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Halbig v Sebelius - Plaintiff's Reply Brief in Support of the Summary Judgment

Halbig v Sebelius - Plaintiff's Reply Brief in Support of the Summary Judgment

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A group of small business owners (and individuals) in six states filed a lawsuit on May 2, 2013 against the federal government over an IRS regulation imposed under the Affordable Care Act (Obamacare), a regulation that will force the plaintiffs to pay exorbitant fines, cut back employees’ hours, or severely burden their businesses.

This document is plaintiffs’ opposition to the government's cross-motion for summary judgment, along with an exhibit in support of opposition, November 18, 2013.

View more about the case at cei.org/obamacare.
A group of small business owners (and individuals) in six states filed a lawsuit on May 2, 2013 against the federal government over an IRS regulation imposed under the Affordable Care Act (Obamacare), a regulation that will force the plaintiffs to pay exorbitant fines, cut back employees’ hours, or severely burden their businesses.

This document is plaintiffs’ opposition to the government's cross-motion for summary judgment, along with an exhibit in support of opposition, November 18, 2013.

View more about the case at cei.org/obamacare.

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Published by: Competitive Enterprise Institute on Nov 19, 2013
Copyright:Attribution Non-commercial

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07/07/2014

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
 JACQUELINE HALBIG,
et al.
,
 Plaintiffs
,
v.
KATHLEEN SEBELIUS,
et al.
,
 Defendants.
) ) ) ) ) ) ) ) ) ) ) )Civ. No. 13-623 (PLF)
OPPOSITION-REPLY PLAINTIFFS’ REPLY IN SUPPORT OF SUMMARY JUDGMENT AND OPPOSITION TO DEFENDANTS’ CROSS-MOTION FOR SUMMARY JUDGMENT
Michael A. Carvin (D.C. Bar No. 366784) Jacob M. Roth (D.C. Bar No. 995090) Jonathan Berry (D.C. Bar No. 1016352) JONES DAY 51 Louisiana Avenue NW Washington, DC 20001 Phone: (202) 879-3939 Fax: (202) 626-1700
 Attorneys for Plaintiffs
Case 1:13-cv-00623-PLF Document 57 Filed 11/18/13 Page 1 of 62
 
TABLE OF CONTENTS Page
 -i- INTRODUCTION ......................................................................................................................... 1 ARGUMENT ................................................................................................................................. 3 I. THE IRS RULE CONTRADICTS THE ACA’S UNAMBIGUOUS TEXT, AND IS THEREFORE CONTRARY TO LAW ........................................................................ 3 A. An Exchange Established by the Federal Government Is Unambiguously  Not “an Exchange Established by the State.” ........................................................ 4 B. Most of the Government’s Allegedly Absurd Consequences Are Not At All Absurd, and the Remainder Are Not Consequences of Plaintiffs’ Position .................................................................................................................. 9 C. No Legislative History Contradicts the Unambiguous Statutory Text, and the Limited Legislative Discussion of Federal Exchanges Reflects the Consensus That States Would Submit to the ACA’s Pressure To Establish Their Own ............................................................................................................ 17 D. Congress Had Good Reasons To Distinguish Between State-Established and Federally Established Exchanges and Thereby Encourage the Former ........ 23 II.
CHEVRON 
 DEFERENCE CANNOT SAVE THE IRS RULE ...................................... 25 A. Because the Relevant Statutory Text Is Unambiguous, The IRS Has No Power To Construe It ........................................................................................... 25 B. No
Chevron
 Deference Is Owed, Because the IRS at Best Shares Regulatory Authority with HHS, and the Agencies Have Issued Conflicting Regulations ....................................................................................... 26 C. Moreover, Chevron Deference Is Displaced Here by the Venerable “Clear Statement” Rule for Tax Exemptions and Credits ............................................... 30 D. In All Events, the IRS Rule Is Not a Reasonable Construction of the Text ........ 33 III. THERE ARE NO JURISDICTIONAL OR PRUDENTIAL BARRIERS TO THIS APA CHALLENGE ......................................................................................................... 34 A. Because Plaintiff David Klemencic Indisputably Has Standing, This Court Has Jurisdiction To Resolve the Merits of Plaintiffs’ APA Challenge ............... 34 B. Although This Court Need Not Reach the Issue, the Texas Restaurants Also Have Standing To Challenge the IRS Rule ................................................. 38 C. The Prospect of an After-the-Fact, Inadequate Tax-Refund Action Does  Not Preclude Suit by Either the Individual or Employer Plaintiffs ..................... 46 IV. AS THE D.C. CIRCUIT HAS REPEATEDLY HELD, THE PROPER REMEDY IN AN APA CHALLENGE IS NATIONWIDE VACATUR OF THE INVALID RULE ............................................................................................................................... 49 CONCLUSION ............................................................................................................................ 50
Case 1:13-cv-00623-PLF Document 57 Filed 11/18/13 Page 2 of 62
 
 -ii-
TABLE OF AUTHORITIES Page C
ASES
 
 Abbott Labs. v. Gardner 
, 387 U.S. 136 (1967) .................................................................................................................46
 Adoptive Couple v. Baby Girl 
, 133 S. Ct. 2552 (2013) ...............................................................................................................4
 Alexander v. ‘Americans United’ Inc.
, 416 U.S. 752 (1974) .................................................................................................................49
 Allen v. Wright 
, 468 U.S. 737 (1984) .................................................................................................................44
 Am. Bar Ass’n v. FTC 
, 430 F.3d 457 (D.C. Cir. 2005) ...........................................................................................25, 26
 Am. Bioscience, Inc. v. Thompson
, 269 F.3d 1077 (D.C. Cir. 2001) ...............................................................................................50
 Am. Fed’n of Labor & Cong. of Indus. Orgs. v. Chao
, 409 F.3d 377 (D.C. Cir. 2005) ...........................................................................................33, 34
 Am. Soc’y of Travel Agents v. Blumenthal 
, 566 F.2d 145 (D.C. Cir. 1977) .................................................................................................44
 Am. Fed’n of Government Employees, AFL-CIO, Local 3669 v. Shinseki
, 709 F.3d 29 (D.C. Cir. 2013) .............................................................................................25, 27
 Animal Legal Defense Fund, Inc. v. Glickman
, 154 F.3d 426 (D.C. Cir. 1998) (en banc) ...........................................................................40, 41
 Apache Bend Apts., Ltd. v. United States
, 987 F.2d 1174 (5th Cir. 1993) (en banc) .................................................................................44
 Arford v. United States
, 934 F.2d 229 (9th Cir. 1991) ...................................................................................................45
 Ass’n of Am. Physicians & Surgeons, Inc. v. Sebelius
, 901 F. Supp. 2d 19 (D.D.C. 2012) ...........................................................................................47
 Ass’n of Civilian Technicians v. Fed. Labor Relations Auth.
, 250 F.3d 778 (D.C. Cir. 2001) .................................................................................................27
Case 1:13-cv-00623-PLF Document 57 Filed 11/18/13 Page 3 of 62

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