[00:00:02] Speaker 00: Case number 15-5113, Robert Gordon Appellant versus Loretta E. Lynch in her official capacity as Attorney General of the United States at L. Mr. Streak for the appellant, Mr. Havman for the appellee. [00:00:22] Speaker 02: May I please the court? [00:00:24] Speaker 02: When the government seeks to moot a case that raises serious constitutional questions by claiming that it does not intend to enforce the challenge policy, the government bears what the Supreme Court has called a formidable burden to show that it is absolutely clear that the challenged conduct cannot reasonably be expected to recur. [00:00:48] Speaker 02: In Clark, this court explained how the government could make that heavy burden [00:00:53] Speaker 02: by getting a statement from the agency with litigating authority, the Department of Justice, to make a, quote, formal legal concession that the plaintiff would have a, quote, complete and adequate defense to any future prosecution. [00:01:08] Speaker 02: The government intentionally declined to provide that type of statement here. [00:01:12] Speaker 02: Instead, it got a statement from an agency official at an agency that does not have litigating authority, the ATF, and the statement merely states that that official does not have a current intent to seek or recommend enforcement action against Mr. Gordon. [00:01:28] Speaker 02: It's a far cry from the sort of formal legal concession of a complete and adequate defense that was at issue in Clark. [00:01:36] Speaker 02: Instead, the government's affidavit here is what this court called in Clark a statement, quote, of an official who simply told the court he had no current plans to prosecute. [00:01:48] Speaker 02: That was what was at issue in the Mesa case from the 10th Circuit, in which that court found that the dispute was not moot. [00:01:55] Speaker 02: In my remaining time, I'd like to touch on the two grounds. [00:01:59] Speaker 03: Just anticipating something that may not happen. [00:02:03] Speaker 03: Do you suppose that government counsel here can fill in the gaps in the government commitment? [00:02:13] Speaker 02: If the government makes a formal legal concession that Mr. Gordon would have a complete and adequate defense to any future prosecution, and this court characterizes that as such, then that would eliminate the future federal government enforcement [00:02:29] Speaker 02: as a basis for avoiding mutinous. [00:02:31] Speaker 02: It would not, however, address the tax burden that is imposed by the PAC Act on Mr. Gordon with respect to sales into states and localities that he has already engaged in. [00:02:44] Speaker 03: Right. [00:02:45] Speaker 03: That turns to the collateral consequences and claims by parties that would not be bound by any incremental decision reached here, right? [00:02:56] Speaker 02: And just to be clear, I think that question could be viewed under collateral consequences doctrine. [00:03:02] Speaker 02: But I think it's actually more naturally viewed as a direct consequence of Mr. Gordon failing to obtain a declaratory judgment in this case. [00:03:13] Speaker 02: because a declaratory judgment from the district court that the tax provisions cannot constitutionally be applied to Mr. Gordon prevents those tax provisions, prevents the tax burden from arising on Mr. Gordon in the first place. [00:03:28] Speaker 05: Well, who enforces this tax burden that you're talking about? [00:03:32] Speaker 05: Assuming it's not the federal government, because they've given an inappropriate statement, how would Mr. Gordon end up having to pay the tax? [00:03:41] Speaker 02: You would end up having to pay the tax if, let me step back just a bit, he currently has a tax obligation under the Pact Act. [00:03:51] Speaker 05: There's a dispute about that, and there's one reading, your reading, that says yes, government's reading says no, but even if your reading is right, if he doesn't pay the tax, who makes him pay? [00:04:04] Speaker 02: The state or the locality could bring an action. [00:04:07] Speaker 02: That's right. [00:04:07] Speaker 05: And when they bring that action, as Judge Williams was suggesting, at least asking, they would not be bound by any decision in this court, right? [00:04:18] Speaker 05: Imagine it was brought in New York. [00:04:21] Speaker 02: That's correct. [00:04:21] Speaker 02: They would not be bound by this court's decision. [00:04:24] Speaker 02: Right. [00:04:25] Speaker 05: So we can't give you any relief because you haven't brought in here any of the states. [00:04:30] Speaker 02: If our only argument was that an injunction would somehow prohibit the states and localities from bringing an action in the first instance, that may be a different case. [00:04:41] Speaker 02: But our argument is that [00:04:43] Speaker 02: Because the PACT Act is allowed to take effect if Mr. Gordon cannot get a declaratory judgment that the provisions are unconstitutional as to him, he has a tax obligation on the books at that time. [00:04:55] Speaker 02: And that precedes any... And that what? [00:05:00] Speaker 05: But the question is, who makes him pay? [00:05:03] Speaker 05: His view is that that tax obligation is unconstitutional. [00:05:06] Speaker 05: Now somebody has to sue him and make him pay that. [00:05:10] Speaker 05: And the only ones who can sue him leaving aside the federal government are states who we do not control. [00:05:18] Speaker 05: So