Simon v. Eastern Kentucky Welf. Rights. Org., 426 U.S. 26 (1976)

MR. JUSTICE BRENNAN, with whom MR. JUSTICE MARSHALL joins, concurring in the judgment.

I agree that, in this litigation as it is presently postured, respondents (herein used to refer to plaintiffs below) have not met their burden of establishing a concrete and reviewable controversy between themselves and the Government with respect to the disputed Revenue Ruling. That is, however, the full extent of my agreement with the Court in this case. I must dissent from the Court’s reasoning on the standing issue, reasoning that is unjustifiable under any proper theory of standing and clearly contrary to the relevant precedents. The Court’s further obfuscation of the law of standing is particularly unnecessary when there are obvious and reasonable alternative grounds upon which to decide this litigation.

I

Respondents brought this action for declaratory and injunctive relief, seeking, inter alia, a declaration that Revenue Ruling 69-545 is inconsistent with the relevant provisions of the Internal Revenue Code and promulgated in violation of the rulemaking provisions of the Administrative Procedure Act, 5 U.S.C. § 553. Respondents claimed to be indigents, to be in need of free or below-cost medical care provided by private, nonprofit hospitals accorded tax-exempt status under the Internal Revenue Code, and to be protected by and beneficiaries of the provisions of the Code providing for tax-exempt status for nonprofit organizations engaging in "charitable" activities. Respondents alleged that they had, in specified instances, been denied provision of free or below-cost medical services by nonprofit hospitals accorded tax-exempt status under the Code, and that, by issuing the disputed Revenue Ruling, the Internal Revenue Service was "encouraging" tax-exempt hospitals to deny them such services. Accordingly, respondents alleged, the IRS was injuring them in their "opportunity and ability" to receive medical services, and doing so illegally, in derogation of the results intended by the "charitable" provisions of the Code.

However, as noted by the Court, the disputed Ruling, on its face, applies only to a narrow category of nonprofit hospitals -- those fairly characterized by the factual and legal circumstances described in the Ruling as pertaining to "Hospital A." The Ruling does not indicate what treatment will be accorded hospitals not within the situation described in the hypothesis.{1} The most hotly contested portion of the disputed ruling, that modifying the earlier Revenue Ruling 56-185 by "remov[ing] therefrom the requirements relating to caring for patients without charge or at rates below cost," is, at best, ambiguous regarding its application or effect respecting nonprofit hospitals not within the factual and legal situation of Hospital A. Accordingly, there is simply no ripe controversy with respect to a claim that the disputed ruling illegally "encourages" all nonprofit hospitals to withdraw the provision of indigent services by removing from all hospitals the requirement of such services as a prerequisite to tax-exempt status.

This was the position of the Secretary of the Treasury and the Commissioner of Internal Revenue with respect to the disputed Ruling at oral argument,{2} and no representation to the contrary appears in the record. Moreover, no facts were alleged or introduced in the District Court that in any way indicated with more specificity that the disputed Ruling had or was intended to have application to all nonprofit hospitals. Respondents apparently made no attempt to clarify the meaning of the Ruling in this regard, as, for example, by filing with the IRS a petition for clarification of the Ruling pursuant to the Administrative Procedure Act, 5 U.S.C. § 555(e), see, e.g., Dunlop v. Bachowski, 421 U.S. 560, 573 (1975), or by petitioning for a revision of the Ruling pursuant to that Act, 5 U.S.C. § 553(e), cf. Oljato Chapter of Navajo Tribe v. Train, 169 U.S.App.D.C.195, 207, 515 F.2d 654, 666-667 (1975), or by seeking clarification by means of discovery or an informal request. Accordingly, with respect to any claim that the Ruling illegally withdraws the requirement of the provision of indigent services from all hospitals seeking tax-exempt status under the "charitable" provisions of the Code, a

lack of ripeness inhere[s] in the fact that the need for some further procedure, some further contingency of application or interpretation . . . serve[s] to make remote the issue which was sought to be presented to the Court.

