Liberty University, Inc. v. Jacob Lew
733 F.3d 72
4th Cir.2013Background
- Plaintiffs (Liberty University and individual Christians) sued to enjoin the ACA’s individual and employer mandates, alleging Commerce Clause, Taxing Clause, First and Fifth Amendment, and RFRA violations; district court dismissed for failure to state a claim.
- On initial appeal the Fourth Circuit dismissed for lack of jurisdiction under the Anti‑Injunction Act (AIA); the Supreme Court vacated and remanded after NFIB v. Sebelius.
- The individual mandate imposes a payment for failure to maintain minimum essential coverage; the employer mandate exposes ‘‘applicable large employers’’ to an ‘‘assessable payment’’ if they fail to offer affordable, minimum‑value coverage.
- Key statutory features: the employer exaction is labeled primarily an ‘‘assessable payment’’ (with limited cross‑references as a ‘‘tax’’), collected by Treasury/IRS, and lacks scienter or criminal punishment; both mandates take effect in future years (2014–2015).
- Plaintiffs allege Article I limits (Commerce/Taxing), Free Exercise and RFRA burdens, Establishment and equal protection defects in the religious exemptions, and later attempted to add a challenge to contraception‑coverage regulations (raised for the first time on remand).
- The Fourth Circuit considered AIA applicability, standing, Commerce Clause and taxing‑power arguments on the employer mandate, and the religious claims; it declined to reach the new regulatory contraception claims as not raised below.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Anti‑Injunction Act bar a pre‑enforcement suit against the employer mandate exaction? | The employer exaction is a tax for AIA purposes, so AIA bars pre‑enforcement suit. | The exaction is primarily an ‘‘assessable payment/penalty’’ (not a tax) as described in the statute; AIA therefore does not apply. | AIA does not bar the suit: employer exaction is not a tax for AIA purposes given statutory labeling and context. |
| Do plaintiffs have standing to bring pre‑enforcement challenges? | Plaintiffs claim imminent economic and religious injury from being forced to provide or pay for coverage. | Government argues injuries are speculative (e.g., employer’s current plan may suffice; individuals may qualify for exemptions). | Liberty and the named individual plaintiffs plausibly alleged imminent injuries (compliance costs, preparation, or payments) and thus have standing at the motion‑to‑dismiss stage. |
| Is the employer mandate a valid exercise of Congress’s Commerce Clause power? | Mandating employer‑provided coverage exceeds the Commerce Clause because it compels economic activity and purchases akin to the invalidated individual mandate. | The employer mandate regulates existing commercial activity (terms of employment/compensation) that substantially affects interstate commerce and mobility. | Employer mandate upheld under the Commerce Clause: it regulates employer compensation (an existing commercial activity) with a rational basis to conclude it substantially affects interstate commerce. |
| Is the employer exaction a constitutional exercise of the taxing power (or an impermissible penalty)? | The exaction is a punitive penalty (invoking Drexel) and thus outside the taxing power. | Functionally the exaction produces revenue, is collected like a tax, lacks scienter, and leaves a choice (offer coverage or pay); it is therefore a tax. | Employer exaction is a constitutional tax under NFIB’s functional test (produces revenue, IRS collection, no scienter/punitive enforcement); Drexel is distinguishable. |
| Do the mandates or their exemptions violate Free Exercise, RFRA, Establishment, or equal protection? | Mandates and compliance options force Plaintiffs to facilitate/support abortion; religious exemptions are arbitrary and discriminate against some religions. | The ACA is neutral and generally applicable; exemptions are analogous to longstanding, permissible statutory accommodations and pass Lemon or rational‑basis review; RFRA requires a substantial burden which Plaintiffs haven’t plausibly alleged. | Free Exercise and RFRA claims fail (no substantial burden and lawful alternatives); Establishment/equal‑protection challenges to statutory exemptions fail (no deliberate sectarian favoritism; Lemon/rational‑basis satisfied). |
Key Cases Cited
- Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012) (Supreme Court’s controlling analysis on AIA, taxing power, and limits of Commerce Clause regarding the individual mandate)
- Enochs v. Williams Packing & Navigation Co., 370 U.S. 1 (1962) (AIA bars pre‑enforcement suits to restrain tax assessment/collection)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing: injury in fact requirements and pleading standards at motion to dismiss)
- United States v. Darby, 312 U.S. 100 (1941) (Congress may regulate terms/conditions of employment under Commerce Clause)
- Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241 (1964) (broad Commerce Clause regulation of businesses affecting interstate commerce)
- Wickard v. Filburn, 317 U.S. 111 (1942) (aggregation principle: individual activity’s aggregate effect on commerce)
- Gonzales v. Raich, 545 U.S. 1 (2005) (rational‑basis aggregate effects test for Commerce Clause regulation)
- Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922) (invalidated a labor‑law ‘tax’ deemed an impermissible penalty; used to contrast punitive versus revenue‑raising exactions)