Decided: Oct 24, 2011

Defendants were alleged members of the Pagans Motorcycle Club (the “PMC”), a gang located primarily across the East Coast. Floyd Moore was the national vice president of the PMC and a convicted felon prohibited from possessing a firearm. Moore instructed other members of the PMC, including defendants, to carry firearms to protect him. Consequently, defendants were charged with violating 18 U.S.C. § 922(h) for possessing firearms while being employed for a convicted felon. Defendants moved to dismiss the charges on the grounds that the words “employed for” and “employment” used in the statute required the government to prove that the defendants were employed for wages. The district court granted the defendants’ motions to dismiss the § 922(h) charges.

On appeal, the Fourth Circuit reversed. The plain language of § 922(h) contains no explicit requirement that the defendant be hired for tangible compensation. Congress did not use any language that referred to monetary value in § 922(h), nor did it use the language “employee of,” as it had done elsewhere in Title 18 to refer to employment for wages. Furthermore, the district court’s interpretation of the statute would frustrate its purpose, which is to prevent felons who may not possess a firearm under § 922(g) from circumventing the prohibition by hiring armed bodyguards. Compensation has never been conclusive to a determination of an employer-employee relationship. Therefore, the Court of Appeals reversed and remanded for further proceedings to determine whether defendants were employed by Moore.

Full Citation

-Sara I. Salehi

Decided: Sept. 8, 2011

The plaintiffs, Liberty University and two individuals, brought suit seeking to enjoin the Secretary of the Treasury from enforcing the “individual” and “employer mandates” in the recently passed Patient Protection and Affordable Care Act (“Act”), also known as “Obamacare,” that require purchasing healthcare coverage. The individuals argued that they had made a conscious choice not to purchase healthcare and the mandate to do so was an unconstitutional penalty couched as a tax. Liberty argued that several of its employees would be eligible for tax credits or cost-sharing reductions under the Act which would subject the employer to “assessable payments” and cause undue financial hardship for the University by means of improper and unconstitutional taxation. The district court held that the exactions were not taxes; it also held that the Act was a valid exercise of Congress’s Commerce Clause powers and dismissed the action.

The Fourth Circuit vacated and remanded with instructions to dismiss the case for lack of subject-matter jurisdiction. Foregoing a Commerce Clause analysis, the majority found that the Act should be evaluated under Congress’s taxing power. The Anti-Injunction Act (“AIA”) states that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person.” I.R.C. § 7421(a). Where applicable, this statute strips the Circuit court of subject-matter jurisdiction. Indeed, the courts have applied the AIA even in cases where the supposed tax was alleged to be something other than a traditional “tax” as provided by the Constitution.

In concurrence, Judge Wynn wrote that on the merits the law should be upheld as constitutional under Congress’s plenary taxing power. Taxes must possess three characteristics in order to be constitutional: they must bear some reasonable relation to raising revenue, must be imposed for the general welfare, and must not infringe on other constitutional rights. Finding these conditions met, Wynn would uphold the constitutionality of the Act. However, concluding the taxes are valid requires a finding that the exactions are in fact taxes and therefore subject to the AIA’s jurisdiction-stripping provision.

Judge Davis dissented. He followed the holdings of the Sixth and Eleventh Circuits, finding that the AIA was inapplicable under a “labeling” theory of statutory interpretation; specifically, the AIA applies to taxes while the Affordable Care Act assesses penalties. Since Judge Davis believed the AIA should not apply to strip the court of jurisdiction, he felt free to reach the merits of the Act and felt it should be evaluated under a Commerce Clause analysis. Judge Davis would uphold the Act, finding uninsured healthcare costs have a substantial effect on commerce and finding no merit to the distinction between regulation of economic “activity” vs. “inactivity.”. Finally, he found no merit to the First Amendment objections to the Act, declaring it a neutral law of general applicability.

Full Opinion

-C. Alexander Cable

Decided Sept. 8, 2011

When President Obama signed the Patient Protection and Affordable Care Act (“Act”), also known as “Obamacare,” into law, the state of Virginia responded by passing the Virginia Health Care Freedom Act (“VHCFA”) stating that, with exceptions, no resident of Virginia would be required to maintain individual health insurance. Though the contested portion of the federal Act, the so-called “individual mandate,” only applied to persons and did not directly affect the state of Virginia, Attorney General Cuccinelli argued the state nonetheless had standing to sue based on the incongruity between state and federal laws, arguing that the Act infringed on Virginia’s sovereign power. The district court agreed, finding standing and declaring the individual mandate unconstitutional.

The Fourth Circuit vacated without reaching the merits of the Act itself because it held that Virginia did not have standing to challenge the law. In order to demonstrate standing, a party must show “(1) it has ‘suffered an injury in fact’; (2) there exists a ‘causal connection between the injury and the conduct complained of’; and (3) a favorable judicial ruling will ‘likely’ redress that injury.” Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992). The court held that Virginia suffered no injury because the VHCFA was not an exercise of sovereign power, only a declaration serving as an attempt to immunize its citizens from what it viewed as an unfavorable federal law. Adopting Virginia’s view of standing, the court noted, would allow states to sue the federal government anytime a disagreeable law is passed merely by passing its own contrary state law. As such, the case was vacated with instructions for the district court to dismiss for lack of standing.

Full Opinion

-C. Alexander Cable