IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF FLORIDA

Pensacola Division

Case No.: 3:10-cv-91-RV/EMT

STATE OF FLORIDA, by and through

BILL McCOLLUM, ATTORNEY GENERAL

OF THE STATE OF FLORIDA;

STATE OF SOUTH CAROLINA, by and through

HENRY McMASTER, ATTORNEY GENERAL

OF THE STATE OF SOUTH CAROLINA;

STATE OF NEBRASKA, by and through

JON BRUNING, ATTORNEY GENERAL

OF THE STATE OF NEBRASKA;

STATE OF TEXAS, by and through

GREG ABBOTT, ATTORNEY GENERAL

OF THE STATE OF TEXAS;

STATE OF UTAH, by and through

MARK L. SHURTLEFF, ATTORNEY GENERAL

OF THE STATE OF UTAH;

STATE OF LOUISIANA, by and through

JAMES D. “BUDDY” CALDWELL, ATTORNEY

GENERAL OF THE STATE OF LOUISIANA;

STATE OF ALABAMA, by and through

TROY KING, ATTORNEY GENERAL

OF THE STATE OF ALABAMA;

MICHAEL A. COX, ATTORNEY GENERAL

OF THE STATE OF MICHIGAN, ON BEHALF OF 

THE PEOPLE OF MICHIGAN;

STATE OF COLORADO, by and through

JOHN W. SUTHERS, ATTORNEY GENERAL

OF THE STATE OF COLORADO;

COMMONWEALTH OF PENNSYLVANIA, by

and through THOMAS W. CORBETT, Jr., 

Case 3:10-cv-00091-RV-EMT Document 68 Filed 08/06/10 Page 1 of 81
ATTORNEY GENERAL OF THE

COMMONWEALTH OF PENNSYLVANIA;

STATE OF WASHINGTON, by and through

ROBERT M. McKENNA, ATTORNEY GENERAL

OF THE STATE OF WASHINGTON;

STATE OF IDAHO, by and through

LAWRENCE G. WASDEN, ATTORNEY GENERAL

OF THE STATE OF IDAHO;

STATE OF SOUTH DAKOTA, by and through

MARTY J. JACKLEY, ATTORNEY GENERAL

OF THE STATE OF SOUTH DAKOTA;

STATE OF INDIANA, by and through 

GREGORY F. ZOELLER, ATTORNEY GENERAL

OF THE STATE OF INDIANA;

STATE OF NORTH DAKOTA, by and through 

WAYNE STENEJHEM, ATTORNEY GENERAL

OF THE STATE OF NORTH DAKOTA;

STATE OF MISSISSIPPI, by and through

HALEY BARBOUR, GOVERNOR OF

THE STATE OF MISSISSIPPI;

STATE OF ARIZONA, by and through JANICE K.

BREWER, GOVERNOR OF THE STATE OF ARIZONA;

STATE OF NEVADA, by and through JIM GIBBONS,

GOVERNOR OF THE STATE OF NEVADA;

STATE OF GEORGIA, by and through SONNY PERDUE,

GOVERNOR OF THE STATE OF GEORGIA;

STATE OF ALASKA, by and through

DANIEL S. SULLIVAN, ATTORNEY GENERAL OF

THE STATE OF ALASKA;

NATIONAL FEDERATION OF INDEPENDENT

BUSINESS, a California nonprofit mutual benefit

corporation;

Case 3:10-cv-00091-RV-EMT Document 68 Filed 08/06/10 Page 2 of 81
MARY BROWN, an individual; and

KAJ AHLBURG, an individual;

Plaintiffs,

v. 

UNITED STATES DEPARTMENT OF

HEALTH AND HUMAN SERVICES;

KATHLEEN SEBELIUS, in her official

capacity as the Secretary of the United States

Department of Health and Human Services;

UNITED STATES DEPARTMENT OF

THE TREASURY; TIMOTHY F.

GEITHNER, in his official capacity as the

Secretary of the United States Department

of the Treasury; UNITED STATES

DEPARTMENT OF LABOR; and HILDA

L. SOLIS, in her official capacity as Secretary

of the United States Department of Labor,

Defendants.

___________________________________________/

PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO

DEFENDANTS’ MOTION TO DISMISS

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i

TABLE OF CONTENTS

Table of Authorities.....................................................................................................iii-xvi

Introduction......................................................................................................................... 1

Argument ............................................................................................................................ 3

I. PLAINTIFFS HAVE STANDING TO CHALLENGE THE INDIVIDUAL 

MANDATE, AND THEIR CHALLENGE IS RIPE ..............................................3

A. Plaintiff States Allege Injuries-in-Fact .......................................................4

B. Plaintiff States Have Standing To Challenge Federal Laws That 

Injure Their Sovereign Power To Legislate To Protect State Citizens 

from Healthcare Coercion............................................................................8

C. Individual Plaintiffs and NFIB Have Standing, Providing Another

Basis for Plaintiff States To Challenge the Individual Mandate................10

1. The Individual Plaintiffs........................................................................11

2. NFIB .....................................................................................................13

D. Plaintiffs‟ Claims Challenging the Individual Mandate Are Ripe............ 16

E. The Anti-Injunction Statute Does Not Apply ........................................... 18

II. THE INDIVIDUAL MANDATE EXCEEDS CONGRESS‟S POWERS 

AND VIOLATES THE NINTH AND TENTH AMENDMENTS AND 

CORE PRINCIPLES OF FEDERALISM .............................................................23

A. The Individual Mandate Is Impermissible Under the Commerce 

Clause.........................................................................................................24

1. Congress‟s Commerce Power Does Not Reach Inactivity .................24

2. The Individual Mandate Does Not Regulate Commerce, It 

Compels It ...........................................................................................27

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B. The Individual Mandate Cannot Be Saved by the Necessary and 

Proper Clause .............................................................................................30

1. The Mandate Is Not a Means To Implement a Constitutionally 

Enumerated Power ..............................................................................30

2. The Individual Mandate Fails Under the Comstock Factors................33

C. The Individual Mandate Is Impermissible Under the Taxing and 

Spending Clause.........................................................................................36

D. Alternatively, if the Individual Mandate‟s Penalty Is a Tax, It Is an 

Unconstitutional Direct, Unapportioned Tax............................................ 39

E. The Individual Mandate Violates the Ninth and Tenth Amendments 

and Core Principles of Federalism.............................................................42

III. THE INDIVIDUAL MANDATE VIOLATES DUE PROCESS..........................43

IV. THE ACT‟S SWEEPING CHANGES TO MEDICAID AND ADDED 

BURDENS ON PLAINTIFF STATES ARE UNCONSTITUTIONAL...............45

A. The Act Transforms Medicaid in Violation of States‟ Sovereign 

Rights.........................................................................................................46

B. The ACA Compels States To Administer and Enforce Federal 

Insurance-Related Programs in Violation of the Constitution‟s 

System of Dual Sovereignty ......................................................................51

C. The Act Unconstitutionally Interferes with the States‟ Sovereignty 

With Respect to State Employees and Officials........................................54

1. The Employer Mandate Regime Violates the Commerce Clause 

and the Tenth Amendment...................................................................55

2. The Employer Mandates Discriminate Against States and Violate 

the Inter-Governmental-Tax-Immunity Doctrine ................................58

CONCLUSION................................................................................................................. 60

CERTIFICATE OF SERVICE ......................................................................................... 62

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iii

TABLE OF AUTHORITIES

CASES

520 S. Mich. Ave. Assocs. v. Devine,

433 F.3d 961 (7th Cir. 2006) ........................................................................................ 12

Abbott Labs. v. Gardner,

387 U.S. 136 (1967)................................................................................................ 16, 17

ACLU of Fla., Inc. v. Miami-Dade County Sch. Bd.,

557 F.3d 1177 (11th Cir. 2009) .................................................................................... 13

Adarand Constructors, Inc. v. Pena,

515 U.S. 200 (1995) ..................................................................................................... 38

Alaska Airlines, Inc. v. Brock,

480 U.S. 678 (1987)........................................................................................................ 7

Alaska v. United States Dep't of Transp.,

868 F.2d 441 (D.C. Cir. 1989).................................................................................... 8, 9

Alden v. Maine,

527 U.S. 706 (1999)...................................................................................................... 43

Am. Dental Ass‟n v. Cigna Corp.,

605 F.3d 1283 (11th Cir. 2010) ...................................................................................... 4

Atlanta Gas & Light Co. v. U.S. Dep‟t of Energy,

666 F.2d 1359 (11th Cir. 1982) .................................................................................... 51

Ayotte v. Planned Parenthood of N. New England,

546 U.S. 320 (2006)........................................................................................................ 7

Babbitt v. United Farm Workers Nat‟l Union,

442 U.S. 289 (1979)...................................................................................................... 13

Bacon v. City of Richmond,

475 F.3d 633 (4th Cir. 2007) ................................................................................... 59-60

Bailey v. Drexel Furniture Co. (The Child Labor Tax Case),

259 U.S. 20 (1922)........................................................................................... 21, 37, 38

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Barr v. United States,

736 F.2d 1134 (7th Cir. 1984) ...................................................................................... 20

Blanchette v. Ct. Gen. Ins. Corps.,

419 U.S. 102 (1974).................................................................................................. 8, 16

Bd. of Trs. v. United States,

289 U.S. 48 (1933)........................................................................................................ 21

Bob Jones Univ. v. Simon,

416 U.S. 725 (1974)...................................................................................................... 22

Bowsher v. Synar,

478 U.S. 714 (1986)...................................................................................................... 11

Bromley v. McCaughn,

280 U.S. 124 (1929)...................................................................................................... 41

Buckley v. Valeo,

424 U.S. 1 (1976).......................................................................................................... 38

Cities Serv. Co. v. Fed. Energy Admin.,

529 F.2d 1016 (Temp. Emer. Ct. App. 1975)............................................................... 18

Clarke v. Sec. Indus. Ass‟n,

479 U.S. 388 (1987)...................................................................................................... 20

Cobell v. Norton,

428 F.3d 1070 (D.C. Cir. 2005).................................................................................... 20

Comm. of Immigrant Rights of Sonoma County v. County of Sonoma,

644 F. Supp. 2d 1177 (N.D. Cal. 2009)........................................................................ 15

Comm‟r of Internal Revenue v. Glenshaw Glass Co.,

348 U.S. 426 (1955)...................................................................................................... 41

Commissioner v. Indianapolis Power & Light Co.,

493 U.S. 203 (1990)...................................................................................................... 41

Connecticut v. Am. Elec. Power Co.,

582 F.3d 309 (2d Cir. 2009).......................................................................................... 12

Coyle v. Smith,

221 U.S. 559 (1911)...................................................................................................... 51

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v

Cruzan v. Dir., Mo. Dep‟t of Health,

497 U.S. 261 (1990)...................................................................................................... 44

DaimlerChrysler Corp. v. Cuno,

547 U.S. 332 (2006)...................................................................................................... 11

Daniel v. Paul,

395 U.S. 298 (1969)................................................................................................ 26, 27

Davis v. Mich. Dep‟t of Treasury,

489 U.S. 803 (1989)...................................................................................................... 60

Dep't of Commerce v. U.S. House of Reps.,

525 U.S. 316 (1999)...................................................................................................... 12

DIRECTV, Inc. v. Brown,

371 F.3d 814 (11th Cir. 2004) ...................................................................................... 19

District of Columbia v. Heller,

128 S. Ct. 2783 (2008).................................................................................................. 43

Doe v. County of Montgomery,

41 F.3d 1156 (7th Cir. 1994) ........................................................................................ 11

Eisner v. Macomber,

252 U.S. 189 (1920)...................................................................................................... 41

Elend v. Basham,

471 F.3d 1199 (11th Cir. 2006) .................................................................................... 16

Ex parte Poresky,

290 U.S. 30 (1933)........................................................................................................ 34

FERC v. Mississippi,

456 U.S. 742 (1982)................................................................................................ 43, 52

Fernandez v. Wiener,

326 U.S. 340 (1945)...................................................................................................... 40

Fla. League of Prof‟l Lobbyists, Inc. v. Meggs,

87 F.3d 457 (11th Cir. 1996) ........................................................................................ 16

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Fla. State Conf. of the NAACP v. Browning,

522 F.3d 1153 (11th Cir. 2008) ............................................................................. passim

Flint v. Stone Tracy Co.,

220 U.S. 107 (1911)...................................................................................................... 40

Fountas v. Comm‟r of Dep‟t Rev.,

2009 WL 3792468 (Mass. Super. Ct. Feb. 6, 2009)..................................................... 34

Freemanville Water Sys., Inc. v. Poarch Band of Creek Indians,

563 F.3d 1205 (11th Cir. 2009) .................................................................................... 19

Fullilove v. Klutznick,

448 U.S. 448(1980),...................................................................................................... 38

Garcia v. San Antonio Metro. Transit Auth.,

469 U.S. 528 (1985)...................................................................................................... 57

Goetz v. Glickman,

920 F. Supp. 1173 (D. Kan. 1996),............................................................................... 18

Gonzales v. Oregon,

546 U.S. 243 (2006)........................................................................................................ 8

Gonzales v. Raich,

545 U.S. 1 (2005)........................................................................................ 26, 30, 31, 33

Grand Lodge of Fraternal Order of Police v. Ashcroft,

185 F. Supp. 2d 9 (D.D.C. 2001).................................................................................. 17

Gustafson v. Alloyd Co.,

513 U.S. 561 (1995)................................................................................................. 19-20

Harris v. McRae, 

448 U.S. 297 (1980)...................................................................................... 6, 46, 47, 48

Harris v. Mexican Specialty Foods, Inc., 

564 F.3d 1301 (11th Cir. 2009) .................................................................................... 16

Hasenfus v. LaJeunesse,

175 F.3d 68 (1st Cir. 1999)........................................................................................... 44

Head Money Cases,

112 U.S. 580 (1884)................................................................................................ 18, 21

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vii

Heart of Atlanta Motel v. United States,

379 U.S. 241 (1964)................................................................................................ 26, 27

Hill v. Wallace,

259 U.S. 44 (1922).................................................................................................... 7, 38

Hodel v. Va. Surface Mining & Reclamation Ass‟n, 

452 U.S. 264 (1981).......................................................................................... 51, 53, 57

Hunnings v. Texaco, Inc.,

29 F.3d 1480 (11th Cir. 1994) ........................................................................................ 4

Hunt v. Wash. State Apple Adver. Comm'n,

432 U.S. 333 (1977).......................................................................................... 13, 14, 15

Hylton v. United States, 

3 Dall. 175 (1796)................................................................................................... 39, 40

In re DeRoche,

287 F.3d 751 (9th Cir. 2002) ........................................................................................ 40

In re Leckie Smokeless Coal Co., 

99 F.3d 573 (4th Cir. 1996) .......................................................................................... 23

Iraola & CIA, S.A. v. Kimberly-Clark Corp.,

232 F.3d 854 (11th Cir. 2000) ...................................................................................... 19

Jacobson v. Massachusetts,

197 U.S. 11 (1905).................................................................................................. 34, 45

Jinks v. Richland Co.,

538 U.S. 456 (2003)...................................................................................................... 36

Knowlton v. Moore,

178 U.S. 41 (1900)........................................................................................................ 39

License Tax Cases,

72 U.S. 462 (1866)........................................................................................................ 37

Lipke v. Lederer,

259 U.S. 557 (1922)...................................................................................................... 21

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Los Angeles v. Lyons,

461 U.S. 95 (1983)........................................................................................................ 12

Lujan v. Defenders of Wildlife,

504 U.S. 555 (1992).......................................................................................... 3, 4, 5, 12

Marchetti v. United States,

390 U.S. 39 (1968)........................................................................................................ 21

Massachusetts v. EPA,

549 U.S. 497 (2007)................................................................................................ 10, 11

Massachusetts v. Mellon,

262 U.S. 447 (1923).................................................................................................. 6, 10

McConnell v. FEC,

540 U.S. 93 (2003)........................................................................................................ 12

McCulloch v. Maryland,

17 U.S. 316 (1819)...................................................................................... 30, 35, 36, 58

Metcalf & Eddy v. Mitchell,

269 U.S. 514 (1926)...................................................................................................... 58

Meyer v. Nebraska,

262 U.S. 390 (1923)...................................................................................................... 44

Mobile Republican Assembly v. United States,

353 F.3d 1357 (11th Cir. 2003) .................................................................................... 21

Morales v. Daley,

116 F. Supp. 2d 801 (S.D. Tex. 2000).......................................................................... 32

Mountain States Legal Found. v. Glickman,

92 F.3d 1228 (D.C. Cir. 1996)...................................................................................... 11

Nat‟l Taxpayers Union v. United States,

68 F.3d 1428 (D.C. Cir. 1995)................................................................................ 15, 23

Nevada v. Burford,

918 F.2d 854 (9th Cir. 1990) ........................................................................................ 17

New York v. United States,

505 U.S. 144 (1992)............................................................................................... passim

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NLRB v. Jones & Laughlin Steel Corp.,

301 U.S. 1 (1937)..................................................................................................... 29-30

N.Y. State Club Ass‟n, Inc. v. City of New York,

487 U.S. 1 (1988).......................................................................................................... 14

Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm'n,

461 U.S. 190 (1983)..................................................................................................... 17 

Pennell v. City of San Jose,

485 U.S. 1 (1988).................................................................................................... 13, 15

Perlowin v. Sassi,

711 F.2d 910 (9th Cir. 1983) ........................................................................................ 23

Pierce v. Soc‟y of Sisters,

268 U.S. 510 (1925)................................................................................................ 12, 44

Pollock v. Farmers‟ Loan & Trust Co. (Pollock I),

157 U.S. 429 (1895)................................................................................................ 39, 40

Pollock v. Farmers' Loan & Trust Co. (Pollock II),

158 U.S. 601 (1895)................................................................................................ 39, 40

Printz v. United States,

521 U.S. 898 (1997)............................................................................................... passim