we can't give you a remedy in that respect. [00:05:22] Speaker 02: Well, I disagree respectfully, Your Honor. [00:05:24] Speaker 02: And I think this Court's decision in Sissel, finding that the plaintiff there had standing, if he did not buy insurance to comply with the individual mandate, he would have a tax burden to comply with. [00:05:39] Speaker 02: The Court found standing on that basis, even though [00:05:42] Speaker 02: There wasn't necessarily, it didn't wait and say, well, you can enforce that when the government tries to enforce that. [00:05:48] Speaker 05: No, but that was a federal government, right? [00:05:51] Speaker 05: Yes, it was. [00:05:51] Speaker 05: And we're in the United States Court of Appeals for the District of Columbia Circuit, right? [00:05:56] Speaker 05: And we bind the federal government. [00:05:58] Speaker 05: But that's not the issue here. [00:06:00] Speaker 05: We do not bind New York State or the state of Arizona. [00:06:05] Speaker 05: We don't bind the Second Circuit. [00:06:07] Speaker 05: We don't bind the Ninth Circuit. [00:06:10] Speaker 05: So we can't give you the remedy. [00:06:12] Speaker 02: I agree that the judgment would not bind any enforcement action in the future. [00:06:18] Speaker 02: But I think even before there is an enforcement action, there is a monetary harm to Mr. Gordon, just as if he owed money under some other obligation. [00:06:27] Speaker 02: That's a monetary harm that's immediate, that is on the books, and that could be eliminated by a declaratory judgment of this court from arising even a declaratory judgment would prevent that even from arising in the first place. [00:06:41] Speaker 03: If you're overlooking Judge Garland's point that the decision of the district court heard by this court, we don't do that. [00:06:53] Speaker 03: We're not eliminating the obligation, however strong it may be. [00:07:01] Speaker 02: Right? [00:07:01] Speaker 02: I disagree, and I think it stems from the unique nature of this case. [00:07:06] Speaker 02: And the statute that's at issue, where it is the federal statute [00:07:10] Speaker 02: That is the only thing that causes the tax burden to arise on Mr. Gordon in the first place. [00:07:17] Speaker 02: And so a declaration that those tax provisions are unconstitutional and cannot be applied to Mr. Gordon would prevent the burden from arising in the first place and would eliminate that harm that Mr. Gordon suffers. [00:07:33] Speaker 03: But would it prevent it as to parties bound by the judgment, or would it prevent it as to parties not bound by the judgment? [00:07:42] Speaker 02: I guess we just have a respectful disagreement on that point, Your Honor. [00:07:46] Speaker 02: And I think, again, it does stem from the unique nature of this case. [00:07:50] Speaker 02: But I also think it's analogous to this court's decision in Abdel Fattah where the expungement of the records, even if it didn't lead to some future enforcement action, even if it didn't lead to some additional harm, the expungement of the records was enough to preserve the case from mootness just so here. [00:08:05] Speaker 05: But we had the authority to expunge the records. [00:08:08] Speaker 05: We could direct somebody to remove the records. [00:08:11] Speaker 05: We can't tell New York State not to regard the statute as constitutional. [00:08:16] Speaker 05: You agree that the precedent, our precedent alone, is not sufficient. [00:08:22] Speaker 05: Is that right? [00:08:22] Speaker 02: Yes, we do agree with that. [00:08:24] Speaker 02: And our point is simply that before you even get to the enforcement question, this court does have the authority to affirm a declaratory judgment that the federal defendants have enacted and essentially maintained an unconstitutional law that causes that burden to come into place in the first instance. [00:08:43] Speaker 02: So you have parties before the court [00:08:46] Speaker 02: who represent the entity that is causing this injury by causing it to come into effect. [00:08:50] Speaker 02: I understand it's a unique scenario that probably hasn't been presented before to this court. [00:08:55] Speaker 02: And I would say, Judge Williams, to your point, that to the extent we're concerned about parties not before the court and issues of that nature, the collateral consequences doctrine would preserve the case from mootness, because the whole point of the collateral consequences doctrine is that you could have parties not bound by the judgment that will nonetheless [00:09:14] Speaker 02: rely on the judgment, rely on the fact that there is a tax burden, and take action against Mr. Gordon. [00:09:20] Speaker 03: Let me ask you just a question about the relationship between what's at stake here and the status quo. [00:09:30] Speaker 03: The status quo, as I understand it, is that we have a preliminary injunction issued by the district court and affirmed by this circuit, right? [00:09:43] Speaker 03: Correct. [00:09:45] Speaker 03: Okay. [00:09:47] Speaker 03: And there's no motion to vacate that or any of the prior decisions. [00:09:53] Speaker 03: Indeed, no suggestion that the vacator is appropriate. [00:09:57] Speaker 03: I've seen quizzical looks on the other... That's correct. [00:10:00] Speaker 02: I have not seen that in the government's brief. [00:10:02] Speaker 03: I haven't seen anything on that. [00:10:03] Speaker 03: The precedent established by this Court's 2013 