The Tenth Circuit’s Punt in Kerr v. Hickenlooper Opens the Door for a Torrent of Litigation

In 1992 the people of Colorado voted to amend their Constitution with adoption of a Taxpayer Bill of Rights (TABOR). This was a historic initiative that put the power in the hands of the people to decide for themselves whether to approve new taxes or tax-hikes. While many states have constitutional protections to prevent new or increased taxes—such as California’s requirement of a supermajority vote in the legislature—Colorado’s TABOR was unique in that it made the citizens of the state the final word on new taxes or increased taxes. TABOR therein served as a model that has been implemented through constitutional amendments in other states, and which NFIB has supported as a means of protecting small business owners from new and ingenious taxing schemes. But TABOR is under attack—and this may have profound implications, not only in Colorado but throughout the country.

TABOR’s Legal Challenges

TABOR was upheld as constitutional in the Colorado Supreme Court last year in the face of a lawsuit advanced by educators and the parents of school-aged children who complained that TABOR makes it harder for schools to get necessary funding. NFIB Small Business Legal Center filed in that case to defend the law, and we were pleased to see the Court ultimately affirm the constitutionality of TABOR. But TABOR faces yet another challenge—this time in federal court.

In Kerr v. Hickenlooper, a group of politically motivated legislators complain that they would like to be able to raise taxes, or to enact new taxes, but that TABOR has taken away the legislature’s power to do so. Whether this constitutes an injury sufficient for Article III standing purposes is a legitimate question—one that the Colorado Attorney General has taken issue with in a motion to dismiss the case. But, the concerning aspect of this case—for those of us outside of Colorado—is that the plaintiff’s theory, as to why a federal court should strike-down TABOR, has far-reaching implications.

A Guarantee Clause Challenge… Seriously?

The plaintiffs invoke an arcane constitutional provision. The Guarantee Clause of the United States Constitution provides simply that the United States must guarantee a “republican form of government” to every state. OK, so what does that mean?

Well, that is hard to say because no court has ever decided a Guarantee Clause case. In the 19th Century the Supreme Court refused to resolve a Guarantee Clause claim in a case challenging the constitutionality of Rhode Island’s government. In that case the Supreme Court refused to weigh into an essentially political dispute between rival groups claiming to represent the government of Rhode Island. The Court essentially said it was the prerogative of the other branches to decide which group to recognize as the legitimate state government—which is essentially what would happen if someone should ask the Court to decide which faction represents the legitimate government in Crimea today.

Since then, courts have treated Guarantee Clause arguments as non-justiciable claims because they invite the court to wade into the proverbial political thicket. Though courts have long decided cases with political ramifications (see e.g., NFIB v. Sibelius), the courts have refused to decide Guarantee Clause cases because they would essentially be impossible to decide without exercising political judgment. So the political questions doctrine holds that any decision requiring the exercise of political judgment—as opposed to the application of legal standards and reasoned analysis—is more appropriately viewed as the prerogative of the other branches of government.

Accordingly, the Supreme Court has long suggested that Guarantee Clause claims are categorically barred by the “political questions doctrine.” For this reason, in Pacific States v. Oregon, the Supreme Court rebuffed a Guarantee Clause challenge to Oregon’s direct voter initiative process in 1912—refusing to dive into the question of whether direct democratic measures (like voter initiatives) are somehow anti-republican. One would have thought the door was shut and closed on Guarantee Clause challenges since then.

But, in the Supreme Court’s opinion in New York v. United States in 1992, Justice O’Connor suggested that the door might still be ajar. This apparently gave hope to those who would like to breath life into the Guarantee Clause—who would like to see it wielded as a weapon in challenge to initiatives they might dislike, or political acts that they find offensive to their sense of good government and political philosophy. I know there are folks on the libertarian side of the equation who would welcome the opportunity to raise the Guarantee Clause in challenge to redistributive social programs or taxes. Meanwhile, the plaintiffs in Kerr advance a progressivist vision for the Guarantee Clause as a means of striking down a state constitutional amendment that impedes them from pursuing their preferred tax and spend policies. Needless to say, the Guarantee Clause could be an unruly weapon, if ever unsheathed.