Regal Drug Corp. v. Wardell,

260 U.S. 386 (1922)...................................................................................................... 21

Reid v. Covert,

354 U.S. 1 (1957).......................................................................................................... 42

Reno v. Condon,

528 U.S. 141 (2000)...................................................................................................... 56

Rodgers v. United States,

138 F.2d 992 (6th Cir. 1943) .................................................................................. 19, 21

Sanchez v. United States,

340 U.S. 42 (1950)........................................................................................................ 37

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Selective Service Cases, 

245 U.S. 366 (1918) ................................................................................................ 31-32

Sierra Club v. TVA,

430 F.3d 1337 (11th Cir. 2005) .................................................................................... 14

Soc‟y of Sisters of Holy Names v. Pierce,

296 F. 928 (D. Or. 1924)............................................................................................... 12

Sonzinsky v. United States,

300 U.S. 506 (1937)................................................................................................ 21, 37

South Carolina v. Baker,

485 U.S. 505 (1988)................................................................................................ 56, 60

South Carolina v. Katzenbach,

383 U.S. 301 (1966)...................................................................................................... 17

South Carolina v. Regan,

465 U.S. 367 (1984)...................................................................................................... 23

South Dakota v. Dole,

483 U.S. 203 (1987)...................................................................................... 3, 36, 49, 50

Steward Machine Co. v. Davis,

301 U.S. 548 (1937)...................................................................................................... 49

Thomas v. Union Carbide Agric. Prods.,

473 U.S. 568 (1985)...................................................................................................... 17

Thomas v. United States,

192 U.S. 363 (1904)...................................................................................................... 40

Toilet Goods Ass‟n v. Gardner,

387 U.S. 158 (1967)...................................................................................................... 17

Tyler v. United States,

281 U.S. 497 (1930)...................................................................................................... 41

U.S. Term Limits, Inc. v. Thornton,

514 U.S. 779 (1995)...................................................................................................... 10

Union Elec. Co. v. United States,

363 F.3d 1292 (Fed. Cir. 2004)..................................................................................... 40

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United States v. Butler,

297 U.S. 1 (1936).................................................................................................... 36, 38

United States v. Comstock,

130 S. Ct. 1949 (2010)........................................................................................... passim

United States v. Darby,

312 U.S. 100 (1941)................................................................................................ 32, 37

United States v. Doremus,

249 U.S. 86 (1919)........................................................................................................ 37

United States v. Gonzales,

520 U.S. 1 (1997).......................................................................................................... 19

United States v. Kahriger,

345 U.S. 22 (1953)............................................................................................ 20, 21, 37

United States v. La Franca,

282 U.S. 568 (1931)...................................................................................................... 21

United States v. Lopez,

514 U.S. 549 (1995)............................................................................................... passim

United States v. Mfrs. Nat‟l Bank of Detroit,

363 U.S. 194 (1960)...................................................................................................... 39

United States v. Morrison,

529 U.S. 598 (2000)...................................................................................................... 25

United States v. Reorganized CF&I Fabricators of Utah, Inc.,

518 U.S. 213 (1996)...................................................................................................... 18

United States v. Ross,

458 F.2d 1144 (5th Cir. 1972) ...................................................................................... 38

United States v. Spoerke,

568 F.3d 1236 (11th Cir. 2009) .................................................................................... 38

United States v. United Mine Workers,

330 U.S. 258 (1947)...................................................................................................... 22

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Usury v. Turner Elkhorn Mining Co.,

428 U.S. 1 (1976).......................................................................................................... 45

Vesta Fire Ins. Corp. v. Florida,

141 F.3d 1427 (11th Cir. 1998) .................................................................................... 45

Vill of Arlington Heights v. Metro. Hous. Dev. Corp.,

429 U.S. 252 (1977)...................................................................................................... 11

Vill of Bensenville v. FAA,

376 F.3d 1114 (D.C. Cir. 2004).................................................................................... 12

Virginia v. Sebelius,

Case No. 3:10-cv-00188, Mem. Op. (E.D. Va. Aug. 2, 2010) .................... 9, 17, 22, 23

Vt. Agency of Natural Res. v. United States,

529 U.S. 765 (2000)...................................................................................................... 22

Warren v. United States,

874 F.2d 280 (5th Cir. 1989) ........................................................................................ 20

Washington v. Glucksberg,

521 U.S. 702 (1997)...................................................................................................... 44

Watt v. Energy Action Educ. Found.,

454 U.S. 151 (1981)...................................................................................................... 11

Watts v. Fla. Int‟l Univ.,

495 F.3d 1289 (11th Cir. 2007) ...................................................................................... 4

West Coast Hotel v. Parrish,

300 U.S. 379 (1937)...................................................................................................... 45

Whitmore v. Arkansas,

495 U.S. 149 (1990)...................................................................................................... 12

Wickard v. Filburn,

317 U.S. 111 (1942).......................................................................................... 26, 30, 33

Williams v. Alabama,

378 F.3d 1232 (11th Cir. 2004) .................................................................................... 44

Williams v. Morgan,

478 F.3d 1316 (11th Cir. 2007) .................................................................................... 45

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CONSTITUTIONAL PROVISIONS

U.S. Const. amend. V (Due Process Cl.) ........................................................... 2, 30, 43-45

U.S. Const. amend. IX ............................................................................................... passim

U.S. Const. amend. X................................................................................................. passim

U.S. Const. amend. XVI ................................................................................................... 41

U.S. Const. art. I, § 2, cl. 3.......................................................................................... 32, 39

U.S. Const. art. I, § 8................................................................................................... 24, 36

U.S. Const. art. I, § 8, cl. 1 (Taxing & Spending Cl.).................................................. 36-39

U.S. Const. art. I, § 8, cl. 3 (Commerce Cl.).............................................................. passim

U.S. Const. art. I, § 8, cl. 12.............................................................................................. 32

U.S. Const. art. I, § 8, cl. 18 (Necessary & Proper Cl.)......................................... 30-36, 38

U.S. Const. art. I, § 9, cl. 4................................................................................................ 39

U.S. Const. art. IV, § 4 (Guarantee Cl.)...................................................................... 43, 50

STATUTES

Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010) 

(“ACA")

§ 1001.......................................................................................................................... 54

§ 1003.......................................................................................................................... 52

§ 1201.......................................................................................................................... 54

§ 1311.................................................................................................................... 53, 54

§ 1312(d)(3)(D)........................................................................................................... 59

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§ 1313(a)(4) ................................................................................................................ 53

§ 1321.................................................................................................................... 53, 54

§ 1341..................................................................................................................... 51-52

§ 1411(c)(4) ................................................................................................................ 52

§ 1413(c)..................................................................................................................... 52

§ 1501(a)(2)(A)........................................................................................................... 38

§ 1501(a)(2)(D)....................................................................................................... 4, 34

§ 1501(a)(2)(I) ............................................................................................................ 18

§ 1501(a)(2)(J) ............................................................................................................ 32

§ 1501(b)............................................................................................................... 13, 18

§ 1511.................................................................................................................... 54, 55

§ 1513.................................................................................................................... 54, 55

§ 1513(a)................................................................................................................. 5, 55

§ 1563.......................................................................................................................... 46

§ 2001(b)..................................................................................................................... 53

§ 2101(b)..................................................................................................................... 53

§ 2105(d)(3) ................................................................................................................ 53

§ 2304.......................................................................................................................... 47

§ 9001.............................................................................................................. 19, 54, 55

§ 9004.......................................................................................................................... 19

§ 9015.......................................................................................................................... 19

§ 9017.......................................................................................................................... 19

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§ 10106(a)............................................................................................................. 18, 32

§ 10106(a)(2)(D)........................................................................................................... 4

§ 10907........................................................................................................................ 18

Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 

Stat. 1029 (2010) (“HCERA”)

§ 1003(b)................................................................................................................. 5, 55

§ 1004(b)..................................................................................................................... 47

§ 1401(a)(2)(C)........................................................................................................... 59

§ 2301.......................................................................................................................... 54

1 U.S.C. § 1....................................................................................................................... 22

26 U.S.C. § 61................................................................................................................... 41

26 U.S.C. § 4980H........................................................................................................ 5, 55

26 U.S.C. § 5000A(g) ....................................................................................................... 22

26 U.S.C. § 6671............................................................................................................... 22

26 U.S.C. § 7343............................................................................................................... 22

26 U.S.C. § 7421(a) (The Anti-Injunction Act)..................................................... 18-23, 55

26 U.S.C. § 7701............................................................................................................... 22

26 U.S.C. § 7806(b).......................................................................................................... 18

28 U.S.C. § 2201(a) (The Declaratory Judgment Act) ..................................................... 23

Fla. Stat. § 110.123(2)(c) (2009) .................................................................................. 5, 55

Fla. Stat. § 110.123(2)(f) (2009)................................................................................... 5, 55

Mass. Gen. Laws ch. 111M, § 2 (2008)............................................................................ 34

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OTHER AUTHORITIES

Bipartisan Comm‟n on the Medicaid Act of 2005, H.R. 985, 109th Cong. § 2(13) 

(2005).............................................................................................................................50

13B Charles Alan Wright et al., Federal Practice and Procedure § 3532.1 (3d ed. 

2008) ...............................................................................................................................8

Joint Comm. on Taxation, Overview of Revenue Estimating Procedures and 

Methodologies (JCX-1-05), February 2, 2005.........................................................19, 20

Joint Comm. on Taxation, Estimated Revenue Effects of the Amendment in the 

Nature of a Substitute to H.R. 4872, the “Reconciliation Act of 2010,” as 

amended, in Combination with the Revenue Effects of H.R. 3590, the “Patient 

Protection and Affordable Care Act („ACA‟),” as Passed by the Senate, and 

Scheduled for Consideration by the House Committee on Rules on March 20, 

2010 (JCX-17-10), March 20, 2010...............................................................................20

Joint Comm. on Taxation, Technical Explanation of the Revenue Provisions of 

the “Reconciliation Act of 2010,” as amended, in combination with the 

“Patient Protection and Affordable Care Act” (JCX-18-10), March 21, 2010 ............19

Joint Comm. on Taxation, Errata for JCX-18-10 (JCX-27-10), May 4, 2010 ..................19

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

Speaker, U.S. House of Reps. (Mar. 20, 2010)........................................................20, 46

Nat‟l Conf. of State Legislatures, http://www.ncsl.org/default.aspx?tabid=18906............ 9

Obama: Requiring health insurance is not a tax increase, CNN (Sept. 29, 2009), 

http://www.cnn.com/2009/POLITICS/09/20/obama.health.care/index.html. .............. 20

Robert Hartman & Paul Van de Water, “The Budgetary Treatment of an Individual 

Mandate to Buy Health Insurance,” CBO Memo. Aug. 1994 ................................. 24-25

Virginia v. Sebelius,

Case No. 3:10-cv-00188, Hr‟g Tr. (E.D. Va. July 1, 2010)........................................... 7

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1

Defendants‟ arguments in their Memorandum in Support (“Def. Mem.”) of their 

Motion to Dismiss the Amended Complaint (“Am. Compl.”) fail as a matter of law.

Introduction

This case is about power, accountability, and the continuing vitality of our 

federalist system. The Patient Protection and Affordable Care Act1(“ACA” or “the Act”) 

represents an unprecedented intrusion on the sovereignty of the States and the freedom of 

their citizens. As such, it threatens to obliterate our system of dual sovereignty, under 

which the federal government is to exercise only those limited powers conferred upon it 

by the Constitution, with all other powers reserved to the States or the people. See New 

York v. United States, 505 U.S. 144, 155-56 (1992). This system, as Justice Kennedy 

explained in United States v. Lopez, 514 U.S. 549, 575 (1995) (concurring), “was the 

unique contribution of the Framers to political science and political theory.” It was 

designed to achieve a “healthy balance of power between the States and the Federal 

Government [to] reduce the risk of tyranny and abuse from either front[,]” by 

empowering both governments so that each “will control [the] other....” Printz v. United

States, 521 U.S. 898, 921-22 (1997). In enacting the ACA, Congress upends that 

balance, usurping powers denied it and thereby inflicting the very harm warned of in 

Printz.

Plaintiff States, Individual Plaintiffs, and the National Federation of Independent 

Business (“NFIB”) are profoundly affected by the so-called “Individual Mandate,” a 

 

1

Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by Health Care and Education 

Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010) (“HCERA”).

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requirement that virtually all Americans obtain and maintain a congressionally-approved 

level of healthcare insurance coverage for themselves and their families. In addition to 

dictating that Individual Plaintiffs, NFIB members, and Plaintiff States‟ citizens must buy 

unwanted insurance, the mandate imposes significant costs on Plaintiff States by driving 

millions of individuals into greatly-expanded Medicaid programs, newly-created State

insurance exchanges, and federally-enlarged insurance programs offered by States as 

employers. Furthermore, the mandate is not severable from other Medicaid and 

insurance reforms in the ACA that require Plaintiff States to incur costs immediately. 

Plaintiffs‟ injuries are clear, are not contingent on any future event, and are legally 

redressable now, even though the mandate will not take effect until 2014. Thus, 

Plaintiffs have standing to challenge the mandate, and their claims are ripe.

The Individual Mandate is manifestly unconstitutional. No enumerated power of 

Congress permits this assertion of top-down centralized economic power; nor can the

Necessary and Proper Clause expand congressional power to support the mandate. 

Congress‟s commerce power extends to regulation of activities having a substantial

relation to interstate commerce, but does not allow it to compel inactive individuals to 

enter a marketplace against their will. Likewise, Congress‟s power to tax does not 

authorize it to compel persons to buy specific insurance products. By exerting such 

sweeping authority over Americans‟ individual decisions, Congress has seized powers

denied it under the Tenth Amendment, in violation of the Constitution‟s federalist 

structure and individual rights under the Fifth and Ninth Amendments.

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Moreover, the Act imposes staggering new costs and obligations on Plaintiff 

States, in violation of the Tenth Amendment and core principles of federalism. The Act

transforms Medicaid from a federal-State partnership to reimburse needy persons‟ 

medical costs into a vast federally-mandated program to benefit millions of persons with

incomes above the poverty line. It also compels the States to assume responsibility not 

only for cost reimbursement but for the provision of healthcare services themselves.

Plaintiff States cannot abandon Medicaid and leave millions of needy residents

without coverage. Yet, to accept the Act‟s requirements would devastate Plaintiff States‟ 

already-strained budgets, forcing them to surrender sovereign power to set their 

legislative agendas and determine their own priorities for meeting their citizens‟ needs. 

The Act worsens these effects by unconstitutionally requiring Plaintiff States to 

administer federal insurance-related programs, by commandeering State resources, and 

by interfering with States‟ sovereignty in their employment relations. The ACA thus 

“pass[es] the point at which „pressure turns into compulsion[,]‟” South Dakota v. Dole, 

483 U.S. 203, 211 (1987) (citation omitted), and must be declared invalid.

Argument

I. PLAINTIFFS HAVE STANDING TO CHALLENGE THE INDIVIDUAL 

MANDATE, AND THEIR CHALLENGE IS RIPE

To establish standing, a plaintiff must demonstrate (1) “injury in fact”; (2) a 

causal relationship between the injury and the challenged conduct; and (3) harm that will 

be “redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 

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560-61 (1992). Defendants dispute only Plaintiffs‟ injuries-in-fact.

2

 Their challenge fails

because the Amended Complaint demonstrates injuries that are “concrete and 

particularized,” and “actual or imminent, not „conjectural‟ or „hypothetical.‟” Lujan, 504 

U.S. at 560 (citations omitted).

3

A. Plaintiff States Allege Injuries-in-Fact

Contrary to Defendants‟ contentions, Def. Mem. 32 n.14, the Amended 

Complaint contains numerous allegations demonstrating how the Individual Mandate 

actually and imminently harms the States. Plaintiff States have detailed the need to 

expend funds and commit resources now to meet the Act‟s requirements, Am. Compl. ¶¶

57 & 49, and allege that the Act will force them “to ignore other critical needs,” id. ¶¶ 59 

& 49. Congress enacted the Individual Mandate to require millions of uninsured persons 

to obtain qualifying coverage. See ACA §§ 1501(a)(2)(D), 10106(a)(2)(D) (“The 

requirement ... will add millions of new consumers to the health insurance market”); Def. 

Mem. 8 (claiming that the Act will “reduce the ranks of the uninsured by approximately 

32 million by 2019”).4 Thus, by Defendants‟ own admission, the mandate will drive 

millions of newly-eligible recipients onto States‟ Medicaid rolls, at a huge cost (increased 

 

2

The latter elements plainly are met. See Lujan, 504 U.S. at 561-62 (when a plaintiff is 

the object of governmental action, “there is ordinarily little question that the action ... has 

caused him injury, and that a judgment preventing ... the action will redress it”).

3 All alleged facts and inferences arising therefrom are to be viewed in the light most 

favorable to plaintiff. Hunnings v. Texaco, Inc., 29 F.3d 1480, 1484 (11th Cir. 1994). A 

motion to dismiss fails unless the complaint states no plausible claim. See Am. Dental 

Ass‟n v. Cigna Corp., 605 F.3d 1283, 1289 (11th Cir. 2010); Watts v. Fla. Int‟l Univ., 495 

F.3d 1289, 1296 (11th Cir. 2007).

4 Defendants‟ speculation that the ACA actually will save Plaintiff States money is 

neither factually supported nor legally relevant. See Hunnings, 29 F.3d at 1484 (at 

motion to dismiss stage, alleged facts and inferences to be viewed in plaintiffs‟ favor).

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more by the Act‟s alteration to reimbursement rates for primary-care practitioners) to the 

States. See, e.g., Am. Compl. ¶¶ 50, 52-54, 59, 72.5 In addition, the mandate‟s 

corresponding insurance provisions commandeer the States and their resources to 

establish a new insurance regime. Those provisions “force many more State employees 

into State insurance plans ... at a significant added cost to the States.” Id. ¶ 48.