decision is quite substantial in terms [00:10:21] Speaker 03: signed to either the state or federal government, states or federal government, that pursuing action under the PAC Act is problematic, is legally problematic. [00:10:36] Speaker 03: And how much would you actually gain by having that preliminary injunction turned into a permanent one? [00:10:45] Speaker 02: Well, I suspect the reason the government has moved to vacate is because that preliminary injunction expressively did not reach the merits and said they're just significant constitutional questions. [00:10:56] Speaker 03: Well, you can't completely not reach the merits, right? [00:11:03] Speaker 03: Sure. [00:11:04] Speaker 03: The approach taken by that court was to say they were terribly evenly balanced. [00:11:09] Speaker 03: But that's a, particularly in light of the sand, which didn't think anything balanced at all, that's a quite a strong signal. [00:11:20] Speaker 02: I agree it would be a signal, but the states have the ability to come after Mr. Gordon and the localities, and I would point out. [00:11:27] Speaker 03: But as this three-way dialogue has suggested, they would still, in the event of your complete victory in getting a permanent adjunction, [00:11:39] Speaker 02: Well, I think it would be the declaratory judgment that would prevent the tax obligations from being imposed on Mr. Gordon in the first place that would prevent the states from being able to come after Mr. Gordon. [00:11:53] Speaker 02: And I would point out as well that [00:11:56] Speaker 02: In the Supreme Court's decision in lay law versus Friends of the Earth, the court took significant notice of the, quote, sunk cost to the judicial system in a case there where it had been going on for years. [00:12:08] Speaker 02: Here we have a case that's been going on for five years. [00:12:11] Speaker 05: Well, it's an interesting question about sunk cost. [00:12:14] Speaker 05: I regard the question of whether the statute is constitutional or not as a very difficult question, upon which two of my colleagues vociferously disagreed previously. [00:12:24] Speaker 05: I have not yet. [00:12:27] Speaker 05: sunk the cost of thinking about this question. [00:12:31] Speaker 05: And in fact, I am constantly reminded by the Supreme Court that I should try to avoid thinking about whether a congressional statute is constitutional if I don't have to. [00:12:40] Speaker 05: So I'm not sure where the sunk cost part comes in here. [00:12:43] Speaker 02: Well, I think where it comes in is that if it's a close call on mootness, sunk costs in terms of the judiciary's consideration of the case as a whole ought to weigh against mootness. [00:12:54] Speaker 02: I don't think the court can engage in naked constitutional avoidance [00:12:58] Speaker 02: If there is an Article III... I don't like that we're naked here. [00:13:01] Speaker 03: I'm not sure why the Supreme Court... That's what the Supreme Court seemed to like. [00:13:05] Speaker 03: Absolutely bare avoidance. [00:13:08] Speaker 02: I think in the context of what the Supreme Court actually says and holds, that can't be the case. [00:13:15] Speaker 02: And I think this Court's prudential mootness cases point out that if there is a constitutional question [00:13:24] Speaker 02: and the remedy that is being sought would not redress the injury, then that may weigh in favor of prudential mootness. [00:13:32] Speaker 02: But here, the remedy would [00:13:36] Speaker 02: redress the future risk of federal enforcement. [00:13:39] Speaker 05: That's not what our cases are about. [00:13:41] Speaker 05: By the way, I think prudential mootness is probably a bad phrase nowadays. [00:13:44] Speaker 05: So let's talk about what the cases actually say. [00:13:47] Speaker 05: They do use the words prudential mootness. [00:13:50] Speaker 05: But what they're really all about, and they're quite clear about this, is equitable discretion. [00:13:56] Speaker 05: You're asking for equitable relief here, a declaratory judgment or an injunction. [00:14:01] Speaker 05: And our case, the Penthouse case, the Chamber of Commerce case, [00:14:05] Speaker 05: And even in late law, the courts make quite clear that just because a case is not moot, it doesn't mean we have to exercise our equitable discretion. [00:14:19] Speaker 05: And one of the issues on equitable discretion, in fact, the principle of the four items with respect to a preliminary injunction is that you can't get adequate relief otherwise. [00:14:32] Speaker 05: When you brought this case, you were thinking of, I'm going to use the word avoidance, not in a bad sense, avoiding taxes in the future. [00:14:45] Speaker 05: You are no longer thinking about that. [00:14:48] Speaker 05: Whatever the clarity of the government's declaration is, the clarity of your clients is quite clear. [00:14:53] Speaker 05: We are not in this business anymore. [00:14:56] Speaker 05: So there is no future act that you need protection from, and therefore no chilling effect in the normal sense that we are concerned about preliminary injunctions. [00:15:07] Speaker 05: It is only about your past acts, which you've already done. [00:15:09] Speaker 05: You've either violated the law or not. [00:15:12] Speaker 05: You're either going to be sued by a state or not. [00:15:15] Speaker 05: It's not going to affect your primary behavior anymore. [00:15:19] Speaker 05: And so you have an adequate remedy at