Constitutional Law II
 Limits on State Regulatory and Taxing Power
 Preemption of State and Local Laws

Express Preemption
 Lorillard Tobacco Co. v. Reilly (2001) O'Connor

Facts:
 Attorney General of Massachusetts promulgated comprehensive
regulations governing the advertising and sale of cigarettes, smokeless
tobacco, and cigars
 Purpose of the regulation was "to eliminate deception and unfairness in the
way tobacco products are marketed, sold and distributed in Massachusetts
in order to address the incidence of tobacco use by children under legal
age"
 regulations prohibited:
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using self-service displays
failing to place cigarettes out of the reach of children
using outdoor advertising which is directed at or near any public playground,
public parks, or elementary schools
 Federal Cigarette Labeling and Advertising Act (FCLAA)
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Issue: Whether certain cigarette advertising regulations are pre-empted by the
FCLAA
Holding: They are.
Analysis:
 Congress' scheme is comprehensive, and therefore encompasses the
protections for youth that the State law is aimed at
 the fact that part of the State statute regulates locations does not make this
regulation constitutional, because the preemption provision of the FCLAA
reaches all "requirements" and "prohibitions"
Dissent: Stevens
 State Police powers are implicated here
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comprehensive congressional scheme governing the advertising and
promotion of cigarettes
forbid regulations under State law with respect to advertising or promotion of
any cigarettes which are in conformity with the Act
zoning
protect health and safety of minors
 Congress had no intent to preempt State regulations dealing with locations
Implied Preemption
 Conflicts Preemption
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IF A FEDERAL AND A STATE LAW ARE MUTUALLY EXCLUSIVE, SO THAT
A PERSON CANNOT COMPLY WITH BOTH, THE STATE LAW IS DEEMED
PREEMPTED
A HOLDING OF FEDERAL EXCLUSION OF STATE LAW IS INESCAPABLE
AND REQUIRES NO INQUIRY INTO CONGRESSIONAL DESIGN WHERE
COMPLIANCE WITH BOTH FEDERAL AND STATE REGULATIONS IS A
PHYSICAL IMPOSSIBLITY FOR ONE ENGAGED IN INTERSTATE
COMMERCE (Florida Lime)
Florida Lime & Avocado Growers, Inc. v. Paul, Director, Dept. of Agriculture of
California (1963) Brennan
 Facts:
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California law only allows for the importation of avocados with a certain oil
content
Federal law doesn't regulate based on oil content
 Issue: What is the constitutionality of the California statute insofar as it may
be applied to exclude from California markets certain Florida avocados
which, although certified to be mature under the federal regulations, do not
meet the California regulations?
 Holding: There is no inevitable collision between the 2 schemes of
regulation, despite the dissimilarity of the standards
 Analysis:
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there is no necessary conflict here
the Florida growers could have left the avocados on the trees past the earliest
picking date permitted by Congress
Impediment Preemption


IF A STATE OR LOCAL LAW IS DEEMED TO IMPEDE THE ACHIEVEMENT
OF A FEDERAL OBJECTIVE
Pacific Gas & Electric Co. v. State Energy Resources Conservation &
Development Commn. (1983) White
 Facts:

1976 amendments to the Warren-Alquist Act
 required the determination that any new nuclear plant have the capacity
for spent fuel, and
 that no license would be issued until there was a solution for disposal of
nuclear waste
 Issue: Whether provisions in the 1976 amendments to California's
Warren-Alquist Act are preempted by the Atomic Energy Act of 1954.
 Holding: "Congress, in passing the 1954 Act and in subsequently
amending it, intended that the federal government should regulate the
radiological safety aspects involved in the construction and operation of a
nuclear plant, but that the States retain their traditional responsibility in the
field of regulating electrical utilities for determining questions of need,
reliability, cost, and other related state concerns."
 Analysis:
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The Atomic Energy Act does not at any point expressly require the States to
construct or authorize nuclear power plants or prohibit the States from
deciding, as an absolute or conditional matter, not to permit the construction of
any further reactors
need for new power facilities, their economic feasibility, and rates and
services, are areas that have been characteristically governed by the States
the CA Act does not interfere with the safety aspects of nuclear power, rather
the cost problem
"Congress has left sufficient authority in the states to allow the development of
nuclear power to be slowed or even stopped for economic reasons."
Field Occupation Preemption
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PREEMPTION WILL BE FOUND IF THERE IS A CLEAR CONGRESSIONAL
INTENT TO HAVE FEDERAL LAW OCCUPY A PARTICULAR AREA OF LAW
Hines, Secretary of Labor & Industry of Pennsylvania v. Davidowitz (1941)
Black
 Facts:

Alien Registration Act of Pennsylvania
 requires aliens to register once a year and to present papers when asked

among other things
federal Alien Registration Act
 provides for a single registration of an alien
 Issue: Whether Pennsylvania's Alien Registration Act is preempted by the
Federal Alien Registration Act.
 Holding: It is preempted
 Analysis:
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the subject matter of the 2 laws is identical
alien registration is intertwined with national government
 The Dormant Commerce Clause
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no constitutional provision
 is therefore attacked from a textual point of view
Why a Dormant Commerce Clause?
 H.P. Hood & Sons, Inc. v. Du Mond, Commissioner of Agriculture & Markets
of New York (1949) Jackson
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Facts:
 Hood is a milk distributor serving Boston, who wants to open a
distributorship in Greenwich, NY
 NY seeks to deny the distributorship to the company
Issue: Does the attempt to deny the distributorship to Hood violate the Dormant
Commerce Clause?
Holding: Yes. "Our system, fostered by the Commerce Clause, is that every
farmer and every craftsman shall be encouraged to produce by the certainty
that he will have free access to every market in the Nation."
Analysis:
 Earlier, similar case, Baldwin v. G.A.F. Seelig, Inc.
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Supreme Court held unconstitutional a statute by NY setting higher tax on milk
imported from VT
Court noted the economic objective, as opposed to any for health and safety
as a downfall of the legislation
"Such a power, if exerted, will set a barrier to traffic between one state and
another as effective as if customs duties, equal to the price differential, had
been laid upon the thing transported."
 History/Ethics
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the sole purpose for the movement which led to the Constitutional Convention
was "to take into consideration the trade of the United States; to examine the
relative situations and trade of the said states, to consider how far a uniform
system in their commercial regulation may be necessary to their common
interest and their permanent harmony"
no other power was so universally assumed to be necessary, no other state
power was so readily relinquished
 Prudential
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the established interdependence of the states only emphasizes the necessity
of protecting interstate movement of goods against local burdens and
repressions
Traditional Arguments for a dormant commerce clause (exemplified by
Hood)
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Historical
 the framers intended to prevent state laws that interfered with interstate
commerce
Economic
 the economy is better off if state and local laws impeding interstate
commerce are invalidated
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protectionism is inefficient because it diverts business away from
presumptively low-cost producers without any colorable justification in terms of
a benefit that deserves approval from the point of view of the nation as a whole
Political
 states and their citizens should not be harmed by laws in other states
where they lack political representation
Argument against the dormant commerce clause
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textual
 the drafters could have included a provision prohibiting states from
interfering with interstate commerce but did not
structural
 separation of powers
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the task of reviewing state laws should be done by Congress
the Court should not be invalidating statutes that elected representatives
enacted
 federalism
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Dormant Commerce Clause before 1938
 traces back to Gibbons v. Ogden
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since then, the Court has struggled to articulate criteria for when state laws
burdening commerce should be upheld as valid exercises of the police power
and when they should be invalidated as violating the dormant Commerce
Clause
Aaron B Cooley v. The Board of Wardens of the Port of Philadelphia (1851)
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we should minimize the instances where state and local laws are invalidated
Facts:
 a PA law required all ships entering or leaving the Port of Phil. to use a local
pilot or to pay a fine that went to support retired pilots
Issue: Is the law an appropriate use of the police power of the state, and
therefore constitutional in that it does not violate the dormant Commerce
Clause?
Holding: This particular regulation concerning half-pilotage fees, is an
appropriate part of a general system of regulations of this subject.
Analysis:
 this is not a covert attempt by the state legislature to regulate interstate
commerce
 it only applies to large vessels which demonstrates that it is for safety
 the concern is local and not national
 it is probably the best way to accomplish the goal
The Contemporary Test for the Dormant Commerce Clause
 The shift to a balancing approach
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BALANCE THE BENEFITS OF THE LAW AGAINST THE BURDENS THAT IT
IMPOSES ON INTERSTATE COMMERCE
South Carolina State Highway Dept. v. Barnwell Bros., Inc. (1938) Stone
 Facts:

SC law prohibited trucks of a certain size and weight from operating on their
highways
 Issue: Whether these prohibitions impose an unconstitutional burden upon
interstate commerce.
 Holding: The regulatory measures taken by SC are within its legislative
power.
 Analysis:
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it is a peculiarly local concern
it applies to in-state and out-of-state vehicles alike
"Our decision have held that a state may impose nondiscriminatory restrictions
with respect to the character of motor vehicles moving in interstate commerce
as a safety measure and as a means of securing the economical use of its
highways"
Southern Pacific Co. v. Arizona ex rel. Sullivan, Attorney General (1945) Stone
 Facts:
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Arizona Train Limit Law made it illegal to operate a train within AZ of more than
14 passenger or 70 freight cars
because of the limit, appellant is required to haul over 30% more trains in AZ
than they would have to otherwise
 Issue: Does the Train Limit Law unduly burden interstate commerce so that
it cannot be justified by the state interest in safety?
 Holding: Yes.
 Analysis:
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the operation of long trains is standard practice over the main lines in the U.S.
if the length of trains is to be regulated at all so that there is uniformity,
Congress should make the decision
there are additional costs of operation on the appellant which impedes efficient
operation
the appellant would have to adjust his train length to the lowest regulation of
the states he passes through, so that the low regulation would be regulating
interstate commerce
Determining Whether a Law is Discriminatory

the balancing test is not the same in all cases, and varies depending upon
whether the state or local law discriminates against out-of-staters or treats
in-staters and out-of-staters alike
 the threshold question is determining whether the state law is discriminatory
against out-of-staters
 Facially Discriminatory Laws
 City of Philadelphia v. New Jersey (1978) Stewart
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Facts:
 NJ law prohibits the importation of most solid or liquid waste which
originated or was collected outside the territorial limits of the State
 affected landfills in NJ, and several cities in other states that had
agreements with these operators for waste disposal
Issue: Whether the statue violates the Commerce Clause. Whether the
statute is basically a protectionist measure, or whether it can fairly be viewed
as a law directed to legitimate local concerns, with effects upon interstate
commerce that are only incidental.
Holding: Both on its face and in its plain effect, the statute violates the principle
of nondiscrimination. The NJ law falls squarely within the area that the
Commerce Clause puts off limits to state regulation.
Analysis:
 *"Where simple economic protectionism is effected by state legislation, a
virtually per se rule of invalidity has been erected."
 the measure imposes on out-of-state commercial interests the full burden
of conserving the State's remaining landfill space
 the Commerce Clause will protect NJ in the future from discriminatory
laws, just as it protects her neighbors today
 C & A Carbone, Inc. v. Town of Clarkstown, New York (1994) Kennedy