6

Defendants seem to suggest that Medicaid‟s voluntary nature allows States to 

avoid these injuries. Def. Mem. 31. But no statutory provision exists for opting out, 

much less any that would facilitate a responsible and orderly exit. Nor would opting out 

avoid injury to Plaintiff States. Am. Compl. ¶¶ 65-68. Over the course of several 

decades, the federal government and States have collaborated in creating distinct, Statespecific Medicaid programs. Through Medicaid (with the partnership of the federal 

government), Plaintiff States have helped to insure millions of their citizens. 

Significantly, while the ACA makes higher-income groups eligible for federal subsidies 

and credits, it makes no provision for the healthcare needs of millions of the Nation‟s 

neediest except through the Medicaid partnership with States. Thus, the federal 

government offers a false choice: States must either absorb the crushing costs associated 

 

5

That the mandate compels individuals to have qualifying coverage fully satisfies any 

need under Lujan to show, where “someone else” is being regulated, that the regulated 

party will act in ways that injure plaintiffs. See Lujan, 504 U.S. at 561-62. Here, 

individuals are not making “unfettered choices” that harm Plaintiff States: Congress has 

made the choice for them. 

6 By law (see Fla. Stat. § 110.123(2)(c), (f) (2009)), Florida excludes from its group plan 

thousands of OPS (Other Personnel Services) employees who will be driven by the 

Individual Mandate to enroll in its ACA-required plan; failure to enroll will trigger 

penalties that could cost Florida, with 120,000 full-time employees and at a penalty of 

$2000 per employee, up to $240 million annually. ACA § 1513(a) (including 26 U.S.C.

§ 4980H; HCERA § 1003(b)). 

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with a massively expanded Medicaid program, or opt out of Medicaid altogether. The 

latter course would require States either to deny insurance to millions of citizens already 

receiving Medicaid, or to establish, administer, and fully fund their own benefits 

programs.7 Even if Plaintiff States have some control over how they are injured, they 

have no control (absent an injunction from this court) over whether they are injured.8

Because Plaintiff States allege substantial, concrete, and ongoing injuries, see, 

e.g., Am. Compl. ¶¶ 56-57, Defendants‟ cited authorities, Def. Mem. 31-32, are 

inapposite. The legislation at issue in those cases is wholly dissimilar from the ACA, 

which directly harms Plaintiff States by requiring significant immediate and long-term 

actions as described above. By contrast, Massachusetts v. Mellon, 262 U.S. 447 (1923), 

relied on heavily by Defendants, involved a challenge to federal legislation that did not 

require Massachusetts “to do or to yield anything.” Id. at 482.

Even if their injuries did not flow directly from the Individual Mandate, Plaintiff 

States would have standing to challenge its constitutionality because other portions of the 

Act – expanded Medicaid coverage and insurance requirements (addressed in Counts 

 

7

 Indeed, no avenue is afforded for States to transition the care of these persons to 

another program. Acting against this backdrop, the Centers for Medicare and Medicaid 

(CMS) have threatened to terminate federal Medicaid funding if a State does not comply 

with the Act. Am. Compl. ¶ 68. This threat carries even more coercive force than the 

already-staggering numbers suggest. Because Medicaid requirements are linked to other 

federal programs, additional benefits would be jeopardized if a State‟s Medicaid 

participation were to be terminated. Am. Compl. ¶ 68.

8

See Harris v. McRae, 448 U.S. 297, 309 n.12 (1980) (“„[A] complete withdrawal of the 

federal prop in the [Medicaid] system with the intent to drop the total cost of providing 

the service upon the states, runs directly counter to the basic structure of the program and 

could seriously cripple a state‟s attempts to provide other necessary medical services 

embraced by its plan.‟”) (citation omitted ) (emphasis added).

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Four and Five, stating coercion and commandeering claims for which Defendants do not 

dispute Plaintiff States‟ standing9) – clearly will injure them, and the mandate cannot be 

severed from those provisions. The Act rises or falls with the Individual Mandate. 

That the Individual Mandate‟s unconstitutionality renders the entire Act 

unconstitutional follows from established legal principles and binding admissions by 

Congress and Defendants. The severability test looks to the functional interdependency 

of the parts of a statute. See Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 684-86 (1987) 

(“Congress could not have intended a constitutionally flawed provision to be severed 

from the remainder of the statute if the balance of the legislation is incapable of 

functioning independently”) (emphasis added). Significantly, the plaintiffs in Alaska 

Airlines brought suit to protest employee-protection provisions of federal legislation on 

the basis that a different provision (regarding a legislative veto) rendered the entire 

legislation ineffective. Even though the Supreme Court ultimately concluded that 

Congress would have enacted the provisions affecting plaintiffs without the 

unconstitutional provision, id. at 691, the courts accepted plaintiffs‟ standing at every 

stage of the litigation. Had the unconstitutional provision been unseverable, the district 

court‟s summary judgment for plaintiffs plainly would have been upheld.10

 

9

See Virginia v. Sebelius, No. 3:10-cv-188, Hr‟g Tr. at 86-87 (E.D. Va. July 1, 2010) 

(conceding that Plaintiffs in Florida case have standing to raise commandeering claims).

10 See also Hill v. Wallace, 259 U.S. 44, 70 (1922) (cited and followed in Alaska Airlines) 

(no severability where challenged provision “so interwoven with those regulations that 

they cannot be separated. None of them can stand.”); Ayotte v. Planned Parenthood of N. 

New England, 546 U.S. 320, 330 (2006) (cautioning against too readily severing 

unconstitutional provision so as not to “substitute the judicial for the legislative 

department of the government.”) (citation omitted). Similarly, “inseverability can make 

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8

The ACA has no severability clause. As Defendants repeatedly concede, Def. 

Mem. 5, 7, 46, 47, 48, Congress has spoken clearly and forcefully: the Individual 

Mandate is essential to the Act as a whole, including those portions that impose costs and 

burdens directly on Plaintiff States.11 Hence, it would be wholly inappropriate either to 

sever the Individual Mandate or to deny Plaintiffs‟ standing to challenge it.

B. Plaintiff States Have Standing To Challenge Federal Laws That 

Injure Their Sovereign Power To Legislate To Protect State Citizens 

from Healthcare Coercion

Plaintiff States suffer injuries to their sovereign interests, as well. By enacting the 

Individual Mandate, Congress usurps Plaintiff States‟ sovereign power to enact statutes 

or State constitutional provisions to protect their State citizens from compulsion in their 

healthcare choices. Am. Compl. ¶ 70. The States‟ police powers, reserved under the 

Tenth Amendment, include the power to protect the health of their citizens. See Gonzales 

v. Oregon, 546 U.S. 243, 270 (2006) (“[T]he structure and limitations of federalism ... 

allow the States „great latitude under their police powers to legislate as to the protection 

of the lives, limbs, health, comfort, and quiet of all persons.‟”) (citations omitted).

In Alaska v. United States Department of Transportation, 868 F.2d 441 (D.C. Cir. 

1989), 27 States were held to have standing to assert another State police power – to 

make and enforce laws to protect citizens from deceptive practices – in challenging DOT 

 

ripe issues that otherwise would be better deferred” and “provisions that are not severable 

often can be attacked if a ripe claim is advanced as to any of them.” 13B Charles Alan 

Wright et al., Federal Practice and Procedure § 3532.1 & n.53 (3d ed. 2008) (citing 

Blanchette v. Ct. Gen. Ins. Corp., 419 U.S. 102, 137 n.20 (1974)).

11 As noted below, while those other provisions could have been enacted without the 

Individual Mandate, they were enacted in the context of the ACA‟s purpose of coercing 

near-universal coverage, which is why Congress deemed the mandate sine qua non.

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9

actions concerning airline industry advertising. The Court of Appeals stated that “[i]t is 

common ground that States have an interest, as sovereigns, in exercising „the power to 

create and enforce a legal code.‟” Id. at 443 (citation omitted). Finding the States‟ injury 

to be “caused by” the actions complained of and “redressable” by the judiciary, the Court 

concluded: “Inasmuch as this preemptive effect is the injury of which petitioners 

complain, we are satisfied that the States meet the standing requirements of Article III.” 

Id. at 444. The Court further noted: “The stringency with which DOT enforces its own 

regulations is a matter unrelated to the question whether the DOT may prevent the States 

from enforcing their laws.” Id. at 444 n.2.

Here, Plaintiff States Georgia, Idaho, Louisiana, and Utah have enacted statutes to 

protect their citizens from the very type of coercion imposed by the Individual Mandate, 

and most of the other Plaintiff States have proposed constitutional amendments or 

legislation to that effect. See Nat‟l Conf. of State Legislatures, 

http://www.ncsl.org/default.aspx?tabid=18906 (last visited August 2, 2010). As in 

Alaska, Plaintiff States here must be deemed to have standing to assert their right to 

create such laws and to enforce them against the intrusion on their sovereignty 

represented by the Act and its coercive Individual Mandate. See also Virginia v. 

Sebelius, Mem. Op. at 13-14 (Aug. 2, 2010) (State‟s challenge to the Individual Mandate 

meets standing requirements).

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In sum, Plaintiff States suffer direct injuries to both proprietary and sovereign 

interests.

12

 The Individual Mandate‟s coercive force will drive millions of their citizens 

onto Plaintiff States‟ Medicaid rolls and into statewide insurance exchanges, will require 

the States to insure classes of employees not previously covered, and will divert resources 

away from other State priorities established on their citizens‟ behalf, all at great cost to 

the States. Moreover, the Individual Mandate will usurp Plaintiff States‟ sovereign 

power to enact laws to protect the freedom of their citizens from compulsion in the 

healthcare arena. Accordingly, Plaintiff States have standing to contest the 

constitutionality of the Individual Mandate.

13

C. Individual Plaintiffs and NFIB Have Standing, Providing Another 

Basis for Plaintiff States To Challenge the Individual Mandate

The Individual Mandate by its terms applies to Individual Plaintiffs and NFIB 

members. Am. Compl. ¶¶ 26-28. As shown below, the mandate causes Individual 

Plaintiffs and NFIB concrete, actual, and imminent injury. No further administrative 

 

12 Massachusetts v. Mellon and Massachusetts v. EPA, 549 U.S. 497 (2007), relied on by 

Defendants, are inapposite to these standing bases. Those cases deal with States‟ quasisovereign standing as parens patriae.

13 Plaintiff States further have quasi-sovereign standing as parens patriae on behalf of the 

millions of their citizens who will be subject to the Individual Mandate in violation of 

their rights under the Ninth and Tenth Amendments. Am. Compl. ¶ 61. As the Printz 

Court explained, every citizen has “„two political capacities, one state and one federal, 

each protected from incursion by the other....‟” Printz, 521 U.S. at 920 (quoting U.S. 

Term Limits, Inc. v. Thornton, 514 U.S. 779, 838 (1995) (Kennedy, J., concurring)). The 

Supreme Court never has held that States cannot sue in that capacity. On the contrary, 

the Mellon Court expressly acknowledged that the States would in some instances have 

standing “to protect [their] citizens against ... enforcement of unconstitutional acts of 

Congress....” Mellon, 262 U.S. at 485. Indeed, in EPA, the Court held that 

Massachusetts had a quasi-sovereign interest on its citizens‟ behalf, 549 U.S. at 518; and 

the dissent agreed that, in proper circumstances, a State “might assert a quasi-sovereign 

right as parens patriae” to protect its citizens, id. at 539. 

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action is required to trigger the mandate‟s facially coercive effects, and the Court‟s 

assessment of its constitutionality vel non will not be assisted by any actual experience 

with its application.

14

1. The Individual Plaintiffs

The Individual Mandate will require many NFIB members and Individual 

Plaintiffs to have qualifying healthcare insurance, even though they do not have it and do 

not want it. Am. Compl. ¶¶ 27, 28. Thus, they are forced either to enter into a 

transaction they want no part of, or to face monetary penalties. Plainly, their alleged 

injuries are “distinct and palpable.” These are not mere “generalized grievances” about 

how tax dollars may be spent, or based on infringement of a broad right to constitutional 

government, as asserted in DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342-43 (2006),

and similar cases on which Defendants rely. Def. Mem. 25.

Nor are Plaintiffs‟ injuries too “indefinite” or remote in time to support standing. 

Def. Mem. 26. Courts repeatedly have found standing to pursue a pre-enforcement 

constitutional challenge where the alleged harm will occur in the future. See, e.g.,

Massachusetts v. EPA, 549 U.S. at 521-23 (standing based on rise in sea levels by the end 

 

14

 Individual Plaintiffs‟ and NFIB‟s standing affords yet another basis by which the 

Court can consider the constitutionality of the Individual Mandate. See Massachusetts v. 

EPA, 549 U.S. at 518 (“Only one of the petitioners needs to have standing to permit us to 

consider the petition for review.”); Bowsher v. Synar, 478 U.S. 714, 721 (1986) 

(declining to bother to adjudicate a labor union‟s standing where a union member alleged 

an injury-in-fact); Mountain States Legal Found. v. Glickman, 92 F.3d 1228, 1232 (D.C. 

Cir. 1996) (“For each claim, if ... standing can be shown for at least one plaintiff, we 

need not consider the standing of the other plaintiffs to raise that claim.”). See also Watt 

v. Energy Action Educ. Found., 454 U.S. 151, 160 (1981); Vill. of Arlington Heights v.

Metro. Hous. Dev. Corp., 429 U.S. 252, 264 n.9 (1977); Doe v. County of Montgomery, 

41 F.3d 1156, 1161 n.4 (7th Cir. 1994). 

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of this century); Pierce v. Soc‟y of Sisters, 268 U.S. 510, 536 (1925) (standing to 

challenge education act at least two years and five months before effective date);15 Dep‟t 

of Commerce v. U.S. House of Reps., 525 U.S. 316, 332 (1999) (standing in February 

1998 to challenge sampling method for 2000 Census); Vill. of Bensenville v. FAA, 376 

F.3d 1114, 1119 (D.C. Cir. 2004) (standing to contest fees not collectible for 13 years). 

Standing “depends on the probability of harm, not its temporal proximity.” See 520 S. 

Mich. Ave. Assocs. v. Devine, 433 F.3d 961, 962 (7th Cir. 2006). As the Eleventh Circuit 

has held, “immediacy requires only that the anticipated injury occur with some fixed 

period of time in the future, not that it happen in the colloquial sense of soon or precisely 

within a certain number of days, weeks, or months.” Fla. State Conf. of the NAACP v. 

Browning, 522 F.3d 1153, 1161 (11th Cir. 2008) (emphasis added).16 Individual 

Plaintiffs and NFIB‟s affected members must comply with the Individual Mandate 

beginning in 2014. ACA § 1501(b). That date is fixed in the law and is certain to occur.

 

15

 While Pierce did not quantify the “lead time,” the lower court identified it as at least 

two years and five months. Soc‟y of Sisters of Holy Names v. Pierce, 296 F. 928, 933 (D. 

Or. 1924). 

16 Defendants‟ reliance on Whitmore v. Arkansas, 495 U.S. 149 (1990), and similar 

authorities is misplaced. The issue in those cases was not passage of time, but the 

contingent and thus uncertain nature of the alleged injuries. Whitmore involved a 

prisoner‟s challenge to procedures that would not affect him unless he could secure 

federal habeas relief from his conviction and sentence. See also McConnell v. FEC, 540 

U.S. 93, 226 (2003) (U.S. Senator would not be affected by challenged provisions unless 

he chose to run for reelection five years later); Los Angeles v. Lyons, 461 U.S. 95, 102 

(1983) (no standing to seek injunction prohibiting police from potential future use of 

“choke holds”); Lujan, 504 U.S. at 564 (no standing where plaintiff expressed only vague 

intention “some day” to return to Sri Lanka to observe endangered species); Connecticut 

v. Am. Elec. Power Co., 582 F.3d 309, 343 n.19 (2d Cir. 2009) (confirming Plaintiffs‟ 

reading of McConnell).

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13

Moreover, there is nothing speculative or contingent about Plaintiffs‟ claims. The 

mandate will take effect in 2014 and will apply to Individual Plaintiffs and NFIB 

members. Plaintiffs Brown and Ahlburg do not now have qualifying coverage, and have 

no intention of changing their status in this regard. Am. Compl. ¶¶ 27, 28. Their injuries, 

like those of NFIB members generally, are not contingent upon further act or decision on 

their part. The only speculation here is by Defendants. Def. Mem. 26-27.

17

2. NFIB

NFIB has standing to challenge the Individual Mandate on behalf of its members

under Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333 (1977). 

An association has such representative standing when: “(a) its members would otherwise 

have standing to sue in their own right; (b) the interests it seeks to protect are germane to 

the organization‟s purpose; and (c) neither the claim asserted nor the relief requested 

requires the participation of individual members in the lawsuit.” Id. at 343.

As shown above, NFIB‟s individual members (including Mary Brown) have 

standing to bring these claims, thus meeting Hunt‟s first element. Protecting its members 

from the mandate also is germane to NFIB‟s purpose “to promote and protect the rights 

of its members to own, operate, and earn success in their businesses, in accordance with 

lawfully-imposed governmental requirements.” Am. Compl. ¶ 26. Courts regularly 

 

17 Plaintiffs need only show that their injury is probable, not that it is absolutely certain. 

See, e.g., Pennell v. City of San Jose, 485 U.S. 1, 8 (1988) (“probability” that landlord‟s 

rent would be reduced by law “sufficient threat of actual injury” to satisfy Article III);

Babbitt v. United Farm Workers Nat‟l Union, 442 U.S. 289, 298 (1979) (standing where 

“realistic danger of sustaining a direct injury as a result of the statute‟s operation or 

enforcement”); ACLU of Fla., Inc. v. Miami-Dade County Sch. Bd., 557 F.3d 1177, 1195-

97 (11th Cir. 2009) (standing to challenge library‟s ban of book plaintiff intended to 

check out later that year).

