Is the So-Called Mandate Without Any Tax Consequences Unconstitutional? And If So, How Should a Court Remedy That? Part Three in a Series Examining Underexplored Issues in the California v. Texas Affordable Care Act Case

VIKRAM DAVID AMAR, EVAN CAMINKER, JASON MAZZONE

In this third of a series of columns examining underexplored issues in the California v. Texas case challenging the Affordable Care Act (ACA), Illinois law dean Vikram David Amar, Michigan Law dean emeritus Evan Caminker, and Illinois law professor Jason Mazzone consider whether the so-called individual mandate of the ACA, now without any tax consequences, is unconstitutional, as the challengers argue. The authors explain why, in their view, the challengers are incorrect, regardless of whether the word “shall” in the ACA is interpreted as obligatory or not.

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CX Reinsurance Co. Limited v. Johnson

Court: US Court of Appeals for the Fourth Circuit

Docket: 19-1516

Opinion Date: October 14, 2020

Judge: Niemeyer

Areas of Law: Civil Procedure

District of Maryland Local Rule 109 requires that any motion requesting attorneys’ fees be filed within 14 days of “entry of judgment,” parroting Federal Rule of Civil Procedure 54. The district court granted the plaintiff’s contested motion for voluntary dismissal of its complaint under Rule 41(a)(2), entering an order of dismissal, with direction to the Clerk “to close this case.” No “separate document” set out the order as a “judgment,” as required by Rule 58(a). The defendant filed a Rule 59(e) post-judgment motion three days later. The court denied that motion. The defendant filed a motion for attorney fees, 18 days after the entry of the dismissal order but 13 days after the court disposed of the Rule 59(e) motion. The court found the motion untimely, rejecting arguments that the Rule 59(e) motion extended the judgment date and that in disregarding the extension, the court rendered its Local Rule in conflict with Rule 54. The Fourth Circuit vacated. Rule 58(a)’s separate-document requirement was not satisfied, so the “entry of judgment” did not occur on the date that the court entered its dismissal order, which did not trigger the time for filing motions for attorneys fees under either Local Rule 109 or Federal Rule 54. The district court’s interpretation of its Local Rule with respect to a Rule 59(e) motion’s effect on the date of judgment was inconsistent with Rule 54, in violation of Rule 83 (requiring local rules to be “consistent with . . . federal statutes and rules”).

In Re: Huffines Retail Partners, LP

Court: US Court of Appeals for the Fifth Circuit

Docket: 20-10581

Opinion Date: October 9, 2020

Judges: Edith H. Jones, Stephen Andrew Higginson, Andrew S. Oldham

Areas of Law: Civil Procedure

The Fifth Circuit granted a petition for mandamus filed by HC Operating, LP. Purchasers filed two Notices of Lis Pendens, in Denton County and Dallas County real property records; sellers moved to expunge the Notices, followed by related pleadings, which were forwarded to a magistrate judge for recommendations; and the magistrate judge issued findings, conclusions and recommendations denying relief, and the district court accepted his recommendations. Consequently, the district court denied Motions to Expunge Lis Pendens Notices, and Motions to Cancel the notices. The court held that allowing the Purchasers to maintain the notices of lis pendens filed in this case was based on clear and indisputable errors of fact and law; the Sellers have no other adequate means of seeking redress than by issuance of this writ; and mandamus is "appropriate under the circumstances." In this case, the district court misread the governing acquisition documents, misapprehended Texas law regarding notices of lis pendens, misapplied the facts to the law, and therefore acquiesced in a gross abuse by Purchasers of state lis pendens law.