A Radical Theory

In Kerr the plaintiffs maintain that Colorado is no longer a “republican form of government” because the citizens have taken away the Legislature’s power to set the state’s tax and spend policies. Though they paint this as a narrow challenge to TABOR itself, the premise of their argument is far reaching in implication. Their assumption is that a state government becomes anti-republican if the citizens assume for themselves certain functions that have traditionally been performed by the legislature. That would call into question any direct initiative process, or referendum. Accordingly, NFIB Small Business Legal Center, TABOR Foundation and other concerned organizations, argued that the case should be dismissed as a nonjusticiable challenge to the initiative process.

But, even if the Plaintiff’s theory is viewed more narrowly, as alleging only that there is a Guarantee Clause violation when citizens usurp certain fundamental legislative powers, it is still nonjusticiable. On what basis can a court determine which—if any—legislative powers are so fundamental to ‘republican government’ that the citizens of the state cannot adopt constitutional restrictions to assert direct democratic control? And by what standard can a court determine when the citizens of a state have gone too far in restricting the prerogative of their legislature to exercise any given power?

In this case the plaintiffs assume that a “republican form of government” requires the legislature to maintain at least some degree of power to raise taxes, or to create new taxes. It is unclear how they derive that posited principle from the requirement that every state must be guaranteed a “republican form of government.” And the theory has far reaching implications because it would potentially call into question any constitutional amendment restricting a legislature’s prerogative to tax and spend. It opens the door for ideologically driven litigants to challenge California’s requirement that you need a 2/3rds vote for new taxes, to North Carolina’s requirement that the legislature must balance its budget before spending taxpayer dollars, or any other abridgement of the legislature’s traditional tax and spend powers.

And even if we assume that the powers to tax and spend are somehow immutable rights of the legislature, by what discernible principle can a court say when the citizens have gone too far in restricting their legislature’s tax and spend powers through a voter approved constitutional amendment? As we argued in our amici brief, the Court cannot draw a line without addressing sticky questions: Where is this (unwritten) mandate guarantying the Legislature some minimum unfettered stream of public revenue? How can the Court determine an appropriate stream of revenue without setting public policy? Does this assume that certain programs must be funded—and at certain minimal levels? Just why is it that the Guarantee Clause requires the Legislature—and not the people—to have a final say on tax and spend issues? 

The point is that the Plaintiff’s dissolves into a series of political issues when examined closely. Since they ultimately ask the courts to enter the realm of political philosophy, NFIB Legal Center maintains that the case should have been dismissed.

The Tenth Circuit Panel Decision Failed to Identify Judicially Manageable Standards

Unfortunately the Kerr lawsuit has survived a motion dismiss thus far. Just last week the federal court of appeals for the Tenth Circuit held that the case was not barred by the political questions doctrine. This means the case will be remanded for the district court to address the merits question of whether TABOR affirmatively violates the Guarantee Clause.

The problem is that the Tenth Circuit punted instead of actually identifying judicially manageable standards for how the district court should address this Guarantee Clause challenge. In Vieth v. Jubelirer, the Supreme Court made clear that cases must be dismissed if the court cannot identify judicially manageable standards derived from the Constitution. Writing for the plurality, Justice Scalia (joined by J. Thomas, O’Connor and Chief Justice Renquist) said that an Equal Protection Clause challenge to an allegedly gerrymandered redistricting plan raised a nonjusticable claim because, on close examination, all of the proposed tests for identifying such a constitutional violation boiled down to a series of questions that required the exercise of political judgment. In concurrence Justice Kennedy agreed that the claim was nonjusticiable because the plaintiffs had failed to offer a judicially manageable test rooted in constitutional principles.