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allow organizations with similarly broad purposes to litigate a wide range of interests on 

members‟ behalf. See, e.g., N.Y. State Club Ass‟n v. City of New York, 487 U.S. 1, 10 n.4 

(1988) (suing to enjoin an anti-discrimination law was germane to a consortium of 

private clubs existing “„to promote the common business interests of its [member 

clubs]‟”) (alteration by Court).

18

 NFIB‟s broad purpose affords it the right to litigate this 

case on behalf of its members.

Defendants cannot rely on the artificial distinction that NFIB represents 

“businesses” and the mandate applies only to individuals. Def. Mem. 28. Minimum 

healthcare insurance requirements for individual owners and operators uniquely impact 

their small businesses, imposing significant cost and cash flow consequences not suffered 

by larger concerns. Moreover, many NFIB members operate as sole proprietors. Such 

individual owners are the businesses. Forcing them to have qualifying coverage for 

themselves and their dependents necessarily diverts resources away from their efforts to 

survive and grow as independent, self-employed small business people. Challenging 

such requirements is very much germane to NFIB‟s purpose, satisfying Hunt‟s second 

element. See N.Y. State Club Ass‟n, 487 U.S. at 10 n.4.

NFIB also meets Hunt‟s third element, because its individual members do not 

need to participate in this suit. Individual joinder generally is not required when the 

organization seeks injunctive relief that will benefit its individual members. See, e.g., 

 

18 See also Browning, 522 F.3d at 1158, 1160 (NAACP‟s challenge to voter registration 

law was germane to its purpose to “work ... to increase voter registration and 

participation among members of racial and ethnic minority communities”); Sierra Club v. 

TVA, 430 F.3d 1337, 1345 (11th Cir. 2005) (suit to require TVA plant to comply with 

opacity regulation was germane to its purpose to “aid in the preservation of areas ... of 

scenic, ecological, biological, historical, or recreational importance”).

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Hunt, 432 U.S. at 343 (injunctive or declaratory relief is suitable for associational 

standing, since benefit will go to individual members); Browning, 522 F.3d at 1160 

(when relief is injunctive, individual member participation is “not normally necessary”). 

This rule applies a fortiorari where, as here, the case involves questions of law and does 

not require an individualized factual inquiry. See Pennell, 485 U.S. at 7 n.3.19

NFIB also has standing in its own right to challenge the Individual Mandate‟s 

constitutionality, because the Act impedes its mission and causes the diversion of its 

resources to educate its membership and address problems created by the new law. See

Browning, 522 F.3d at 1158, 1164-66 (NAACP showed a cognizable injury, because it 

“will have to divert personnel and time to educating volunteers on compliance with 

Subsection 6” and to address problems caused by the subsection). See also Comm. of 

Immigrant Rights of Sonoma County v. County of Sonoma, 644 F. Supp. 2d 1177, 1195-

96 (N.D. Cal. 2009). Here, to meet its members‟ needs as it has done in the past, NFIB 

will be forced to expend “additional costs in assisting its members in understanding how 

the Act applies to them and affects their businesses.” Am. Compl. ¶¶ 26, 63.20

 

19 Nor is it relevant how many members have claims. NFIB need only show that one of 

its members, even if unidentified, will be required to obtain ACA-compliant healthcare 

coverage against his or her will. See Browning, 522 F.3d at 1160, 1163.

20 Nat‟l Taxpayers Union v. United States, 68 F.3d 1428, 1434 (D.C. Cir. 1995) (cited in 

Def. Mem. 28-29 n.13), is inapposite. There an organization founded to “promote fair, 

responsible, and legal revenue-raising practices by the United States government” 

challenged a law retroactively raising tax rates. The court reasoned that the organization 

could not show “injury” from expending resources to inform the public and its members 

about a tax bill, since this was its very purpose. Id. at 1434. NFIB does not exist solely 

to monitor and report on federal healthcare legislation, and doing so diverts its resources 

from other priorities, as with the NAACP in Browning. See 522 F.3d at 1164-66.

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D. Plaintiffs’ Claims Challenging the Individual Mandate Are Ripe

Ripeness turns on two factors: “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). As Defendants admit, a “conspicuous overlap” exists between 

standing and ripeness inquiries in pre-enforcement challenges to statutes like the ACA,

Def. Mem. 32 n.15, where ripeness often turns on “whether there is sufficient injury to 

meet Article III‟s requirement of a case or controversy and, if so, whether the claim is 

sufficiently mature, and the issues sufficiently defined and concrete, to permit effective 

decision-making by the court.” Elend v. Basham, 471 F.3d 1199, 1211 (11th Cir. 2006); 

see also Harris v. Mexican Specialty Foods, Inc., 564 F.3d 1301, 1308 (11th Cir. 2009) 

(purely legal claim is “presumptively ripe for judicial review” because no developed 

factual record needed). Here, all Plaintiffs allege that the Individual Mandate will cause 

them actual, concrete, and imminent injury. Am. Compl. ¶¶ 47, 57, 62-63.

Defendants cannot rely on the mandate‟s effective date being in the future,

because injury to Plaintiffs is inevitable and, “[w]here the inevitability of the operation of 

a statute against certain individuals is patent, it is irrelevant to the existence of a 

justiciable controversy that there will be a time delay before the disputed provisions come 

into effect.” Blanchette v. Ct. Gen. Ins. Corps., 419 U.S. 102, 143 (1974). If “the 

enforcement of a statute is certain, a pre-enforcement challenge will not be rejected on 

ripeness grounds.” Browning, 522 F.3d at 1164 (emphasis added).21 This is particularly

 

21 See also Fla. League of Prof‟l Lobbyists, Inc. v. Meggs, 87 F.3d 457, 459 (11th Cir. 

1996) (lobbying group‟s prospective challenge to law‟s constitutionality was ripe where 

group was faced with choice to “refrain from engaging in protected First Amendment 

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true where, as here, the challenge mainly raises questions of law. See Pac. Gas & Elec. 

Co. v. State Energy Res. Conservation & Dev. Comm‟n, 461 U.S. 190, 201-03 (1983) 

(case ripe where “predominantly legal” question raised).

Nor is there any “uncertainty” about whether the mandate will apply to Plaintiffs. 

Unlike Toilet Goods Ass‟n v. Gardner, 387 U.S. 158, 163-64 (1967), and cases like it, the 

Individual Mandate as written will impact Plaintiffs, regardless of any additional 

administrative action.22 And unlike the FDA regulation at issue in Toilet Goods, the 

mandate‟s validity does not turn on factors (e.g., practical enforcement problems) such 

that the “judicial appraisal ... is likely to stand on a much surer footing in the context of a 

specific application” of the challenged provision. Id. at 164. Congress itself has 

established the Individual Mandate‟s metes and bounds. Its practical application by the 

agencies enforcing it will not illuminate the legal issues now raised. This case is fully 

ripe for adjudication. See Virginia v. Sebelius, Mem. Op. at 15-17 (Aug. 2, 2010) (State‟s

challenge to the Individual Mandate is ripe).

 

activity or risk civil sanction for alleged unethical conduct”); Abbott Labs., 387 U.S. at 

152-53 (challenge to regulation was ripe where it was directed at plaintiffs, required them 

to change business practices, and subjected them to civil penalties for noncompliance).

22 Defendants‟ cases, Def. Mem. 22-23, are inapposite. They involve either injuries 

contingent on further agency action (ruling by arbitration tribunal in Thomas v. Union 

Carbide Agric. Prods. Co., 473 U.S. 568, 577-78 (1985), completion of site selection 

process in Nevada v. Burford, 918 F.2d 854, 857 (9th Cir. 1990), additional FDA 

determinations in Toilet Goods)), or provisions forbidding conduct where no violation or 

desire to engage in the conduct was alleged (interference with voting rights in South 

Carolina v. Katzenbach, 383 U.S. 301, 317 (1966), deprivation of rights by officials in 

Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 17-18 (D.D.C. 

2001)).

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E. The Anti-Injunction Statute Does Not Apply

The Anti-Injunction Act, 26 U.S.C. § 7421(a) (“AIA”), does not bar Plaintiffs‟ 

challenge to the Individual Mandate and its penalty regime. The mandate, which requires 

persons to have coverage, cannot be a tax subject to the AIA, because its stated purpose is 

not to raise revenue but to create “effective health insurance markets.” See Goetz v. 

Glickman, 920 F. Supp. 1173, 1181 (D. Kan. 1996), aff'd, 149 F.3d 1131 (10th Cir. 

1998), cert. denied, 525 U.S. 1102 (1999) (citing Head Money Cases, 112 U.S. 580 

(1884)) (a regulation “will not constitute a tax unless the real purpose and effect of the 

statute and regulations ... is to raise revenues for the general support of the 

government.”); Cities Serv. Co. v. Fed. Energy Admin., 529 F.2d 1016, 1029 (Temp. 

Emer. Ct. App. 1975) (same); see also Def. Mem. 5 (quoting ACA §§ 1501(a)(2)(I), 

10106(a)).23 Indeed, the Individual Mandate itself raises no revenue, and significantly, in 

enacting the mandate, Congress expressly relied on its commerce power.

Thus, the Act‟s corresponding enforcement penalty also is not a tax. As with the 

mandate itself, Congress grounded the penalty in the Commerce Clause, not in its taxing 

or spending powers. It designed and denominated the penalty as a means to enforce the 

Individual Mandate. ACA § 1501 at § 5000A(b)(1). By contrast, where Congress levies 

taxes, it identifies them as such – as it did in at least five other sections of the Act. See, 

e.g., ACA §§ 9001, 9004, 9015, 9017, & 10907.

 

23 Neither the Mandate‟s placement in the Internal Revenue Code, nor its inclusion in 

“Subtitle D – Miscellaneous Excise Taxes,” may give rise to an inference or presumption 

of legislative construction. See United States v. Reorganized CF&I Fabricators of Utah, 

Inc., 518 U.S. 213, 222 (1996); 26 U.S.C. § 7806(b) (providing that no inferences or 

implications can be made based on the penalty‟s placement).

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The Individual Mandate‟s penalty was not enacted as a “tax” and this is 

dispositive. Freemanville Water Sys., Inc. v. Poarch Band of Creek Indians, 563 F.3d 

1205, 1209 (11th Cir. 2009) (“[W]here Congress knows how to say something but 

chooses not to, its silence is controlling.”).24 Indeed, the penalty will generate only 

“some revenue,” Def. Mem 50, and then only as an incident to some persons‟ failure to 

obey the law. See Rodgers v. United States, 138 F.2d 992, 994 (6th Cir. 1943) (if 

regulation is statute‟s primary purpose, “the mere fact that incidentally revenue is also 

obtained does not make the imposition a tax, but a sanction imposed for the purpose of 

making effective the congressional enactment.”).

Contemporaneous legislative history confirms that Congress enacted a “penalty” 

and not a “tax.” Congress‟s Joint Committee on Taxation (“JCT”), which analyzes the 

effects of proposed taxes,25 and on which Defendants rely, Def. Mem. 51, consistently 

refers to the penalty as a “penalty” in its technical explanation of the law.26 The JCT also 

 

24 Defendants treat “the statutory label of the provision as a „penalty‟” as inconsequential, 

Def. Mem. 50 n.23. But it is well settled that “when Congress uses different language in 

similar sections it intends different meanings.” DIRECTV, Inc. v. Brown, 371 F.3d 814, 

818 (11th Cir. 2004); Iraola & CIA, S.A. v. Kimberly-Clark Corp., 232 F.3d 854, 859 

(11th Cir. 2000) (citing United States v. Gonzales, 520 U.S. 1, 5 (1997)).

25 See JCT, Overview of Revenue Estimating Procedures and Methodologies Used by the 

Staff of the Joint Committee on Taxation (JCX-1-05), February 2, 2005, at 2. Defendants 

admit that the JCT staff is “closely involved with every aspect of the legislative 

process....” Def. Mem. 51 n.24.

26 See JCT, Technical Explanation of the Revenue Provisions of the “Reconciliation Act 

of 2010,” as amended, in combination with the “Patient Protection and Affordable Care 

Act” (JCX-18-10), March 21, 2010, at 31-34. (The JCT fails to call the penalty a 

“penalty” only in a heading.) Not surprisingly, weeks after this lawsuit was filed, the 

JCT amended this Technical Explanation, in Errata for JCX-18-10 (JCX-27-10), May 4, 

2010, at 2, only then referring to the penalty as a “new excise tax.” Such after-the-fact 

“legislative history” is not indicative of Congressional intent. See, e.g., Gustafson v. 

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conspicuously fails to estimate any revenue from the penalty – whereas it dutifully scored 

the ACA‟s numerous other provisions imposing true taxes. Defendants, of course, cite 

Congressional Budget Office (“CBO”) estimates.27 Def. Mem. 51. But the CBO “has 

responsibility for scoring the budget effects of non-tax legislation.” See JCX-1-05, at 16. 

Congress enacted a penalty, as it clearly intended and understood, and not a “tax.”

Indeed, cases cited by Defendants do not support their spurious suggestion that 

the penalty is a tax. Def. Mem. 33. Both Barr v. United States, 736 F.2d 1134, 1135 (7th 

Cir. 1984), and Warren v. United States, 874 F.2d 280, 281 (5th Cir. 1989), involved 

efforts to enjoin collection of penalties directly assessed for failing properly to pay an 

undisputed tax: falsely claiming a withholding exemption in Barr, and refusing to sign a 

federal tax return in Warren. Those penalties were essential to the collection of revenue 

(see United States v. Kahriger, 345 U.S. 22, 31-32 (1953), overruled in part on other 

 

Alloyd Co., 513 U.S. 561, 579 (1995) (“Material not available to the lawmakers is not 

considered, in the normal course, to be legislative history. After-the-fact statements ... 

are not a reliable indicator of what Congress intended when it passed the law.”); Clarke v. 

Sec. Indus. Ass‟n, 479 U.S. 388, 407 (1987) (Supreme Court gives little weight to 

legislative history entered 10 days after enactment of legislation); Cobell v. Norton, 428 

F.3d 1070, 1075 (D.C. Cir. 2005) (“post-enactment legislative history is not only 

oxymoronic but inherently entitled to little weight”).

27 Compare Letter from Douglas Elmendorf, Director, CBO, to the Hon. Nancy Pelosi, 

Speaker, U.S. House of Reps. (Mar. 20, 2010) at 15, Table 4 (showing budget estimates 

of inflows and outflows, including the Penalty) with JCT, Estimated Revenue Effects of 

the Amendment in the Nature of a Substitute to H.R. 4872, the “Reconciliation Act of 

2010,” as amended, in Combination with the Revenue Effects of H.R. 3590, the “Patient 

Protection and Affordable Care Act („ACA‟),” as Passed by the Senate, and Scheduled 

for Consideration by the House Committee on Rules on March 20, 2010 (JCX-17-10), 

March 20, 2010 (showing effects of tax provisions, but conspicuously not including 

estimate of penalties). The President also declared that the Individual Mandate was 

“absolutely not” a tax. See, e.g., Obama: Requiring health insurance is not a tax 

increase, CNN (Sept. 29, 2009), http://www.cnn.com/2009/POLITICS/09/20 

/obama.health.care/index.html (last visited August 5, 2010).

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grounds by Marchetti v. United States, 390 U.S. 39 (1968)), not extraneous to the 

government‟s tax needs (id. at 31), and clearly “supportable as in aid of a revenue 

purpose” (Sonzinsky v. United States, 300 U.S. 506, 513 (1937)). Here, however, the 

penalty is not incidental to collecting a tax, but is a “means of enforcing ... regulations” 

that are “extraneous to any tax need.” See Sonzinsky, 300 U.S. at 513; Kahriger, 345 

U.S. at 31. This distinction is critical – as the courts often have recognized. See, e.g., 

United States v. La Franca, 282 U.S. 568, 572 (1931) (“notwithstanding they are called 

taxes, [they] are in their nature also penalties ... the exaction here in question is not a true 

tax, but a penalty involving the idea of punishment for infraction of the law”); Bailey v. 

Drexel Furniture Co. (The Child Labor Tax Case), 259 U.S. 20, 36 (1922) (a tax may 

involve an incidental regulatory restraint but a penalty actually regulates).

28

 

28 See also Rodgers, 138 F.2d at 994 (if primary purpose is regulatory, incidental revenue 

does not “make the imposition a tax”); Lipke v. Lederer, 259 U.S. 557, 561-62 (1922) 

(allowing challenge to penalties under Prohibition Act); Regal Drug Corp. v. Wardell, 

260 U.S. 386, 391-92 (1922) (same); Mobile Republican Assembly v. United States, 353 

F.3d 1357, 1361 (11th Cir. 2003) (analyzing whether provision was penalty or tax for 

AIA purposes). Defendants also cite the Head Money Cases, 112 U.S. 580 (1894), 

Rodgers, and Bd. of Trustees v. United States, 289 U.S. 48 (1933), arguing that the 

Constitution‟s apportionment requirements do not apply to penalties enacted under the 

commerce power. Def. Mem. 55-57. Of course, such penalties were not subject to 

apportionment because they were not taxes at all. In the Head Money Cases, Congress 

did not exercise its taxing power, but penalized “incident to the regulation of commerce.” 

112 U.S. at 595. In Bd. of Trustees, the Supreme Court held that “customs duties” were 

not subject to tax-limiting doctrines, because they also were imposed pursuant to the 

Commerce Clause. 289 U.S. at 58-59. The Rodgers Court held that revenues derived 

from penalties aimed at regulating interstate commerce “do not divest the regulation of its 

commerce character and render it an exercise of the taxing power.” 138 F.2d at 995. 

Defendants‟ argument demonstrates precisely why the mandate‟s penalty is not a tax 

subject to the AIA.

