Fourth Circuit Good News and Bad News

David Freddoso reports that the Fourth Circuit, which is considering the Virginia ObamaCare lawsuit, has ordered supplemental briefing in the case on an issue mostly ignored because it is so farfetched.

This afternoon, the Fourth Circuit panel considering the Commonwealth of Virginia's challenge to Obamacare has asked for supplemental briefs from all parties related to the arguments about the federal government's constitutional powers of taxation. This may mean that the court is setting itself up to rule that the penalty for not purchasing insurance under Obamacare is, in fact, a tax and not a penalty at all, and that therefore the court lacks jurisdiction to hear the case.

Most of the discussion of the individual mandate has focused on the Commerce Clause and the Necessary and Proper Clause. One of the defenses that the Obama Administration has raised is that it is a tax, even though Obama explicitly stated in no uncertain terms during the run-up to the vote on the bill that it was not a tax and the language of the statute does not use the word tax. If it is then under the Tax Anti-Injunction Act courts would not have jurisdiction over the ObamaCare lawsuits until taxpayers pay in full before challenging the legality of any tax.

No court, including the courts that ultimately upheld the individual mandate under the Commerce Clause and the Necessary and Proper Clause have held that the individual mandate is a constitutional exercise of the Tax and Spend Clause. This is because, among other problems, it would be an unconstitutional capitation tax.

Freddoso thinks that this is bad news:

This completely unexpected development strongly increases the odds that the separate Florida lawsuit against Obamacare will be the decisive one that eventually reaches the Supreme Court. As the Examiner reported two weeks ago, the three judges on the Fourth Circuit panel are all Democrat appointees, including two Obama appointees.

Well, he's right that the "Florida" suit will probably be the decisive one (more on that below), but not because these Democratic appointees have decided to muck about with a bad tax argument. In fact, I think this is good news. If the judges are taking a swing at the dubious tax argument, then they're probably having a hard time with the Commerce Clause and Necessary and Proper arguments. It is possible one or more of the judges has decided that untrammeled federal power to intrude into private economic decisions is a bridge too far. They may be hoping to dispose of the sticky Commerce Clause problem by finding authority for the mandate in the Tax Clause. A decision on tax grounds is a decision that we will win in the Supreme Court.

As far as the Florida lawsuit, which is actually a multi-state lawsuit against ObamaCare, being the important one, I've written before that it is the lawsuit to keep an eye on. Unlike the headlines-grabbing (and politically ambitious) Virginia AG, who jumped as fast as he could to be first in line with these lawsuits and managed only to challenge the individual mandate, the multi-state suit challenged multiple sections of ObamaCare on several different grounds and with several different types of plaintiffs, therefore giving the appellate courts and (eventually) the Supreme Court more options to find it unconstitutional. Moreover, it is procedurally the better case since, of course, it actually won below on the severability argument.

posted by Gabriel Malor at 06:13 PM

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