Constitutional Law II
Economic Substantive Due Process
Spring 2005
Con Law II
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Overview of Economic Rights
Original Text
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
Art. I - Contracts Clause
Art. VI – Survivability of Debts
Slavery clauses
Taxing clauses
Bill of Rights
 5th

Amd – Takings Clause
5th Amd - Due Process Clause
14th Amendment

Charles Beard:
protection of
property &
wealth was
major impetus
for the Const.
Protected via
judicial review
of state & fed’l
economic
regulations
Due Process Clause
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Substantive Due Process
5th/14th Amds:
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“No person shall .. be deprived of life, liberty,
or property, without due process of law”
Due Process Liberty:
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voluntary economic relationships?
Property:

natural law definition of property rights?
Due Process:

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Procedural: fair hearings/procedures
Substantive: good enough reasons
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Early Cases
Murray v. Hoboken Land (1855)

Due process had procedural content only
Slaughterhouse Cases (1872)
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Miller: No substantive restraint on state power
Field/Bradley: laws can be arbitrary both in
procedural and substantive ways
 laws that interfered with natural rights violated SDP
 natural right to practice one’s trade

Louisiana law (arbitrarily) deprived both liberty & property
Laissez faire theories
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Social Darwinism
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& Natural Law
Loan Association v. Topeka (1874)

City tax exceeded the police power
 Note: no specific constitutional prohibition
Calder v. Bull (1798)

Chase: “I cannot subscribe to the omnipotence of a
State Legislature, or that it is absolute, without control;
although its authority not be expressly restrained by the
Constitution … There are certain vital principles in our
free Republican governments, which overrule a flagrant
abuse of legislative power. [Acts] contrary to the great
first principles of the social compact, cannot be
considered a rightful exercise of legislative authority.”
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Allgeyer v. LA
(1879)
Due Process “Liberty” includes:


not just freedom from physical restraint
freedom to enjoy all faculties in any lawful way
 i.e., liberty of contract

begs the
question
What is the source of this “liberty” right?
 textual (contracts clause)?
 original intent?
 non-interpretivist?
natural law, or Godgiven right to enter
into contracts?
Does the DP clause protect insurance cos?

Are they “persons”?
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Lochner v. NY
(1905)
NY law sets maximum work hours (bakeries)
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
Qu. 1: Does the law interfere with the “liberty”
rights of either the employer or the employee?
Qu. 2: If so, is the law reasonable (satisfy DP)?
 Not all interferences are unconstitutional; only
arbitrary ones
Whose liberty rights are being protected?

Bakery employees?
 Why shouldn’t workers have the right to work long
hours in substandard conditions, if they want to?
 Labor laws “seriously cripple the ability of the
laborer to support himself and his family”
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Vincenzo, age 15, and
Angelo, age 11, work
the 5 pm to 5 am shift
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Lochner v. NY
(1905)
Is this interference (w/ liberty of K) justified?

i.e., does the state have a sufficiently strong
justification?
Public Health:

No evidence that bread
baked in the 12th hour
is less wholesome than
bread baked earlier
 Whose burden to adduce
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evidence?
 Is the presumption for or
against constitutionality?
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Lochner v. NY
(1905)
Employee Health:

Is this an unhealthful profession?
 Not like mining (Holden v. Hardy)
 “Worker health” concedes too much power to state
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any law might find shelter (be immune from constitution)
Do bakers need economic protection by state?
 Paternalistic laws are patronizing and demeaning
 If asymmetry in economic power is a function of
nature, aren’t labor regulations per se unnatural?
“We think this law is not within the police
power, and is invalid”
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Lochner v. NY
(1905)
Scrutiny of Ends:
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Were the state’s goals impermissible?
 Public health, worker health, worker welfare?

Who decides?
Scrutiny of Means:
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Assuming legitimate goals, how well must the
law promote them?
 The law “must have a more direct relation” than this

Who decides (if the law actually attains its ends)?
Strict Scrutiny vs. Rational Basis
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Lochner v. NY
(1905)
Holmes Dissent:

How far does liberty of contract go?
 has become “a shibboleth”
 DP violated only when “a rational and fair man”
believes that a statute infringes fundamental rights

Does Holmes disagree with the methodology of
substantive due process, or just the outcome?
Harlan Dissent:
 Worker welfare is a legitimate end
 Worker health is promoted by this law

Does Harlan disagree with SDP?
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The Lochner Era
Coppage v. Kansas (1915)

State law forbidding “yellow dog contracts”
 interferes with employee’s freedom of choice

to renounce union & remain employed, or forfeit job
 both seller & purchaser of labor have right to contract

