Court Opinion

ID: 4577643
Source: CourtListenerOpinion
Date Created: 2020-10-16 00:00:26.682403+00
Date Added: 2024-06-11T13:36:48.274204
License: Public Domain

Case: 18-20440      Document: 00515603503          Page: 1     Date Filed: 10/15/2020

            United States Court of Appeals
                 for the Fifth Circuit                                   United States Court of Appeals
                                                                                  Fifth Circuit

                                                                                FILED
                                                                         October 15, 2020
                                    No. 18-20440                           Lyle W. Cayce
                                                                                Clerk

   John J. Dierlam,

                                                              Plaintiff—Appellant,

                                        versus

   Donald J. Trump, President of the United States, in his official capacity
   as President of the United States; United States Department of
   Health and Human Services; Alex M. Azar, II, Secretary,
   U.S. Department of Health and Human Services, in his official capacity as the
   Secretary of the U.S. Department of Health and Human Services; United
   States Department of Treasury; Steven T. Mnuchin,
   Secretary, U.S. Department of Treasury, in his official capacity as the Secretary
   of the U.S. Department of the Treasury; United States Department
   of Labor; Eugene Scalia, Secretary, U.S. Department of Labor, in his
   official capacity as the Secretary of the U.S. Department of Labor,

                                                           Defendants—Appellees.

                   Appeal from the United States District Court
                       for the Southern District of Texas
                             USDC No. 4:16-CV-307

   Before Clement, Haynes, and Willett, Circuit Judges.
   Don R. Willett, Circuit Judge:
Case: 18-20440           Document: 00515603503             Page: 2       Date Filed: 10/15/2020

                                            No. 18-20440

           The Affordable Care Act, now ten years old, is “the most challenged
   statute in American history.” 1 The ACA’s far-reaching scope has sparked
   more than 2,000 legal challenges, including a smattering of suits filed by
   individual plaintiffs.2 Over this decade of litigation, no pro se challenge can
   likely match the breadth of John J. Dierlam’s, which seeks retrospective and
   prospective relief for myriad alleged violations of the United States
   Constitution and the Religious Freedom Restoration Act.
           But there are jurisdictional issues concerning both the forward- and
   backward-looking relief Dierlam seeks. So, as explained below, we decline to
   reach the merits of his claims.
           First, as Dierlam’s case was progressing, the ACA was evolving. A
   year after Dierlam filed his lawsuit, Congress passed and President Donald J.
   Trump signed the Tax Cut and Jobs Act, which reduced the shared-
   responsibility payment (imposed on individuals who fail to purchase health
   insurance) to $0. 3 That same year, the Department of Health and Human
   Services created new exemptions to the contraceptive mandate, including an
   exemption for individuals like Dierlam. 4 These exemptions were enjoined
   until the Supreme Court’s recent decision in Little Sisters of the Poor Saints
   Peter and Paul Home v. Pennsylvania. 5 Given the altered legal landscape, and
   the potential effects on Dierlam’s request for prospective relief, a mootness
   analysis must precede the merits.

           1
            Abbe R. Gluck et. al., The Affordable Care Act’s Litigation Decade, 108 Geo. L.J.
   1471, 1472 (2020).
           2
               Id. at 1521–22.
           3
               See Pub. L. No. 115-97, § 11081, 131 Stat. 2054, 2092 (Dec. 22, 2017).
           4
               82 Fed. Reg. 47792-01 (Oct. 13, 2017).
           5
               140 S. Ct. 2367 (2020).

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                                           No. 18-20440

          Second, the parties agree that the district court incorrectly dismissed
   Dierlam’s claim for retrospective relief (a refund of his shared-responsibility
   payments). The Government argues that, even though Dierlam’s refund
   request is jurisdictionally deficient, he should be allowed to amend his
   complaint to cure any jurisdictional deficiencies.
          Our holding: We vacate the district court’s dismissal of Dierlam’s
   claims and remand so that the district court can conduct a mootness analysis
   in the first instance and allow Dierlam to amend his complaint.
                                                 I
          To contextualize Dierlam’s claims, we start with an explanation of the
   ACA’s serpentine history, emphasizing the ways in which the individual and
   contraceptive mandates have changed over the course of this lawsuit. Then
   we discuss the procedural history of Dierlam’s claims.
                                                 A
          In 2010, President Barack Obama signed the ACA into law. 6 As
   originally enacted, the ACA’s individual mandate required an “applicable
   individual” 7 to maintain “minimum essential coverage” (basic health
   insurance). 8 If an individual failed to comply, and didn’t receive an
   exemption, he had to make a “shared responsibility payment” (pay a
   penalty) to the IRS. 9