Facts:
 flow control ordinance required all solid waste to be processed at a
designated transfer station before leaving the municipality
 town would finance its new facility with the income generated by tipping
fees
 C & A was another solid waste processor
 the ordinance required them to bring waste to the new facility
 C & A began bringing the waste to other stations in and out of the state
to avoid the tipping fee
 Issue: Whether the flow control ordinance is valid despite its undoubted effect
on interstate commerce
 Holding: The ordinance violates the Dormant Commerce Clause
 Test:
 Whether the ordinance discriminates against interstate commerce
 it allows only the favored operator to process waste that is within the
limits of the town
 it hoards a local resource
 it squelches competition in the waste-processing service altogether,
leaving no room for investment from outside
 whether the ordinance imposes a burden on interstate commerce that is "clearly excessive in
relation to the putative local benefits."
 local benefit is funding its transfer station
 "Discrimination against interstate commerce in favor of local business or
investment is per se invalid, save in a narrow class of cases in which the
municipality can demonstrate, under rigorous scrutiny, that it has no other
means to advance a legitimate local interest"
 the city could address the health and environmental problems in any
number of ways
 Dissent: Souter
 this case is different
 the ordinance bestows no benefit on a class of local private actors
 the law does not differentiate between all local and all out-of-town
providers
 the majority is expanding the Clause's dormant reach
 Hughes v. Oklahoma (1979) Brennan
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Facts: Minnows
Issue: Whether an Oklahoma Statute violated the Commerce Clause, insofar
as it provides that "no person may transport or ship minnows for sale outside
the state which were seined or procured within the waters of this state."
Holding: The statute discriminates against interstate commerce on its face,
and is the most discriminatory means even though nondiscriminatory
alternatives would seem likely to fulfill the State's purported legitimate local
purpose more effectively.
Analysis:
 "At a minimum such facial discrimination invokes the strictest scrutiny of
any purported legitimate local purpose and of the absence of
nondiscriminatory alternatives"
 it forbids the transportation of minnows out of the state for sale = facially
discriminatory
 Oklahoma has chosen to "conserve" its minnows in the way that most
overtly discriminates against interstate commerce
 Reciprocity Agreements
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have been held to be facially discriminatory
Facially Neutral Laws
 can be held to be discriminatory if they have the 1) purpose or 2) effect of
discriminating against out-of-staters
 Hunt, Governor of the State of North Carolina v. Washington State Apple
Advertising Commn. (1977) Burger
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Facts:
 NC enacted a statute which required all closed containers of apples sold,
offered for sale, or shipped into the State to bear "no grade other than the
applicable U.S. grade or standard"
 Washington state grades have gained acceptance in the trade and either
meet or exceed the federal standard
Issue: Does the statute violate the Commerce Clause?
Holding: Yes. It has the practical effect of not only burdening interstate sales
of Washington apples, but also discriminating against them
Analysis:
 It raises the costs of doing business in NC for Wash. apple growers and
dealers, while leaving those of their NC counterparts unaffected
 has the effect of stripping away from the Wash. apple industry the
competitive and economic advantages it has earned for itself through its
expensive inspection and grading system
 it has a leveling effect which insidiously operates to the advantage of local
apple producers
 NC cannot justify the measure in terms of the local benefits flowing form
the statute and the unavailability of nondiscriminatory alternatives
adequate to preserve the local interests at stake
 Exxon Corp. v. Governor of Maryland (1978) Stevens
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Facts:
 Maryland statute provides that a producer or refiner or petroleum products
1) may not operate any retail service station within the State, and 2) must
extend all "voluntary allowances" uniformly to all service stations it
supplies
 stems from the 1973 gas shortage where the State found that gas
stations owned by producers or refiners of gasoline received
preferential treatment during the period of short supply
 Exxon owns 36 stations in the state and brought suit challenging the law
Issue: Whether the statute has the effect of discriminating against
out-of-staters.
Holding: The statute does not discriminate against interstate goods, nor does it
favor local producers and refiners.
Analysis:
 all of Md.'s gas is in interstate commerce
 several major interstate marketers of gasoline, who do not have service
stations in the state, are not affected by the Act
 the Act creates no barriers whatsoever against interstate independent
dealers
 it does not prohibit the flow of interstate goods
 it doesn't place added costs on them
 it doesn't distinguish between in-state and out-of-state companies in the
retail market
 in-state independent dealers will have no competitive advantage over
out-of-state dealers
 if Exxon got out of the market, their share could be easily taken by another
interstate marketer
 West Lynn Creamery, Inc. v. Healy, Commissioner of Massachusetts Dept.
of Food & Agriculture (1994) Stevens
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Facts:
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Mass pricing order places an assessment on all fluid milk sold by dealers
to Mass. retailers
 about 2/3 of the milk is produced out of state, but the subsidy only
goes to Mass. farmers
 West Lynn is a milk dealer licensed to do business in Mass
 it purchases raw milk, processes, and packages it and sells to retailers
and other milk dealers
 about 97% of the raw milk it purchases is produced by out-of-state
farmers
 the legislation is in response to a declining Mass. dairy market, that was
being taken over by out-of-state dealers who could produce more cheaply
 Governor appointed a special commissioner who declared a state of
emergency and ordered that dealers had to make payments into a
fund that is disbursed to Mass. farmers on a monthly basis
 Mass. argues that because the tax is legal, and the subsidy is legal, the
combination of the 2 legal acts makes this order constitutional
Issue: Whether the pricing order unconstitutionally discriminates against
interstate commerce
Holding: "The purpose and effect of the pricing order are to divert market
share to Massachusetts dairy farmers . . . [which] necessarily injures the dairy
farmers in neighboring States."
Analysis:
 "Preservation of local industry by protecting it from the rigors of interstate
competition is the hallmark of the economic protectionism that the
Commerce Clause prohibits."
 the pricing order if funded primarily from taxes on out-of-state milk
producers, while the benefit goes only to Mass. dairy farmers
 "By so funding the subsidy, respondent not only assists local farmers,
but burdens interstate commerce."
 "The pricing order thus violates the cardinal principle that a State may
not 'benefit in-state economic interests by burdening out-of-state
competitors."
 State of Minnesota v. Clover Leaf Creamery Co. (1981) Brennan
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Facts:
 MN enacted a statute banning the use of nonreturnable plastic bottles for
the retail sale of milk
 statute had the explicit purpose of environmentalism
 Clover Leaf filed suit, and won in the the lower court, whose judge
determined that MN was acting to further local interest in the pulpwood
industry, to the detriment of the out-of-state plastic industry
Issue: Because the law "regulates even-handedly" the question is "whether
the incidental burden imposed on interstate commerce by the Minnesota Act is
'clearly excessive in relation to the putative local benefits.'"
Holding: It is not
Analysis:
 the burden imposed is minor
 milk still flows freely across the border
 also, most dairies package in multiple types of bottles, so adapting to the
MN regulation will not be difficult
 "there is no reason to suspect that the gainers will be Minnesota firms, or
the losers out-of-state firms."
 plastics will continued to be used in the production of plastic pouches,
plastic returnable bottles, and paperboard itself
 out-of-state pulpwood producers will presumably absorb some of the
business generated by the Act

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the local benefits are ample to support MN's decision
there is no approach with "a lesser impact on interstate activities."
Analysis If a Law is Deemed Discriminatory
 Dean Milk Co. v. City of Madison, Wisconsin (1951)
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Facts:
 Madison ordinance makes it unlawful to sell any milk as pasteurized
unless it has been processed and bottled at an approved pasteurization
plant within a radius of 5 miles from the central square of Madison and
from a source within 25 miles of the city
 Dean Milk is an Illinois corporation who purchases and gathers milk from
950 farms in northern Ill. and southern Wisc., none being within a 25-mile
radius of Madison
 Dean was denied a license to sell in Madison and challenged the validity of
the ordinance
Issue: Whether the ordinance is constitutional.
Holding: The regulation must yield to the principle that "one state in its dealings
with another may not place itself in a position of economic isolation."
Analysis:
 reasonable and adequate alternatives are available
 the Health Commissioner of Madison even introduced an alternative plan
based on the Model Milk Ordinance recommended by the United States
Public Health Service
 the model imposes no geographic regulation
 the regulation is simply not essential for the local health of the citizens, and
therefore unfairly burdens interstate commerce
 Maine v. Taylor & United States (1986) Blackmun

Facts:
 Maine statute prohibits the importation of live baitfish
 Taylor arranged to have 158,000 live golden shiners delivered to him from
outside the state
 he was charged under a federal law that prohibited importation of fish in
violation of state law
 Issue: Is the Maine statute in violation of the Commerce Clause?
 Holding: The constitutional principles underlying the Commerce Clause
cannot be read as requiring the State of Maine to sit idly by and wait until
potentially irreversible environmental damage has occurred or until the
scientific community agrees on what disease organisms are or are not
dangerous before it acts to avoid such consequences.
 Analysis:
 because the statute discriminates against interstate commerce, the state
must demonstrate both that the statute "serves a legitimate local purpose,"
and that this purpose could not be served as well by available
nondiscriminatory means.
 the experts for the prosecution asserted that importation of baitfish in the
State poses 2 threats:
 the population of wild fish would be placed at risk by 3 types of parasites prevalent in out-of-state
baitfish
 nonnative species inadvertently included in shipments of live baitfish could disturb Maine's aquatic
ecology to an unpredictable extent
 even though the science is not concrete, Maine has a legitimate interest in
guarding against imperfectly understood environmental risks
 Dissent: Stevens
 ambiguity about the science should defeat, not help the case
 environmental regulation does not hold some special place that should
make it different