Kennedy’s concurrence only departed from the plurality in that he was not willing to say that all political gerrymandering claims are nonjusticiable. Whereas the plurality concluded outright that there were no judicially manageable standards, Kennedy held out the possibility that some plaintiff might eventually offer judicially manageable standards in a future case; however, he agreed with the plurality that all of the proposed standards thus far have been unmanageable. For this reason Kennedy agreed that the case was nonjusticiable.

Importantly all of the dissenting Justices seemed to agree that it was incumbent upon the court itself, or the plaintiff, to identify judicially manageable standards before allowing the case to move forward. They dissented only because they believed they had identified such standards. But the point remains that all nine Justices assumed that the court must first identify manageable standards before a case can be resolved on the merits.

So in Kerr, the Tenth Circuit’s panel opinion made a fundamental mistake in assuming the case to be justiciable without affirmatively identifying judicially manageable standards for resolving the case on the merits. The panel opinion assumes that a standard can be identified upon a thorough analysis of the Federalist Papers and other historical records.  But, as the plurality in Vieth makes clear, a case cannot move forward simply because the defendant has failed to prove a total lack of judicially manageable standards. Rather, the burden is on the plaintiff to identify such standards. And in this case the plaintiffs have simply failed to offer any set of workable standards.

Are Guarantee Clause Claims Categorically Barred?

It is worth noting that there is a legitimate debate as to whether Guarantee Clause challenges are categorically barred by the political questions doctrine. To be sure, we should be cautious of any approach to constitutional law that would effectively neuter a constitutional provision. And I can envision potentially viable Guarantee Clause claims.

For example, if Governor Jerry Brown should declare himself King of California, or if the Canadians should invade Minnesota and declare it the province of her Majesty the Queen, I should think there would be a Guarantee Clause problem. Short of that happening, I don’t see a viable theory for advancing a Guarantee Clause claim. And if we are at the point where a Governor is calling himself King, or another nation is asserting sovereignty over a State—like the current situation in Crimea—its highly doubtful that an opinion from a court is going to matter much in practical terms, except potentially to spur the executive branch to take action. But, I would nonetheless posit that there would be a legitimate Guarantee Clause claim in such a situation and I would be able to offer a judicially manageable standard for its resolution.

Scholarship on the Guarantee Clause confirms that if anything the term “republican form government” was used, and understood, in contradiction to monarchal rule, or more generally in contradiction to any form of governance that denies the people the right of self-determination through the political process. Contrary to the assertions of the plaintiffs in Kerr, republicanism was not used exclusively to connote a system of representative government, but more generally to refer to a government that allows the citizens a meaningful opportunity for self-governance. Accordingly, I think we could divine a judicially manageable standard for determining the viability of a Guarantee Clause challenge: Does the challenged action deprive the citizens of a state the right to self-determination through the political process?

With that posited standard guiding its analysis, a court could easily determine that Jerry Brown’s declaration of monarchal rule in California (or the Canadian occupation of Minnesota) violates the Guarantee Clause—or more precisely the United States’ failure to take action to redress such problems would constitute a violation.  Of course that proposed judicial standard is completely unhelpful for the plaintiffs in Kerr because they are challenging a constitutional amendment that affirmatively puts more power in the hands of the citizenry, not less.

So it may well be that there are some judicially manageable standards for assessing the propriety of a Guarantee Clause claim. But it is incumbent upon the plaintiff to demonstrate that there are identifiable, and judicially manageable, standards for a specific theory of an alleged constitutional violation. As recognized in Justice Kennedy’s concurrence in Vieth, a plaintiff may well be able to identify judicially manageable standards for a contemplated Guarantee Clause challenge in some future case; however, the courts have yet to find such principles in any Guarantee Clause challenge to date. The closest we have come to that is the Tenth Circuit’s ipsi dixit conclusion that there are manageable standards for assessing Kerr’s claims; however, we do not know what those standards are, only that the Tenth Circuit assumes they can be found.