law. [00:15:21] Speaker 05: If you are someday sued, which seems to me almost incomprehensible given the fact that you were acting during a preliminary injunction which authorized your behavior, but if you were, you could defend. [00:15:37] Speaker 05: And in terms of some costs, that starts today. [00:15:41] Speaker 05: Either you're going to have to go back to the district court and have the district court here decide the constitutionality of the statute and then we decide that question, or you're going to go, say, in New York and have that district court decide it and have the Second Circuit decide it. [00:15:59] Speaker 05: And that is very unlikely ever going to happen, because it seems to me very unlikely you're ever going to be sued. [00:16:05] Speaker 05: So I don't see why the district court's evaluation here, where the district court said, even if I have jurisdiction, which is something we don't like courts to say, but they did say it, even if I had jurisdiction, I wouldn't exercise my equitable authority here, my equitable discretion here, because I don't want to reach a constitutional question. [00:16:24] Speaker 05: I don't have to. [00:16:25] Speaker 05: And I don't need to, because you guys are protected if there is a problem. [00:16:29] Speaker 05: then you'll be able to defend yourself. [00:16:32] Speaker 05: What's the answer to that? [00:16:33] Speaker 02: Well, there's a lot to unpack in that question. [00:16:35] Speaker 02: I appreciate it, I'm sorry. [00:16:36] Speaker 02: That's perfectly fine, of course. [00:16:38] Speaker 05: I feel like maybe a senator at a judicial committee hearing asking a very, very long question. [00:16:45] Speaker 02: I think the shortest and most direct answer to what you're getting at is that [00:16:50] Speaker 02: if what the district judge did was withhold equitable relief as opposed to dismiss for subject matter jurisdiction, which is the way this court characterized it in its most recent prudential mootness case, the MBIA case. [00:17:05] Speaker 05: But we never characterized it that way before, and late law makes pretty clear that that's not the way to characterize it. [00:17:12] Speaker 05: And the district court here didn't say that. [00:17:16] Speaker 05: The district just says, for these reasons, the court will exercise its discretion to decline to decide these difficult and important constitutional questions until they are squarely presented. [00:17:30] Speaker 02: Well, they are squarely presented now. [00:17:32] Speaker 05: That's a different question. [00:17:33] Speaker 05: The question is whether it's subject matter jurisdiction. [00:17:35] Speaker 02: OK. [00:17:36] Speaker 02: I agree the court's cases speak out of both sides of its mouth in a sense on that question. [00:17:41] Speaker 05: I don't like that phrasing. [00:17:42] Speaker 02: Well, I think it's a reaction to the fact that this is an unclear doctrine. [00:17:47] Speaker 02: It's been called into question by the Supreme Court. [00:17:50] Speaker 02: But I think if the court is going to withhold relief on an equitable basis, there's an established way to do that. [00:17:57] Speaker 02: It has to run through the four factor test [00:18:00] Speaker 02: that is a balancing test that determines, first of all, whether there's a constitutional violation, irreparable harm, public interest, all of those factors. [00:18:09] Speaker 05: They don't have to decide there's a constitutional violation. [00:18:11] Speaker 05: All they have to decide is what they did decide here, which is when he originally granted a preliminary injunction that it was, I don't know, probably, I can't remember what the exact phraseology is, but that you made a reasonable claim of one, and then he goes on in saying, [00:18:30] Speaker 05: The judge goes on to say this would have no effect on Gordon's future conduct. [00:18:38] Speaker 05: Therefore, it's speculative. [00:18:41] Speaker 05: You seek equitable relief that would invalidate a part of the federal statute. [00:18:45] Speaker 05: Under these circumstances, the court should stay at hand. [00:18:49] Speaker 05: Now, what else would you like him to say? [00:18:51] Speaker 02: Well, I think he needs to evaluate. [00:18:52] Speaker 02: First of all, I don't think he said it was a probable right to relief. [00:18:56] Speaker 02: Right under the permanent injunction test, it would have to be whether there was actually a violation or not. [00:19:01] Speaker 02: And that would be given heavy weight in the four-factor test. [00:19:04] Speaker 02: And then you would run through the other factors. [00:19:07] Speaker 05: But I think my point is that you think he has to, in order to decide equitable relief, he has to decide that question. [00:19:14] Speaker 05: That's a preliminary injunction question. [00:19:16] Speaker 05: That's not a question for equitable relief. [00:19:20] Speaker 02: I believe this Court has always included that as one of the factors. [00:19:24] Speaker 02: Now, perhaps the Court could somehow pre-dermit that question, but I don't think the Court engaged in the balancing that it needed to do in the first instance. [00:19:33] Speaker 02: And I think what this Court is talking about in its prudential mootness cases, every single one, the primary thing that exists is that the relief requested would not redress the injury. [00:19:46] Speaker 02: And we don't have that problem here, because Mr. Gordon does face a risk that