Poe v. Ullman, 367 U.S. 497, 528 (1961) (Harlan, J., dissenting). Cf. Toilet Goods Assn. v. Gardner, 387 U.S. 158, 163-164 (1967).{3}

It is clear beyond question . . . that [the disputed Ruling], on [its] face, raise[s] questions which should not be adjudicated in the abstract and in the general, but which require a "concrete setting" for determination.

Gardner v. Toilet Goods Assn., 387 U.S. 167, 197 (1967) (opinion of Fortas, J.).

Further, if respondents wished to challenge the legality of the Ruling in respect to the unambiguous aspects of its application -- its application to hospitals fairly coming within the situation described as pertaining to Hospital A -- it was incumbent upon them to allege, and, at the appropriate stage of the litigation, to offer evidence to show that the hospitals whose conduct affected them were hospitals whose operations could fairly be characterized as implicated by the terms of the Ruling. Such allegations and showings were necessary to demonstrate some logical connection or nexus between the wrongful action alleged, the issuance of the disputed Ruling, and the harm of which respondents complain, injury to their "opportunity and ability" to secure medical services. This is required, of course, by the only constitutional, "case or controversy," policy affecting the law of standing -- to ensure that the party seeking relief has

alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the [C]ourt so largely depends for illumination of difficult . . . questions.

Baker v. Carr, 369 U.S. 186, 204 (1962).

The allegations of the complaint are probably sufficient to state this claim with respect to certain of the respondents. {4} In any event, however, the petitioners (used herein to refer to defendants below) later moved for summary judgment on the standing issue, specifically arguing that

[t]he plaintiffs have failed to demonstrate that the alleged injuries complained of herein were incurred as a result of any actions on the part of the defendants.

App. 154. At this point in the litigation, it was clearly incumbent upon the respondents to make a showing sufficient to create a material issue of fact whether there was any connection between the hospitals affecting them and the Ruling alleged to be illegally "encouraging" tax-exempt hospitals to withdraw the provision of indigents’ services, thereby injuring respondents’ "opportunity and ability" for such services.See Barlow v. Collins, 397 U.S. 159, 175, and n. 10 (1970) (opinion of BRENNAN, J.).{5} No such showing was made. There is absolutely no indication in the record that the contested Ruling altered the operation of these hospitals in any way, or that the tax-exempt status of these hospitals was in any way related to the Ruling. Accordingly, the petitioners were entitled to judgment in their favor on their motion for summary judgment.

II

The Court today, however, wholly ignores the foregoing aspects of this case. Rather, it assumes that the governmental action complained of is encouraging the hospitals affecting respondents to provide fewer medical services to indigents. Ante at 42, and n. 23. This is done in order to make the gratuitous and erroneous point that respondents, as a prerequisite to pursuing any legal claims regarding the Revenue Ruling, must allege and later prove that the hospitals affecting respondents "are dependent upon" their tax-exempt status, ante at 44, that they would not, in the absence of the Ruling’s assumed "encouragement," "elect to forgo favorable tax treatment," and that the absence of the allegedly illegal inducement would "result in the availability to respondents of such services," ante at 43. In reaching this conclusion, the Court abjures analysis either of the Art. III policies heretofore assumed to inhere in the constitutional dimension of the standing doctrine, or of the relevant precedents of this Court.{6}

A

First, the Court’s treatment of the injury-in-fact standing requirement is simply unsupportable in the context of this case. The wrong of which respondents complain is that the disputed Ruling gives erroneous economic signals to nonprofit hospitals whose subsequent responses affect respondents; they claim the IRS is offering the economic inducement of tax-exempt status to such hospitals under terms illegal under the Internal Revenue Code. Respondents’ claim is not, and by its very nature could not be, that they have been and will be illegally denied the provision of indigent medical services by the hospitals. Rather, if respondents have a claim cognizable under the law, it is that the Internal Revenue Code requires the Government to offer economic inducements to the relevant hospitals only under conditions which are likely to benefit respondents. The relevant injury in light of this claim is, then, injury to this beneficial interest -- as respondents alleged, injury to their "opportunity and ability" to receive medical services. Respondents sufficiently alleged this injury, and if, as the Court so readily assumes, they had made a showing sufficient to create an issue of material fact that the Government was injuring this interest, they would continue to possess standing to press the claim on the merits.