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In addition, contrary to Defendants‟ position, the fact that the penalty is “assessed 

and collected in the same manner as an assessable penalty under Subchapter B of chapter 

68” cannot transform it into a tax or a tax penalty. Def. Mem. 33. Unlike the tax 

enforcement penalties in Subchapter B, the mandate‟s penalty is not a collection 

mechanism for any other penalty or tax under the Internal Revenue Code. Moreover, as 

Defendants admit, Def. Mem. 50 n.21, the penalty cannot be enforced through criminal 

prosecution or a tax lien or levy – the customary enforcement mechanisms when the 

public fisc is implicated. See 26 U.S.C. § 5000A(g). Because the mandate is purely a 

regulatory measure enforced by a penalty, the AIA does not apply.29

Even if the penalty were a “tax,” the AIA would not bar Plaintiff States‟ 

challenge. Plaintiff States are not “person[s]” to whom the AIA applies. That term is 

repeatedly defined in the federal code to the exclusion of the States, see, e.g., 1 U.S.C. § 

1; 26 U.S.C. § 6671; 26 U.S.C. § 7343; 26 U.S.C. § 7701 (see parenthetical), and there is 

a “longstanding interpretive presumption that „person‟ does not include the sovereign.” 

Vt. Agency of Natural Res. v. United States, 529 U.S. 765, 780 (2000); United States v. 

United Mine Workers, 330 U.S. 258, 275 (1947). See also Virginia v. Sebelius, Mem. 

Op. at 7-11 (Aug. 2, 2010) (AIA does not bar State‟s challenge to the Individual 

Mandate).

 

29 Defendants‟ reliance on Bob Jones Univ. v. Simon, 416 U.S. 725, 741 n.12 (1974), also 

is misplaced. Def. Mem. 50. That case did not involve the critical distinction between a 

“tax” and a “penalty” at issue here, but rather whether the AIA applied to a challenge 

involving the withdrawal of an entity‟s tax-exempt status. The Court itself noted that the 

suit was “aimed at the imposition of federal income, FICA and FUTA taxes which clearly 

are intended to raise revenue.” Id. In contrast, the Individual Mandate is neither a 

regulatory nor a revenue-raising tax at all, but a regulation enforced by a non-tax penalty.

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Further, the AIA does not bar suits by States, because States cannot pay the “tax” 

and then sue for its return. Thus, in South Carolina v. Regan, 465 U.S. 367 (1984), the 

Court refused to apply the AIA to the State‟s challenge to the federal tax treatment of 

State bonds, because Congress had not “provided an alternative avenue for an aggrieved 

party to litigate its claims on its own behalf.” Id. at 380-81. Here, Congress similarly has 

failed to provide States an alternative avenue to litigate claims regarding the mandate –

including that its penalty, if a “tax,” is an impermissible direct, unapportioned tax (as 

shown below).

Finally, States have undisputed standing to challenge the ACA‟s fundamental 

revisions to the Medicaid program and its conscription of the States and their officials to 

implement and manage the new federal healthcare program. Because the Individual 

Mandate is not severable from other parts of the ACA, Plaintiff States necessarily have 

standing to challenge the Mandate along with them.30

II. THE INDIVIDUAL MANDATE EXCEEDS CONGRESS’S POWERS AND 

VIOLATES THE NINTH AND TENTH AMENDMENTS AND CORE 

PRINCIPLES OF FEDERALISM

By enacting the Individual Mandate, Congress has exceeded its legislative 

authority under Article I. Neither its commerce and taxing powers, nor the Necessary 

and Proper Clause, affords Congress the power to coerce citizens – under threat of 

 

30 The Declaratory Judgment Act, 28 U.S.C. § 2201(a), also is no bar. “If [a] suit is 

allowed under the [AIA], it is not barred by the Declaratory Judgment Act.” Perlowin v. 

Sassi, 711 F.2d 910, 911 (9th Cir. 1983) (per curiam). See also In re Leckie Smokeless 

Coal Co., 99 F.3d 573, 583 (4th Cir. 1996) (the two statutes “are, in underlying intent and 

practical effect, coextensive”); Nat‟l Taxpayers Union, Inc., 68 F.3d at 1435 (the statutes 

“operate coterminously”); Virginia v. Sebelius, Mem. Op. at 7 n.2 (Aug. 2, 2010) (Act 

does not bar State‟s challenge to the Individual Mandate).

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penalty – into the stream of commerce, thereby subjecting them to its regulation. This 

unprecedented assertion of unbridled authority usurps powers reserved to the States by 

the Tenth Amendment, disparages the rights of their citizens protected by the Ninth 

Amendment, and obliterates this Nation‟s unique system of dual sovereignty.

A. The Individual Mandate Is Impermissible Under the Commerce 

Clause

Defendants‟ position that the Individual Mandate is a valid exercise of Congress‟s 

commerce power depends entirely upon the incredible contention that inactivity – the 

failure to have healthcare insurance – constitutes economic activity in the form of a 

“volitional event” itself subject to federal regulation. Def. Mem. 34-44. But no court

ever has upheld so sweeping an assertion of federal power. To do so would arm 

Congress with unbridled top-down control over virtually every aspect of persons‟ lives, 

as consumers and producers, and destroy this Nation‟s defining legacy of dual 

sovereignty, thereby transforming our federal government from one of limited, 

enumerated powers into one of limitless authority over States and their citizens.

1. Congress’s Commerce Power Does Not Reach Inactivity

The Constitution gives Congress the power “[t]o regulate Commerce with foreign 

nations, and among the several States, and with Indian Tribes[,]” U.S. Const., Art. I, § 8, 

effectively allowing it to superintend the Nation‟s commercial and economic activities. 

However, its power to regulate activity does not permit Congress to forbid inactivity. 

Congress may not order inactive Americans to buy, sell, manufacture, grow, or distribute 

any product or service against their will. No federal court ever has upheld such a 

limitless exercise of the commerce power. See Robert Hartman & Paul Van de Water, 

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“The Budgetary Treatment of an Individual Mandate to Buy Health Insurance,” CBO 

Memo., at 1, Aug. 1994 (“The government has never required people to buy any good or 

service as a condition of lawful residence in the United States.”).

In United States v. Lopez, 514 U.S. 549 (1995), the Court identified three broad 

categories of activities that Congress may regulate under its Commerce Clause power:

First, Congress may regulate the use of the channels of interstate 

commerce. Second, Congress is empowered to regulate and protect the 

instrumentalities of interstate commerce, or persons or things in interstate 

commerce, even though the threat may come only from intrastate 

activities. Finally, Congress‟ commerce authority includes the power to 

regulate those activities having a substantial relation to interstate 

commerce....

Id. at 558-59 (emphasis added). Applying these principles, the Court held that “[t]he 

possession of a gun in a local school zone is in no sense an economic activity that might, 

through repetition elsewhere, substantially affect any sort of interstate commerce.” Id. at 

567 (emphasis added). 

Similarly, in United States v. Morrison, 529 U.S. 598 (2000), the Court applied 

the same three-category analysis and struck down the challenged provision of the 

Violence Against Women Act because “[g]ender-motivated crimes of violence are not, in 

any sense of the phrase, economic activity.” Id. at 613 (emphasis added). It concluded: 

“We accordingly reject the argument that Congress may regulate noneconomic, violent 

criminal conduct based solely on that conduct‟s aggregate effect on interstate commerce.” 

Id. at 617 (emphasis added).

It bears emphasizing that the conduct at issue in Lopez and Morrison, although 

non-economic and unreachable under the Commerce Clause, was nonetheless activity 

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voluntarily engaged in by the parties. In this key respect, the inactivity which Congress 

here seeks to regulate is even further removed from its legitimate commerce power.

Defendants rely heavily on Gonzales v. Raich, 545 U.S. 1 (2005), and Wickard v. 

Filburn, 317 U.S. 111 (1942). However, both cases upheld regulation of economic

activity. In Raich, the Court‟s most recent Commerce Clause decision, it upheld 

application of the federal Controlled Substances Act (CSA) to the intrastate manufacture 

and possession of marijuana for medical purposes because those activities were economic 

in character and, at least in the aggregate, had a substantial effect on interstate commerce: 

Our case law firmly establishes Congress‟ power to regulate purely local 

activities that are part of an economic “class of activities” that have a 

substantial effect on interstate commerce. ... As we stated in Wickard, 

“even if appellee‟s activity be local and though it may not be regarded as 

commerce, it may still, whatever its nature, be reached by Congress if it 

exerts a substantial economic effect on interstate commerce.” ... When 

Congress decides that the “„total incidence‟” of a practice poses a threat to 

a national market, it may regulate the entire class.

Id. at 26 (emphasis added) (citing Wickard, in which the Court held that the activity of 

growing wheat for personal consumption was subject to regulation). The Raich Court, in 

discussing how the CSA “directly regulates economic, commercial activity,” defined the 

term “economics” to refer to “the production, distribution, and consumption of 

commodities.” 545 U.S. at 17. In every respect – whether one is making, transferring, or 

using a good or service – economics refers to activity, not inactivity. Indeed, in the 

absence of activity, the term would be devoid of meaning.

Ironically, Defendants cannot help but use the words “activities,” “activity,” and 

“conduct,” Def. Mem. 36, in searching for support. They misread Heart of Atlanta Motel 

v. United States, 379 U.S. 241 (1964), and Daniel v. Paul, 395 U.S. 298 (1969), as 

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supporting their position. But both cases involved commercial establishments offering 

goods or services to the public: an inn “serv[ing] interstate travelers” in Heart of Atlanta, 

379 U.S. at 261; a restaurant “offer[ing] ... food [that] has moved in commerce” in

Daniel, 395 U.S. at 304. Neither case fairly can be read to permit Congress to require 

activity by someone who is inactive. In both instances, the defendants could have opted 

not to engage in any commerce. It was their own commercial activity which subjected 

them to congressional regulation. Thus, the Lopez Court itself cited Heart of Atlanta 

Motel as a case “where we have concluded that the activity substantially affected 

interstate commerce.” Lopez, 514 U.S. at 557 (emphasis added).

2. The Individual Mandate Does Not Regulate Commerce, It 

Compels It

The Individual Mandate does not regulate economic activity, but compels it by 

forcing individuals who lack a congressionally-dictated level of healthcare coverage –

and particularly those who would not qualify for Medicaid even under the Act‟s greatly 

expanded eligibility criteria – into the insurance market. In this crucial respect, the 

mandate is unlike any legislation ever upheld under the Commerce Clause.

Defendants assert that not having insurance is reachable under the commerce 

power because it is an “economic decision.” But a decision is purely a mental process

which may, or may not, result in activity (economic or otherwise), depending on the 

decision. A decision to do nothing does not convert nothing to something. Zero 

multiplied by any number still equals zero. Defendants cannot fill that void with 

references to congressional concern over “market timing” and “premium spirals.” Def. 

Mem. 42-43. Under Defendants‟ logic, any failure to buy – or sell – particular goods or 

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services is both a regulable prelude to future economic activity and a decision Congress 

can reach because it impacts the existing marketplace.31 Thus, the continued ownership 

of a home is transformed into a “decision” not to sell, which then can be characterized as 

an “economic activity,” which Congress therefore can mandate. That logic, which leads 

to an infinite commerce power, finds no support in any case decision.32

Moreover, Congress‟s conclusion “that a particular activity substantially affects 

interstate commerce does not necessarily make it so....” Lopez, 514 U.S. at 557 n.2. 

This is “ultimately a judicial rather than a legislative question,” id., and the Supreme 

Court has expressed concern over any instance in which Congress piles “inference upon 

inference” as a basis “to convert congressional authority under the Commerce Clause to a 

general police power of the sort retained by the States.” Id. at 567. See also United 

States v. Comstock, 130 S. Ct. 1949, 1967 (2010) (Kennedy, J. concurring) (“The rational 

basis referred to in the Commerce Clause context is a demonstrated link in fact, based on 

empirical demonstration.”). Here, Congress only can connect an individual‟s lack of 

healthcare insurance with the supposed need for the mandate to regulate interstate 

insurance markets through a series of unsubstantiated and unquantifiable inferences and 

assumptions, some expressed and others implied (even if unacknowledged), about human 

 

31 Defendants cannot settle on a consistent alchemy to transform inactivity into activity. 

At times, they contend that the decision not to buy insurance is a properly regulable

“volitional event,” Def. Mem. 5, 43; but at other times they imply that a presumed later

use of healthcare services renders a current failure to buy insurance regulable activity, id. 

at 43-44. Both positions are nonsensical.

32 Indeed, even in industries such as securities trading, where Congress presumably could 

preempt State regulation, the power to regulate commerce never has been construed to 

allow Congress to compel inactive individuals to purchase stocks or bonds.

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behavior and its effects.33 This attenuated chain simply is too long and fragile to 

constitute the “substantial relation to interstate commerce” required by Lopez.

More fundamentally, accepting Defendants‟ position would make it impossible to 

maintain any outer limits on the commerce power. See Lopez, 514 U.S. at 557. It would 

permit Congress, upon the flimsiest of nexuses, itself to manufacture the basis on which it 

can regulate anyone at any time. Such a ruling would transform our Nation beyond 

recognition. The Commerce Clause makes no distinction between one type of economic 

activity and another. Nor does it distinguish between demand (buying) and supply 

(producing and selling) activities. Every decision individuals make, at some remote level 

of analysis, can be said to have economic purposes or consequences.

If Congress can compel Americans to buy healthcare insurance, then it can 

compel them to buy – or to make or sell – any good or service, based on a finding that 

such compulsion will assist its efforts to achieve some desired “economic” result. 

Congress could force citizens to buy government-acquired manufacturers‟ cars and 

government-rescued banks‟ financial instruments, or to work in any industry and on 

whatever terms it chooses. Even in NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 

(1937), in which the Court abandoned its earlier efforts to restrict New Deal legislation, it 

 

33 These include assumptions that: (1) everyone at some point in life will consume 

healthcare services; (2) to save money, some persons who can afford healthcare insurance 

decide not to buy it; (3) some of these persons will not pay for healthcare services they 

consume; (4) some of these persons get away without being pursued for payment by their 

healthcare providers, who instead pass the costs on to other patients, providers, and 

insurers; (5) this passing on increases the aggregate cost of healthcare services, driving up 

the cost of insurance premiums; (6) the Act will drive up premium costs (especially by its 

requirement that insurers ignore preexisting conditions); and (7) the Individual Mandate 

will reduce premium costs.

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warned that a Congress armed with excessive powers under the Commerce Clause would 

threaten our system of federalism and bring about “a completely centralized 

government.” Id. at 37 (and quoted in Lopez, 514 U.S. at 557). The ACA underscores 

the prescience of that warning.

Defendants ask this Court to expand the commerce power far beyond the limits 

established by Supreme Court precedent, including Wickard and Raich. The Court 

should reject this doctrinal revolution out of hand and uphold the settled limits on the 

Commerce Clause articulated in the Supreme Court‟s existing jurisprudence.

B. The Individual Mandate Cannot Be Saved by the Necessary and 

Proper Clause

Defendants turn to the Necessary and Proper Clause, the “last, best hope of those 

who defend ultra vires Congressional action.” Printz v. United States, 521 U.S. 898, 923 

(1997). But that clause cannot rescue the Individual Mandate, because it is not a means 

of implementing a constitutionally enumerated power and it fails under the considerations 

recently described by the U.S. Supreme Court in United States v. Comstock.

1. The Mandate is Not a Means To Implement a Constitutionally 

Enumerated Power

The Necessary and Proper Clause grants Congress broad authority to pass laws in 

furtherance of constitutionally-enumerated powers. It was has been settled since 

McCulloch v. Maryland, 17 U.S. 316 (1819), that the clause may not substitute for 

powers the Constitution denied Congress, or empower Congress to violate rights 

otherwise protected by the Constitution, e.g., by the Fifth, Ninth, and Tenth amendments:

Let the end be legitimate, let it be within the scope of the constitution, and 

all means which are appropriate, which are plainly adapted to that end, 

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which are not prohibited, but consist with the letter and spirit of the 

constitution, are constitutional.

Id. at 421 (emphasis added). See Raich, 545 U.S. at 39 (Scalia, J., concurring) 

(McCulloch‟s limits on Congress‟s power under the clause “are not merely hortatory”).

“[I]n determining whether the Necessary and Proper Clause grants Congress the 

legislative authority to enact a particular federal statute, we look to see whether the 

statute constitutes a means that is rationally related to the implementation of a 

constitutionally enumerated power.” Comstock, 130 S. Ct. at 1956 (emphasis added). 

The clause only allows Congress the authority to enact a statute that is “legitimately 

predicated on an enumerated power[,]” and only so long as the relationship between the 

statute as the means and the enumerated power as the end is “not too attenuated.” Id. at 

1963-64.

The Individual Mandate does not implement or effectuate any enumerated power. 

Congress seeks coverage for uninsured Americans by ordering everyone to be covered. 

The Act‟s ultimate goal (universal coverage) and the substance of its mandate (requiring 

all to get coverage) are the same. The mandate is not a means to the exercise of an 

enumerated power, but an end and a novel exercise of power to compel the American 

people. The Necessary and Proper Clause is not an independent source of authority for 

such a policy goal, and therefore cannot validate the Individual Mandate.34

 

34 The power to impose an affirmative mandate on individuals is unlike the power to 

regulate (control or proscribe) ongoing activities. Significantly, in those rare instances in 

which Congress has imposed affirmative obligations on persons based solely upon their 

being citizens or residents, it has done so not by claiming expanded power over 

commerce or general health and welfare – much less by invocation of the Necessary and 

Proper Clause – but based on explicit constitutional authority. See, e.g., Selective Service 

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Although Defendants would justify the mandate by reference to Congress‟s power 

to regulate the interstate insurance and healthcare markets, even under the Commerce 

Clause Congress cannot create or expand its own legislative authority simply by forcing 

inactive and unwilling people into markets so that they then can be regulated. Such 

coercion would be unprecedented in our history and, if upheld, would effectively 

eliminate any discernible limits on congressional power. If Congress can regulate the 

failure to have healthcare insurance coverage, it can equally regulate the “failure” to meet 

any other requirement it chooses to impose.