Analysis if Law is Deemed Non-Discriminatory
 NON-DISCRIMINATORY LAWS ARE UPHELD SO LONG AS THE
BENEFITS TO THE GOVERNMENT OUTWEIGH THE BURDENS ON
INTERSTATE COMMERCE
 Loren J. Pike v. Bruce Church, Inc. (1970) Stewart
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Facts:
 Appellee is company engaged in expansive farming operations in CA and
AZ
 they had invested a lot of money in order to grow cantaloupes in AZ,
but had no packing sheds there, so they would truck their cantaloupes
to their packing facility 30 miles away in CA
 Pike is the official charged with enforcing the Arizona Fruit and Vegetable
Standardization Act
 all cantaloupes grown in AZ must "be packaged in regular compact
arrangement in closed standard containers approved by the
supervisor . . . "
 pursuant to this authority, he issued an order prohibiting the appellee
company from transporting uncrated cantaloupes from its Parker, AZ
ranch to nearby Blythe, CA for packing and processing
 If the order stood, the company would lose $700,000 for its loss of its 1968
crop
Issue: Should the statute be upheld because of its legitimate state concern?
Holding: No. The state's tenuous interest in having the company's
cantaloupes identified as originating in AZ cannot constitutionally justify the
requirement that the company build and operate an unneeded $200,000
packing plant in the State.
Analysis:
 TEST = "Where the statute regulates even-handedly to effectuate a
legitimate local public interest, and its effects on interstate commerce are
only incidental, it will be upheld unless the burden imposed on such
commerce is clearly excessive in relation to the putative local benefit. If a
legitimate local purpose is found, then the question becomes one of
degree. And the extent of the burden that will be tolerated will of course
depend on the nature of the local interest involved, and on whether it could
be promoted as well with a lesser impact on interstate activities."
 the court has "viewed with particular suspicion state statutes requiring
business operations to be performed in the home State that could more
efficiently be performed elsewhere."
 the statute doesn't impose an undue burden on an entire industry, but "it
does impose just such a straitjacket on the appellee company with respect
to the allocation of its interstate resources."
 the state's interest is "minimal at best"
 Bibb, Director, Dept. of Public Safety of Illinois v. Navajo Freight Lines, Inc.
(1959) Douglas
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Facts:
 Illinois statute required the use of a certain type of rear fender mudguard
on trucks and trailers operated on the highways of that State
Issue: Is the statute unconstitutional based on the Commerce Clause?
Holding: Yes. "The heavy burden which the Illinois mudguard law places on
the interstate movement of trucks and trailers seems to us to pass the
permissible limits even for safety regulations."
Analysis:
 Highway safety is traditionally a state concern, so unless "we can
conclude on the whole record that 'the total effect of the law as a safety
measure in reducing accidents and casualties is so slight or problematical

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as not to outweigh the national interest in keeping interstate commerce
free from interferences which seriously impede it,' we must uphold the
statute"
the cost is prohibitively high to change mudguards every time they enter
and leave Illinois
the contour mud flap possesses no advantages over the conventional or
straight mud flap
 there was evidence that the contoured mud flap tended to cause an
accumulation of heat in the brake drum, thus decreasing the
effectiveness of brakes and increasing accidents
could cause significant delay in an operation where prompt movement
may be of the essence
it would require welding to change the flaps, and if the rig were
transporting something flammable, it poses a safety concern
statute seriously interferes with the "interline" operations of the companies
 Consolidated Freightways Corp. of Delaware v. Raymond Kassel (1981)
Powell
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Facts:
 Consolidated is a large shipping company and employs both single semis,
and doubles
 Iowa restricts the length of its semis to the single length
 Consolidated filed suit challenging the statute
Issue: Whether the statute unconstitutionally burdens interstate commerce
Holding: It does.
Analysis:
 State failed to present any persuasive evidence that the doubles are less
safe than the single
 State's safety interest is "illusory"
 the law would add about $12.6 million each year to the costs of trucking
companies if they had to change to singles when entering Iowa, or avoid
Iowa altogether
 the law may hurt safety by requiring more total miles to be driven
Dissent: Rehnquist
 "the analysis in both opinions oversteps our limited authority to review
state legislation under the Commerce Clause and seriously intrudes upon
the fundamental right of the States to pass laws to secure the safety of
their citizens."
 PA and NJ also have similar laws
 there is a difficult comparison of financial losses and "the loss of lives and
limbs of workers and people using the highways"
 Out-of-State business regulations
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consistently held to be unconstitutional
the critical inquiry is whether the practical effect of the regulation is to control
conduct beyond the boundaries of the State.
Exceptions to the Dormant Commerce Clause

Congressional Approval
 STATE LAWS BURDENING COMMERCE ARE PERMISSIBLE, EVEN
WHEN THEY OTHERWISE WOULD VIOLATE THE DORMANT
COMMERCE CLAUSE, IF THEY HAVE BEEN APPROVED BY
CONGRESS
 In re Rahrer (1891)

Court upheld a state law restricting the importation and sale of alcoholic
beverages
 the Court had earlier struck down a similar law, but Congress then
adopted a law expressly permitting such state regulation of alcoholic
beverages
 However, although the law will not violate the dormant Commerce Clause,
it still can be challenged under other constitutional provisions such as equal
protection or the Privileges and Immunities Clause of Article IV

Metropolitan Life Insurance Co. v. Ward (1985)
 Court found that a state tax that discriminated against out-of-state
insurance companies violated the Equal Protection Clause, even though a
federal law permitted such discriminatory taxes and thus there was not a
violation of the dormant Commerce Clause
 Western & Southern Life Insurance Co. v. State Board of Equalization of
California (1981) Brennan





Facts:
 California Insurance Code imposed a retaliatory tax on out of state
insurers doing business in CA, when the insurer's State of incorporation
imposed higher taxes on CA insurers doing business in that State than CA
would otherwise impose on that State's insurers doing business in CA
 Western & Southern is an Ohio corporation who paid the tax under protest
from 1965 through 1971
 Congress removed all Commerce Clause limitations on the authority of the
States to regulate and tax the business of insurance when it passed the
McCarran-Ferguson Act
 Western & Southern and others argued that the Act does not permit
"anticompetitive state taxation that discriminates against out-of-state
insurers"
Issue: Are the taxes imposed by CA constitutional?
Holding: The McCarran-Ferguson Act removes entirely any Commerce
Clause restriction upon California's power to tax the insurance business
Analysis:
 there is no limitation against anticompetitive state taxation in the language
of the Act
 the language of the Act is unequivocal
 the Act declares that "silence on the part of the Congress shall not be
construed to impose any barrier to the regulation or taxation of such
business by the several States"
 Section 2 of the Act declares, "The business of insurance . . . shall be
subject to the laws of the several States which relate to the regulation
or taxation of such business"
The Market Participant Exception
 A STATE MAY FAVOR ITS OWN CITIZENS IN DEALING WITH
GOVERNMENT-OWNED BUSINESS AND IN RECEIVING BENEFITS
FROM GOVERNMENT PROGRAMS

IF A STATE IS LITERALLY A PARTICIPANT IN THE MARKET, SUCH AS
WITH A STATE-OWNED BUSINESS, AND NOT A REGULATOR, THE
DORMANT COMMERCE CLAUSE DOES NOT APPLY
 Hughes v. Alexandria Scrap Corp. (1976)


first articulation of the exception
the Court upheld a MD law designed to rid the state of abandoned automobiles
by having the state pay for the destruction of inoperable cars
 the State required minimal documentation of ownership from in-state
scrap processors, but required more elaborate proof from out-of-state
scrap processors
 Reeves, Inc. v. William Stake (1980) Blackmun

Facts:





1919 SD took to building a cement plant, originally in response to
shortages, but it soon began to sell cement in the region
 Reeves was an out-of-state purchaser, who purchased about 95% of its
cement from the SD plant
 the plant became unable to meet the demand and reaffirmed its purpose
of favoring SD firms and Reeves was forced to cut production by 76%
 Reeves brought suit
Issue: Whether, consistent with the Commerce Clause, the State of South
Dakota, in a time of shortage, may confine the sale of the cement it produces
solely to its residents
Holding: "South Dakota, as a seller of cement, unquestionably fits the "market
participant" label more comfortably than a State acting to subsidize local scrap
processors."
Analysis:
 restraint in this area is counseled by considerations of state sovereignty,
"the role of each State 'as guardian and trustee for its people' and 'the long
recognized right of trader or manufacturer, engaged in an entirely private
business, freely to exercise his own independent discretion as to parties
with whom he will deal'"
 when acting as proprietor, States should similarly share existing freedoms
from federal constraints, including the inherent limits of the Commerce
Clause
 the considerations in the area of State proprietorship will often be complex
and difficult to assess under traditional Commerce Clause analysis
 this makes it better suited for Congress than the Court
Dissent: Powell
 "This policy represents precisely the kind of economic protectionism that
the Commerce Clause was intended to prevent."
 the application of the Commerce Clause should turn on the nature of the
governmental activity involved
 If the state enters the private market and operates a commercial
enterprise for the advantage of its private citizens, it may not evade
the constitutional policy against economic Balkanization
 White v. Massachusetts Council of Construction Employers, Inc. (1983)
Rehnquist



Facts:
 1979: the mayor of Boston issued an executive order which required that
all construction projects funded in whole or in part by city funds or funds
which the city had the authority to administer should be performed by a
work force consisting of at least half bona fide residents of Boston
Holding: "the application of the mayor's executive order to the contracts in
question did not violate the Commerce Clause"
Analysis:
 the city, insofar as it expended its own funds in entering into construction
contracts for public projects, it was a market participant
 South-Central Timber Development, Inc. v. Commissioner, Dept. of Natural
Resources of Alaska (1984) White


Facts:
 Alaska Dept. of Natural Resources published a notice that it would sell
timber provided that primary manufacture of the timber occurred within the
State of Alaska
 South-Central is an Alaska Corp. who sells almost exclusively to Japan
and does not operate a mill in Alaska
 they brought an action for an injunction
Issue: Can Alaska impose such a restriction?