the government has refused to abjure, and he faces the immediate harm from the tax obligations that are imposed on him by the PAC Act. [00:20:04] Speaker 02: And once that is true, then you have Article III satisfied. [00:20:10] Speaker 02: If Article III is satisfied, [00:20:13] Speaker 02: I don't think there's any such thing as prudential mootness, and I don't think the Court can take into account – once Article 3 is satisfied, I don't believe the Court can take into account whether there's a difficult constitutional question. [00:20:24] Speaker 02: I think that's been clearly established by the Supreme Court's recent cases, that there's a virtually unflagging obligation to exercise jurisdiction to decide constitutional questions that are presented. [00:20:36] Speaker 02: Now, the court may be able to go back and balance that against – it can balance whatever risk of current harm there is versus the possibility that Mr. Gordon could raise that in a future proceeding. [00:20:48] Speaker 02: But the fact is that under collateral consequences doctrine, Mr. Gordon already has an existing tax obligation, and he won't have the opportunity necessarily to address that question. [00:21:02] Speaker 02: He has those obligations on the books. [00:21:04] Speaker 02: They have collateral consequences in the future. [00:21:07] Speaker 02: And the government, I think it's very interesting to point out, got declarations from the six state officials from the states in which Mr. Gordon sold his products. [00:21:17] Speaker 02: But they didn't ask those states whether they intended to enforce the law against Mr. Gordon. [00:21:22] Speaker 02: They got all kinds of other declarations. [00:21:24] Speaker 02: They could have redressed that collateral consequences question, and they declined to do so. [00:21:31] Speaker 02: If there are no further questions, I'll save some time for rebuttal. [00:21:35] Speaker 02: Okay, thank you. [00:21:36] Speaker 02: We'll hear from the government. [00:21:47] Speaker 01: May it please the Court, we'll have him in on behalf of the Attorney General. [00:21:51] Speaker 01: When this case was last on appeal, the court concluded that the case survived the closure of Mr. Gordon's business, but only because Mr. Gordon's wife and business partner declared that they intended to reopen that business if they prevailed in this lawsuit. [00:22:04] Speaker 01: Therefore, the one thing that preserved the case of controversy during the last appeal is indisputedly no longer true in this case. [00:22:10] Speaker 01: That is, Mr. Gordon will not reopen his business no matter what happens, and he's stipulated to that in district court. [00:22:16] Speaker 01: He's repeated it here, and he's bound by a consent decree entered into in the Southern District of New York that prevents him from ever selling cigarettes again. [00:22:24] Speaker 01: Mr. Gordon's conduct is therefore totally unaffected by the tax provisions of the PACT Act that he asks this Court to declare unconstitutional. [00:22:31] Speaker 03: I think it's hard to read that passage as globally resolving all future pollutants issues with respect to this case. [00:22:40] Speaker 03: This is the only thing here. [00:22:43] Speaker 03: It's enough to move on. [00:22:45] Speaker 01: I think that that's right, but I also think that it's noteworthy. [00:22:49] Speaker 01: The court recognized that although the case was not then moot, the court recognized that circumstances could develop on remand that would moot the case going forward, and it's difficult to imagine what this court thought could have possibly mooted the case, if not the permanent closure of Mr. Borden's business. [00:23:04] Speaker 03: coupled with the declaration by the United States that we don't intend to prosecute him for his past violations. [00:23:23] Speaker 01: We did not intend to be mealy-mouthed, Your Honor, and I will not be mealy-mouthed here. [00:23:27] Speaker 01: The government can represent to this court that if the record is accurate, that is, if Mr. Gordon is in fact out of business, and if he will not reenter business, the United States government will not seek to hold him either civilly or criminally liable under the tax provisions of the PACT Act for his past conduct. [00:23:43] Speaker 03: And that, under Clark, is more than enough to... The only contingency lurking in the word current is Mr. Gordon staying out of the business. [00:23:51] Speaker 01: That's right, and that NT is bound to do so, but just in case the record is inaccurate for whatever reason. [00:23:57] Speaker 01: And that is more than enough under Clark. [00:24:01] Speaker 01: And I think that it's important to note that even apart from the government's representation in this case, the idea that the government will go after Mr. Gordon for his past violations of the PAC Act is inconceivable. [00:24:14] Speaker 01: These provisions were subject to a PI at all relevant times. [00:24:18] Speaker 01: Their constitutionality has never been upheld in a court of appeals and has been called into question twice. [00:24:23] Speaker 01: We disagree with that. [00:24:24] Speaker 01: And Mr. Gordon has engaged in other violations of the law, such that if some future prosecutor wanted to disregard the representation that we have made to the court, there would be ample bases for liability other than these tax provisions. [00:24:39] Speaker 01: And under Clark, that is more than