Fuerst v. Secretary of the Air Force

Court: US Court of Appeals for the Sixth Circuit

Docket: 19-4139

Opinion Date: October 14, 2020

Judge: Thapar

Areas of Law: Civil Procedure, Government & Administrative Law, Labor & Employment Law

Fuerst fell at a military base, which left her disabled. She returned to work part-time. The Air Force removed Fuerst from service after determining that her ability to work only part-time was affecting the office’s mission. The Department of Labor subsequently determined that Fuerst was no longer disabled. Fuerst applied to participate in a fast-track reemployment program for civil-service employees who were removed from service because of a disability but have recovered, 5 U.S.C. 8151(b). The Air Force did not place her on the priority reemployment list. Fuerst appealed to the Merit Systems Protection Board, which found that her removal was not improper or motivated by discrimination, but ordered the Air Force to rehire her. The Air Force offered Fuerst two jobs at her pay grade. Fuerst did not accept the offers. The Board ruled that the Air Force had complied. Fuerst appealed to a federal district court. The Sixth Circuit affirmed the dismissal of the claim for lack of subject matter jurisdiction. Employees must generally appeal Board decisions to the Federal Circuit. Fuerst’s case could not qualify as a “mixed case” within the district court’s jurisdiction; it was not an appeal of an agency's action, but a petition for enforcement, although Fuerst sought to enforce an order issued in a mixed case. In a mixed case, the Board decides "both the issue of discrimination and the appealable action[s].” When Fuerst petitioned for enforcement, the Board had decided those issues already. Fuerst had a chance to ask a district court to review those decisions but did not do so.

Memphis A. Philip Randolph Institute v. Hargett

Court: US Court of Appeals for the Sixth Circuit

Docket: 20-6046

Opinion Date: October 15, 2020

Judge: Gibbons

Areas of Law: Civil Procedure, Civil Rights, Constitutional Law, Election Law

Tennessee voters must apply to vote absentee. The county administrator of elections determines whether the voter has established eligibility to vote absentee, and compares the signature of the voter on the request with the signature on the voter’s registration record. Voters who qualify to vote absentee receive a ballot, an inner envelope and an outer envelope, and instructions. The inner envelope has an affidavit; the voter must verify that he is eligible to vote in the election. The ballot must be received no later than when the polls close. Upon receipt by mail of the absentee ballot, the administrator "shall open only the outer envelope and compare the voter’s signature on the [affidavit] with the voter’s signature" on the registration record. If the administrator determines the signatures do not match, the ballot is rejected; the voter is “immediately” notified in writing. Voters who are concerned that their absentee ballot might be rejected may cast a provisional ballot before being notified of a rejection. The Sixth Circuit affirmed the denial of a preliminary injunction to prohibit the enforcement of the signature verification procedures. The plaintiffs cannot cite with certainty or specification any past erroneous rejection of an absentee ballot; their speculative allegations of harm are insufficient to establish standing. The plaintiffs have not demonstrated that anyone whose ballot may be erroneously rejected will ultimately be unable to vote, either absentee or by provisional ballot; there is no evidence that anyone’s constitutional rights are likely to be infringed.

Mohlman v. Financial Industry Regulatory Authority

Court: US Court of Appeals for the Sixth Circuit

Docket: 20-3257

Opinion Date: October 14, 2020

Judge: Gilbert Stroud Merritt, Jr.

Areas of Law: Civil Procedure, Government & Administrative Law, Securities Law

Mohlman became a licensed securities professional in 2001. The Financial Industry Regulatory Authority, a not-for-profit member organization, regulates practice in the securities industry and enforces disciplinary actions against its members. In 2012, Mohlman had conversations with several individuals concerning WMA. Mohlman did not attempt to sell WMA investments and did not receive compensation from WMA. Mohlman learned in 2014 that WMA was a Ponzi scheme and immediately informed all persons who had invested in WMA. Mohlman appeared for testimony as part of FINRA’s investigation. Another day of testimony was scheduled but instead of appearing, Mohlman and his counsel signed a Letter of Acceptance, Waiver, and Consent, agreeing to a permanent ban from the securities industry. FINRA agreed to refrain from filing a formal complaint against him. Mohlman waived his procedural rights under FINRA’s Code of Procedure and the Securities Exchange Act, 15 U.S.C. 78a and agreed to “not take any position in any proceeding brought by or on behalf of FINRA, or to which FINRA is a party, that is inconsistent with any part of [the Letter].” FINRA accepted the Letter in 2015. In 2019, Mohlman filed suit, alleging that FINRA fraudulently avoided considering mitigating factors in administering the sanction. The Sixth Circuit affirmed the dismissal of the suit without addressing the merits. Mohlman failed to exhaust administrative remedies under the Exchange Act by appealing to the National Adjudicatory Council and petitioning the SEC for review.