          6
              See Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010).
          7
              26 U.S.C. § 5000A(d)(2)(A), (B).
          8
              See id. § 5000A(f)(1).
          9
            See id. § 5000A(b); NFIB v. Sebelius, 567 U.S. 519, 570 (2012) (holding that
   Congress “had the power to impose the exaction in § 5000A under the taxing power”).

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                                                No. 18-20440

            In 2017, Congress passed and President Trump signed into law the
   TCJA,           which      eliminated        the     shared-responsibility    payment      for
   noncompliance with the individual mandate. 10 But the TCJA did not alter
   the existence of the individual mandate—under the statute, an “applicable
   individual” must still “maintain minimum essential coverage.” 11
            The changes to the contraceptive mandate are more complex,
   involving “six years of protracted litigation.” 12 The ACA requires health-
   insurance providers to cover certain preventive services without “any cost
   sharing requirements.” 13 For women, coverage must include “preventive
   care and screenings . . . as provided for in comprehensive guidelines
   supported by” HHS. 14 The statute says nothing more, and it doesn’t
   mention contraceptives. Under the statute’s direction, though, HHS issued
   guidelines requiring coverage of all FDA-approved contraceptives for plan
   years beginning on or after August 1, 2012. 15 The guidelines provided an
   exemption for religious employers, such as churches, and an accommodation
   for religious nonprofits. 16
            After several changes in the exemption and accommodation process,
   HHS and the Departments of Labor and the Treasury promulgated two
   interim final rules in 2017. “The first IFR significantly broadened the

            10
                 See Pub. L. No. 115-97, § 11081, 131 Stat. 2054, 2092 (Dec. 22, 2017).
            11
                 26 U.S.C. § 5000A(a).
            12
                 Little Sisters of the Poor, 140 S. Ct. at 2373.
            13
                 42 U.S.C. § 300gg-13(a).
            14
                 Id. § 300gg-13(a)(4).
            15
                 See 77 Fed. Reg. 8725, 8725 (Feb. 15, 2012); 76 Fed. Reg. 46,621, 46,623 (Aug. 3,
   2011).
            16
                 Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682, 698–99 (2014).

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                                               No. 18-20440

   definition of an exempt religious employer.” 17 And “[t]he second IFR
   created a similar ‘moral exemption’ for employers.” 18 Part of the second
   IFR also included an “individual exemption,” which allows “a willing plan
   sponsor” or “willing health insurance issuer” to offer a separate policy to
   individuals who object to some or all contraceptive services. 19 The individual
   exemption is completely dependent on an insurer’s willingness to provide a
   one-off plan that doesn’t cover contraceptives. 20 It “cannot be used to force
   a plan (or its sponsor) or an issuer to provide coverage omitting
   contraception.” 21
           When the Departments finalized the new exemptions, a district court
   enjoined them, and the Third Circuit affirmed the injunction. 22 The
   Supreme Court recently reversed that decision in Little Sisters of the Poor and
   remanded the case with instructions to dissolve the nationwide injunction. 23
           With this background in mind, we turn to the case before us.
                                                      B
           Dierlam is a devout Roman Catholic who opposes the use, funding,
   provision, and support of contraceptives. He believes that life begins at

           17
                Little Sisters of the Poor, 140 S. Ct. at 2377.
           18
                Id. at 2378.
           19
                82 Fed. Reg. at 47,812.
           20
                Id.
           21
                Id.
           22
              83 Fed. Reg. 57,536, 57,536 (Nov. 15, 2018) (final religious exemption); 83 Fed.
   Reg. 57,592 (Nov. 15, 2018) (final moral exemption); Pennsylvania v. President of the United
   States, 930 F.3d 543, 556 (3d Cir. 2019).
           23
             Little Sisters of the Poor, 140 S. Ct. at 2373 (holding that the ACA authorized
   HHS to exempt or accommodate employers’ religious or moral objections to providing no-
   cost contraceptive coverage).

