Supremacy Clause Issues in the Independent Living Center Litigation
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1 Supremacy Clause Issues in the Independent Living Center Litigation Stephen S. Schwartz Kirkland & Ellis LLP Washington, DC I. Introduction. A. This presentation is not intended to address Medicaid-specific issues, but rather the constitutional underpinnings of the Independent Living Center cases. B. Topics include the nature of the Supremacy Clause lawsuit the Ninth Circuit authorized, the theories in play before the Supreme Court, and the Supreme Court s handling of Supremacy Clause issues. II. No federal statute authorizes a suit arguing that California s statute is pre-empted by 42 U.S.C. 1396a. A. It has been basically undisputed in the Ninth Circuit and the Supreme Court that Section 1396a does not create personal rights directly enforceable under an implied statutory cause of action. It was also basically undisputed that Section 1396a does not create personal rights enforceable under 42 U.S.C B. This put Plaintiffs in a bind: How to sue under a statute that is not enforceable by any private statutory cause of action? Plaintiffs solution was to use nominal reliance on the Supremacy Clause to circumvent the lack of statutory authorization. Plaintiffs argue that a plaintiff with standing may seek a prospective injunctive remedy under the Supremacy Clause in virtually any case where federal statute allegedly conflicts with state law. III. The Supreme Court dodged the question of whether Plaintiffs could in fact sue under the Supremacy Clause. A. All nine justices agreed that the Ninth Circuit s decision should be reversed and remanded.
2 Page 2 B. The five-justice majority (Breyer, J.) remanded on administrative law grounds. The Ninth Circuit is to reconsider Plaintiffs claims in light of HHS approval of the California rate reductions. Supremacy Clause arguments will remain in play. This narrow decision is justifiable on principles of constitutional avoidance and judicial minimalism. C. The four-justice dissent (Roberts, C.J.) would have reversed on the basis that the Supremacy Clause does not create a cause of action. IV. Conceptually, three major areas of legal authority and evidence to consider in evaluating Plaintiffs theory, none of which supports the cause of action the Plaintiffs are depending on. A. Law of suits for injunctive relief, particularly for pre-emption. B. History and pre-history of the Supremacy Clause. C. Other existing mechanisms for enforcement of federal statutory rights. D. The majority declined to consider these sources of authority. The dissent addressed some of them in reaching its conclusion. V. Lawsuits under the Supremacy Clause. A. The Supreme Court was faced with an apparent tension in the caselaw. There does appear to be some history of lawsuits under the Supremacy Clause in pre-emption cases, including lawsuits to enjoin prospective application of state laws. E.g., Ex parte Young. However, cases also say that the Supremacy Clause is not a source of federal rights. Chapman v. Houston Welfare Rights Org. 1. How to reconcile? 2. Plaintiffs essentially took the history of Supremacy Clause lawsuits at face value, in the broadest possible sense. In other words, because there have been suits for prospective injunctive relief under the Supremacy Clause, Plaintiffs claimed that they could do so too. The Ninth Circuit agreed. 3. Issue was whether that s the best and most accurate story to tell about the Supreme Court s previous jurisprudence. a) What is the basis for those Supremacy Clause suits? b) Do any limiting principles accompany them?
3 Page 3 B. Origins of Ex parte Young. 1. The Ex parte Young cause of action originated in federal equity law pertaining to anti-suit injunctions. a) The Ex parte Young Court s analysis tracked the elements of injunctive relief. It required, for example, a showing that waiting to assert federal pre-emption as a defense would not be an adequate remedy. b) The Court recognized, in effect, a sovereign immunity exception for an uncontroversial equitable action. 2. That s not the same as a suit for pre-emption. a) Anti-suit injunction claims were about preventing the enforcement of pre-empted state law in ways that would have denied persons of property or liberty rights, in cases where there was no other adequate remedy. b) Only negative injunctions against state enforcement were permitted, not injunctions compelling state action. c) Conceptually, there is an underlying federal right in such cases: the right not to be subjected to pre-empted state enforcement actions. d) Similar to asserting a federal defense, but unlike a general right to assert that state law makes one worse off than federal law. e) Ex parte Young is distinguishable from Independent Living Center on that basis. C. Applications of Ex parte Young. 1. Caselaw such as Shaw v. Delta Air Lines is generally consistent. In the large bulk of cases, Supremacy Clause actions were intended to prevent prospective state enforcement of pre-empted regulations. Some exceptions may exist, but even the possible exceptions involve, at most, the Court assuming without deciding that a cause of action exists. 2. Justice Kennedy s concurrence in Virginia Office for Protection & Advocacy v. Stewart described the Ex parte Young-type of action as nothing more than the pre-emptive assertion in equity of a defense that would otherwise have been available in the State s enforcement proceedings at law.