enough. [00:24:42] Speaker 01: This court's on-bank decision in Clark recognized that it doesn't need to be a zero-risk future prosecution. [00:24:47] Speaker 01: Rather, the question is whether future prosecution is speculative, and it is far more than speculative here. [00:24:57] Speaker 03: Your face expressed thoughts when I was discussing with counsel the question of the survival of the preliminary injunction. [00:25:06] Speaker 01: That's right. [00:25:07] Speaker 01: So on page 216 of the record, the district court vacated the preliminary injunction. [00:25:12] Speaker 01: So there is no preliminary injunction on appeal. [00:25:16] Speaker 01: And so I think that that's also relevant because I think that... [00:25:21] Speaker 03: I obviously missed that. [00:25:25] Speaker 03: What did the district court say in justifying that? [00:25:28] Speaker 01: The district court, I'm not sure that the district court engaged in much of an analysis. [00:25:32] Speaker 01: I think the district court said that basically this isn't going to have any effect on Mr. Gordon's future conduct. [00:25:37] Speaker 01: And therefore, there is no basis for the preliminary injunction to stand. [00:25:42] Speaker 01: And I think that that was absolutely correct. [00:25:44] Speaker 01: And here, what Mr. Gordon is asking this court to do is require the district court to go back and enter an injunction. [00:25:51] Speaker 01: And I think that it's useful to step back and recognize... Wasn't the district court's point that the case is moot, so he's vacating his injunction? [00:25:59] Speaker 01: That's right. [00:26:01] Speaker 01: That's right. [00:26:02] Speaker 01: The case is moot, and so he's vacating the injunction. [00:26:04] Speaker 03: Because that doesn't follow automatically. [00:26:07] Speaker 03: It's the second step after mootness. [00:26:10] Speaker 03: I take it the district court didn't pursue that second step. [00:26:14] Speaker 01: I think that, as I recall, there was a brief discussion of why it was appropriate to vacate the injunction. [00:26:20] Speaker 01: I don't recall exactly what the district court said. [00:26:24] Speaker 01: But I think that the district court, the gist of it was that this is not going to have any effect. [00:26:28] Speaker 05: Munson worries about vacating an opinion. [00:26:31] Speaker 05: It's not at all about injunctions. [00:26:34] Speaker 05: And he didn't vacate his opinion. [00:26:36] Speaker 05: He just vacated the injunction. [00:26:38] Speaker 05: That's right. [00:26:39] Speaker 05: So whatever precedential value his opinion had, I guess it still stands. [00:26:45] Speaker 05: That's correct. [00:26:46] Speaker 05: And he certainly didn't vacate our opinion. [00:26:48] Speaker 05: And no one's asked us to vacate our opinion. [00:26:51] Speaker 05: No, that's right. [00:26:51] Speaker 05: I presume the government is not going to ask us to do that. [00:26:53] Speaker 01: I have no intention of asking you that. [00:26:55] Speaker 01: Excellent answer. [00:26:59] Speaker 01: So I think, and I do think that that point is relevant to the question of mootness. [00:27:04] Speaker 01: In the normal collateral consequence case, there is a judgment on the books. [00:27:09] Speaker 01: And although the primary consequence of that judgment has expired, there are collateral consequences to the judgment that still have an effect on the party seeking relief. [00:27:18] Speaker 01: And here, there's simply no judgment. [00:27:20] Speaker 01: And what Mr. Borden is asking is it's asking this court to require the district court to go back and enter a judgment. [00:27:29] Speaker 01: To do that, this court would have to be convinced not only that an Article III case or controversy survives the closure of this business, but also that the District Court abused its discretion in declining to grant relief that I think everyone agrees is in all events discretionary. [00:27:46] Speaker 01: And I don't think that Mr. Gordon comes close to meeting that burden. [00:27:51] Speaker 03: You, um, in your treatment of the collateral consequences issue, you say, page 29, in the cases Gordon cited, um, the court retained the power to [00:28:12] Speaker 03: That's the case, for example, in Justine, the findings [00:28:23] Speaker 03: That's right. [00:28:38] Speaker 01: In Justine and in the typical collateral consequence case that arises in a criminal context, there's a judgment that has been entered against the party seeking relief. [00:28:48] Speaker 01: And although the primary result of that judgment has expired, has gone, there are other consequences to the judgment, real-world practical consequences on the party seeking relief, that getting rid of the judgment can eliminate. [00:29:01] Speaker 01: And that was the case in Justine, and it's the case... [00:29:03] Speaker 01: may eliminate, can eliminate, yes. [00:29:06] Speaker 01: And here, that is not the case. [00:29:08] Speaker 03: Eliminate is overstating it, substantially. [00:29:11] Speaker 01: Well, it can alleviate, can help to remedy. [00:29:14] Speaker 01: And here, there is no question. [00:29:17] Speaker 05: Can you just remind me, Justine, the facts, what's the issue? [00:29:22] Speaker 01: Justine was a civil commitment case. [00:29:24] Speaker 01: And the plaintiff in that case, or I think that's right, the plaintiff in that case had been adjudicated to be [00:29:34] Speaker 01: It was adjudicated to be, I think it was some