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                                        No. 18-20440

   conception, and that “supporting [the practice of abortion, contraception,
   and sterilization] even indirectly” contradicts the teachings of the Catholic
   Church.
           In 2012, Dierlam was enrolled in his employer-provided health-
   insurance plan. But after learning about ACA-mandated changes to the
   plan’s coverage of contraceptives and “abortion services,” he dropped his
   insurance to avoid “support[ing] these services through payment of
   premiums and fees.” Dierlam then tried and failed to find alternative
   insurance plans consistent with his faith. So Dierlam went without insurance,
   paid the shared-responsibility payment in 2014 and 2015, and altered his diet
   to minimize the need for healthcare services.
           In 2016, Dierlam sued the Government pro se, bringing numerous and
   novel statutory and constitutional claims. 24 Dierlam seeks both retrospective
   relief (a refund of his shared-responsibility payments) and prospective relief
   (an injunction of the mandates, a declaration that the mandates are
   unconstitutional, and a simpler exemption process).
           The Government filed a 12(b)(6) motion to dismiss Dierlam’s claims.
   Focusing almost exclusively on the RFRA claims, the magistrate judge
   recommended granting the Government’s motion in its entirety. At the
   hearing on objections to the magistrate judge’s report, the court dismissed
   with prejudice all of Dierlam’s claims. Dierlam timely appealed.

           24
              Dierlam argues that the individual and contraceptive mandates violate RFRA.
   Dierlam also brings a claim under § 1502(c) of the ACA for failure to notify him of
   insurance exchanges available through the state. Finally, Dierlam raises numerous
   constitutional claims, arguing that the individual and contraceptive mandates violate the
   Establishment, Free Exercise, and Freedom of Association clauses of the First
   Amendment, the Due Process clause of the Fifth Amendment, and the Fourth and Ninth
   Amendments.

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                                            No. 18-20440

                                                  II
           We review Rule 12(b)(6) dismissals de novo. 25 But given the ACA’s
   recent and relevant changes, we must scrutinize our jurisdiction before we
   scrutinize the district court’s judgment. We review jurisdictional questions
   de novo. 26
           We first address our jurisdiction over Dierlam’s request for
   prospective relief then briefly turn to retrospective relief.
                                                  A
           Dierlam seeks various types of prospective relief—an injunction of the
   individual and contraceptive mandates, a declaration that the mandates are
   unconstitutional, and a simpler and expanded exemption process from the
   mandates. But under the TCJA, there is no longer a shared-responsibility
   payment for failing to maintain health insurance. 27 And the new HHS rules
   provide an exemption for individuals, like Dierlam, with moral objections to
   contraceptives. So we must ask whether these changes provided Dierlam
   with all of the prospective relief he seeks. 28 In other words, did these
   intervening changes moot Dierlam’s claims?
           The doctrine of mootness arises from Article III of the Constitution,
   which provides federal courts with jurisdiction over a matter only if there is
   a live “case” or “controversy.” 29 “Accordingly, to invoke the jurisdiction of

           25
                Moon v. City of El Paso, 906 F.3d 352, 357 (5th Cir. 2018).
           26
                In re Scruggs, 392 F.3d 124, 128 (5th Cir. 2004).
           27
                See Pub. L. No. 115-97, § 11081, 131 Stat. 2054, 2092 (Dec. 22, 2017).
           28
            Dailey v. Vought Aircraft Co., 141 F.3d 224, 227 (5th Cir. 1998) (“[I]f the facts
   suggest mootness,” then “a federal court is obligated to raise the issue.”).
           29
                DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006).