Warsaw Orthopedic, Inc. v. Sasso

Court: US Court of Appeals for the Federal Circuit

Docket: 19-1583

Opinion Date: October 14, 2020

Judge: Pauline Newman

Areas of Law: Civil Procedure, Intellectual Property, Patents

Under the 1999 Agreement, Medtronic purchased Dr. Sasso's inventions, agreeing to royalty payments based on Medtronic’s sales of the defined Medical Device until “the last to expire of the patents included in Intellectual Property Rights, or if no patent application(s) issue into a patent having valid claim coverage of the Medical Device, then seven (7) years from the Date of First Sale of the Medical Device.” The initial patent application was filed in November 1999; two patents issued, both entitled “Screw Delivery System and Method.” Medtronic made royalty payments in 2002-2018. Sasso claimed that Medtronic was not paying royalties on sales of all relevant devices, and filed suit in Indiana state court. A judgment in Sasso's favor is on appeal. Medtronic sought a federal declaratory judgment. While Sasso describes the state court action as a contract case for payment for patent rights, Medtronic describes the federal action as a patent case in which payment requires valid patents. The Federal Circuit affirmed the dismissal of the suit without prejudice, based on abstention in view of the concurrent action in Indiana state court between the same parties concerning the same dispute. District courts possess significant discretion to dismiss or stay claims seeking declaratory relief, even when they have subject matter jurisdiction.

Downing v. Country Life Insurance Company

Court: Alaska Supreme Court

Docket: S-17557

Opinion Date: October 9, 2020

Judge: Carney

Areas of Law: Civil Procedure, Contracts, Insurance Law, Personal Injury

In October 2015, Amy Downing purchased a life insurance policy from Country Life Insurance Company. She purchased both an “executive whole life” policy that would pay a flat amount of $500,000 to her beneficiaries upon her death and a “Paid-Up Additions Rider” (PUAR) that provided an additional death benefit and an investment opportunity. Although Amy's father Tom worked for Country, another employee, Robert Sullivan, met with Amy and Tom to describe the terms of the policy. Amy asked Sullivan why she needed one and a half million dollars in insurance coverage because it was a larger benefit than she expected to need and it required higher yearly premiums. Sullivan explained that although she might not need the large death benefit, the structure of the PUAR provided an investment opportunity because it maximized the policy’s cash value. Sullivan later testified that he never represented to Amy that the death benefit associated with the PUAR was a flat amount. After paying the premiums for a year, Amy informed her parents that she intended to abandon the policy and withdraw its existing cash value. Her mother Kathleen decided to look into the policy as an investment. Kathleen decided to take over payment of the premiums on Amy’s life insurance policy, including the PUAR, as an investment. With Tom’s assistance, Amy assigned her policy to Kathleen. Four months later, on January 27, 2017, Amy died in an accident. Her death occurred in the second year of her policy coverage. Country paid the death benefit of $500,000 on Amy’s whole life policy. Country also paid $108,855 on Amy’s PUAR. Kathleen sued, alleging that she was entitled to $1,095,741 on Amy’s PUAR, minus the $108,855 already paid. Judgment was rendered in favor of Country, and Kathleen appealed. The Alaska Supreme Court determined the superior court did not err in its interpretation of the insurance policy at issue, and affirmed the decision.

Brigade Leveraged Capital Structures Fund Ltd v. Stillwater Mining Co.