Holding: No. "The limit of the market-participant doctrine must be that it
allows a State to impose burdens on commerce within the market in which it is
a participant, but allows it to go no further. The State may not impose
conditions, whether by statute, regulation, or contract, that have a substantial
regulatory effect outside of that particular market."
Analysis:
 Alaska participates in the timber industry, but is imposing conditions
"downstream in the timber-processing market."
 the seller of timber usually has no say over, and no interest in, how the
product is to be used after sale
 "Unless the 'market' is relatively narrowly defined, the doctrine has the
potential of swallowing up the rule that States may not impose substantial
burdens on interstate commerce even if they act with the permissible-state
purpose of fostering local industry"
 "Downstream restrictions have a greater regulatory effect than do
limitations on the immediate transaction."
Dissent: Rehnquist
 "the line of distinction drawn in the plurality opinion between the State as
market participant and the State as market regulator is both artificial and
unconvincing"
 the State could accomplish the result in any number of ways
 The Privileges and Immunities Clause of Article IV, § 2

Introduction
 "The Citizens of each State shall be entitled to all Privileges and Immunities
of Citizens in the several States"







interpreted as limiting the ability of a state to discriminate against out-of-staters
with regard to fundamental rights or important economic activities
Hague v. Committee for Industrial Organization (1939)
 "[t]he section, in effect, prevents a State from discriminating against
citizens of other States in favor of its own."
Discrimination against citizens of other states is a prerequisite for application of
the Privileges and Immunities Clause
"citizen" refers to individuals who are U.S. citizens
 not corporations
 not aliens
can be used only if there is discrimination against out-of-staters
congressional approval does not excuse a law that violates the Privileges and
Immunities Clause
Analysis Under the Privileges and Immunities Clause
 2 Basic Questions:
 has the state discriminated against out-of-staters with regard to privileges and immunities
that it accords its own citizens?
 if there is such discrimination, is there a sufficient justification for the discrimination?


The Clause is not absolute, but creates a strong presumption against state
and local laws that discriminate against out-of-staters with regard to
fundamental rights or important economic activities
What are the "Privileges and Immunities of Citizenship?"
 Corfield v. Coryell (1823) Justice Bushrod Washington

the Clause protects interests "which are fundamental; which belong, of right, to
the citizens of all free governments. [They] may be comprehended under the
following general heads: Protection by the government, the enjoyment of life
and liberty, with the right to acquire and possess property of every kind, and to
pursue and obtain happiness and safety; subject nevertheless to such
restraints as the government may justly prescribe for the general good of the
whole."

Baldwin v. Fish & Game Commission of Montana (1978)


Toomer v. Witsell (1948) Vinson





Facts:
 suit to enjoin as unconstitutional the enforcement of several South Carolina
statutes governing commercial shrimp fishing in the 3-mile maritime belt off
the coast of the state
 statute required payment of $25 for a license to operate a shrimp boat by
residents, and $2,500 for a boat owned by a non-resident
 appellants are residents of Georgia
Issue: Are there valid independent reasons for the law apart from citizenship,
and does the degree of discrimination bear a close relationship to those
reasons?
Holding: No, the Act is unconstitutional.
Analysis:
 primary purpose of the Privileges and Immunities Clause was to help fuse
into one Nation a collection of independent, sovereign States
 "In line with this underlying purpose, it was long ago decided that one of the
privileges which the clause guarantees to citizens of State A is that of doing
business in State B on terms of substantial equality with the citizens of that
State."
 the statute plainly and frankly discriminates against non-residents
United Building & Construction Trades Council of Camden County v. Mayor
& Council of the City of Camden (1984) Rehnquist






the Clause applies "only with respect to those privileges and immunities
bearing upon the vitality of the Nation as a single entity."
Facts:
 municipal ordinance in Camden, NJ requires that at least 40% of the
employees of contractors and subcontractors working on city construction
projects be Camden residents
Issue: Whether the ordinance burdens one of the privileges and immunities
protected by the Clause
Threshold Issue: "Whether an out-of-state resident's interest in employment on
public works contracts in another State is sufficiently "fundamental" to the
promotion of interstate harmony so as to "fall within the purview of the
Privileges and Immunities Clause"
Holding: "the pursuit of a common calling is one of the most fundamental of
those privileges protected by the Clause."
Overall Holding: it is impossible to evaluate Camden's justification on the
record as it now stands
Lester Baldwin v. Fish & Game Commn. of Montana (1978) Blackmun

Facts:
 Montana's hunting license system made it so that a nonresident paid 7 1/2
times as much as the resident to hunt, and 25 times as much if they only
wanted to hunt elk
 Lester Baldwin is a Montana resident who is an outfitter holding a state
license as a hunting guide





 other residents of Minnesota come to Montana to hunt and joined Baldwin
in his suit
Issue: Are the disparities between residents and nonresidents in the State's
hunting license system constitutional under the Privileges and Immunities
Clause?
Holding: Yes. "Appellants' interest in sharing this limited resource on more
equal terms with Montana residents simply does not fall within the purview of
the Privileges and Immunities Clause."
Analysis:
 Unlike the means to a livelihood or the right to travel, equality in access to
Montana elk is not basic to the maintenance or well-being of the Union
 "Only with respect to those "privileges" and "immunities" bearing upon the
vitality of the Nation as a single entity must the State treat all citizens,
resident and nonresident, equally"
 elk hunting is a recreation and a sport
 it is not a means to the nonresident's livelihood
What Justifications Are Sufficient to Permit Discrimination?
 Supreme Court of New Hampshire v. Kathryn A. Piper (1985) Powell

Facts:
 the Rules of the Supreme Court of New Hampshire limit bar admission to
state residents
 Piper lives about 400 yards from NH in Vermont






the majority of his customers are nonresidents who come to Montana to hunt
elk and other big game
she took and passed the NH bar, but was informed that she would have to
have a NH address to practice law there
Issue: Whether this restriction violates the Privileges and Immunities Clause
Holding: The state "neither advances a 'substantial reason' for its
discrimination against nonresident applicants to the bar, nor demonstrates that
the discrimination practiced bears a close relationship to its proffered
objectives."
Analysis:
 there is nothing in prior decisions that suggests that practicing law is not a
"privilege" under the Clause
 the practice of law is important to the national economy
 "the legal profession has a noncommercial role and duty that reinforce the
view that the practice of law falls within the ambit of the Privileges and
Immunities Clause."
 Test: The Clause does not preclude discrimination against nonresidents
where:
there is a substantial reason for the difference in treatment; and
the discrimination practiced against nonresidents bears a substantial relationship to the State's
objective
 the availability of less restrictive means if a factor in this prong
 State's justifications: nonresident members of the bar would be less likely:



to become, and remain, familiar with local rules and procedures;
 there's no evidence to support this claim
to behave ethically
 there's no reason to believe this
to be available for court proceedings; and
 this can be taken care of by courts requiring the appointment of a local
attorney for emergencies
also, most of the people who take the bar are likely to be nearby to begin
with
to do pro bono and other volunteer work in the State
 most lawyers who become members of a state bar will endeavor to
perform their share of these services


 Also, the rule is underinclusive because it allows people who were
residents at the time they passed the bar to remain attorneys, even if they
no longer are residents
 Federalism: The Bill of Rights and The States
 History
 The Application of the Bill of Rights to the States

The rejection of application before the Civil War
 Barron v. Mayor & City Council of Baltimore (1833) Marshall





Facts:
 Barron sued the City of Baltimore for taking property without just
compensation in violation of the 5th Amendment
Issue: Does the Takings Clause of the 5th Amendment apply to the city?
Holding: No. "The constitution was ordained and established by the people of
the United States for themselves, for their own government, and not for the
government of the individual states."
Analysis:
 the Bill of Rights restricts the power granted within it - that is the power of
the federal government
 the Bill of Rights "demanded security against the apprehended
encroachments of the general government - not against those of the local
governments."
 there is no language in the Bill of Rights that indicates an intention that they
would apply to local governments
A False Start in Applying the Bill of Rights to the States: The Privileges or
Immunities Clause and the Slaughter-House Cases
 14th Amendment = "No State shall make or enforce any law which shall
abridge the privileges or immunities of citizens of the United States."


Congressional debate over the Amendment
 representatives and senators stated that they meant for the Amendment to
protect basic rights from state interference
Slaughter-House Cases: Butchers' Benevolent Assn. of New Orleans v.
Crescent City Livestock Landing & Slaughter-House Co. (1872) Miller



Facts:
 LA legislature gave a monopoly in the livestock landing and the
slaughterhouse business for the city of New Orleans to the Crescent City
Livestock Landing and Slaughter-House Co.
 law required that the company allow any person to slaughter animals in the
slaughterhouse for a fixed fee
 Several butchers brought suit challenging the grant of the monopoly.
Issue: What do the new Amendments mean?
Holding:
 13th Amendment: servitude is of larger meaning than slavery = the obvious
purpose was to forbid all shades and conditions of African slavery
 14th Amendment: only applies to the federal government





purpose was for the protection of the "slave race"
by reversing the decision of the LA supreme court, would mean that this Court
would be a perpetual censor on state regulation
The court's narrow interpretation of the Due Process Clause was overruled
relatively quickly
The court's narrow interpretation of the Equal Protection Clause lasted until
well into the 20th century
The court's narrow interpretation of the Privileges or Immunities Clause
lasted until very recently . . .

Saenz v. Roe (1999) Stevens
 Facts:

In 1992, CA enacted a statute limiting the maximum welfare benefits available
to newly arrived residents
 Issue: May CA enact this statute within the Privileges or Immunities Clause
of the 14th Amendment?
 Holding: These classifications may not be justified by a purpose to deter
welfare applicants from migrating to CA
 Analysis:




newly arrived citizens have 2 political capacities, one state and one federal
since the right to travel embraces the citizens' right to be treated equally in her
new State of residence, the discriminatory classification is itself a penalty
the number of people to whom the statute applies is small, thereby not
justifying the burden
The Incorporation of the Bill of Rights into the Due Process Clause of the 14th
Amendment
 Chicago, Burlington & Quincy Railroad Co. v. City of Chicago (1897)



Court ruled that the Due Process Clause of the 14th Amendment prevents
states from taking property without just compensation
did not expressly discuss incorporation . . .
Twining v. New Jersey (1908)




Facts:
 Jury was told that they could draw an unfair inference about the
defendant's choice not to testify at a criminal trial
Issue: Whether such a law violates the 14th Amendment, either by abridging
the privileges or immunities of citizens of the United Sates, or by depriving
persons of their life, liberty, or property without due process of law.
Holding: No.
Analysis:
 the privileges or immunities clause only relates to the federal government
as held by the Slaughterhouse cases.
 Due Process

"IT IS POSSIBLE that some of the personal rights safeguarded by the first
eight Amendments against national action may also be safeguarded against
state action, because a denial of them would be a denial of due process of law"
 If so, it's not because they're in the Bill of Rights, but because they're of
such nature to be included within the concept of due process
 Is the right against self-incrimination one of these rights?
 No, "it would be going far to rate it as an immutable principle of justice
which is the inalienable possession of every citizen of a free
government."

