings governing appeals from one Article III court to another. And
you specifically said that it does not apply to situations involving a party seeking initial
judicial review of agency action, which is what we have here.
So, while you're right, the texts in Bowles and Thaler are not terribly different, those
cases are explained by that principle. Under Henderson, it doesn't apply to this case.
The text in this case speaks to the suit, the cause of action of the litigant. It doesn't
speak to the jurisdiction or power of the court. The Anti-Injunction Act is placed in
a section of the tax code governing procedure. It's not placed in -
SOTOMAYOR: Counsel, all of those -all of that in particular -
KATSAS: You did rely on that in Reed Elsevier as one consideration.
SOTOMAYOR: And we haven't relied on it in other cases.
KATSAS: Another -- another consideration in Reed Elsevier that cuts in our favor is the
presence of exceptions. You said three in Reed Elsevier cut against jurisdictional characterization.
Here, there are 11. And - SOTOMAYOR: Many of which themselves speak
in very clear jurisdictional language. KATSAS: Well, some of them have no jurisdictional
language at all, and not a single one of them uses the word "jurisdiction" to describe the
ability of the court to restrain the assessment and collection of taxes, which is what one
would have expected - BREYER: Basically, it begs the difference
-- language is relevant. There are a lot of relevant things. But one thing that's relevant
in my mind is that taxes are, for better or for worse, the life's blood of government.
KATSAS: Yes. BREYER: And so what Congress is trying to
do is to say there is a procedure here that you go through. You can get your money back,
or you go through the Tax Court, but don't do this in advance for the reason that we
don't want 500 Federal judge -judges substituting their idea of what is a proper equitable defense,
of when there is going to be an exception made about da, da, da, for the basic rule.
No. Okay? And so there is strong reason that is there.
You tried to apply that reason to the copyright law. You can't find it. Registration for the
copyright register is not the life's blood of anything. Copyright exists regardless.
So the reasoning isn't there. The language -- I see the similarity of language.
I've got that. But it's the reasoning, the
sort of underlying reason for not wanting a waiver here that --that is -- has a significant
role in my mind of finding that it is jurisdictional. Plus the fact that we have said it nonstop
since that Northrop or whatever that other case is.
KATSAS: Justice Breyer, as to reasoning, you -- you give an argument -- you give an argument
why, as a policy matter, it might make sense to have a non-jurisdictional statute. But
of course, this Court's recent cases time and again say Congress has to clearly rank
the statute as non-jurisdictional in its text and structure. It seems to me a general appeal
to statutory policies doesn't speak with sufficient clarity -
BREYER: That's fine. I just wanted to ask the question in case you wanted to answer
the policy question. KATSAS: As to policy -- as to policy, I think
Helvering against Davis is the refutation of this view. It is true that in most cases,
the Government doesn't want and Congress doesn't want people coming into court. But Davis shows
there may be some cases including, for instance, constitutional challenges to landmark Federal
statutes where the Government sensibly decides that its revenue-raising purposes are better
served by allowing a party to come into court and waiving its defense. That's what the Solicitor
General did in Davis, and this Court accepted that waiver.
As for prior cases, we have the holding in Davis and the holding in all of the equitable
exception cases like Williams Packing, the Government -
SOTOMAYOR: So why don't we say -why don't we say it's jurisdictional except when the
Solicitor General waives? KATSAS: You have used -
SOTOMAYOR: Why would that not promote Congress's policy of ensuring -- or Congress, explicitly
says - KATSAS: It's jurisdictional except when the
Solicitor General waives it? SOTOMAYOR: Yes. It's a contradiction in terms.