Clearly such conditions, if met, would provide the essence of the only constitutionally mandated element of standing -- a personal stake sufficient to create concrete adverseness meeting minimal conditions for Art. III justiciability. Baker v. Carr, 369 U.S. at 204; Barlow v. Collins, supra at 164. See also United States v. Richardson, 418 U.S. 166, 196 n. 18 (1974) (POWELL, J., concurring). Nothing in the logic or policy of constitutionally required standing is added by the further injury-in-fact dimension required by the Court today -- that respondents allege that the hospitals affecting them would not have elected to forgo the favorable tax treatment, and that this would "result in the availability to respondents of" free or below-cost medical services.

Furthermore, the injury of which respondents complain is of a continuing and continuous nature, and the additional allegations and showings that the Court requires would not be determinative of the hospitals’ future conduct. Even if a given hospital affecting respondents had in the past made its determination regarding indigent services without regard to the tax consequences of that determination -- would have elected to forgo favorable tax treatment in the absence of the allegedly illegal "encouragement" -- such a choice presumably would be subject to continuous reevaluation in the future, as the hospital’s circumstances, the economic climate, and expectations regarding donor contributions changed over time. Respondents complain of and seek relief from the threat of future policy determinations by the hospitals based on the allegedly illegal tax Ruling, not redress for past "encouragement." We have often found standing in plaintiffs to complain of such future harm irrespective of any showing of the realization of such threatened injuries in the past. E.g., Doe v. Bolton, 410 U.S. 179, 188 (1973); Epperson v. Arkansas, 393 U.S. 97, 101-102 (1968).

Indeed, to the extent that there is Art. III substance to the concerns addressed by the Court today, it is not a question of standing -- of identifying the proper party to bring the action -- but rather whether the threat of the more ultimate future harm is of sufficient immediacy to meet the minimum requirements of Art. III justiciability. The task is one of distinguishing between a "justiciable controversy" and a "difference or dispute of a hypothetical or abstract character," Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240 (1937), and the question is "necessarily one of degree." Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941); Golden v. Zwickler, 394 U.S. 103, 108 (1969).

[I]t would be difficult, if it would be possible, to fashion a precise test for determining in every case whether there is such a controversy. Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.

Ibid. If, as the Court assumes, respondents had demonstrated that the disputed Ruling had application to the hospitals affecting them, I would have no doubt that this standard had been met. In such a case, I would readily conclude:

[T]he challenged governmental activity . . . is not contingent, . . . and, by its continuing and brooding presence, casts what may well be a substantial adverse effect on the interests of the [responding] parties.

* * * *

Where such state action or its imminence adversely affects the status of private parties, the courts should be available to render appropriate relief and judgments affecting the parties’ rights and interests.

Super Tire Engineering Co. v. McCorkle, 416 U.S. 115, 122, 125 (1974).

B

Second, the Court’s treatment of the injury-in-fact requirement directly conflicts with past decisions. Respondents brought this action seeking general statutory review of administrative action under the provisions of the Administrative Procedure Act. Hence, the governing precedents respecting standing are those developed in Data Processing Service v. Camp, 397 U.S. 150 (1970); Barlow v. Collins, 397 U.S. 159 (1970); Sierra Club v. Morton, 405 U.S. 727 (1972); and United States v. SCRAP, 412 U.S. 669 (1973). See also Harding v. Kentucky Utilities Co., 390 U.S. 1 (1968). Any prudential, nonconstitutional considerations that underlay the Court’s disposition of the injury-in-fact standing requirement in cases such as Linda R.S. v. Richard D., 410 U.S. 614 (1973),{7} and Warth v. Seldin, 422 U.S. 490 (1975), are simply inapposite when review is sought under a congressionally enacted statute conferring standing and providing for judicial review.{8} In such a case, considerations respecting "the allocation of power at the national level [and] a shift away from a democratic form of government," United States v. Richardson, 418 U.S. at 188 (POWELL, J., concurring), are largely ameliorated, and such prudential limitations as remain are supposedly subsumed under the "zone of interests" test developed in Data Processing Service v. Camp, supra.{9} See United States v. Richardson, supra at 196 n. 18 (POWELL, J., concurring).