Gitlow v. New York (1925)


Powell v. Alabama (1932)


the Court for the first time said that the 1st Amendment's protection of freedom
of speech applies to the states through its incorporation into the Due Process
Clause of the 14th Amendment
Court found that a state's denial of counsel in a capital case denied due
process, thereby in essence applying the 6th Amendment to the states in
capital cases
The Debate over Incorporation



incorporationists = all of the Bill of Rights should be included
 Black, Douglas
selective incorporationists = only some of the Bill of Rights should be applied
 Cardozo, Frankfurter
Palko v. Connecticut (1937) Cardozo
 Conn. statute allowing the State to appeal in criminal cases was challenged
by appellant as an infringement of the 14th Amendment
 Cardozo



there is no general rule that all of the Bill of Rights is incorporated
the Court has held in the past, that in prosecutions by a state, presentment or
indictment by a grand jury may give way to informations at the instance of a
public officer
trial by jury may be modified by a state or abolished altogether
 Holding: The right to trial by jury and the immunity from prosecution except
as the result of an indictment may have value and importance, but "are not
of the very essence of a scheme of ordered liberty"
 Analysis:




to abolish trials by jury would not "violate a principle of justice so rooted in the
traditions and conscience of our people as to be ranked as fundamental"
justice would not be impossible without trial by jury
"The edifice of justice stands"
Adamson v. California (1947) Reed
 Facts:


Adamson was convicted, without recommendation for mercy, by a jury for
murder
CA law permitted the failure of the defendant to explain or deny evidence
against him to be commented on by the court and by counsel and to be
considered by court and jury
 Issue: Is the law constitutional?
 Holding: "The fact that the witness may also be the defendant makes the
choice more difficult but a denial of due process does not emerge from the
circumstances"
 Analysis:


Due Process doesn't draw in all of the rights of the Bill of Rights
"The purpose of due process is not to protect an accused against a proper
conviction but against an unfair conviction."
 Dissent: Frankfurter


"to suggest that such a limitation can be drawn out of 'due process' in its
protection of ultimate decency in a civilized society is to suggest that the Due
Process Clause fastened fetters of unreason upon the States."
to apply the Bill of Rights to the States completely, "would deprive the States of
opportunity for reforms in legal process designed for extending the area of
freedom."
 Dissent: Black



"one of the chief objects that the provisions of the Amendment's first section,
separately, and as a whole, were intended to accomplish was to make the Bill
of Rights applicable to the States"
history shows that the 14th Amendment was meant to apply the Bill of Rights
to the states
Issues in the Debate:
 History

Whether the framers of the 14th Amendment intended it to apply the Bill of
Rights to the states
 Federalism



Applying the Bill of Rights imposes a substantial set of restrictions on state and
local governments
 opponents of total incorporation = the desirability of preserving state and
local governing autonomy by freeing State and local governments from
application of the Bill of Rights
 total incorporationists = federalism is not a good enough reason for
tolerating violations of fundamental liberties
 Appropriate Judicial Role
Result:
 Supreme Court has never accepted the total incorporationist point of view
 however, one by one, nearly all of the Bill of Rights has been applied to the
States
The Current Law as to What's Incorporated

Duncan v. Louisiana (1968) White
 Facts:


Duncan was convicted of simple battery
LA did not allow jury trials for minor offenses
 Issue: Does the right to a jury trial apply to State governments?
 Holding: Yes. "The 14th Amendment guarantees a right of jury trial in all
criminal cases which - were they to be tried in a federal court - would come
within the 6th Amendment's guarantee."
 Analysis:




Rights Incorporated to date:
 5th Amendment right to compensation for property taken by the State
(Chicago B. & Q. R. Co. v. City of Chicago (1897))
 rights of speech, press, and religion covered by the 1st Amendment (e.g.
Fiske v. State of Kansas (1927))
 4th Amendment rights to be free from unreasonable searches and
seizures and to have excluded from criminal trials any evidence illegally
seized (Mapp v. Ohio (1961))
 5th Amendment right to be free from compelled self-incrimination (Malloy
v. Hogan (1964))
 6th Amendment right to counsel (Gideon v. Wainright (1963))
 speedy trial (Klopfer v. North Carolina (1967))
 speedy and public trial (In re Oliver (1948))
 confrontation of opposing witnesses (Pointer v. Texas (1965))
 compulsory process for obtaining witnesses (Washington v. Texas (1967))
The right to jury trial, like these, is "fundamental to the American scheme of
justice"
requiring a jury trial prevents oppression by the government
this stems from an American reluctance to entrust plenary powers over the life
an liberty of the citizen to one judge or to a group of judges
 Concurring: Black/Douglas





What's not Incorporated






We still feel "that the 14th Amendment, as a whole, makes the Bill of Rights
applicable to the States."
"the words 'No state shall make or enforce any law which shall abridge the
privileges or immunities of citizens of the United States' seem to me an
eminently reasonable way of expressing the idea that henceforth the Bill of
Rights shall apply to the States."
Senator Howard, who introduced the Amendment in the Senate felt this way
"I have never believed that under the guise of federalism that States should be
able to experiment with the protections afforded our citizens through the Bill of
Rights"
2d Amendment "right to bear arms" (Presser v. Illinois (1886))
3d Amendment not to have soldiers quartered in a person's home
5th Amendment right to a grand jury indictment in criminal cases (Hutardo v.
California (1884))
7th Amendment right to jury trial in civil cases (Minneapolis & St. Louis
Railroad Co. v. Bombolis (1916))
8th Amendment prohibition of excessive fines (Browning-Ferris Industries of
Vt., Inc. v. Kelco Disposal, Inc. (1989))
The Content of Incorporated Rights



In some cases, the Court has expressly stated that the Bill of Rights provision
applied in exactly the same manner whether it is a federal or a state
government action
In other instances, the Court has ruled that some Bill of Rights provisions apply
differently to the states than to the federal government
Apodaca v. Oregon (1972)
 Court ruled that states may allow non-unanimous jury verdicts in criminal
cases
 may allow 11-1, or 10-2; but a non-unanimous 6-person jury violates due
process
 The Application of the Bill of Rights and the Constitution to Private
Conduct

The Requirement for State Action
 The Civil Rights Cases: U.S. v. Stanley (1883)





Facts:
 Civil Rights Act made it illegal for "any person" to deny access to common
carriers
 Stanley and others were all convicted under the Act discriminating against
minorities in hotels, theaters, and opera houses, etc.
Issue: Is the Civil Rights Act constitutional under the 14th Amendment?
Holding: No. The amendment relates to state action and not private action
Analysis:
 the law makes no reference whatever to any supposed or apprehended
violation of the 14th Amendment on the part of the states
 it steps into local lawmaking and lays down rules for the conduct of
individuals in society toward each other
 difficult to see where it would stop
Dissent: Harlan
 "The substance and spirit of the recent amendments of the constitution
have been sacrificed by a subtle and ingenious verbal criticism."
 full effect should be given to the intent of the framers of the Amendment

Qualifications to the Rule of State Action


13th Amendment directly regulates private conduct
 it forbids people from being or owning slaves
Statutes, both federal and state, can apply constitutional norms to private
conduct
 the government can enact laws that require that private conduct meet the
same standards that the Constitution requires of the government.
 i.e. equal protection applies only to the government, but Congress can
enact legislation such as the Civil Rights Act of 1964, that prohibit private
discrimination by private employers and by places of public
accommodation



actions are brought under the laws and are governed by the terms of those
laws
There are exceptions to the state action requirement . . .
The Exceptions to the State Action Doctrine (conceptual disaster area)
 The Public Functions Exception


A PRIVATE ENTITY MUST COMPLY WITH THE CONSTITUTION IF IT IS
PERFORMING A TASK THAT HAS BEEN TRADITIONALLY, EXCLUSIVELY
DONE BY THE GOVERNMENT
Marsh v. Alabama (1946) Black
 Facts:



town of Chickasaw is owned by the Gulf Shipbuilding Corporation
 town is essentially like any other town, except that it is owned by the
company; a "company town"
Marsh was a Jehovah's witness who was distributing pamphlets at the town's
stores
She was arrested and charged in the state court with violating Alabama law
which made it a crime to enter or remain on the premises of another after
having been warned not to do so
 Issue: Whether a State, consistently with the First and Fourteenth
Amendments, can impose criminal punishment on a person who
undertakes to distribute religious literature on the premises of a
company-owned town contrary to the wishes of the town's management
 Holding: "The managers appointed by the corporation cannot curtail the
liberty of press and religion of these people consistently with the purposes
of Constitutional guarantees, and a state statute, as the one here involved,
which enforces such action by criminally punishing those who attempt to
distribute religious literature clearly violates the 1st and 14th
Amendments."
 Analysis:




ownership does not always mean absolute dominion
Test (kind of):
 "The more an owner, for his advantage, opens up his property for use by
the public in general, the more do his rights become circumscribed by the
statutory and constitutional rights of those who use it."
the 1st Amendment freedom of press and religion hold a preferred place
Jackson v. Metropolitan Edison Co. (1974) Rehnquist
 Facts:

Metro Edison is a privately owned PA corporation who is heavily regulated by
the state's Penn Public Utility Commission


Ms. Jackson had trouble paying her electric bill, and had her service shut off,
got it back under another's name, and had it shut off again
Jackson brought suit arguing that under the Due Process Clause of the 14th
Amendment she cannot be deprived of this entitlement to utility service without
adequate notice and a hearing before an impartial
 Issue: Whether there is a sufficiently close nexus between the State and
the challenged action of the regulated entity so that the action of the latter
may be fairly treated as that of the State itself
 Holding: "The State of Pennsylvania is not sufficiently connected with
respondent's action in terminating petitioner's service so as to make
respondent's conduct in so doing attributable to the State for purposes of
the 14th Amendment."
 Analysis:



Jackson's argument #1: "state action" is present because of the monopoly
status allegedly conferred upon the company
 the fact that the company has a monopoly is not determinative in deciding
whether the action were state action
Jackson's argument #2: state action is present because the company
performs an essential function
 the PA courts have rejected the contention that the furnishing of utility
services is either a state function or a municipal duty
Jackson's argument #3: the Court should expand the doctrine to include all
business "affected with the public interest"
 if this were the case, then doctors, optometrists, lawyers, etc. would be
considered state action because they affect the public interest
 Dissent: Marshall



There is State action here
 essential public service
 the company is the only entity public or private with the power to act in this
area
 State imposes extensive regulations on the company
 State has granted its approval to the company's mode of service
termination - the very conduct that is challenged here
State Action cases factors relied upon in the past, and present in this case:
 state-sanctioned monopoly
 extensive pattern of cooperation between the private entity and the State
 service which is uniquely public in nature
The Entanglement Exception