Defendants also miss the mark in asserting that the Individual Mandate is valid 

because it effectuates other ACA provisions regulating the markets in healthcare and 

insurance, e.g., increase in Medicaid eligibility, new insurance mandates. Def. Mem. 45-

48. Unlike the Individual Mandate (see ACA §§ 1501(a)(2)(J), 10106(a)), Congress has 

not declared those other provisions “essential,” and they could have been enacted, 

implemented, and enforced without the Individual Mandate. Thus, while they may be 

means to carry out the mandate, the converse is not true: the mandate is not a means for 

them. Unlike the recordkeeping requirements upheld in United States v. Darby, 312 U.S. 

100, 125 (1941), for example, the mandate does not facilitate enforcement of the ACA‟s 

other regulations. Nor does it protect these new federal requirements from evasion or 

 

Cases, 245 U.S. 366, 383, 390 (1918) (conscription into armed services justified by 

power “to raise and support Armies” under U.S. Const. art. I, § 8, cl. 12); Morales v. 

Daley, 116 F. Supp. 2d 801 (S.D. Tex. 2000), aff‟d, 275 F.3d 45 (5th Cir. 2001), cert. 

denied, 534 U.S. 1135 (2002) (compelling answers to census questions justified by U.S. 

Const. art. I, § 2, cl. 3).

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obstruction, as was the case in Wickard and Raich – on which Defendants rely.35

Moreover, the Necessary and Proper Clause does not validate Congress‟s attempt to relabel and downplay its universal coverage goal as if the mandate were merely a means to 

cover individuals with preexisting conditions. Upholding the Individual Mandate by 

reference to the Act‟s various ancillary regulations would in effect grow the Necessary 

and Proper tail large enough to wag the enumerated power dog.

In sum, the Necessary and Proper Clause cannot confer on Congress a vast, new 

power to legislate its desired end whenever it chooses to wave the commerce flag.36

2. The Individual Mandate Fails Under the Comstock Factors

Comstock only underscores that the Necessary and Proper Clause cannot save the 

mandate. Examination of the five “considerations” relied on by the Court, in determining 

that the clause permitted the civil commitment of sexually dangerous former federal 

inmates, confirms that the Individual Mandate – unlike the law at issue in Comstock – is 

by no means a “discreet and narrow exercise of authority over a small class of persons 

already subject to the federal power.” 130 S. Ct. at 1968 (Kennedy, J., concurring). 

First, the relevant enactment must be a rational means to implement an otherwise proper 

 

35 Wickard and Raich each involved an “as applied” challenge to the regulation of 

interstate commercial activity in producing a good that was included within a large class 

of fungible goods (wheat in Wickard, marijuana in Raich). The Court simply approved 

regulation of a local subset of the very same commodity.

36 This is not to say that the mandate cannot have a connection to such provisions, but 

that it necessarily must effectuate or protect Congress‟s legitimate regulation of interstate 

commercial activities. See Raich, 545 U.S. at 38 (authority under the necessary and 

proper clause “extends only to those measures necessary to make the interstate regulation 

effective.”) (Scalia, J., concurring). If a legislative scheme is itself incapable of 

achieving an overall policy goal by dint of Congress‟s legitimately-wielded power, the 

Necessary and Proper Clause cannot make up the difference.

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exercise of an enumerated power, not an end in itself. Id. at 1956. But, as explained 

above, the Individual Mandate is not a means to a proper end. It stands alone as the Act‟s 

unseverable centerpiece, from which the other provisions flow.

Second, in sharp contrast to the long federal history (more than 150 years) of 

enacting and enforcing criminal laws, detaining prisoners, and providing them with 

mental health services present in Comstock, Congress has no history of directing 

Americans‟ individual healthcare or insurance decisions. Any authority for such 

requirements resides solely in the States as sovereigns, as part of that general police 

power “which the State[s] did not surrender when becoming [] member[s] of the Union 

under the Constitution.” Jacobson v. Massachusetts, 197 U.S. 11, 25 (1905).37

Third, no sound reason exists for the Individual Mandate in light of Congress‟s 

lack of authority to compel commerce, whether in regulating insurance, healthcare, or 

any other industry or field of endeavor. Compelling activity differs fundamentally from 

simply regulating a market.

Fourth, the Comstock Court made clear that any exercise of power supportable 

under the Necessary and Proper Clause must be consistent with the Constitution‟s federal 

architecture, and reaffirmed that the clause does not “confer[] on Congress a general 

„police power which the Founders denied the National Government and reposed in the 

States...‟.” Comstock, 130 S. Ct. at 1964. But, far from “properly account[ing] for state 

 

37 Significantly, past mandates requiring citizens to have insurance have been grounded in 

the States‟ police powers. See Ex parte Poresky, 290 U.S. 30, 32 (1933) (automobile 

insurance). This also is true of the individual mandate enacted by Massachusetts – Mass. 

Gen. Laws ch. 111M, § 2 (2008); see also Fountas v. Comm‟r of Dep‟t of Rev., 2009 WL 

3792468 (Mass. Super. Ct. Feb. 6, 2009), aff‟d, 922 N.E.2d 862 (Mass. App. Ct. 2009) –

which Congress admittedly emulated here. See ACA § 1501(a)(2)(D).

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interests,” id. at 1962, the Individual Mandate can only be imposed through exercise of a 

police power, and it shreds the traditional federalism guaranteed by Tenth Amendment. 

As shown below, the federal government has no right to compel the States to commit 

their resources to accommodate the added costs stemming from the Individual Mandate 

or from the ACA‟s unprecedented expansion of Medicaid, its insurance exchanges and 

reinsurance requirements, and its expensive employer coverage provisions. See Printz, 

521 U.S. at 923-24 (“When a law ... violates the principle of state sovereignty ... it is not 

a law ... proper for carrying into Execution the Commerce Clause.”). Thus, the ACA 

“invade[s] state sovereignty [and] improperly limit[s] the scope of „powers that remain 

with the States.‟” Comstock, 130 S. Ct. at 1962. 

Fifth, the Individual Mandate is not narrow in scope like the law upheld in 

Comstock, but threatens to bring about fundamental and unprecedented change by 

centralizing top-down economic power in Congress.38 The Necessary and Proper Clause 

cannot serve as a bootstrap by which Congress may evade the constitutional limits on its 

enumerated powers. The McCulloch Court condemned this use of the Necessary and 

Proper Clause long ago and made clear it would not be tolerated:

Should Congress, under the pretext of executing its powers, pass laws for 

the accomplishment of objects not entrusted to the government; it would 

 

38 Defendants assert a need for such sweeping new power, but ignore other avenues for 

Congress to achieve universal coverage through legitimate exercise of its enumerated 

powers, such as tax incentives, or laws encouraging or requiring payment for services 

rendered, all creating stronger incentives for uninsured persons to choose to buy 

coverage. Moreover, any relation the mandate may have to the exercise of “an 

enumerated Article I power” is far “too attenuated” for Necessary and Proper Clause 

purposes. Id. at 1963 (quoting Lopez, 514 U.S. at 567). As explained above, the mandate 

is separated by many degrees of speculation and inference from any enumerated power. 

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become the painful duty of this tribunal ... to say, that such an act was not 

the law of the land.

17 U.S. at 423. See also Jinks v. Richland Co., 538 U.S. 456, 464 (2003) (quoting 

McCulloch for the proposition that a measure adopted “as a „pretext‟ for „the 

accomplishment of objects not entrusted to the [federal] government‟” would not be an 

appropriate exercise of authority under the Necessary and Proper Clause).

C. The Individual Mandate Is Impermissible Under the Taxing and 

Spending Clause

Although sited within the Internal Revenue Code, neither the Individual Mandate 

nor its associated penalty is a “tax” justified as an exercise of Congress‟s taxing power 

under Article I, section 8 of the Constitution. As explained above, the mandate itself is a 

straightforward regulatory requirement, enacted under the Commerce Clause. It has none 

of the characteristics of a “tax,” and cannot be upheld as such.

The same is true of the mandate‟s penalty. Although Congress‟s power to “lay 

and collect taxes” is broad, Congress cannot thwart Article I limitations and broaden that 

power simply by tucking a penalty into a regulatory law:

If, in lieu of compulsory regulation of subjects within the states‟ reserved 

jurisdiction, which is prohibited, the Congress could invoke the taxing and 

spending power as a means to accomplish the same end, clause 1 of 

section 8 of article 1 would become the instrument for total subversion of 

the governmental powers reserved to the individual states.

United States v. Butler, 297 U.S. 1, 75 (1936); see also Dole, 483 U.S. at 216-17 

(O‟Connor, J., dissenting) (Taxing and Spending Clause limits in Butler “remain sound”).

Although taxes may have a regulatory effect, the Court has invalidated “[p]enalty 

provisions in tax statutes added for breach of a regulation concerning activities in 

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themselves subject only to state regulation.” Kahriger, 345 U.S. at 31 (citing Bailey, 259 

U.S. at 34, 38). In Bailey, the Court struck down, as an improper use of Congress‟s 

taxing authority, a regulation incorporating a 10 percent tax on employers for use of child 

labor. Id. at 34. The decision distinguished permissible uses of the taxing power that 

serve legitimate tax purposes (a strong regulatory aim also may be present) from taxes 

added to otherwise impermissible regulations as penalties – the “so-called tax as a 

penalty.” Id. at 36.39

Sonzinsky, on which Defendants rely, is not to the contrary. Def. Mem. 50. 

There, the Court upheld an annual federal tax on certain firearms dealers, explaining that 

“[o]n its face it is only a taxing measure” that was not “attended by an offensive 

regulation.” Sonzinsky, 300 U.S. at 513-514. The Court refused to infer a nefarious 

congressional motive to avoid otherwise applicable constitutional limitations on federal 

power. Id. at 514. However, the Court – as if to distinguish the ACA – made clear that it 

was not dealing with a case “where the statute contains regulatory provisions related to a 

purported tax in such a way as has enabled this Court to say in other cases that the latter 

is a penalty resorted to as a means of enforcing the regulations.” Id. at 513.40

 

39 Although the Court later upheld Bailey-type labor regulations under the Commerce 

Clause (see, e.g., Darby), it has consistently reaffirmed Bailey‟s Taxing and Spending 

Clause limiting principle. See, e.g., Kahriger, 345 U.S. at 31-32.

40 In Defendants‟ other cases taxes were sustained because their regulatory mechanisms 

supported revenue collection. See Sanchez v. United States, 340 U.S. 42 (1950) (special 

taxes imposed on marijuana imports, production, and sales); United States v. Doremus, 

249 U.S. 86 (1919) (same with respect to opiates and coca derivatives); License Tax 

Cases, 72 U.S. 462 (1866) (“license” requirements taxes because federal government 

lacked power to authorize licensed activity). In all of these cases, the test of a valid tax 

“is whether on its face the tax operates as a revenue generating measure and the attendant 

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Similarly, Butler, also relied on by Defendants, makes clear that Congress cannot 

avoid limits on its powers simply by denominating a penalty, designed to enforce 

otherwise impermissible regulations, as a “tax.” The Court referenced Bailey (The Child 

Labor Tax Case) and Hill v. Wallace, noting that the laws at issue there “purported to be 

taxing measures,” but really were meant to regulate conduct not otherwise subject to the 

commerce or any other enumerated power with “the levy of the tax a means to force 

compliance.” Butler, 297 U.S. at 70.41 This was held “an unconstitutional abuse of the 

power to tax.” Id.42

Here, as noted, Congress did not even bother to label the mandate‟s penalty a 

“tax,” and expressly relied on the Commerce Clause to support both provisions. See 

ACA § 1501(a)(2)(A). Neither mandate nor penalty is supported by the Taxing and 

Spending Clause, a result that also cannot be cured by reliance on the Necessary and 

Proper Clause (and Defendants conspicuously omit any such reliance).

 

regulations are in aid of a revenue purpose.” United States v. Ross, 458 F.2d 1144, 1145 

(5th Cir. 1972), cert. denied, 409 U.S. 868 (1972), cited in United States v. Spoerke, 568 

F.3d 1236 (11th Cir. 2009).

41 Butler also considered and rejected the same argument Defendants advance here based 

on the General Welfare Clause. See 297 U.S. at 68. Although the power to provide for 

the general welfare is an “independent grant of legislative authority” (Fullilove v. 

Klutznick, 448 U.S. 448, 473-74 (1980), overruled on other grounds by Adarand 

Constructors, Inc. v. Pena, 515 U.S. 200 (1995); see also Buckley v. Valeo, 424 U.S. 1, 

90 (1976)), that authority is limited to the imposition of taxes and spending of revenues.

42 The Court further noted “that the power to tax could not justify the regulation of the 

practice of a profession, under the pretext of raising revenue” and “that Congress could 

not, in the guise of a tax, impose sanctions for violation of state law respecting the local 

sale of liquor.” Id. (citations omitted).

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D. Alternatively, if The Individual Mandate’s Penalty Is a Tax, It Is an 

Unconstitutional Direct, Unapportioned Tax 

In the alternative, if the Individual Mandate‟s penalty is a tax, it is a direct, 

capitation (or “head”) tax that must be apportioned among the States according to Census 

data. U.S. Const. Art. I, § 2, cl. 3 & Art. I, § 9, cl. 4. The Constitution allows two broad 

types of taxation – indirect taxes, such as duties, imposts and excises, which must be 

“uniform throughout the United States,” U.S. Const. art. I, § 8, cl. 1; and direct taxes, 

which must be apportioned. All legitimate taxes must be one or the other. See Pollock v. 

Farmers‟ Loan & Trust Co., 157 U.S. 429, 557 (1895) (“Pollock I”). These requirements 

cannot be ignored. See United States v. Mfrs. Nat‟l Bank of Detroit, 363 U.S. 194, 199 

(1960) (analyzing the merits of a direct tax challenge); Knowlton v. Moore, 178 U.S. 41, 

82 (1900) (“The commands of the Constitution in this, as in all other respects, must be 

obeyed; direct taxes must be apportioned”).

Holding personal property and income taxes to be direct, the Supreme Court also 

has defined direct taxes to include capitation and real property taxes. Pollock v. Farmer‟s 

Loan & Trust Co., 158 U.S. 601 (1895) (“Pollock II”); Pollock I, 157 U.S. at 558. 

Contrary to Defendants‟ claim, Def. Mem. 58, the Court never has suggested that only 

property taxes are “direct” taxes.43 In Knowlton, the Court simply iterated the holding of 

Pollock II that “no sound distinction existed between a tax levied on a person solely 

because of his general ownership of real property, and that same tax imposed solely 

because of his general ownership of personal property.” 178 U.S. at 82. It held that the 

 

43 Any contrary suggestion in Hylton v. United States, 3 Dall. 175 (1796), was dictum. Its 

result was based on the reverse logic that only an apportionable tax can be a direct tax. 

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tax at issue – an estate tax – was an excise tax upon the transfer of property, and thus not 

an unapportioned direct tax as defined in Pollock II. 

The Individual Mandate‟s penalty, if a tax at all, is like the direct taxes in Pollock 

I and II, being levied directly on individuals and not on any specific transaction or event. 

Thus, it does not qualify as an excise or other indirect tax and, as discussed above, its 

placement among the Internal Revenue Code‟s true excise taxes is irrelevant. Excises are 

imposed upon (1) the manufacture, sale, or consumption of a commodity requiring a 

taxable event or transaction; or (2) a fee levied for the privilege of transacting business.44 

As the Court explained in Thomas v. United States – addressing a stamp tax on stock 

transfers – imposts, duties, and excise taxes are imposed on “importation, consumption, 

manufacture, and sale of certain commodities, privileges, particular business transactions, 

vocations, occupations, and the like.” 192 U.S. at 370. “[A] fundamental characteristic 

of a typical excise tax” is that it is based on an “act by the person or entity taxed[,]” and 

such exactions can be avoided “by the simple expedient of refraining from an act that 

would give rise to the tax.” In re DeRoche, 287 F.3d 751, 756 (9th Cir. 2002). See also 

Flint v. Stone Tracy Co., 220 U.S. 107, 150-51 (1911) (excise taxes may be imposed on 

the privilege of doing business).45

 

44 See Fernandez v. Wiener, 326 U.S. 340, 362 (1945) (excise tax is “a tax imposed upon 

the exercise of some of the numerous rights of property.”); Thomas v. United States, 192 

U.S. 363, 370 (1904).

45 Defendants cannot rely on Union Electric Co. v. United States, 363 F.3d 1292 (Fed. 

Cir. 2004). The tax there was levied on purchasing, not on the refusal to purchase, and 

does not bring Pollock II‟s validity into question. That case distinguished Hylton because 

the carriage tax there was an excise on a consumable expense, not a direct tax on personal 

property. 

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Relying on Tyler v. United States, 281 U.S. 497 (1930), Defendants make a novel 

argument that a tax predicated on a “decision” is indirect. But Tyler involved an estate 

tax imposed on the transfer of property and only confirms that a tax laid “upon the 

happening of an event” is an indirect tax. Id. at 502. An excise is triggered by an action, 

not by the decision which necessarily precedes it. To permit imposition of an excise on 

inaction is to “wipe[] out the distinction between direct and other classes of taxes.” 

Bromley v. McCaughn, 280 U.S. 124, 137-138 (1929) (suggesting that a tax on keeping 

property was direct as no different from a tax on property). 

Nor is the mandate‟s penalty an “income” tax, exempted from apportionment by 

the Sixteenth Amendment. Although the penalty amount turns in part on income, an 

income tax is levied on “accessions to wealth.” Comm‟r of Internal Revenue v. Glenshaw 

Glass Co., 348 U.S. 426, 429, 431 (1955). The Internal Revenue Code defines gross 

income in the constitutional sense as “all income from whatever source derived.” 26 

U.S.C. § 61 (H.R. Rep. No. 1337, 83rd Cong. 2d. Sess., A18 (1954)). Thus, to tax 

“income” there must be an actual increase in wealth; otherwise, the Sixteenth 

Amendment is inapplicable and cannot rescue an improper direct tax. See Eisner v. 