Our previous decisions concerning standing to sue under the Administrative Procedure Act conclusively show that the injury in fact demanded is the constitutional minimum identified in Baker v. Carr, 369 U.S. at 204 -- the allegation of such a "personal stake in the outcome of the controversy as to assure" concrete adverseness. Sierra Club v. Morton, supra at 732-733; Data Processing Service v. Camp, supra at 151-152 . True, the Court has required that the person seeking review allege that he personally has suffered or will suffer the injury sought to be avoided, Sierra Club, supra at 740. But there can be no doubt that respondents here, by demonstrating a connection between the disputed Ruling and the hospitals affecting them, could have adequately served the policy implicated by the pleading requirement of Sierra Club -- putting "the decision as to whether review will be sought in the hands of those who have a direct stake in the outcome." Ibid. In such a case, respondents would not be attempting merely to "vindicate their own value preferences through the judicial process." Ibid.See Albert, supra,n. 8, at 485-489. If such a showing were made, a real and recognizable harm to tangible interest would have been alleged, indeed more so than we have required in other circumstances. United States v. SCRAP, supra; Sierra Club v. Morton., supra;cf. Barlow v. Collins, supra at 163.{10} Moreover, the injury alleged would be a "`distinctive or discriminating’ . . . harm," id. at 172 n. 5 (opinion of BRENNAN, J.), clearly a "particularized injury [setting respondents] apart from the man on the street." United States v. Richardson, supra at 194 (POWELL, J., concurring).

Furthermore, our decisions regarding standing to sue in actions brought under the Administrative Procedure Act make plain that standing is not to be denied merely because the ultimate harm alleged is a threatened future one rather than an accomplished fact. United States v. SCRAP, supra; Sierra Club v. Morton, supra. Nor has the fact that the administrative action ultimately affects the complaining party only through responses to incentives by third parties been fatal to the standing of those who would challenge that action. United States v. SCRAP, supra; Barlow v. Collins, supra. And the ultimate harm to respondents threatened here is obviously much more "direct and perceptible," and the "line of causation" less "attenuated," than that found sufficient for standing in United States v. SCRAP, 412 U.S. at 688.

Certainly the Court’s attempted distinction of SCRAP will not "wash." The Court states that, in SCRAP,

although the injury was indirect and "the Court was asked to follow an attenuated line of causation," . . . the complaint nevertheless "alleged a specific and perceptible harm" flowing from the agency action.

Ante at 45 n. 25. The instant case is different, the Court says, because the complaint "fails to allege an injury that fairly can be traced" to the allegedly wrongful action. I find it simply impossible fairly and meaningfully to differentiate between the allegations of the two sets of pleadings. Compare App. 13-25 in this case with App. 8-12 in No. 72-562, O.T. 1972, Aberdeen & Rockfish R. Co. v. SCRAP. The Court complains that "whether the injuries fairly can be traced to [the disputed] Ruling depends upon unalleged and unknown facts about the relevant hospitals." Ante at 45 n. 25. It is obvious that the complaint in SCRAP lacked precisely the same specific factual allegations; there, however, the Court’s response was much more in keeping with modern notions of civil procedure. 412 U.S. at 689-690, and n. 15.

Moreover, apart from the specificity required of the pleadings, it is not apparent why these "unalleged and unknown facts about the relevant hospitals" are required to establish injury in fact at all. As the Court notes, ante at 42 n. 23, the earlier Revenue Ruling requires a hospital only to provide medical care "to the extent of its financial ability," and stated that a low charitable record was not conclusive on the point. Accordingly, in the absence of some showing to the contrary by the petitioners, it readily can be inferred that a hospital under the earlier Ruling would provide some indigent services, the maximum extent being the point at which the benefits received from the favorable tax status were exactly offset by the cost of the services conferred. If respondents had demonstrated at the summary judgment stage a connection between the disputed Ruling withdrawing this incentive and the hospitals affecting them, they would have certainly made a showing of injury to their "opportunity and ability" to receive medical care sufficient under SCRAP for standing to challenge the governmental action.