PRIVATE CONDUCT MUST COMPLY WITH THE CONSTITUTION IF THE
GOVERNMENT HAS AUTHORIZED, ENCOURAGED, OR FACILITATED
THE UNCONSTITUTIONAL CONDUCT
Key Question = What degree of government involvement is sufficient to make
the Constitution applicable?
Judicial and Law Enforcement Actions
 Shelley v. Kraemer (1948) Vinson

Facts:
 most business owners on one street in St. Louis entered into restrictive
covenants whereby they agreed not to sell their land to African Americans
 Shelleys, who are African American, bought a store on the street, and
apparently had no idea about the covenant
 businesses on the street brought suit to have the sale rescinded as
violating the restrictive covenant
 this would not be allowed under the Constitution if the government was
acting






Issue: Whether the fact that these are private individuals removes these cases
from the operation of the prohibitory provisions of the 14th Amendment.
Holding: It does not.
Analysis:
 purposes of the agreements were only secured by judicial enforcement by
state courts
 judicial officers of state courts are clearly state actors within the meaning
of the 14th Amendment
 the judicial branch is subject to the 14th Amendment as much as any other
branch
Issue: Is the enforcement by state courts of the restrictive covenants "acts of
the State"?
Holding: Yes. "there has been state action in these cases in the full and
complete sense of the phrase."
Analysis:
 "the states have made available to such individuals the full coercive power
of government to deny to petitioners, on the grounds of race or color, the
enjoyment of property rights in premises which petitioners are willing and
financially able to acquire and which the grantors are willing to sell"
 New York Times Co. v. Sullivan (1964)


Court held that the common law of libel is state action that must comply with
the 1st Amendment
Judicial Enforcement as State Action:
 Prejudgment Attachment


Lugar v. Edmondson Oil Co. (1982) White
 Facts:
 Petitioner, a lessee/operator of a truckstop in VA became indebted to
his supplier, Edmondson Oil
 Edmondson sued on the debt and sought prejudgment attachment of
certain of petitioner's property
 Clerk of the state court issued a writ of attachment, which was
executed by the Sheriff
 Later, the attachment was dismissed because Edmondson had failed
to meet the statutory requirement
 Lugar then brought suit against Edmondson and its president,
claiming that in attaching his property, they had acted jointly with the
State to deprive him of his property without due process of law
 Issue: Whether the claimed deprivation has resulted from the exercise of a
right or privilege having its source in state authority and whether, under the
facts of this case, respondents, who are private parties, may be
appropriately characterized as "state actors"
 Holding: The procedural scheme is obviously state action and "a private
party's joint participation with state officials in the seizure of disputed
property is sufficient to characterize that party as a 'state actor' for
purposes of the 14th Amendment"
 Analysis:
 Lugar was deprived of his property through state action
 therefore, respondents were acting under color of state law in
participating in that deprivation
Flagg Brothers v. Brooks (1978)
 Court held that a private creditor's self-help repossession did not
constitute state action and thus due process was not required prior to the
sale of her belongings
 woman had been evicted from her home and the Sheriff arranged for
the storage of her things at a warehouse



warehouse demanded payment
she claimed a right to due process, but the Court concluded that since
the warehouse company was privately owned the Constitution did not
apply
creditor was not delegated, "an exclusive prerogative of the
sovereign"
 Peremptory Challenges



the ability of the litigant to excuse prospective jurors without showing cause
Batson v. Kentucky (1986)
 Court held that equal protection prohibits prosecutors from using
peremptory challenges in a discriminatory fashion in criminal cases
Edmonson v. Leesville Concrete Co. (1991)
 Facts:
 Edmonson, who is black, was injured in a construction accident
 He sued Leesville for negligence in District Court claiming that a
Leesville employee permitted one of the company's trucks to roll
backward and pin him against some construction equipment
 during voir dire, Leesville used 2 of its 3 peremptory challenges to
strike black people from the jury
 citing Batson, Edmonson requested that the District Court require
Leesville to articulate a race-neutral explanation for striking the 2
jurors
 District Court denied the request on the ground that Batson does not
apply in civil proceedings
 jury then included 11 white and 1 black person
 jury ruled in favor of Edmonson, but attributed 80% of the fault to his
contributory negligence and awarded him $18,000 of a $90,000
damage award
 Issue: Whether a private litigant in a civil case may use peremptory
challenges to exclude jurors on account of their race.
 Holding: Race-based exclusion violates the equal protection rights of the
challenged jurors
 Analysis:
 "Discrimination on the basis of race in selecting a jury in a civil
proceeding harms the excluded juror no less than discrimination in a
criminal trial."
 the claimed deprivation of right has its source in state authority as
peremptory challenges have no significance outside a court of law
 peremptory challenges are only permitted when the government, by
statute or decisional law, deem them appropriate to allow parties to
exclude a given number of persons who otherwise would satisfy the
requirements for service on the jury
 in this case, the challenges were exercised under a federal statute
 without this state authority, Leesville would not have been able to
engage in the alleged discriminatory acts
 to determine whether an actor is deemed a government actor the
Court must look to: 1) the extent to which the actor relies on
governmental assistance and benefits, 2) whether the actor is
performing a traditional governmental function, and 3) whether
the injury caused is aggravated in a unique way by the incidents
of governmental authority
 based on those factors, "the exercise of peremptory challenges by a
defendant in the District Court was pursuant to a course of state
action."
 the private party made extensive use of state procedures with "overt,
significant assistance of state officials"


without this assistance, the peremptory challenge system, as well as
the jury trial system of which it is a part, simply could not exist
 the court uses its authority to summon jurors, constrain their
movements, and subject them to public scrutiny and examination
 without the assistance of the judge, who is a state actor, the
peremptory challenge system would serve no purpose
 by enforcing the peremptory challenges, the court "has not only made
itself a party to the [biased act], but has elected to place its power,
property and prestige behind the [alleged] discrimination"
Georgia v. McCollum (1992)
 Issue: Whether a criminal defendant's exercise of a peremptory challenge
constitutes state action for purposes of the Equal Protection Clause
 Holding: for purposes of jury selection, a criminal defendant is a state actor
in exercising peremptory challenges
 Government Regulation



IN GENERAL, GOVERNMENT LICENSING OR REGULATING IS
INSUFFICIENT FOR A FINDING OF STATE ACTION, UNLESS THERE IS
OTHER GOVERNMENT ENCOURAGING OR FACILITATING OF
UNCONSTITUTIONAL CONDUCT
Burton v. Wilmington Parking Authority (1961) Clark
 Facts:
 coffee shop, located within an off-street parking building in
Wilmington, refused to serve Burton because he was an African
American
 the parking building is owned and operated by the Wilmington Parking
Authority, an agency of the State of Delaware, and the restaurant is
the Authority's lessee
 Issue: Is the restaurant considered a state actor because it is located
within a state-run parking building?
 Holding: Yes. "the exclusion of appellant under the circumstances shown
to be present here was discriminatory state action in violation of the Equal
Protection Clause of the 14th Amendment."
 Analysis:
 the land and building are publicly owned
 the building is dedicated to "public uses" in performance of the
Authority's "essential governmental functions"
 public funds aid the building
 profits earned by discrimination not only contribute to, but also are
indispensable elements in the financial success of a governmental
agency
 "By its inaction, the Authority, and through it the State, has not only
made itself a party to the refusal of service, but has elected to place
its power, property and prestige behind the admitted
discrimination."
Moose Lodge No. 107 v. Irvis (1972) Rehnquist
 Facts:
 Irvis, a black man, was refused service by Moose Lodge, a local
branch of the national fraternal organization located in Harrisburg, PA
 Irvis claimed that because the PA liquor board had issued Moose
Lodge a private club license that authorized the sale of alcoholic
beverages on its premises, the refusal to him was "state action" for the
purposes of the Equal Protection Clause
 Moose Lodge is a private club, with its own building and is not publicly
funded
 Issue: Is the Lodge a "state actor" because of its liquor license granted by
the State for purposes of the Equal Protection Clause?


Holding: No. "the operation of the regulatory scheme enforced by the PA
Liquor Control Board does not sufficiently implicate the State in the
discriminatory guest policies of Moose Lodge to make the latter 'state
action' within the ambit of the Equal Protection Clause of the 14th
Amendment."
Analysis:
 the Lodge owns its own building
 the Lodge acknowledges that it is not open to the public
 it is not in a building that serves a public function
 the PA Liquor Control Board plays absolutely no part in establishing or
enforcing the membership or guest policies of the club
 Government Subsidies



DECISIONS OF LATE MAKE IT HIGHLY DOUBTFUL THAT SUBSIDIES BY
THEMSELVES, NO MATTER HOW LARGE, COULD JUSTIFY APPLYING
THE CONSTITUTION
Norwood v. Harrison (1973)
 Facts:
 Mississippi statutory program buys textbooks and lends them to
school children both private and public
 appellants are parents of 4 school children
 complaint alleged that certain private schools were discriminatory and
because the State program lent books to the schools, this was "state
action"
 Issue: Does the program count as "state action?"
 Holding: Yes. "When, as here, that necessary expense is borne by the
State, the economic consequence is to give aid to the enterprise; if the
school engages in discriminatory practices the State by tangible aid in the
form of textbooks thereby gives support to such discrimination."
 Analysis:
 a textbook lending program is not legally distinguishable from other
forms of state assistance foreclosed by earlier decisions (such as
state tuition grants)
Gilmore v. City of Montgomery, Alabama (1974)
 Court held that a city could not give racially segregated private schools
exclusive use of public recreational facilities
 Economic Liberties
 Art. I, § 10, cl. 1: "No State shall enter into any Treaty, Alliance, or
Confederation; grant Letters of Marque and Reprisal; coin Money; emit
Bills of Credit; make any Thing but gold and silver Coin a Tender in
Payment of Debts; pass any Bill of Attainder, ex post facto Law, or
Law impairing the Obligation of Contracts, or grant any title of
Nobility."
 5th Amendment: "No person shall be held to answer for a capital, or
otherwise infamous crime, unless on a presentment or indictment of a
Grand Jury, except in cases arising in the land or naval forces, or in the
Militia, when in actual service in time of War or public danger; nor shall
any person be subject for the same offence to be twice put in jeopardy
of life or limb; nor shall be compelled in any criminal case to be a
witness against himself, nor be deprived of life, liberty, or property,
without due process of law; nor shall private property be taken
for public use, without just compensation."
 14th Amendment § 1: "All persons born or naturalized in the United
States, and subject to the jurisdiction thereof, are citizens of the United
States and of the State wherein they reside. No State shall make or
enforce any law which shall abridge the privileges or immunities of
citizens of the United States; nor shall any State deprive any person
of life, liberty, or property, without due process of law; nor deny
to any person within its jurisdiction the equal protection of the
laws."
 History



the Court's protection of economic liberties has varied enormously over time
 early 19th century, the Court invoked natural law principles to protect
property rights and aggressively used the Contracts Clause to limit the
ability of states to interfere with existing contractual obligations
the Lochner Era:
 Beginning in the late 19th century through 1937, court found that freedom of
contract was a basic right under the liberty and property provisions of the
Due Process Clause
Only twice since 1937 has the Court found that any law violates the Contract
Clause
 Economic Substantive Due Process