Macomber, 252 U.S. 189, 206 (1920) (the Sixteenth Amendment “shall not be extended 

by loose construction” to repeal or modify a direct tax apportionment requirement).46

The Individual Mandate‟s penalty does not require any accession to wealth, does 

not tax “income derived,” and thus is not an income tax. It does not tax a transfer of 

 

46 The penalty also does not meet the constitutional requirement that income taxes be 

“derived” or “realized,” Commissioner v. Indianapolis Power & Light Co., 493 U.S. 203, 

214 (1990), because it is imposed regardless of any realization event. 

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property or the manufacture, sale, or consumption of a commodity, nor does it impose a 

fee for the privilege of transacting business; thus, it is not an indirect tax. The penalty 

falls on each American not otherwise excepted. If it is a tax, it is an unconstitutional, 

unapportioned direct tax and must be invalidated on that account.47

E. The Individual Mandate Violates the Ninth and Tenth Amendments 

and Core Principles of Federalism

Because Article I provides no authority to Congress to enact the Individual 

Mandate, the power to make such individual healthcare insurance decisions rests with the 

States or individuals themselves. As the Supreme Court has observed, the “United States 

is entirely a creature of the Constitution” and “it can only act in accordance with all the 

limitations imposed by the Constitution.” Reid v. Covert, 354 U.S. 1, 5-6 (1957) (Black, 

J.) (plurality opinion). Whatever authority the people refused to delegate to the federal 

government remained with them or their States. This basic principle is enshrined in the 

Tenth Amendment, which declares that all powers neither delegated to the federal 

government nor prohibited to the States “are reserved to the States respectively, or to the 

people.” Thus, as the Court noted in New York v. United States, the Constitution‟s 

structure creates “essentially a tautology.... The Tenth Amendment confirms that the 

power of the Federal Government is subject to limits that may, in a given instance, 

reserve power to the States.” New York, 505 U.S. at 157. 

 

47 Defendants‟ cases, Def. Mem. 55-57, posited as exempting penalties enacted under the 

Commerce Clause from the limits on direct taxes, involved penalties not subject to 

apportionment because they were not taxes at all. Like the mandate‟s penalty, they were 

enacted to enforce regulations of commerce, not to raise revenue – however little.

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The ACA violates this constitutional system of dual sovereignty and federalist 

principles by eliminating the ability of individuals to make critical healthcare decisions 

for themselves (or through their States), and instead allowing Congress to co-opt the 

budgetary processes, personnel, and resources of the States. Because systemic safeguards 

in the Tenth Amendment, Article I, and the Guarantee Clause protect the States from 

precisely the kind of federal incursion attempted with the Individual Mandate and 

corresponding mandates on the States, the Act cannot be upheld.48

III. THE INDIVIDUAL MANDATE VIOLATES DUE PROCESS

Count Two also states a valid due process claim against the federal government, 

because the Individual Mandate unconstitutionally deprives Plaintiffs of recognized 

liberty interests in the freedom to eschew entering into a contract, to direct matters 

concerning dependent children, and to make decisions regarding the acquisition and use 

 

48 The Ninth Amendment complements recent cases recognizing limits on federal power, 

and itself calls into question the constitutionality of the Individual Mandate and other 

ACA provisions. The Supreme Court has recognized that the Ninth Amendment 

“unambiguously refer[s] to individual rights.” District of Columbia v. Heller, 128 S. Ct. 

2783, 2790 (2008). Here, the mandate clearly denies or disparages individual rights 

retained by the people, including their right to self-government through the States. The 

Guarantee Clause further complements the “dual sovereignty” in our constitutional 

system by directing the federal government to “guarantee to every State in this Union a 

Republican Form of Government.” U.S. Const., art. IV, § 4. This guarantee operates 

alongside the Constitution‟s principle of federalism to preserve the States and their 

independence from the federal government. Each State “is entitled to order the processes 

of its own governance.” Alden v. Maine, 527 U.S. 706, 752 (1999). “Indeed, having the 

power to make decisions and to set policy is what gives the State its sovereign nature.” 

FERC v. Mississippi, 456 U.S. 742, 761 (1982). While the question of whether 

Guarantee Clause claims are justiciable was briefly noted in New York, 505 U.S. at 185, 

the Supreme Court nevertheless proceeded to analyze the challenged federal legislation 

under the clause, concluding that the clause was not violated there because “Congress 

offers the States a legitimate choice rather than issuing an unavoidable command.” Id. 

The same cannot be said here of the ACA.

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of medical services. See, e.g., Washington v. Glucksberg, 521 U.S. 702, 720 (1997);

Cruzan v. Dir., Mo. Dep‟t of Health, 497 U.S. 261 (1990); Pierce v. Soc‟y of Sisters, 268 

U.S. 510 (1925); Meyer v. Nebraska, 262 U.S. 390, 399 (1923).

Congressional imposition of the Individual Mandate is an extraordinary and 

unprecedented exercise of power beyond Congress‟s authority to act, as shown above. 

Defendants cite no case, and Plaintiffs have found none, where Congress under the 

Commerce Clause has purported to require virtually all Americans to have or contract for 

any particular good or service simply because they live in the United States.49

Defendants miss the mark in asserting that the Amended Complaint does not 

sufficiently define the due process interests at stake here. Def. Mem. 52. Their cited 

authorities do not address recognized liberty interests on a motion to dismiss, but instead 

analyze the merits of whether a new fundamental right or a new application of an existing 

such right should be recognized. As the Eleventh Circuit explained in Williams v. 

Alabama, 378 F.3d 1232, 1239 (11th Cir. 2004), that limited sort of analysis “„must begin 

with a careful description of the asserted right[,]‟” followed by consideration of whether 

such a right “is one of „those fundamental rights and liberties which are, objectively, 

deeply rooted in this Nation‟s history and tradition, and implicit in the concept of ordered 

liberty.‟” Id. (citations omitted). Plaintiffs here have alleged Due Process violations 

arising from long-recognized interests. Am. Compl. ¶ 77 (alleging the Act to require, 

 

49 Indeed, Anglo-American common law (where the Court must look to determine the 

nature and scope of protected liberty interests) always has disfavored imposition of 

affirmative obligations absent some duty either willingly undertaken or properly inferred. 

See, e.g., Hasenfus v. LaJeunesse, 175 F.3d 68, 71 (1st Cir. 1999) (“Under common law, 

inaction rarely gives rise to liability unless some special duty of care exists.”). 

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under pain of penalty, that Individual Plaintiffs and NFIB‟s members obtain and maintain 

a federally-defined level of healthcare insurance for themselves and their dependents).

These interests are not diminished by West Coast Hotel v. Parrish, 300 U.S. 379 

(1937), and its progeny, also relied on by Defendants. Def. Mem. 53-54. Those cases 

recognize that the terms on which entities and individuals may contract are subject to 

regulation in appropriate circumstances, but do not speak to the question of whether 

Congress can compel Americans to buy something in the first instance. Williams v. 

Morgan, 478 F.3d 1316 (11th Cir. 2007), and Vesta Fire Ins. Corp. v. Florida, 141 F.3d 

1427 (11th Cir. 1998), are similarly inapposite. Like Usury v. Turner Elkhorn Mining 

Co., 428 U.S. 1 (1976), they considered regulation of economic activity of those already 

engaged in the marketplace, per their freely-made choices.

50

 For these reasons, the 

Amended Complaint sufficiently alleges a violation of the liberty guaranteed against 

federal encroachment by the Fifth Amendment‟s Due Process Clause.

IV. THE ACT’S SWEEPING CHANGES TO MEDICAID AND ADDED 

BURDENS ON PLAINTIFF STATES ARE UNCONSTITUTIONAL

The ACA shifts billions of dollars in costs, mandates, and responsibilities to the 

States, coerces and commandeers their resources, and renders them arms of the federal 

 

50 Significantly, Parrish, Williams, and Vesta Fire Ins. Corp. all involved the exercise of 

State police powers, which are broader than the federal commerce power. Defendants‟ 

reliance on Jacobson v. Massachusetts is similarly misplaced. In that case, the Supreme 

Court considered whether a State could require adult residents to be vaccinated against 

smallpox. It upheld the law, but only as an exercise of Massachusetts‟s “police power – a 

power which the State did not surrender when becoming a member of the Union” and 

which includes the power to “protect the public health and the public safety.” Jacobson, 

197 U.S. at 24-25. This, of course, is precisely the power the Constitution denies to 

Congress, and the power Congress unlawfully has purported to exercise here.

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government, in violation of Congress‟s Article I powers, the Ninth and Tenth 

Amendments, and the Constitution‟s federalist structure.

51

A. The Act Transforms Medicaid in Violation of States’ Sovereign Rights

The ACA transforms the historic federal-State Medicaid partnership and forces 

States to accept staggering new costs and obligations under the program.52

In seeking dismissal, Defendants argue that the federal government has changed 

Medicaid before, that it has the right to make whatever changes to Medicaid it wishes, 

and that Plaintiff States can drop out of Medicaid if they object. But Defendants‟ claim 

that the ACA is just business-as-usual when it comes to congressional alterations to 

Medicaid is demonstrably wrong. Prior Medicaid changes mainly addressed eligibility 

criteria to provide better and more extensive coverage for the needy. Those changes were 

within the original and foreseeable spirit of the Medicaid partnership. 

Defendants make much of the Supreme Court‟s statement in Harris v. McRae, 

448 U.S. 297 (1980), that “[a]lthough participation in the Medicaid program is entirely 

optional, once a State elects to participate, it must comply with the requirements of Title 

XIX.” Id. at 301. But obviously this statement, from three decades ago, was made in the 

 

51 Compare ACA § 1563 with Letter from Douglas Elmendorf, Director, CBO, to the 

Hon. Nancy Pelosi, Speaker, U.S. House of Reps. (Mar. 20, 2010) at 15, Table 4 (noting 

that the Act imposes “several” costly mandates, including a $20 billion increase in 

States‟ Medicaid spending).

52 The Amended Complaint describes: the federal-State Medicaid partnership prior to 

passage of the Act (¶¶ 39-41); the many ways that the Act alters that relationship and 

imposes new and substantial insurance-related requirements on the States (¶¶ 42-48); the 

Act‟s adverse impact on Plaintiffs, including on Plaintiff States‟ sovereignty and fiscs (¶¶

49-64); and the unavoidability of the Act‟s requirements and effects (¶¶ 65-68). These 

allegations support the claims in Counts Four, Five, and Six of the Amended Complaint.

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expectation of Medicaid continuing to be for the benefit of the poor and remaining 

“entirely optional.” In fact, the McRae Court expressed concern for States in 

circumstances where the partnership model is abandoned: “Title XIX was designed as a 

cooperative program of shared financial responsibility, not as a device for the Federal 

Government to compel a State to provide services that Congress itself is unwilling to 

fund.” Id. at 309 (emphasis added). 

The ACA undoes every critical characteristic of Medicaid identified in McRae. 

“The Medicaid program was created ... for the purpose of providing federal financial 

assistance to States that choose to reimburse certain costs of medical treatment for needy 

persons.” Id. at 301 (emphasis added). The Court further stated:

The Medicaid program ... is a cooperative endeavor in which the Federal 

Government provides financial assistance to participating States to aid 

them in furnishing health care to needy persons. ... The cornerstone of 

Medicaid is financial contribution by both the Federal Government and 

the participating State.

Id. at 308 (emphasis added). Where Medicaid was supposed to be a partnership, the Act 

now makes the States wholly subservient to congressional dictates. Where Medicaid was 

supposed to address healthcare needs of the poor, the Act now forces expansion of 

eligibility criteria to cover persons with incomes up to 33 percent above the poverty 

line.53 Where Medicaid was designed to aid the poor through the joint reimbursement of 

their healthcare expenses, the Act now requires that States (but not the federal 

government) be responsible for the provision of medical care, ACA § 2304, an open 

 

53 Actually, the correct figure is 38 percent above the poverty line, because of a five 

percent “income disregard” provision that expands Medicaid eligibility yet further 

beyond caring for the poor. HCERA § 1004(b).

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invitation to endless lawsuits, the costs of which cannot begin to be estimated. The 

projected incremental costs to the States will be at least $20 billion over the next few 

years, with those costs increasing greatly thereafter as the federal government reduces its 

proportional contribution. See Am. Compl. ¶ 56.

All of this is so utterly beyond the scope of Medicaid, as originally conceived and 

implemented, as to constitute not merely a change of degree, but a change of kind. The 

ACA transforms Medicaid into something completely different.

The Supreme Court underscored its concern over the federal government altering 

fundamental Medicaid parameters by itself quoting from a lower court opinion:

“The Medicaid program is one of federal and state cooperation in funding 

medical assistance; a complete withdrawal of the federal prop in the 

system with the intent to drop the total cost of providing the service upon 

the states, runs directly counter to the basic structure of the program and 

could seriously cripple a state‟s attempts to provide other necessary 

medical services embraced by its plan.”

McRae, 448 U.S. at 309 n.12 (emphasis added).

The ACA‟s regime alters the fundamental parameters of Medicaid and “seriously

cripples” the States by imposing a Hobson‟s Choice between: (1) accepting the ACA‟s 

transformed Medicaid program with its attendant obligations and costs that State budgets 

cannot afford; and (2) opting out of Medicaid and losing federal healthcare assistance for 

their neediest persons (as well as other Medicaid-linked federal funds), at a time when 

there is neither a programmatic substitute to provide care, nor an established transition 

process or a period for transferring this weighty responsibility completely to the States.

54

 

 

54 No federal statutory provision can be found, even in the ACA‟s 2,700 pages, to require 

the federal government to help States fund or transition to an independent State-run 

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Either way, the ACA‟s unconstitutional coercion puts Plaintiff States on a collision 

course with disaster through lost control over their sovereignty, budgets, and legislative 

agendas.

Congress may not use its financial clout to compel states to do its bidding. As the 

Supreme Court has stated:

Our decisions have recognized that in some circumstances the financial 

inducement offered by Congress might be so coercive as to pass the point 

at which “pressure turns into compulsion.” Steward Machine Co. v. 

Davis, [301 U.S. 548, 590 (1937)]. Here, however, Congress has directed 

only that a State desiring to establish a minimum drinking age lower than 

21 lose a relatively small percentage of certain federal highway funds.

South Dakota v. Dole, 483 U.S. at 211 (emphasis added). Similarly, in Steward Machine, 

the Court acknowledged that “the point at which pressure turns in to compulsion, and 

ceases to be inducement, would be a question of degree, at times, perhaps, of fact.” 301 

U.S. at 590. There, however, “the point had not been reached when Alabama made her 

choice. We cannot say that she was acting, not of her unfettered will, but under the strain 

of a persuasion equivalent to undue influence....” Id. See also New York v. United 

States, 505 U.S. at 166 (“Our cases have identified a variety of methods, short of outright 

coercion, by which Congress may urge a State to adopt a legislative program consistent 

with federal methods.”) (emphasis added). 

 

Medicaid-like program. Ironically, a State opting out of Medicaid still would be subject 

to the ACA‟s other coercive insurance requirements (discussed below), which require 

States to support and provide healthcare insurance benefits to comparatively high-income 

persons not qualifying for Medicaid. Thus, the net effect of a State dropping out of 

Medicaid could be the loss of massive federal funding for its neediest residents, while 

federal and coerced State governments would continue to assist persons not in poverty.

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The “point at which pressure turns into coercion” plainly has been reached here 

by enactment of the ACA. In stark contrast from the subsidies at stake in Dole – a mere 5 

percent of certain federal highway funds, which the Court characterized as “relatively 

mild encouragement to the States to enact higher minimum drinking ages[,]” 483 U.S. at 

211 – “Medicaid is the single largest Federal grant-in-aid program to the States, 

accounting for over 40 percent of all Federal grants to States.” Bipartisan Comm‟n on 

the Medicaid Act of 2005, H.R. 985, 109th Cong. § 2(13) (2005). Taking Florida as an 

example, 26 percent of its budget presently is devoted to Medicaid outlays. Am. Compl. 

¶ 51. In recent years, Florida on average has paid 44.55 percent of total Medicaid 

spending under its program, with the federal government contributing 55.45 percent. Id.

¶ 52. For Florida to establish its own Medicaid program offering the same level of 

benefits that 2.7 million participants now receive, Florida‟s outlays would have to be 

more than doubled, to the point of consuming more than 58 percent of its budget.

55

The Hobson‟s Choice “offered” by Congress inflicts a “strain” on Plaintiff States‟ 

sovereignty and fiscs that is “equivalent to undue influence.” The Act‟s coercion and 

impact on State sovereignty violate Article I and the Ninth and Tenth Amendments, as 

alleged in Count Four.

56

 

55 In the meantime, federal funds taken via taxation of Florida‟s people and businesses –

funds that used to flow back to Florida from Washington, D.C. – would be diverted to 

States that have agreed, in violation of constitutional principles, to surrender their 

sovereignty. See New York v. United States, 505 U.S. at 182 (a State cannot 

constitutionally give away its sovereignty, or agree to the enlargement of Congress‟s 

powers beyond those enumerated in the Constitution).

56 Indeed, the ACA‟s effects are so great as to warrant invocation of the Guarantee 

Clause. See supra, note 48. 

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B. The ACA Compels States To Administer and Enforce Federal 

Insurance-Related Programs in Violation of the Constitution’s System 

of Dual Sovereignty

The ACA clearly violates the Constitution‟s system of dual sovereignty by, inter 

alia, directing the States to establish critical elements, and bear regulatory burdens, of a 

new federal exchange and insurance coverage program. Because the States retain an 

inviolable sovereignty, “the Constitution has never been understood to confer upon 

Congress the ability to require the States to govern according to Congress‟ instructions.” 