I don't disagree. I don't disagree. KATSAS: It is a contradiction in terms. All
of your cases analyze the situation as if the statute is jurisdictional, then it's not
subject to waiver. If you were to construe this as such a one-of unique statute, it seems
to me we would still win because the Solicitor General with full knowledge of the Anti-Injunction
Act argument available to him affirmatively gave it up. This is not just a forfeiture
where a Government lawyer is -- through inadvertence fails to raise an argument. This is a case
where the Government - SOTOMAYOR: They raised it and then gave it
up. KATSAS: They made it below. They know what
it is; and not only are they not pursuing it here, they are affirmatively pursuing an
argument on the other side. KAGAN: Mr. Katsas, is your basic position
that when we are talking about the jurisdiction of the district courts, a statute has to say
it's jurisdictional to be jurisdictional? KATSAS: I wouldn't go quite that far. I think
at a minimum, it has -- it has to either say that or at least be directed to the courts
which is a formulation you have used in your cases and which is the formulation that Congress
used in the Tax Injunction Act, but did not use in this Statute.
KAGAN: Well, how would -- I mean, I suppose one could try to make a distinction between
this case and Reed Elsevier by focusing on the difference between instituting something
and maintaining something, and suggesting that instituting is more what a litigant
does, and maintaining, as opposed to dismissing, is more of what judge does.
KATSAS: I don't think so, Justice Kagan, because we have an adversarial system, not an inquisitorial
one. The parties maintain their lawsuits, I think, is the more natural way of thinking
of it. If I could turn -- if I could turn to the
merits question on the AIA before my time runs out.
The purpose of this lawsuit is to challenge a requirement -- a Federal requirement to
buy health insurance. That requirement itself is not a tax. And for that reason alone, we
think the Anti-Injunction Act doesn't apply. What the amicus effectively seeks to do is
extend the Anti-Injunction Act, not just to taxes which is how the statute is written,
but to free-standing nontax legal duties. And it's just -CHIEF
JUSTICE ROBERTS: The whole point -the whole point of the suit is to prevent the collection
of penalties. KATSAS: Of taxes, Mr. Chief Justice.
ROBERTS: Well, prevent the collection of taxes. But the idea that the mandate is something
separate from whether you want to call it a penalty or tax just doesn't seem to make
much sense. KATSAS: It's entirely separate, and let me
explain to you why. ROBERTS: It's a command. A mandate is a command.
Now, if there is nothing behind the command, it's sort of, well, what happens if you don't
follow the mandate? And the answer is nothing, it seems very artificial to separate the punishment
from the crime. KATSAS: I'm not sure the answer is nothing,
but even assuming it were nothing, it seems to me there is a difference between what the
law requires and what enforcement consequences happen to you. This statute was very deliberately
written to separate mandate from penalty in several different ways.
They are put in separate sections. The mandate is described as a "legal requirement" no fewer
than 20 times, three times in the operative text and 17 times in the findings. It's imposed
through use of a mandatory verb "shall." The requirement is very well defined in the statute,
so it can't be sloughed off as a general exhortation, and it's backed up by a penalty.
Congress then separated out mandate exceptions from penalty exceptions. It defined one category
of people not subject to the mandate. One would think those are the category of people
as to whom Congress is saying: You need not follow this
law. It then defined a separate category of people not subject to the penalty, but subject
to the mandate. I don't know what that could mean other than -
ROBERTS: Why would you have a requirement that is completely toothless? You know, buy
insurance or else. Or else what? Or else nothing. KATSAS: Because Congress reasonably could
think that at least some people will follow the law precisely because it is the law. And
let me give you an example of one category of person that might be -- the very poor,
who are exempt from the penalty but subject to the mandate. Mr. Long says this must be
a mandate exemption because it would be wholly harsh and unreasonable for Congress to expect
people who are very poor to comply with the requirement to obtain health insurance when
they have no means of doing so. That gets things exactly backwards. The very
poor are the people Congress would be most concerned about with respect to the mandate
to the extent one of the justifications for the mandate is to prevent emergency room cost
shifting when people receive uncompensated care. So they would have had very good reason
to make the very poor subject to the mandate, and then they didn't do it in a draconian
way; they gave the very poor a means of complying with the insurance mandate, and that is through
the Medicaid system. KAGAN: Mr. Katsas, do you think a person who
is subject to the mandate but not subject to the penalty would have standing?
KATSAS: Yes, I think that person would, because that person is injured by compliance with
the mandate. KAGAN: What would that look like? What would
the argument be as to what the injury was? KATSAS: The injury -- when that subject to
the mandate, that person is required to purchase health insurance. That is a forced acquisition
of an unwanted good. It's a classic pocketbook injury.