kind of, it was a sexual something. [00:29:41] Speaker 05: A very bad thing. [00:29:43] Speaker 05: And the problem was that there were other statutes, say in other states, [00:29:49] Speaker 05: which added consequences to a previous commitment. [00:29:55] Speaker 05: So the classic collateral consequences case is we have a case in this court, the person is convicted of a drug crime, he serves his sentence [00:30:07] Speaker 05: and and he's out and now government says it's moot and the court says well it's not moot because he has a conviction for drug crime which in another state or at another time could lead to an enhanced sentence but the reason it leads to an enhanced sentence is because another state has a statute that says if you were convicted in federal court then we are going to count this against you so [00:30:35] Speaker 05: well we are the only ones who can control the question of whether person has been convicted or uh... or or it's been reversed that's absolutely right and that's fiction doesn't strike me to be the situation here that's exactly the the the state is not saying [00:30:50] Speaker 05: I don't know, say New York is not saying if the only way we're going to impose taxes is if the DC Circuit either keeps or doesn't keep the constitutionality of the, it's nice if they would say that, but no other state seems to have that view. [00:31:11] Speaker 01: That's right. [00:31:12] Speaker 01: And as Mr. Gordon, I think, conceded, nothing about this case will bind third party states or localities if they seek to enforce the PACT Act against Mr. Gordon. [00:31:23] Speaker 01: I think that the most that he can argue is that a favorable decision in this case would be helpful to him. [00:31:28] Speaker 01: in a later suit brought by such a state or locality, but every court to address that basis or that defense to mootness has rejected it. [00:31:36] Speaker 01: And I think that Judge Posner in the Seventh Circuit said that if that was enough to prevent a case from becoming moot. [00:31:40] Speaker 01: Well, even better. [00:31:40] Speaker 05: Then Judge Scalia said that for this court in radiophone. [00:31:45] Speaker 05: Even better. [00:31:46] Speaker 05: Better because it binds us. [00:31:48] Speaker 05: Right. [00:31:49] Speaker 03: An understanding, wasn't it? [00:31:51] Speaker 01: Yes, an understanding question. [00:31:53] Speaker 01: If there are no further questions, we ask that the court affirm. [00:31:58] Speaker 01: Any time left? [00:32:00] Speaker 05: We'll give you another two minutes anyway. [00:32:06] Speaker 02: Thank you, Your Honor. [00:32:07] Speaker 02: Just to be clear, I may have misunderstood the question. [00:32:11] Speaker 02: I didn't mean to say that Judge Lambert had not vacated the preliminary injunction. [00:32:16] Speaker 02: I thought the question concerned whether this court's previous opinion had been vacated. [00:32:22] Speaker 02: And I apologize if it was my fault. [00:32:25] Speaker 02: And the government has not asked this court to vacate its previous opinion. [00:32:30] Speaker 02: If Mr. Gordon is sued by one of the states, [00:32:36] Speaker 02: Mr. Gordon will have to raise a federal affirmative defense at that time, and he'll have to bring in the government. [00:32:41] Speaker 02: So it's exactly the same thing that's happening right now. [00:32:44] Speaker 02: The federal government is the cause of the tax obligation that arises [00:32:50] Speaker 02: under the PAC Act. [00:32:51] Speaker 05: Why will they have to bring in the federal government? [00:32:55] Speaker 05: If New York sues them for taxes, and the ground for their suit is the section of the PAC Act which allows such suits, and he says the PAC Act is unconstitutional, the federal government doesn't have to be a party. [00:33:11] Speaker 02: Well, I suspect they would intervene to defend the constitutionality of the statute, and we'd be right back where we are now. [00:33:17] Speaker 02: And so I think to say it's adequate or in some way a reason to avoid deciding a case that's before the court is not accurate. [00:33:25] Speaker 05: And the reason to avoid is that we don't know that's ever going to happen. [00:33:29] Speaker 05: This is exactly, notwithstanding what we were talking about before, this is exactly what we said in the Penthouse case that [00:33:39] Speaker 05: The Declaratory Judgment Act states only that a court may declare the rights and other legal relations of any interested party. [00:33:46] Speaker 05: Where it's uncertain that declaratory relief will benefit the party alleging injury, the court will normally refrain. [00:33:52] Speaker 05: This is especially true where the court can avoid the premature adjudication of constitutional issues. [00:33:59] Speaker 02: Well, I don't think that's good law. [00:34:01] Speaker 02: I think that's questionable law after the prudential [00:34:05] Speaker 02: Article 3 decisions of the Supreme Court. [00:34:07] Speaker 02: I understand this court is bound by that, but I also don't think the first factor is met because a declaratory judgment that the tax provisions cannot be applied, it doesn't just have a precedential or an influential effect on other jurisdictions. [00:34:22] Speaker 02: It prevents those tax obligations from ever being imposed on Mr. Gordon in the first instance. [00:34:27] Speaker 02: If I could just briefly address the [00:34:31] Speaker 03: Here, disregarding the fact that an