Court: Delaware Supreme Court

Docket: 427, 2019

Opinion Date: October 12, 2020

Judge: Montgomery-Reeves

Areas of Law: Business Law, Civil Procedure, Securities Law

In 2017, Sibanye Gold Ltd. (“Sibanye”) acquired Stillwater Mining Co. (“Stillwater”) through a reverse triangular merger. Under the terms of the merger agreement, each Stillwater share at closing was converted into the right to receive $18 of merger consideration. Between the signing and the closing of the merger, the commodity price for palladium (which Stillwater mined) increased by nine percent, improving Stillwater’s value. Certain former Stillwater stockholders dissented to the merger, perfected their statutory appraisal rights, and pursued this litigation. During the appraisal trial, petitioners argued the flawed deal process made the deal price an unreliable indicator of fair value and that increased commodity prices raised Stillwater’s fair value substantially between the signing and closing of the merger. In 2019, the Delaware Court of Chancery issued an opinion, holding that the $18 per share deal price was the most persuasive indicator of Stillwater’s fair value at the time of the merger. The court did not award an upward adjustment for the increased commodity prices. Petitioners appealed the Court of Chancery’s decision, arguing that the court abused its discretion when it ignored the flawed sale process and petitioners’ argument for an upward adjustment to the merger consideration. After review of the parties’ briefs and the record on appeal, and after oral argument, the Delaware Supreme Court found no reversible error and affirmed the Court of Chancery.

Kalb v. Wise

Court: Idaho Supreme Court - Civil

Docket: 47057

Opinion Date: October 9, 2020

Judge: Bevan

Areas of Law: Civil Procedure, Legal Ethics, Trusts & Estates

Attorney Craig Wise appealed a district court’s determination that he breached a duty of care owed to Billy Kyser, Jr., as a beneficiary of Carolyn Kyser’s will. Wise represented Billy’s mother, Carolyn, in divorce proceedings from Bill Kyser, Sr., and in preparing a will that bequeathed her entire estate in equal shares to Billy and his brother Brent Kyser. As part of the divorce proceedings, and before Carolyn’s will was completed, Carolyn and Bill Sr. executed a property settlement agreement in which Bill Sr. and Carolyn agreed to retain sequential life estates in the family home, with the remainder going to Brent and Billy as tenants in common upon the death of the last surviving parent. Wise prepared a deed memorializing the terms of the property settlement agreement. After Bill Sr. and Carolyn both passed away, Brent retained Wise to represent him as the personal representative of Carolyn’s estate. Brent also hired Wise independently to prepare a quitclaim deed transferring Billy’s interest in the home to Brent. Wise sent the deed to Billy, who then executed it. David Kalb, Billy’s court-appointed conservator, then filed a malpractice suit against Wise. After a court trial, the district court held Wise breached the duty he owed to Billy as a beneficiary of Carolyn’s will by preparing the deed because it frustrated Carolyn’s testamentary intent that her estate be divided equally between her two sons. After review, the Idaho Supreme Court reversed the district court’s legal determination that Wise owed Billy a duty of care when Wise was acting as counsel for the personal representative of Carolyn’s estate, Brent. "Although Wise owed Billy a duty of care in drafting and executing Carolyn’s will, the district court impermissibly extended that duty by requiring that Wise ensure an asset outside the probate estate complied with Carolyn’s intent in her will."

Sutton v. David Stanley Chevrolet

Court: Oklahoma Supreme Court

Citation: 2020 OK 87

Opinion Date: October 13, 2020

Judge: Douglas L. Combs

Areas of Law: Arbitration & Mediation, Business Law, Civil Procedure, Consumer Law