UPDATE:

I am updating this post to clarify a few points. First, Colorado is one of several states that now require voter approval for new taxes. Other states have followed Colorado’s lead, and adopted nearly identical taxpayer protections through constitutional amendments. But, as Professor Robert Natelson points out, Colorado’s TABOR “is only one of the stronger fiscal-restraint provisions that appear in the constitutions of the 49 states. (The exception is Vermont).” And to our point, all such taxpayer protections may be subject to challenge if TABOR is struck-down.

Second, I was painting with too broad of a brush in saying that no court has ever decided a Guarantee Clause case. To be sure, in 1875, the Supreme Court said, in Minor v. Happersett: “No particular government is designated as republican, neither is the exact form to be guaranteed, in any manner especially designated.” But, in so rejecting an appeal to the Guarantee Clause, the opinion suggests only that there is a lack of identifiable and judicially manageable standards for assessing Guarantee Clause claims.

Of course, it must be conceded that state courts have heard Guarantee Clause cases—as they are not bound by federal justiciability rules. But, I believe those cases suffer from the same vexing problem as the courts had struggled with before Vieth in attempting to resolve political gerrymandering cases without any identifiable, principled or judicially manageable standard. On close examination, state-based Guarantee Clause decisions either prove entirely unhelpful for the plaintiffs in Kerr or they fail to offer any discernible, principled and judicially manageable standard.

Finally, I must clarify that I am not convinced that there are any justiciable Guarantee Clause cases. But regardless of whether Guarantee Clause cases are categorically barred by the political questions doctrine, my fundamental point remains that the plaintiffs in this case have utterly failed to identify judicially manageable standards for the court to address their claim that TABOR has rendered Colorado anti-republican. And the Tenth Circuit’s decision has likewise failed to identify such standards. The case should have been dismissed.

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About Luke Wake

Luke A. Wake is a senior staff attorney at the NFIB Small Business Legal Center. Wake has particular expertise on environmental and land use issues, and has worked on numerous other constitutional issues and matters of importance to small business owners. He is an ardent defender of private property rights, which he believes are essential to the free enterprise system and the foundation of American liberty. As a strong advocate of individual rights and economic liberties, he has built his career defending small business interests. Since joining the NFIB Legal Center, Wake has focused on a whole host of issues, from employment law matters to regulatory compliance. In addition to serving as a resource for small business owners, Wake remains committed to the Legal Center’s pledge to ensure that the voice of small business is heard in the nation’s courts. He is also working to advance small business interests in law review articles, including publications in the Berkeley Journal of Law & Ecology, the Texas Journal of Law and Politics, and Competition Magazine. See R.S. Radford & Luke A. Wake, Deciphering and Extrapolating: Searching for Sense in Penn Central, 38 Ecology L.Q. 731, 746-747 (2011); Damien M. Schiff, Luke A. Wake, Leveling the Playing Field in David v. Goliath: Remedies to Agency Overreach, 17 Tex. L. Rev. & Pol. 97 (2012); Jarod M. Bona and Luke A. Wake, The Market-Participant Exception to State-Action Immunity From Antitrust Liability, J. of Antitrust and Unfair Competition of the State Bar of Ca., Vol. 23, No. 1, 156 (Spring 2014); James S. Burling and Luke A. Wake, Takings and Torts: The Role of Intention and Foreseeability in Assessing Takings Damages, in Condemnation 101: Making the Complex Simple in Eminent Domain 449-51 (ALI-ABA Committee on Continuing Professional Education eds. 2011). Before joining the Legal Center’s team, Wake completed a prestigious two-year fellowship as an attorney in the Pacific Legal Foundation’s (PLF) College of Public Interest Law. Wake is a graduate of Case Western Reserve University School of Law in Cleveland Ohio. He is a member of the California Bar, the District of Columbia Bar, and the U.S. Supreme Court Bar. He completed his undergraduate studies at Elon University in North Carolina in 2006 where he focused on political theory and corporate communications.
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One Response to The Tenth Circuit’s Punt in Kerr v. Hickenlooper Opens the Door for a Torrent of Litigation

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