Introduction
 procedural due process = the procedures that government must follow
when it takes away a person's life, liberty, or property
 substantive due process = asks whether the government has an adequate
reason for taking away a person's life, liberty, or property



focus is on the sufficiency of the justification for the government's action, not on
the procedures the government has followed
has been used in primarily 2 areas:
 protecting economic liberties, and
 safeguarding privacy
The Early History of Economic Due Process
 Murray v. Hoboken Land & Improvement Co. (1855)


Court denied a due process challenge to an attempt by the government to
collect delinquent taxes
Slaughterhouse Cases



Court expressly rejected a substantive due process claim
Court emphasized that due process concerned the procedures the
government must follow
Justices Field and Bradley strongly disagreed
 they saw the Due Process Clause as limiting the ability of states to adopt
arbitrary laws, especially ones that interfered with natural rights
 interpreted the words liberty and property in the Due Process Clause as
protecting a right to practice a trade of profession and believed that
arbitrary interference with these rights violated the 14th Amendment

During the 1870s, government regulation significantly increased as
industrialization changed the nature of the economy


business turned to the courts to have these regulations ruled unconstitutional
many judges espoused a laissez-faire, unregulated economy
 partly based on Social Darwinism









widely cited work was "Social Statics" by Herbert Spencer
 also based on a belief that government regulations unduly interfered with
the natural rights of people to own and use their property and with a basic
liberty interest in freedom of contract
Loan Association v. Topeka (1874)
 regarded as one of the first instances of the Court's using natural law
principles to limit government regulatory power
 Court invalidated a city law that imposed a tax to fund bonds to attract
private businesses to Topeka
over the next 2 decades, the Supreme Court rejected due process challenges
to government economic regulations
 however, dicta indicated that it would invalidate laws as violating due
process if they interfered with natural principles of justice
 although these cases articulated the principles of substantive economic
due process, the Court did not use them to declare laws unconstitutional
Munn v. Illinois (1876)
 Court upheld a state law that set maximum rates for grain-storage
warehouses
 The court did however expressly declare that it was for the judiciary to
evaluate the reasonableness of state regulations
Railroad Commission Cases (1886)
 Court upheld a state law regulating railroad rates
Mugler v. Kansas (1887)
 Court upheld a state law that prohibited the sale of alcoholic beverages
These 3 cases were important for articulating that due process was a limit on
the government's regulatory power
Santa Clara County v. Southern Pacific R.R. Co., 118 U.S. 394 (1886)
 Court held that corporations were "persons" under the Due Process and
Equal Protection Clauses
Substantive Due Process of the Lochner Era
 Themes (from Lochner) that persist until 1937:
 Freedom of contract was a right protected by the Due Process Clauses of the 5th and 14th
Amendment,
 the government could interfere with freedom of contract only to serve a valid police purpose of
protecting public health, public safety or public morals; and
 the judiciary would carefully scrutinize legislation to ensure that it truly served a police purpose


from Lochner to 1937 - almost 200 state laws were declared
unconstitutional as violating the Due Process Clause of the 14th
Amendment
Allgeyer v. Louisiana (1897) Peckham

Facts:
 LA state law prohibited foreign insurance companies from doing business
within the state
 in this case, the only violation consisted of the sending of a letter through
the mail notifying the NY insurance company of the property to be covered




by the policy already held
 all of the action took place, and would take place in NY (except for the
sending of the letter and the existence of the property in LA)
Issue: Is the state law a constitutional exercise of power?
Holding: No. "the statue is a violation of the 14th amendment . . . in that it
deprives the defendants of their liberty without due process of law." "'liberty' .
. . is deemed to embrace the right of the citizen to be free in the enjoyment of all
his faculties; to be free to use them in all lawful ways; to live and work where he
will; to earn his livelihood by any lawful calling; to pursue any livelihood or
avocation; and for that purpose to enter into all contracts which may be
proper, necessary, and essential to his carrying out to a successful
conclusion the purposes mentioned above."
Analysis:
 a citizen has a right to contract outside of the state for insurance
 "We are not alluding to acts done within the state by an insurance company
or its agents doing business therein, which are in violation of the state
statutes."
 the contract was made out of the state and was therefore a proper contract
 the statute prohibits an act which under the Constitution, the defendant had
a right to perform
Lochner v. New York (1905) Peckham





Facts
 defendant was convicted of violating a NY statute limiting the number of
hours a baker could work in a week
Issue: "which shall prevail - the right of the individual to labor for such time as
he may choose, or the right of the state to prevent the individual form laboring,
or from entering into any contract to labor, beyond a certain time prescribed by
the state."
Holding: "There is no reasonable ground for interfering with the liberty of
person or the right of free contract, by determining the hours of labor, in the
occupation of a baker."
Test: "The act must have a more direct relation as a means to an end, and the
end itself must be appropriate and legitimate, before an act can be held to be
valid which interferes with the general right to an individual to be free in his
person and in his power to contract in relation to his own labor."
Analysis:
 While the States do possess the police power, this exercise of that power is
an arbitrary interference with the right of contract
 bakers can as well as anyone think for themselves and negotiate the terms
of their contracts
 "a law like the one before us involves neither the safety, the morals, nor the
welfare, of the public, and that the interest of the public is not in the slightest
degree affected by such an act."




labor of any kind may carry with it unhealthiness
no occupation could escape the police power if this law were upheld
the act is not a health law
 the act may have been passed from other motives
Dissent: Holmes
 "This case is decided upon an economic theory which a large part of the
country does not entertain"
 "The 14th Amendment does not enact Mr. Herbert Spencer's Social


Statics."
Dissent: Harlan
 this statute was enacted for the health of bakers, who suffer, according to
medical testimony, disproportionately from extended work hours and
severe working conditions
 the Court should not presume that the NY legislature acted in bad faith
 the statute "is not shown to be plainly and palpably inconsistent with [the
Constitution]."
Laws Protecting Unionizing

Coppage v. Kansas
 Facts:

Coppage was found guilty of a KS statute that prohibited any person from
influencing any other person not to join a Union
 Issue: Is the statute constitutional under the 14th Amendment?
 Holding: Yes.
 Analysis:





Adair v. U.S.
 identical law, in which the Court held the act to be an invasion of the
personal liberty as well as of the right of property guaranteed by the 5th
Amendment.
If Congress is prevented from arbitrary interference with the right to contract,
"it is too clear for argument that the states are prevented from the
like-interference by virtue of the corresponding clause of the 14th
Amendment."
 it is similarly unconstitutional for a state to require an employer to require
his employee as a condition of employment to agree not to become or
remain a member of a Union
the individual has the right to stipulate what terms he will consent to the
inception, or to the continuance, of that relationship
chief among the right to contract is that of personal employment by which labor
and other services are exchanged for money or other forms of property
Maximum Hour Laws


in Lochner, the Court distinguished Holden v. Hardy, in which the Court had
upheld maximum hours for coal miners
Muller v. Oregon (1908) Brewer
 Facts:


Oregon state law prohibited women from working a certain number of hours in
a week
Brandeis Brief detailed "facts" purporting to show the damage long hours can
have on women
 Issue: Is the statute constitutional?
 Holding: Yes. "it cannot be adjudged that the act in question is in conflict
with the Federal Constitution"
 Analysis:



woman's physical structure and maternal instincts put her at a disadvantage in
the work place
the physical well-being of women is an object of public interest in order to
preserve the strength and vigor of the race
Bunting v. Oregon (1917)
 Court upheld a maximum hours law for men and women in manufacturing
jobs
 seemed to overrule Lochner, but President Harding appoints 4 new
justices, and the Court turns back

Minimum Wage Laws

Adkins v. Children's Hospital (1923) Sutherland
 Facts:

Act of the District of Columbia fixed the minimum wages for women and
children
 Issue: Is the act constitutional?
 Holding: No. It "passes the limit prescribed by the Constitution" because
"it exacts from the employer an arbitrary payment for a purpose and upon a
basis having no causal connection with his business"
 Analysis:






it cannot be shown that well-paid women safeguard their morals more carefully
than those who are poorly paid = no causal connection between the means
and the end
 in this way, the Act is not for the aid of public health under the police power
the Act has no reasonable basis
the law takes account of only one side of the contract
also, the law applies to smaller employers who may not have the means to pay
the wage
Morehead v. New York ex rel. Tipaldo (1936)
 the Court reaffirms its holding in Adkins
Consumer Protection Legislation

Weaver v. Palmer Bros. Co. (1926) Butler
 Facts:



Act forbids the use of shoddy
Defendant manufactures bed covers some of which are filled with materials
defined by the Act as shoddy
shoddy may be rendered harmless by disinfection or sterilization
 Issue: Whether the provision of the Act prohibiting the use of shoddy
violates the Due Process Clause or the Equal Protection Clause
 Holding: "the provision in question cannot be sustained as a measure to
protect health; and the fact that the act permits the use of numerous
materials, prescribing sterilization if they are secondhand, also serves to
show that the prohibition of the use of shoddy, new or old, even when
sterilized, is unreasonable and arbitrary."
 Analysis:



there is no evidence that any illness was caused by the shoddy
disease is likely to be caused with close proximity to an infected person or
rodent, not by shoddy (as expert testimony stated in the brief)
 there is no probability that bacteria or vermin likely to carry disease survive
after the period usually required for the gathering of the materials, the
production of shoddy, and the manufacture and the shipping of
comfortables
with sterilization, there would little danger to the health of the public
 Dissent: Holmes


"if the Legislature regarded the danger as very great and inspection and
tagging as inadequate remedies, it seems to me that in order to prevent the
spread of disease it constitutionally could forbid any use of shoddy for bedding
and upholstery."
Price Regulations:
 laws setting the maximum prices for theater tickets, employment agencies,
and gasoline were declared unconstitutional as interfering with freedom of
contract
 however, toward the end of the Lochner era . . .
 Nebbia v. New York (1934) Roberts