We may properly wonder where the Court, armed with its "fatally speculative pleadings" tool, will strike next. To pick only the most obvious examples, will minority schoolchildren now have to plead and show that, in the absence of illegal governmental "encouragement" of private segregated schools, such schools would not "elect to forgo" their favorable tax treatment, and that this will "result in the availability" to complainants of an integrated educational system? See Green v. Kennedy, 309 F.Supp. 1127 (DC 1970), later decision reported sub nom. Green v. Connally, 330 F.Supp. 1150, summarily aff’d sub nom. Coit v. Green, 404 U.S. 997 (1971).{11} Or will black Americans be required to plead and show that, in the absence of illegal governmental encouragement, private institutions would not "elect to forgo" favorable tax treatment, and that this will "result in the availability" to complainants of services previously denied? See McGlotten v. Connally, 338 F.Supp. 448 (DC 1972); Pitts v. Wisconsin Dept. of Revenue, 333 F.Supp. 662 (ED Wis.1971). As perusal of these reported decisions reveals, the lower courts have not assumed that such allegations and proofs were somehow required by Art. III.

C

Of course, the most disturbing aspect of today’s opinion is the Court’s insistence on resting its decision’ regarding standing squarely on the irreducible Art. III minimum of injury in fact, thereby effectively placing its holding beyond congressional power to rectify. Thus, any time Congress chooses to legislate in favor of certain interests by setting up a scheme of incentives for third parties, judicial review of administrative action that allegedly frustrates the congressionally intended objective will be denied, because any complainant will be required to make an almost impossible showing. Clearly the Legislative Branch of the Government cannot supply injured individuals with the means to make the factual showing in a specific context that the Court today requires. More specific indications of a congressional desire to confer standing upon such individuals would be germane not to the Art. III injury-in-fact requirement, but only to the Court’s "zone of interests" test for standing, that branch of standing lore which the Court assiduously avoids reaching. Ante at 39 n.19.{12}

In our modern-day society, dominated by complex legislative programs and large-scale governmental involvement in the everyday lives of all of us, judicial review of administrative action is essential both for protection of individuals illegally harmed by that action, Flast v. Cohen, 392 U.S. 83, 111 (1968) (Douglas, J., concurring), and to ensure that the attainment of congressionally mandated goals is not frustrated by illegal action, Barlow v. Collins, 397 U.S. at 173-175, and n. 9 (opinion of BRENNAN, J.). See Albert, 83 Yale L.J., supra,n. 8, at 451-456. In dissenting from the Court’s earlier creation of the "zone of interests" test applicable to standing for review under the Administrative Procedure Act, an inquiry that confuses standing with aspects of reviewability and the merits, I said:

[I]n my view, alleged injury in fact, reviewability, and the merits pose questions that are largely distinct from one another, each governed by its own considerations. To fail to isolate and treat each inquiry independently of the other two, so far as possible, is to risk obscuring what is at issue in a given case, and thus to risk uninformed, poorly reasoned decisions that may result in injustice. Too often these various questions have been merged into one confused inquiry, lumped under the general rubric of "standing." The books are full of opinions that dismiss a plaintiff for lack of "standing" when dismissal, if proper at all, actually rested either upon the plaintiff’s failure to prove on the merits the existence of the legally protected interest that he claimed or on his failure to prove that the challenged agency action was reviewable at his instance.

Barlow v. Collins, supra at 176.{13}

Today, however, the Court achieves an even worse result through its manipulation of injury in fact, stretching that conception far beyond the narrow bounds within which it usefully measures a dimension of Art III justiciability. The Court’s treatment of injury in fact without any "particularization" in light of either the policies properly implicated or our relevant precedents threatens that it shall "become a catchall for an unarticulated discretion on the part of this Court" to insist that the federal courts "decline to adjudicate" claims that it prefers they not hear. Poe v. Ullman, 367 U.S. at 530 (Harlan, J., dissenting).