DP clauses in 5th & 14th are treated same
Muller v. Oregon (1908)

Maximum hours for female laundry workers
 Why is this law reasonable (const’l) but Lochner not?
 Women’s physical structure and maternal functions
need more state protection (we judicially know that)
 Women are not (economic/political) equals to men
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The Lochner Era
Adkins v. Children’s Hospital (1923)
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
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Passage of 19th Amd (sufferage) have erased
political powerlessness; hence –
(wage) protection for women unreasonable
state has no business equalizing bargaining
power of workers and business
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The Lochner Era
Weaver v. Palmer Bros (1926)

Law prohibiting shoddy was unreasonable
 State failed to prove shoddy caused illness
 Rather, evidence shows sterilization is safeguard
 What standard & burden of proof req’d?

Holmes (dissent)
 Would defer to
legislative judgment
on health issues
 Emergence of
deferential rational
basis test
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Lochner Era in Decline
Nebbia v. NY (1934)


Price control for milk (minimum prices)
Milk has long been a regulated industry
 “Affected with the public interest”

Legislature might reasonably conclude further
regulation was necessary
This law is not unreasonable or arbitrary


“State is free to adopt whatever economic
policy may reasonably be deemed to promote
public welfare”
Is this the end of Lochner? Or
Who determines? does Ct. simply approve of law?
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West Coast Hotel v. Parrish (1937)
Mimimum wage law for women

Invalidated in Adkins v. Children’s Hospital
Revisiting whole idea of liberty of contract

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Not absolute; subject to police power
New standard of review
Examination of ENDS


Protection of women is a legitimate end
As is equalizing bargaining strength
Examination of MEANS

Legislature is entitled to reach own conclusions
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West Coast Hotel v. Parrish (1937)
What causes Court to change 180 degrees?


Court packing plan
Great depression
Must prove the
non-existence of
“constitutional
 Laissez faire simply didn’t work
out
facts”
Who has burden of proof under new test?


Challenger
What must state show to sustain the law?
 “while no factual brief has been presented, there is
no reason to doubt that the state of Washington has
encountered [these] social problems”

Presumption of constitutionality
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US v. Carolene Products
(1938)
Federal prohibition on “filled milk” (skim milk)

DP clause of 5th amd treated same as 14th
How strong is the presumption of
constitutionality?
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
“the existence of facts supporting the
legislative judgment is to be presumed”
“whether any state of facts either known or
which could reasonably be assumed affords
support for it.”
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Williamson v. Lee Optical
(1955)
OK law requires optical prescriptions

even to fix glasses or replace frames
Isn’t this special interest legislation?


Maybe, but Ct. would need to know a lot about
optics to decide if law was reasonable.
a “law need not be in every respect logically
consistent with its aims to be constitutional”
Extreme deference:
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
it is for the legislature, not the courts, to
balance the advantages and disadvantages
Econ SDP is dead. Long live SDP
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State Farm v. Campbell
(2003)
Ins. Co. wrongly withholds payment

Is this a SDP problem?
Kennedy: grossly excessive awards are an
arbitrary deprivation of property
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Degree of reprehensibility
Disparity between actual and punitive damages
Difference between jury award & civil penalty
BMW v. Gore

State can only promote own interest, can’t
punish for nationwide misbehavior
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State Farm v. Campbell
(2003)
Degree of reprehensibility


physical harm worse than economic harm
culpability of tort feasor (compare mens rea)
 must serve punishment goal
 here, out-of-state conduct was lawful where occured
 problem of multiple punishments
Disparity between actual/punitive damages
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no rigid benchmarks, but
2-digit multipliers probably unconstitutional
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State Farm v. Campbell
(2003)
Difference between jury award &
comparable civil penalty

Punitive damages not substitute for crim law
 which carries additional procedural safeguards
Scalia (dissent); Thomas (dissent)

SDP “insusceptible of principled application”
Ginzburg (dissent)
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Legislatures can cure abuses in pun. damages
Is amount of reprehensibility and damage to
social fabric a judicial or legislative question?
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State Farm v. Campbell
(2003)
Compare excessive punishments imposed
on corporations to excessive punishments
imposed on individuals

Does 5th Amd Due Process provide more
explicit protection that 8th Amd?
Death Penalty for corporations:

What if Utah law allowed judge/jury to revoke
State Farm’s corporate charter?
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Overview of Economic Rights
Original Text




Art. I - Contracts Clause
Art. VI – Survivability of Debts
Slavery clauses
Taxing clauses
Bill of Rights


5th Amd – Takings Clause
5th Amd - Due Process Clause
14th Amendment

Due Process Clause
Spring 2005
Con Law II
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