4 Page 4 D. Plaintiffs counterarguments. 1. Broader reading of causes of action underlying Supreme Court cases. In other words, Plaintiffs take the Ex parte Young-type action at a very high level of generality, leaving out the historically implicit limiting principles. 2. Broad reading of judicial jurisdiction to entertain suits in equity, relying on very old United States (and even English) equity cases. 3. Plaintiffs argument has few limiting principle, and contemplates an expansive view of federal rights and causes of action. The dissent rejected these arguments, indicating that (1) the Ex parte Young-type cause of action should remain limited to its historical purpose, and (2) equity alone does not create a cause of action in the absence of a legal right. VI. Constitutional History. A. The Supremacy Clause arose out of pre-independence legal practice, reflects debates at the Constitutional Convention, and was commented on after the Constitution was produced and ratified. B. Pre-History: Colonial Charters. 1. Colonies were required by their charters to legislate consistently with English law. Laws repugnant to English law were invalid. These charter provisions were precursors to the Supremacy Clause. The charters contemplated two different enforcement mechanisms. 2. In most colonies, statutes passed by legislature were subject to administrative review in London by the Board of Trade. a) This review had some legal aspects, but it was essentially political. 3. In some colonies, colonists could appeal adverse decisions of colonial courts to the Privy Council s Committee for Appeals. a) This was a judicial process, but it appears to have required a right or defense, rather than a simple claim of repugnancy. C. Constitutional Convention.
5 Page 5 1. A critical question at the Convention was how to ensure the states legislated consistently with federal law. The delegates drew on the two colonial models of political/administrative or judicial review. The key issue was whether to maintain the administrative review of state legislation that had prevailed preindependence. 2. Madison was the key supporter of a congressional negative on state laws. That proposal was rejected as too intrusive, despite concerns that states would not obey the Constitution without some sort of check on their legislation. 3. After failure of the negative, the precursor of the Supremacy Clause was introduced and unanimously approved without recorded debate. a) The Supremacy Clause was evidently a compromise between the need to ensure that pre-empted state laws would be invalidated and the delegates decision to avoid intrusive, blanket review of state legislation. 4. Best inference is that the Supremacy Clause was intended to be a rule of decision, but not to give rise to lawsuits like Plaintiffs. D. Early interpretations and explications. 1. Early explications of the Supremacy Clause confirm that it was not intended to provide for comprehensive review of all state legislation for preemption, or to create a free-standing cause of action, but rather to clarify the rule of decision if pre-emption were part of a federal right or defense. 2. The Federalist. a) No. 33 (Hamilton): The Supremacy Clause only declares a truth which flows immediately and necessarily from the institution of a federal government. The dissent quotes this language. b) The Federalist makes no express reference to private suits. This indicates that it was not regarded as a serious issue, and likely that the Anti-Federalists did not raise the possibility of such suits as an objection to ratification of the Constitution. 3. Joseph Story s Commentaries. a) Supremacy Clause added to make the principle of federal supremacy more strongly felt by state judges.
6 Page 6 4. All this corroborates the view that the Supremacy Clause is a rule of decision. Even if it is related to the Ex parte Young-type cause of action, it wouldn t expand the cause of action s scope. VII. Existing Statutory Remedies. A. Litigants can assert federal statutes as a shield, either as an affirmative defense or by seeking injunctive remedies as described above. When can they use federal rights as a sword? B. Implied statutory causes of action. 1. Requires a showing of congressional intent to create both a private right and a private remedy. Stoneridge Inv. Partners v. Scientific-Atlanta; Alexander v. Sandoval. Neither of those conditions is met by Plaintiff. C. Section Requires a federal right as well. Essentially undisputed that no such right existed here. 2. Ratification debates during Reconstruction indicated that its injunctive remedies were regarded as new. 3. This, combined with the historical nature of the Ex parte Young cause of action, indicates that Congress did not expect that a Supremacy Clause cause of action would exist when it determined not to permit one under Section 1983.
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