adjudication resolves issues between the parties to the adjudication doesn't make a world different apart from that. [00:34:45] Speaker 03: It doesn't make it legally different apart from that. [00:34:50] Speaker 03: So it's all very well to say, and newspapers always do, that such and such a statute was thrown out. [00:34:56] Speaker 03: Well, it isn't thrown out. [00:34:59] Speaker 02: I understand your point and that it doesn't bind the world, but it does affect Mr. Gordon's current legal obligations to the states and localities. [00:35:10] Speaker 02: He is currently legally obligated to pay taxes. [00:35:16] Speaker 02: regardless of whether there's any future enforcement by the states or localities. [00:35:21] Speaker 02: And we don't need the states to be a party to that sort of determination. [00:35:25] Speaker 02: In fact, the federal government is the proper defendant because it's the federal government's actions in enacting and maintaining the PACT Act that have imposed [00:35:34] Speaker 02: that tax burden in the first instance. [00:35:36] Speaker 02: Nothing the state has done imposes the tax burden. [00:35:39] Speaker 02: They don't have that authority. [00:35:41] Speaker 02: It's the federal government that has imposed it, and therefore it's the federal government that's the proper defendant in a declaration that the statute's unconstitutional prevents that harm from coming in the first place. [00:35:51] Speaker 02: And if I could briefly address some of the questions about Justine for 30 seconds. [00:35:56] Speaker 02: I think what was important about Justine is that [00:36:01] Speaker 02: This court said it wasn't the burden on the plaintiff to try to negate the fact that there would be, to try to prove up the fact that there would be collateral consequences. [00:36:11] Speaker 02: It was the burden on the government to negate and to show that there would be no collateral consequences. [00:36:17] Speaker 02: The government has simply defaulted on that here. [00:36:20] Speaker 02: And here we will have a judgment with the effect that the tax provisions apply to Mr. Gordon [00:36:28] Speaker 02: and that Mr. Gordon has a tax obligation. [00:36:31] Speaker 02: And those, I think it's natural to assume that if you have tax obligations to states or localities, that affects your legal rights in those states or localities. [00:36:41] Speaker 02: There's a risk that those states or localities could take some legal action against Mr. Gordon. [00:36:46] Speaker 02: And because the government has failed to negate that point, that is a collateral consequence that prevents mootness. [00:36:50] Speaker 05: Just for interest, what section of the statute do you think imposes the tax [00:36:55] Speaker 05: obligation to pay taxes by Mr. Gordon. [00:36:59] Speaker 05: The 376A imposes an obligation to collect taxes by Mr. Gordon. [00:37:07] Speaker 05: It doesn't say Mr. Gordon has to pay the tax. [00:37:10] Speaker 02: Well, I would respectfully disagree with that because... Just refer me to the section. [00:37:15] Speaker 02: Sure. [00:37:15] Speaker 02: 376A that I believe you were looking at says [00:37:21] Speaker 02: No delivery seller. [00:37:22] Speaker 02: This is AA3. [00:37:28] Speaker 02: It says, no delivery seller may sell or deliver to any consumer any cigarettes or smokeless tobacco pursuant to delivery sale unless in advance of the sale, go down. [00:37:42] Speaker 04: Which section are you on? [00:37:43] Speaker 04: You're on D now? [00:37:44] Speaker 04: 3C, right? [00:37:45] Speaker 04: Yes. [00:37:46] Speaker 04: Yes, go ahead. [00:37:48] Speaker 02: Unless in advance of the sale, go down. [00:37:51] Speaker 02: to any cigarette or smokeless tobacco excise tax that is imposed by the state in which cigarettes or smokeless has been paid to the state. [00:38:03] Speaker 05: Yeah, so that's a good question about sunk costs. [00:38:05] Speaker 05: Here the Congress has done its favorite thing, which is to use the passive tense. [00:38:11] Speaker 05: It doesn't say who is supposed to have paid this. [00:38:14] Speaker 05: And the government's position is paid by the smoker, by the buyer. [00:38:19] Speaker 05: And your position is paid by the seller. [00:38:21] Speaker 02: Correct. [00:38:21] Speaker 02: And let me unpack that just a little bit. [00:38:23] Speaker 02: Because the only way a tax can be paid to the state before the sale is by the seller buying the excise tax stamp from the state. [00:38:35] Speaker 02: The buyer doesn't – it gets passed on to the buyer. [00:38:39] Speaker 05: This, I have to say, is another one of these sunk costs that's not yet been sunk. [00:38:42] Speaker 05: And the government argues to the contrary. [00:38:45] Speaker 05: I don't know what the right answer to this question is. [00:38:46] Speaker 02: Well, I think it's just very clear when you look at the legislative histories directly on point. [00:38:52] Speaker 02: It said – I'm quoting – the delivery seller must pay all applicable excise taxes [00:38:58] Speaker 02: and to fix all required stamps in advance of delivery. [00:39:01] Speaker 05: Well, the same spree court opinion that you're relying on for reversing our previous cases tells us not to look at the legislative history. [00:39:08] Speaker 02: If the statutory language is clear. [00:39:10] Speaker 02: If it's clear. [00:39:12] Speaker 02: Okay, thank you. [00:39:12] Speaker 05: We'll take the matter under submission.