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                                           No. 18-20440

   a federal court, a litigant must have suffered, or be threatened with, an actual
   injury traceable to the defendant and likely to be redressed by a favorable
   judicial decision.” 30 This case-or-controversy requirement persists “through
   all stages of federal judicial proceedings.” 31
          If an intervening event renders the court unable to grant the litigant
   “any effectual relief whatever,” the case is moot. 32 But even when the
   “primary relief sought is no longer available,” “being able to imagine an
   alternative form of relief is all that’s required to keep a case alive.” 33 So “[a]s
   long as the parties have a concrete interest, however small, in the outcome of
   the litigation, the case is not moot.” 34
          Further, a case is not necessarily moot because it’s uncertain whether
   the court’s relief will have any practical impact on the plaintiff. “Courts often
   adjudicate disputes where the practical impact of any decision is not
   assured.” 35 For example, “the fact that a defendant is insolvent does not
   moot a claim for damages.” 36 And “[c]ourts also decide cases against foreign
   nations, whose choices to respect final rulings are not guaranteed.” 37

          30
               Chafin v. Chafin, 568 U.S. 165, 171–72 (2013) (cleaned up).
          31
               Id. at 172.
          32
               Calderon v. Moore, 518 U.S. 149, 150 (1996).
          33
              Univ. of Notre Dame v. Sebelius, 743 F.3d 547, 553 (7th Cir. 2014), judgment
   vacated sub nom. Univ. of Notre Dame v. Burwell, 575 U.S. 901 (2015).
          34
               Knox v. Serv. Emps. Int’l Union, Local 1000, 567 U.S. 298, 307–08 (2012).
          35
               Chafin, 568 U.S. at 175.
          36
               Id. at 175–76.
          37
               Id. at 176.

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           When conducting a mootness analysis, a court must not “confuse[]
   mootness with the merits.” 38 This means that a court analyzing mootness in
   the early stages of litigation need only ask whether the plaintiff’s requested
   relief is “so implausible that it may be disregarded on the question of
   jurisdiction.” 39 “[I]t is thus for lower courts at later stages of the litigation to
   decide whether [the plaintiff] is in fact entitled to the relief he seeks.” 40
           Ordinarily, when a case “has become moot on appeal,” the court
   should “vacate the judgment with directions to dismiss.” 41 But “in instances
   where the mootness is attributable to a change in the legal framework govern-
   ing the case, and where the plaintiff may have some residual claim under the
   new framework that was understandably not asserted previously,” we “va-
   cate the judgment and remand for further proceedings in which the parties
   may, if necessary, amend their pleadings or develop the record more
   fully.” 42
           Both the magistrate judge and district court addressed mootness, but
   only in part. The magistrate judge found that the latest HHS exemption to
   the contraceptive mandate mooted all of Dierlam’s claims for prospective re-
   lief. The magistrate judge first stated that the exemption applied to Dierlam,
   and thus “[t]he sole issue is whether [Dierlam] can obtain” healthcare cov-
   erage under the exemption. Taking judicial notice, sua sponte, of a “Catholic

           38
                Id. at 174.
           39
                Id. at 177.
           40
                Id.
           41
              N.Y. State Rifle & Pistol Ass’n, Inc. v. City of N.Y., 140 S. Ct. 1525, 1526 (2020)
   (citation omitted); see also Diffenderfer v. Cent. Baptist Church of Miami, Fla., Inc., 404 U.S.
   412 (1972) (remanding case to allow amendment of the pleadings after new statute altered
   terms of real estate tax exemption at issue).
           42
                N.Y. State Rifle & Pistol Ass’n, 140 S. Ct. at 1526 (citation omitted).

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                                              No. 18-20440