In 2016, plaintiff-appellee Isaac Sutton went shopping for a vehicle at the defendant-appellant David Stanley Chevrolet, Inc.'s (hereafter DSC) car dealership. He agreed to purchase a 2016 Chevy Silverado on credit and he agreed to trade-in his 2013 Challenger. He was informed by DSC that his credit was approved. In addition, he was given $22,800.00 for the Challenger for which he still owed $25,400.00. The documents for the purchase of the vehicle amounted to approximately eighty-six pages, which included a purchase agreement and a retail installment sale contract (RISC). He left the dealership that evening with the Silverado and left his Challenger. Several days later he was informed by DSC that his financing was not approved and he would need a co-signor to purchase the Silverado. Sutton visited DSC but was then told he did not need a co-signor and there was no need to return the vehicle. At the end of June his lender for his 2013 Challenger contacted him about late payments. Sutton contacted DSC who said it was not their responsibility to make those payments since they did not own the Challenger he traded-in. A few days later, he was notified by DSC that his Challenger had been stolen and the matter was not the responsibility of DSC. Sutton had to make an insurance claim on his Challenger and DSC took back the Silverado. In the meantime, Sutton continued to make payments on the Challenger. Plaintiff and his wife Celeste Sutton sued DSC over the whole transaction involving the Challenger. DSC moved to compel arbitration. Plaintiffs alleged they were fraudulently induced into entering the arbitration agreement. The trial court found there was fraudulent inducement and overruled the motion to compel arbitration. The Oklahoma Court of Civil Appeals reversed the trial court and remanded for further proceedings concerning the unconscionability of the arbitration agreement. The Oklahoma Supreme Court granted certiorari, and found the trial court's order was fully supported by the evidence. The opinion of the Oklahoma Court of Civil Appeals was therefore vacated and the matter remanded to the trial court for further proceedings.

Albany & Eastern Railroad Co. v. Martell

Court: Oregon Supreme Court

Docket: S066941

Opinion Date: October 15, 2020

Judge: Thomas A. Balmer

Areas of Law: Civil Procedure, Real Estate & Property Law

Plaintiff Albany & Eastern Railroad Company (AERC) petitioned the Oregon Supreme Court for reconsideration of its decision in Albany & Eastern Railroad Co. v. Martell, 469 P3d 748 (2020). In the previous case, the Supreme Court ruled in favor of defendants, holding that the trial court correctly concluded that defendants established a prescriptive easement over plaintiff AERC’s land. By that decision, the Supreme Court reversed the decision of the Court of Appeals and affirmed the judgment of the trial court. In its petition for reconsideration, plaintiff did not challenge the resolution of the prescriptive easement issue. Instead, plaintiff argued the Supreme Court erred in affirming the judgment of the trial court, rather than remanding the case to the Court of Appeals to consider a separate issue: the trial court’s award of attorney fees to defendants under ORS 20.080(2). Plaintiff had argued to the Court of Appeals that, even if defendants successfully asserted a prescriptive easement counterclaim, the trial court had no authority to award attorney fees to defendants. According to plaintiff, a prescriptive easement was an equitable remedy that fell outside of ORS 20.080. Defendants filed a response, arguing that the trial court was correct in its award of attorney fees. They also filed petitions for attorney fees and costs and disbursements. Plaintiff objected to the request for attorney fees, arguing that the issue of defendants’ entitlement to fees had not yet been resolved and, alternatively, that defendants’ claimed fees were unreasonable. The Supreme Court agreed with plaintiff that the matter of attorney fees should have been remanded to the Court of Appeals following its disposition on the merits. Accordingly, plaintiff’s petition for reconsideration was granted, and the disposition in the earlier case modified. Defendants' petition for fees was denied.

Fleming v. Wilson

Court: Supreme Court of Texas

Docket: 19-0230

Opinion Date: October 9, 2020

Judge: Per Curiam

Areas of Law: Civil Procedure, Contracts

The Supreme Court reversed the judgment of the court of appeals reversing the trial court's grant of summary judgment for Defendants in this breach of contract and fiduciary duty action, holding that the court of appeals erred in finding that Defendants failed properly to authenticate uncertified copies of a prior jury verdict and judgment - documents upon which the motion for summary judgment relied. Approximately four thousand plaintiffs sued their former attorney and his law firm, alleging breach of contractual and fiduciary duties. The trial court granted summary judgment in favor of Defendants. The court of appeals reversed, concluding that the documents at issue were not properly authenticated and thus were not competent summary judgment evidence. The Supreme Court reversed, holding that the trial court properly exercised its discretion by finding the documents authentic and competent as summary judgment evidence.