But even if I'm wrong about that question, Justice Kagan, the question of who has standing
to bring the challenge that we seek to bring seems to me very different -- your hypothetical
plaintiff is very different from the actual plaintiffs. We have individuals who are planning
for compliance in order to avoid a penalty, which is what their affidavits say. And we
have the States, who will be subject no doubt to all sorts of adverse ramifications if they
refuse to enroll in Medicaid the people who are forced into Medicaid by virtue of the
mandate. So we don't have the problem of no adverse
consequences in the case. And then, we have the separate distinction
between the question of who has Article III standing in order to maintain a suit and the
question of who is subject to a legal obligation. And you've said in your cases that even if
there may be no one who has standing to challenge a legal obligation like the incompatibility
clause or something, that doesn't somehow convert the legal obligation into a legal
nullity. Finally, with respect to the States, even
if we are wrong about everything I've said so far, the States clearly fall within the
exception recognized in South Carolina against Regan. They are injured by the mandate because
the mandate forces 6 million new people onto their Medicaid rolls. But they are not directly
subject to the mandate, nor could they violate the mandate and incur a penalty.
KAGAN: Could I just understand, Mr. Katsas, when the States say that they are injured,
are they talking about the people who are eligible now, but who are not enrolled? Or
are they also talking about people who will become newly eligible?
KATSAS: It's people who will enroll -people who wouldn't have enrolled had they been given
a voluntary choice. KAGAN: But who are eligible now.
KATSAS: That's the largest category. think there could be future eligibles who would
enroll because they are subject to a legal obligation but wouldn't have enrolled if given
a voluntary choice. But I'm happy to -- I'm happy to focus on
currently eligible people who haven't enrolled in Medicaid. That particular class is the
one that gives rise to, simply in Florida alone, a pocketbook injury on the order of
500 to $600 million per year. KAGAN: But that does seem odd, to suggest
that the State is being injured because people who could show up tomorrow with or without
this law will -- will show up in greater numbers. I mean, presumably the State wants to cover
people whom it has declared eligible for this benefit.
KATSAS: They -- they could, but they don't. What the State wants to do is make Medicaid
available to all who are eligible and choose to obtain it. And in any event -
GINSBURG: Why would somebody not choose to obtain it? Why -- that's one puzzle to me.
There's this category of people who are Medicaid eligible; Medicaid doesn't cost them anything.
Why would they resist enrolling? KATSAS: I -- I don't know, Justice Ginsburg.
All I know is that the difference between current enrollees and people who could enroll
but have not is, as I said, on the -- is a $600 million delta. And -
GINSBURG: But it may be just that they haven't been given sufficient information to understand
that this is a benefit for them. KATSAS: It's possible, but all we're talking
about right now is the standing of the States. And the only arguments made against the standing
of the States -- I mean, there is a classic pocketbook injury here. The only arguments
made about -- against the standing of the States are, number one, this results from
third-party actions. That doesn't work, because the third-party actions are not unfettered
in -- in the sense of Lujan; they are coerced in the sense of Bennett v. Spear. Those people
are enrolling because they are under a legal obligation to do so.
The second argument made against the States' standing is that the States somehow forfeit
their ability to challenge the constitutionality of a provision of Federal law because they
voluntarily choose to participate SOTOMAYOR: I'm -- I'm a little bit confused.
And this is what I'm confused about. There -- there is a challenge to the individual
mandate. KATSAS: Yes.
SOTOMAYOR: All right. What is -the fact that the State is challenging Medicaid, how does
it give the State standing to challenge an obligation that is not imposed on the State
in any way? KATSAS: The -- the principal theory for State
standing is that States are challenging the mandate because the mandate injures them when
people are forced to enroll in Medicaid. Now, it is true they are not directly subject
to the mandate, but - SOTOMAYOR: Yes. That's what I'm -
KATSAS: Okay. Let me -- let me try to - SOTOMAYOR: -- a little confused by.
KATSAS: Let me try it this way -- may I finish the thought?