   health care sharing ministry” she found online, the magistrate judge con-
   cluded that Dierlam could “join the Catholic sharing ministry without violat-
   ing his beliefs.” Finally, the magistrate judge found that the new HHS ex-
   emption would cause “the health care marketplace” to “adapt . . . to provide
   insurance plans that do not cover contraceptive services.” At the time of the
   magistrate judge’s report, the HHS exemption was not a final rule.
         During the district court’s hearing on the magistrate judge’s report,
   the Government said it was no longer pursuing a mootness argument
   concerning the exemption (still in an interim state). But it maintained that
   Dierlam’s ability to find alternative insurance plans mooted his claims. The
   district court then raised the TCJA, which became law after the magistrate
   judge issued her report but before the hearing. The Government said the new
   statute mooted only claims based on the individual mandate’s shared-
   responsibility payment. From the bench, the district court held that the
   TCJA mooted Dierlam’s claims for prospective relief concerning the
   individual mandate. And then it dismissed the remainder of Dierlam’s claims
   with prejudice.
          On appeal, the Government continues to argue that the TCJA moots
   only Dierlam’s claims for prospective relief from the individual mandate. It
   only mentions the HHS exemption in a footnote, noting that the exemption
   was enjoined at the time. Dierlam argues that neither the TCJA nor the latest
   HHS exemption moot his claims. He asserts that, even though the TCJA
   reduced the shared-responsibility payment to $0, the mandate remains. And
   he asserts that the new exemption is “worthless.” After the parties
   completed their briefing, the Supreme Court dissolved the nationwide
   injunction of the relevant HHS exemption to the contraceptive mandate. 43

          43
               Little Sisters of the Poor, 140 S. Ct. at 2373.

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          In sum, the mootness arguments below and on appeal were made
   piecemeal because of the way the ACA was changing in real time. And the
   magistrate judge’s and district court’s partial mootness analyses were
   problematic. Thus, the mootness analyses so far have been incomplete and
   incorrect.
          First, it’s unclear what effect the district court thought the TCJA had
   on the mootness of Dierlam’s claims. At the hearing, the district court only
   said: “I think, prospectively, it seems to me that most recent legislation does
   take care of the problem.”
          Second, the magistrate judge’s conclusion about the insufficiency of
   Dierlam’s search for alternative health-insurance plans, including taking sua
   sponte judicial notice of a Catholic healthcare-sharing ministry, is irrelevant
   to the mootness determination. Dierlam says the sharing ministry is not a
   viable option for him. And he says that the magistrate judge’s conclusion
   about his search for insurance “is factually incorrect.” It is inappropriate to
   resolve these types of factual disputes at the pleadings stage to determine
   mootness. These are merits issues, not mootness issues.
          With the relevant legal standards explained above, we vacate and re-
   mand for the district court to conduct a thorough mootness analysis in the
   first instance. If necessary, the district court should allow the parties to
   amend their pleadings to address the intervening changes to the individual
   and contraceptive mandates.
                                         B
          We also vacate and remand Dierlam’s claim for retrospective relief in
   which he seeks a refund of his 2014 and 2015 shared-responsibility payments.
   The parties agree that the district court incorrectly dismissed Dierlam’s
   claim with prejudice, and the Government argues that Dierlam is entitled to
   amend his complaint to cure any jurisdictional deficiencies. Given the

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                                           No. 18-20440

   circumstances of this case, Dierlam should be allowed to amend his
   complaint. 44
                                                III
           For the reasons explained above, we VACATE the district court’s
   dismissal of Dierlam’s claims and REMAND for further proceedings
   consistent with this opinion and any ensuing precedents. If a party to this case
   later files a notice of appeal, the appeal should be assigned to the same
   panel. 45

           44
               While a court can dismiss a deficient pleading, it should provide “at least one
   opportunity to cure pleading deficiencies before dismissing a case, unless it is clear that . .
   . the plaintiffs advise the court that they are unwilling or unable to amend in a manner that
   will avoid dismissal.” Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d
   305, 329 (5th Cir. 2002) (emphasis added). For pro se plaintiffs, 12(b)(6) dismissals “are
   disfavored, [and] a court should grant a pro se party every reasonable opportunity to
   amend.” Hale v. King, 642 F.3d 492, 503 n.36 (5th Cir. 2011).
          Also, the Government states that Dierlam is seeking a refund for 2016. But
   Dierlam’s complaint only refers to payments made in 2014 and 2015. Even so, the
   Government is correct that Dierlam requested his 2015 refund in April 2016 and filed his
   amended complaint only three months later, which was too soon. The relevant statute, 26
   U.S.C. § 6532, states that a taxpayer seeking a refund cannot file a lawsuit until at least six
   months after filing a refund claim with the IRS.
           45
              See Constructora Subacuatica Diavaz, S.A. v. M/V Hiryu, 718 F.2d 690, 693 (5th
   Cir. 1983).

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