Monday, February 23, 2015

Contrived Threats versus Uncontrived Warnings

Guest Blogger

Einer Elhauge

Contractual duress, unconstitutional conditions, and blackmail have long been puzzling.  The puzzle is why these doctrines sometimes condemn threatening lawful action to induce agreements, but sometimes do not.  My new article, Contrived Threats v. Uncontrived Warnings, provides a general solution to this puzzle.  Such threats are unlawfully coercive only when they are contrived, meaning the threatened action would not have occurred if no threat could be made.  I show that such contrived threats can be credible because making the threat strongly influences whether the threatened action occurs.  When such threats are uncontrived warnings, meaning the threatened action would have occurred even if no threat could be made, they are not coercive and can only benefit the agreeing parties.  However, sometimes (as with blackmail) agreements produced by uncontrived warnings are also unlawful on the different grounds that they harm third parties.  I show that this distinction explains contract law on duress and modifications, the doctrine of unconstitutional conditions, and the broad scope of the prohibition on blackmail.

This contrived-threat test also has relevance to two prominent Supreme Court cases on Obamacare.  First, it explains why the Medicaid defunding threat in Obamacare was properly held unconstitutional in NFIB.  That provision threatened to take away pre-existing Medicaid from any State that did not accept the Medicaid Expansion.  That threat was contrived because it was clear that, without a condition linking pre-existing Medicaid to the Medicaid Expansion, Congress would never have eliminated pre-existing Medicaid.  As my article details, several passages in Chief Justice Robert’s opinion (for himself and Justices Breyer and Kagan) emphasized that crucial feature of the threat, and his distinction of other Congressional threats that were constitutional stressed features showing that those threats were uncontrived warnings.

Second, this same principle explains why, in the pending case of King v Burwell, the canon of avoidance requires interpreting Obamacare not to withhold tax credits from States that do not create insurance exchanges.  Although I think that interpretation is also inconsistent with statutory text, purpose and structure, another fatal problem with that interpretation is that it posits that Congress threatened to withhold tax credits in order to coerce States to waive their constitutional right not to administer federal programs.  If one thought Congress were making such a threat, it would clearly be a contrived threat, because (if such a condition could not be imposed) the enacting Congress surely would have preferred giving tax credits to denying them given that, as NFIB itself stressed, its overriding goal was universal coverage.  Such a threat would be particularly coercive because, given other provisions in Obamacare, withdrawing tax credits would collapse State individual insurance markets below pre-Obamacare levels.  Because such an interpretation would make the provision unconstitutional under NFIB, or at a minimum raise serious constitutional doubts, the canon of avoidance requires avoiding it.

Einer Elhauge is the Petrie Professor of Law at Harvard Law School and Founding Director of the Petrie-Flom Center for Health Law Policy, Biotechnology and Bioethics. You can reach him by e-mail at elhauge at

Older Posts
Newer Posts