New York, 505 U.S. at 162 (citing Coyle v. Smith, 221 U.S. 559, 565 (1911)). Congress 

may not simply commandeer State processes by directly compelling them to enforce a 

federal regulatory scheme. Id. at 161. See also Printz, 521 U.S. at 935 (“The Federal 

Government may neither issue directives requiring the States to address particular 

problems, nor command the State‟s officers, or those of their political subdivisions, to 

administer or enforce a federal regulatory program. ... [S]uch commands are 

fundamentally incompatible with our constitutional system of dual sovereignty.”). The 

federal government must accept the “full regulatory burden” of its programs, Hodel v. Va. 

Surface Mining & Reclamation Ass‟n, 452 U.S. 264, 288 (1981), and allow States and 

their officers to “remain free to reject” a delegation of federal authority, Atlanta Gas & 

Light Co. v. U.S. Dep‟t of Energy, 666 F.2d 1359, 1369 (11th Cir. 1982).

Defendants acknowledge these principles, Def. Mem. 17-19, but ignore numerous 

ACA provisions that conscript and coerce States into carrying out critical elements of the 

insurance exchange program. First, States must, to ensure that exchanges can survive in 

the Act‟s early years, establish reinsurance entities not later than January 1, 2014. ACA § 

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1341 (a)(2) & (c). The exchanges depend on the States and these entities, during the very 

time that they face the “greatest” risk, to stabilize insurance premiums in the individual 

and small-group markets. Id. § 1341(c)(1)(A). States are not free to reject this federal 

mandate, but have discretion only to set up more than one such entity if they wish. Id. § 

1341(c)(2). In conjunction with this requirement, the Act mandates that States must 

conform State programs “to the extent necessary to carry out the reinsurance program.” 

Id. § 1341(d). By requiring States both to assist in the Act‟s enforcement and to modify 

their own laws and programs, this provision violates the Constitution. 

Second, the Act requires that States work “in conjunction with” the HHS 

Secretary to develop an insurance premium review process for insurers outside and inside 

the exchanges. ACA § 1003. This annual review process must be established for the 

2010 plan year and continue into the future. Insurers will have to justify unreasonable 

premium increase proposals in filings with the States, and the States must continually 

“monitor premium increases of health insurance coverage offered through an Exchange 

and outside of an Exchange.” Id. This provision gives States no “opt-out” discretion, but 

unlawfully makes “use [of] state regulatory machinery to advance federal goals” in 

violation of States‟ sovereignty. FERC v. Mississippi, 456 U.S. 742, 759 (1982).

Third, the Act directs States to establish “a secure electronic interface allowing an 

exchange of data” between the exchanges and other health subsidy programs. ACA § 

1413(c). Here, again, the Act conscripts States in support of federal programmatic goals 

– in this case an e-system that is “compatible with [a federally-established system] for 

data verification under section 1411(c)(4)” – as if the States were arms of the federal 

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government or (unpaid) government contractors. This treatment squarely violates 

constitutional commandeering principles which require the federal government to accept 

the “full regulatory burden” of its programs. Hodel, 452 U.S. at 288.

Moreover, the ACA links State exchange participation with compliance 

requirements in other federal programs so as to give States no real choice but to establish 

an exchange. For instance, section 2101(b) mandates that States establish an exchange 

where Children‟s Health Insurance Program resources prove insufficient. ACA § 

2101(b) (amending Social Security Act § 2105(d)(3)). This provision relies on States not 

only to ensure coverage for children, but to do so through a State-established, section 

1311 exchange. Similarly, the Act conditions State relief from new strict Medicaid 

parameters on whether a State establishes a section 1311 exchange. ACA § 2001(b) 

(inserting “(gg) Maintenance of Effort” requirements into Social Security Act § 1902). 

Finally, the Act also holds States responsible for exchange compliance without 

regard for a State‟s section 1321 election to decline to establish and operate an exchange: 

If the Secretary determines that an Exchange or a State has engaged in 

serious misconduct with respect to compliance with the requirements of, 

or carrying out of activities required under, this title, the Secretary may 

rescind from payments otherwise due to such State involved under this or 

any other Act administered by the Secretary an amount not to exceed 1 

percent of such payments per year until corrective actions are taken by the 

State that are determined to be adequate by the Secretary. 

ACA § 1313(a)(4) (emphasis added). This provision broadly subjects States to penalties, 

irrespective of their election to establish an exchange or other actions, if an exchange is 

noncompliant with the Act. As such, States have no practical choice but to operate and 

oversee the exchanges in order to safeguard their federal funding in unrelated programs.

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Taken together, the plain language of these provisions renders the section 1321 

“election” illusory. Because the Act requires States to establish a section 1311 exchange 

or at least to bear regulatory burdens of the federal insurance exchange program, Count 

Five of the Amended Complaint states a valid claim, consistent with the constitutional 

principles enunciated in New York and Printz.

C. The Act Unconstitutionally Interferes with the States’ Sovereignty 

With Respect to State Employees and Officials

Plaintiff States also state a claim for relief in Count Six, which challenges the 

“employer mandate” portions of the ACA, specifically sections 1511, 1513, and 9001 as 

violative of Congress‟s commerce power and the Ninth and Tenth Amendments.

As alleged, the ACA harms States by forcing them to offer federally-prescribed 

benefits, without regard for current State practice, policy preferences, or financial 

constraints. First, States must immediately expand benefits offered to employees within 

their State group insurance plans – presumably including governors, judges, legislators 

and staff, department secretaries, and other state officers. ACA § 1001.

57 Second, States 

must by 2014 enroll automatically any other employees working 30 or more hours a week 

into these expanded State insurance plans and pay applicable taxes and penalties. ACA 

 

57 By September 23, 2010, State group plans, including grandfathered plans (HCERA § 

2301), must comply with new requirements relating to: pre-existing conditions (ACA § 

1201 (inserting § 2704 into the Public Health Service Act (“PHSA”)); exclusions for 

excessive waiting periods (ACA § 1201 (PHSA § 2708)); lifetime and annual policy 

limits (ACA § 1001 (PHSA § 2711)); prohibition on rescission of coverage (ACA § 1001 

(PHSA §2712)); dependent coverage (ACA § 1001 (PHSA § 2714)); and reporting 

requirements (ACA § 1001 (PHSA § 2718)).

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§§ 1511, 1513; Am. Compl. ¶¶ 48, 57, 58, 89-90. These mandates violate State 

sovereignty and consume State resources. Id.58

Moreover, even if States do offer coverage to this broader set of employees, the 

Act will penalize them for each State employee who opts for other federally-subsidized

coverage. Id. Also, ACA section 9001 taxes States if they give “high cost” benefits that 

exceed a federal threshold. Am. Compl. ¶¶ 48, 58, 89-90. Count Four states a valid and 

ripe claim because these employer mandates impose immediate and expensive 

requirements on the States that will continue and increase.

1. The Employer Mandate Regime Violates the Commerce 

Clause and the Tenth Amendment

The employer mandate is a blatant attempt by Congress to commandeer the 

legislative processes of the States, compelling them to enact and support a federal 

program in clear violation of the Tenth Amendment. See New York v. United States. 

There, the Supreme Court held that Congress had no power to compel States to subsidize 

producers of radioactive waste by forcing them either to accept ownership of that waste 

or to become liable for damages suffered by the producers as a result of the States‟ failure 

to do so. New York, 505 U.S. at 174-76. The point, as the Supreme Court was at pains to 

 

58 Contrary to Defendants‟ assertion, Florida does not cover or offer to cover all full-time 

equivalent employees in a healthcare insurance plan as required by the Act, nor has it 

previously offered all of the expanded benefits required by the Act. Am. Compl. ¶¶ 48, 

57, 58. As noted above, by law Florida excludes from participation thousands of OPS 

employees, Fla. Stat. § 110.123(2)(c) & (f), whom Florida now will have to enroll in its 

plan or face penalties up to $240 million annually, ACA § 1513(a) (adding 26 U.S.C. § 

4980H); HCERA § 1003(b). Furthermore, the Anti-Injunction Act does not foreclose this 

claim for the reasons noted in Part I.E. above.

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make, is that Congress may not usurp the sovereignty of the States by compelling them to 

enact, enforce, or administer a federal regulatory program. Id. at 176, 188.

The employer mandate is not, as Defendants claim, merely a regulatory program 

addressing the terms and conditions of employment, no different from the programs at 

issue in Reno v. Condon, 528 U.S. 141 (2000), and South Carolina v. Baker, 485 U.S. 

505 (1988). In Reno and Baker, the States were required to do little more than obey the 

negative commands of federal law; in the former, not to sell or disclose certain private 

information; in the latter, not to issue unregistered bonds. As the Court observed, “[a]ny 

federal regulation demands compliance.” Reno, 528 U.S. at 150 (quoting Baker, 485 

U.S. at 514). That the States must be cognizant of and comply with federal law in 

numerous other contexts is not the issue here.

The Act compels States to provide extensive new benefits to State officers and 

employees, or to pay substantial penalties. This is exactly the kind of conscription of 

State governments and resources prohibited by New York and Printz, 521 U.S. at 912 

(“We have held ... that state legislatures are not subject to federal direction.”) (citing 

New York).

59

 

59 In Baker, the Court noted: “That a State wishing to engage in a certain activity must 

take administrative and sometimes legislative action to comply with federal standards 

regulating that activity is a commonplace that presents no constitutional defect.” 485 

U.S. at 514-515. However, employing State officers and others to carry out essential 

government functions is not an “activity” that States may wish to undertake, or not. That 

Congress may decree the basic terms of the employment relationship with State officers 

and employees and usurp the States‟ authority over their budgets and resources goes far 

beyond what was approved in Baker and Reno.

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Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 (1985), 

cannot save these provisions. In New York, the Supreme Court identified Garcia as an 

example of the “unsteady path” of its Tenth Amendment jurisprudence. 505 U.S. at 160. 

The New York Court found no reason to revisit Garcia because Congress had not 

“subjected a State to the same legislation applicable to private parties[,]” id., but made

clear that Congress may not impair States‟ sovereignty by forcing a choice between 

unconstitutional alternatives:

Congress has not held out the threat of exercising its spending power or its 

commerce power; it has instead held out the threat, should the States not 

regulate according to one federal instruction, of simply forcing the States 

to submit to another federal instruction. A choice between two 

unconstitutionally coercive regulatory techniques is no choice at all. 

Either way, “the Act commandeers the legislative processes of the States 

by directly compelling them to enact and enforce a federal regulatory 

program.”

New York, 505 U.S. at 176 (quoting Hodel, 452 U.S. at 288).60

Here, commanding the States to provide the mandated employee insurance 

benefits or pay penalties is logically indistinguishable from the choice found wanting in 

New York. Either way, State authority to define the conditions of its officeholders and 

employees and to control appropriations has been usurped. Congress may not compel the 

States to provide employer benefits on pain of penalty simply because a similar 

obligation has been imposed upon select, private employers. “The alleged diminution in 

 

60 The ACA itself is proof positive that Garcia‟s underlying assumption (469 U.S. at 555-

56) – that the political process alone will protect State sovereignty – is no longer tenable, 

if it ever was. Here, Congress‟s interference in States‟ relations with their officers and 

employees is a far cry from the mere regulation of employees‟ hours and wages.

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state authority over its own affairs is not any less because the federal mandate restricts 

the activities of private parties.” New York, 505 U.S. at 202 (White, J., dissenting).

2. The Employer Mandates Discriminate Against States and 

Violate the Inter-Governmental-Tax-Immunity Doctrine

The Act‟s employer mandate penalty regime also levies discriminatory penalties 

or taxes against the States qua States. As noted, States that do not provide benefits to all 

employees qualifying under the Act will pay an exorbitant annual penalty, as will States 

that give “high cost” benefits that exceed a federally-defined threshold, and States will be 

penalized if State employees enroll in federally-subsidized plans instead of offered State 

plans.

These exactions substantially interfere with essential functions of State 

government in violation of the inter-governmental-tax-immunity doctrine (“ITID”). The 

Court has long recognized that the Constitution‟s federal structure forbids the federal 

government from imposing such costs on States as States: the very nature of our system 

of dual sovereign governments impliedly prohibits the federal government from so 

burdening the instrumentalities of a State government. See Metcalf & Eddy v. Mitchell, 

269 U.S. 514, 521 (1926); see also McCulloch v. Maryland, 17 U.S. 316, 431 (1819) 

(warning that the “the power to tax involves the power to destroy”) (Marshall, C.J.).

Although the exact contours of the ITID are not firmly established, the Supreme 

Court made clear in New York that States enjoy immunity from federal taxation that is 

discriminatory or interferes with the essential functions of State government and State 

sovereignty. 505 U.S. at 582, 587-88, 590-97.

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Here, the Act‟s employer penalty regime discriminates by penalizing States more 

harshly than other employers. States not only must pay penalties for unenrolled 

employees, but, unlike private employers, must assume costs and responsibilities related 

to operating the very exchanges from which non-enrolled employees would seek 

coverage (see Count Five discussion above). Also, the regime prefers federal employees 

by using the most popular federal employee healthcare plan as a baseline for calculating 

the healthcare cost adjustment percentage from which taxes will be determined for the socalled “high cost” plans. HCERA § 1401(a)(2)(C). Moreover, unlike with States, the 

ACA substantially excuses the federal legislature from covering all employees within an 

employer plan and, thus, from coverage-related penalties. ACA § 1312(d)(3)(D) 

(exempting Members of Congress and staff and requiring that they obtain coverage 

through an exchange). Furthermore, the regime‟s penalties impact States differently from 

private employers, because States lack the same flexibility to meet increased labor costs 

by raising product and service prices or by altering employee relationships. Unlike 

private employers, States must retain certain officials and employees to carry out 

essential obligations under law. 

In addition, the regime unduly influences and interferes with State relationships 

with officials and employees, whose employment is essential to operating a sovereign 

government. Congress‟s use of taxes to assume authority over such relationships 

effectively permits the federal government to co-opt the States‟ ability to govern 

themselves, to control their budgets, and to allocate their scarce resources among 

competing sovereign interests. Am. Compl. ¶¶ 48, 57, 58, 89-90; cf. Bacon v. City of 

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Richmond, 475 F.3d 633, 641 (4th Cir. 2007) (noting a State‟s “power to structure its 

internal government is among those reserved ... by the Tenth Amendment”).61

Because the Act‟s employer penalty and tax regime clearly discriminates against 

the States and violates the ITID‟s purpose “to protect each sovereign‟s governmental 

operations from undue interference by the other,” these provisions cannot stand. Davis v. 

Mich. Dep‟t of Treasury, 489 U.S. 803, 814 (1989).

Conclusion

For all the reasons stated above, Defendants‟ motion should be denied in its 

entirety.

Respectfully submitted,

BILL MCCOLLUM

ATTORNEY GENERAL OF FLORIDA

/s/ Blaine H. Winship

Blaine H. Winship (Fla. Bar No. 0356913)

Assistant Attorney General

Joseph W. Jacquot (Fla. Bar No. 189715)

(admission pending)

Deputy Attorney General

Scott D. Makar (Fla. Bar No. 709697)

Solicitor General

Louis F. Hubener (Fla. Bar No. 0140084)

Timothy D. Osterhaus (Fla. Bar No.

0133728)

Deputy Solicitors General

Office of the Attorney General of Florida

The Capitol, Suite PL-01

Tallahassee, Florida 32399-1050

 

61 The regime is not saved merely because a State may pay prescribed benefits and 

thereby avoid taxes. “The United States cannot convert an unconstitutional tax into a 

constitutional one simply by making the tax conditional. Whether Congress could have 

imposed the condition by direct regulation is irrelevant; Congress cannot employ 

unconstitutional means to reach a constitutional end.” Baker, 485 U.S. at 516. 

Case 3:10-cv-00091-RV-EMT Document 68 Filed 08/06/10 Page 79 of 81
61

Telephone: (850) 414-3300

Facsimile: (850) 488-4872

Email: blaine.winship@myfloridalegal.com

Attorneys for Plaintiff States

David B. Rivkin (D.C. Bar No. 394446)

Lee A. Casey (D.C. Bar No. 447443)

Baker & Hostetler LLP

1050 Connecticut Avenue, N.W., Ste. 1100

Washington, DC 20036

Telephone: (202) 861-1731

Facsimile: (202) 861-1783

Attorneys for Plaintiff States, National

Federation of Independent Business, Mary

Brown, and Kaj Ahlburg

Katherine J. Spohn

Special Counsel to the Attorney General

Office of the Attorney General of Nebraska

2115 State Capitol Building

Lincoln, Nebraska 68508

Telephone: (402) 471-2834

Facsimile: (402) 471-1929

Email: katie.spohn@nebraska.gov

Attorneys for Plaintiff the State of Nebraska

Karen R. Harned William J. Cobb III

Executive Director Special Assistant and Senior Counsel

National Federation of Independent to the Attorney General

Business Office of the Attorney General of Texas

Small Business Legal Center P.O. Box 12548, Capitol Station

1201 F Street, N.W., Suite 200 Austin, Texas 78711-2548

Washington, DC 20004 Telephone: (512) 475-0131

Telephone: (202) 314-2061 Facsimile: (512) 936-0545

Facsimile: (202) 554-5572 Email: bill.cobb@oag.state.tx.us

Of counsel for Plaintiff National Attorneys for Plaintiff the State of Texas

Federation of Independent Business

Case 3:10-cv-00091-RV-EMT Document 68 Filed 08/06/10 Page 80 of 81
62

CERTIFICATE OF SERVICE

I hereby certify that, on this 6th day of August, 2010, a copy of the foregoing 

Memorandum in Opposition to Defendants‟ Motion to Dismiss was served on counsel of 

record for all Defendants through the Court‟s Notice of Electronic Filing system.

/s/ Blaine H. Winship

Blaine H. Winship

Assistant Attorney General

Office of the Attorney General of Florida

Case 3:10-cv-00091-RV-EMT Document 68 Filed 08/06/10 Page 81 of 81