ROBERTS: Go ahead. KATSAS: In South Carolina v. Regan, the State
was not subject to the tax at issue. The State was harmed because -- as the issuer of the
bonds, and the bond holders were the ones subject to the tax. So the State is injured
not because it is the direct object of the Federal tax, but because of its relationship
to the regulated party as issuer/bond holder. ROBERTS: Thank you, Mr. Katsas.
KATSAS: Thank you, Mr. Chief Justice. ROBERTS: Mr. Long, you have 5 minutes remaining.
LONG: Everyone agrees that the section 5000A penalty shall be assessed and collected in
the same manner as taxes. And the parties' principal argument why that does not make
the Anti-Injunction Act applicable is that, well, that simply goes to the Secretary's
activities. And I would simply ask, if -- if you look
at chapters 63 and 64 of the Internal Revenue Code, which are the chapters on assessment
and collection, they are not just addressed to the Secretary. There are many provisions
in there that are addressed to courts and indeed talk about this interaction, the very
limited situations in which courts are permitted to restrain the assessment and collection
of taxes. There was a statement made that there aren't
-- and many of the exceptions to the Anti-Injunction Act are in the assessment and collection provisions
-- there was a statement made that none of these directly confer jurisdiction to restrain
the assessment and collection of taxes. That's not true. In footnote 11 of our opening brief,
we cite several. I'll simply mention section 6213 as an example.
That says -- I quote: "Notwithstanding the provisions of section 7421(a), the making
of such assessment or the beginning of such proceeding or levy during the time such prohibition
is in force may be enjoined by a proceeding in the proper court, including the Tax Court.
The Tax Court shall have no jurisdiction to enjoin any action or proceeding or order any
refund under this subsection unless a timely petition for redetermination of the deficiency
has been filed, and then only in respect of the deficiency that is the subject of such
petition." BREYER: And all that's going to really what
I think Congress's intent was meant to be in sticking the collection thing into chapter
68, and -and it's certainly an argument in your favor.
The -- the over-arching thing in my mind is it's -- it's up to Congress, within leeway.
And they did not use that word "tax," and they did have a couple of exceptions. And
it is true that all this language that you quote -- you know, the first two sentences
and so forth, it talks about the use of tax in the IRC. It talks about the penalties and
liabilities provided by this subchapter. And we look over here and it's a penalty and liability
provided by a different law, which says collect it through the subchapter, and it has nothing
to do with the IRC. See? So we've got it in a separate place, we can
see pretty clearly what they're trying to do. They couldn't really care very much about
interfering with collecting this one. That's all the statutory argument.
Are you following me? You see? I'm trying to get you to focus on
that kind of argument. LONG: I mean, I think I'm following you, but
-- but the fact that it's not in the particular subchapter for assessable penalties in my
view makes no difference, because they said it's still clearly -- it's assessed and collected
in the same manner - BREYER: Yes, it is.
LONG: -- as the penalty in that subchapter, and those penalties are collected in the same
manner as taxes. BREYER: Yes, yes.
LONG: And so that's -- I think it's -it's rather detailed, but I think it's a rather
clear indication that the Anti-Injunction Act applies.
The -- the refund statute that does specifically refer to penalties, that has nothing to do
with this argument that it's assessed and collected in the same manner as a tax. That
would simply go to the point that well, you can't just call it a tax, because they've
referred to it as a penalty. And finally, on jurisdiction, you know, I
think the key point is we have a long line of this Court's decisions that's really been
ratified by Congress, with all these exceptions in jurisdictional terms.
As I read Bowles and John R. Sand & Gravel, the -- the gist of those decisions was not
any special sort of rule about appeals, it's that when we have that situation, which I
would submit applies as much to the collection of Federal taxes as it does to appeals from
Federal district courts when we have this degree of -of precedent, including precedent
from Congress in the form of amendments to this Anti-Injunction Act, that should be -- the
presumption should be that this is jurisdictional. If there are no further questions.
ROBERTS: Mr. Long, you were invited by this Court to defend the proposition that the Anti-Injunction
Act barred this litigation. You have ably carried out that responsibility, for which
the Court is grateful. LONG: Thank you.
ROBERTS: We will continue argument in this case tomorrow.