Facts:
 New York established a Milk Control Board which could set prices of milk
 due to the families of farmers being unable to make a profit from
production and sale of milk
Issue: Whether the Constitution prohibits a state from fixing the price of milk
Holding: "we find no basis in the Due Process Clause of the 14th Amendment
for condemning the provisions of the Agriculture and Markets Law"
Analysis:
 "Failure of producers to receive a reasonable return for their labor and
investment over an extended period threaten a relaxation of vigilance
against contamination"
 legislative investigation demonstrated the harm caused by the normal law
of supply and demand in the milk market
 "the Legislature might reasonably consider further regulation and control
desirable for protection of the industry and the consuming public."
 the order is not without a reasonable basis, or without relation to the
purpose of public health
 "a state is free to adopt whatever economic policy may reasonably be
deemed to promote public welfare, and to enforce that policy by legislation
adapted to its purpose"
Economic Substantive Due Process Since 1937
 By the mid 1930s, enormous pressures were mounting for the Court to
abandon the laissez-faire philosophy of the Lochner Era
 Intellectual foundations of the era were also under attack:



Important themes regarding the "switch in time that saved nine"



the Lochner Era rested on the assumption that freedom of contract and related
property rights were part of the natural liberties possessed by individuals
Legal realists attacked this premise and persuasively argued that the law
reflected political choices
Profound change in horizontal structure
 much more deference to state and federal government
 "Constitutional Moment"
A shift from Legal Formalism to Legal Realism
The End of Lochnerism

West Coast Hotel Co. v. Parrish (1937) Hughes
 Facts:



Washington had a minimum wage law for women and minors
Parrish, a chambermaid, brought suit for the difference between what she
made and what she should have made under the law
Hotel challenged the law as repugnant to the Due Process Clause
 Issue: Was Adkins wrongly decided?
 Holding: Yes. The decision "was a departure from the true application of
the principles governing the regulation by the state of the relation of
employer and employed."
 Analysis:



the Court in Adkins was closely divided
economic conditions have supervened
the Constitution does not recognize an absolute and uncontrollable liberty
such as the freedom of contract

the health of women is very much in the public interest
 Issue: Is this law a permissible exercise of State power?
 Holding: Yes. The legislative response to insufficient wages, "cannot be
regarded as arbitrary or capricious and that is all we have to decide."
 Analysis:




the right to protect workers is a legitimate end
it was perfectly reasonable to think that minimum wage laws could help in the
attainment of that end
the workers have much lower bargaining power than the companies
United States v. Carolene Products Co. (1938) Stone
 Facts:


Congress enacted the "Filled Milk Act" which prohibited the shipment in
interstate commerce of milk mixed with oils or other non-milk liquids
Carolene Products was charged under the act for their "Milnut" beverage, a
mixture of condensed skimmed milk and coconut oil made to resemble
condensed milk
 Issue: Does the "Filled Milk Act" violate the 5th Amendment?
 Holding: No. "The prohibition of shipment of appellee's product in
interstate commerce does not infringe the 5th Amendment"
 Analysis:






evidence has steadily accrued of the danger to the public health from the
consumption of foods which have been stripped of elements essential to the
maintenance of health
"There is nothing in the Constitution which compels a Legislature, either
national or state, to ignore such evidence."
"Even in the absence of [such evidence], the existence of facts supporting the
legislative judgment is to be presumed, for regulatory legislation affecting
ordinary commercial transactions is not to be pronounced unconstitutional
unless in the light of the fact made known or generally assumed it is of such a
character as to preclude the assumption that it rests upon some rational basis
within the knowledge and experience of the legislators."
Footnote 4 = there may be heightened scrutiny for cases involving
fundamental rights and "discrete and insular minorities."
here, the question is at least debatable whether commerce in filled milk should
be regulated, so the Congress was within its power to adopt the measure
Economic Substantive Due Process Since 1937



since 1937, not one state or federal economic regulation has been found
unconstitutional as infringing liberty of contract as protected by the Due
Process Clauses of the 5th and 14th Amendments
Test = whether the law is rationally related to a legitimate government purpose
 purpose can be any goal not prohibited by the Constitution
 does not need to be narrowly tailored
Williamson v. Lee Optical of Oklahoma, Inc. (1955) Douglas
 Facts:


OK law made it unlawful for any person not a licensed optometrist or
ophthalmologist to fit lenses to a face or to duplicate or replace into frames
lenses or other optical appliances
the effect of the law was to forbid the optician from fitting or duplicating lenses
without a prescription from an ophthalmologist or optometrist
 no optician can fit old glasses into new frames or supply a lens, whether it
be a new lens or one to duplicate a lost or broken lens, without a
prescription
 Issue: Is this law unconstitutional under the Due Process Clause?
 Holding: No. "For protection against abuses by legislatures the people
must resort to the polls, not to the courts."
 Analysis:






it is for the legislature, not the courts to weigh the advantages and
disadvantages of a piece of legislation
the legislature could have felt that this was a good way to protect the health of
the people
"the law need not be in every respect logically consistent with its aims to be
constitutional."
Lincoln Federal Labor Union v. Northwestern Iron & Metal Co. (1949)
 the Court unanimously upheld a state "right-to-work" law, which mandated
that no person could be denied a job for failure to join a union
Ferguson v. Skrupa (1963)
 Court upheld a Kansas law that made it unlawful for a person to engage in
the business of debt adjusting, except incident to the practice of law
 demonstrates that the Court no longer interpreted the Due Process Clause
to protect a right to practice a trade of profession or even freedom of
contract
The Rebirth of Economic Due Process?: Constitutional Limits on Punitive
Damages

BMW of North America, Inc. v. Gore (1996) Stevens
 Facts:






Gore bought a BMW from an Alabama dealership
when he went to have the car repainted, he was told that it had already been
repainted once
BMW had a policy wherein if a car was damaged in transport or storage less
than 3% of the total value of the car, the company would sell the car as new
without telling the dealership that it had been damaged
Gore brought suit praying for $500,000 in compensatory and punitive
damages
 to support his claim for punitive damages, Gore introduced evidence that
since 1983, BMW had sold 983 refinished cars as new, including 14 in
Alabama, without disclosing that the cars had been repainted before sale
at a cost of more than $300 per vehicle
jury returned a verdict for Gore
 compensatory damages = $4,000
 punitive damages = $4 million
Alabama Supreme Court reduced the punitive damage award to $2 million
 Issue: Is the punitive damages award "grossly excessive" so that it
amounts to a violation of due process?
 Holding: Yes. "the grossly excessive award imposed in this case
transcends the constitutional limit."
 Analysis:


punitive damage awards serve the purpose of deterring future wrongful
conduct
 however, states may not impose economic sanctions on violators of its laws
with the intent of changing the tortfeasors' lawful conduct in other states
 Alabama would be infringing on other states' policy choices
 Factors:
Degree of Reprehensibility
 the damage was purely economic
 "BMW's conduct evinced no indifference to or reckless disregard for
the health and safety of others."

Ratio

"exemplary damages must bear a 'reasonable relationship' to
compensatory damages"
 the award was 500 times the compensatory damage award
 Sanctions for Comparable Misconduct
 the punitive damage award is substantially greater than any statutory
fine available in Alabama
 the maximum civil penalty authorized by the Alabama Legislature for a
violation of its Deceptive Trade Practices Act is $2,000
 Dissent: Scalia




the Constitution does not make punitive damage awards the Court's business
this is an unjustified incursion into the province of state governments
"the Court's new rule of constitutional law is constrained by no principle other
than the Justices' subjective assessment of the 'reasonableness' of the award
in relation to the conduct for which it was assessed"
State Farm Mutual Automobile Insurance Co. v. Campbell (2003) Kennedy
 Facts:








Campbell attempted to pass 6 vehicles on a Utah highway
Ospital had to swerve out of the way and collided with Slusher
 Ospital died, Slusher was permanently disabled, and the Campbells were
OK
State Farm, pursuant to their nationwide policy, refused to settle for the policy
limit, and assured the Campbells that their assets would be fine and that State
Farm would represent them
a jury determined that Campbell was 100% at fault and awarded a damage
amount of $185,849, far more than the policy limit
 at first, State Farm refused to pay the amount over the policy limit and told
the Campbells "put for sale signs on [their] property to get things moving."
Slusher, Ospital, and Campbell then agreed to join in a suit against State Farm
for insurance bad faith, wherein the Ospitals and Slusher would receive 90%
of any punitive damage award
after the Utah Supreme Court denied Campbell's appeal in the wrongful death
suit, State Farm paid the entire judgment
Campbells brought suit and the jury awarded them $2.6 million in
compensatory damages and $145 million in punitive damages
 trial court reduced compensatory to $1 million and punitive to $25 million
Utah Supreme Court reinstated the punitive damage award
 Issue: Whether an award of $145 million in punitive damages, where full
compensatory damages are $1 million, is excessive and in violation of the
Due Process Clause of the 14th Amendment.
 Holding: Under the principles outlined in BMW v. Gore, the damage award
is clearly excessive
 Analysis:

Degree of reprehensibility factors:
 whether the harm caused was physical as opposed to economic
 whether the tortious conduct evinced an indifference to or a reckless
disregard of the health or safety of others
 whether the target of the conduct had financial vulnerability
 whether the conduct was repetitious or isolated
 whether the harm was the result of intentional malice, trickery, or deceit, or
mere accident
 Analysis:
 the actions by State Farm were bad, but a more modest punishment
for this reprehensible conduct could have satisfied the State's






legitimate objectives
the courts used this case as a platform to expose State Farm's
nationwide policy
this award bore no relation to the Campbell's harm which was
economic - what really counted was the entirety of the actions, which
should not come into play
evidence that had nothing to do with a 3d party lawsuit was introduced
at trial at length
"The reprehensibility guidepost does not permit courts to expand the
scope of the case so that a defendant may be punished for any
malfeasance, which in this case extended for a 20-year period. In
this case, because the Campbells have shown no conduct by State
Farm similar to that which harmed them, the conduct that harmed
them is the only conduct relevant to the reprehensibility analysis."
Ratio
 no bright-line rule
 there is a presumption against an award that has a 145-1 ratio
 the harm was economic, and the Campbells suffered only minor economic
injuries
Sanctions for comparable misconduct
 "The most relevant civil sanction under Utah state law for the wrong done
to the Campbells appears to be a $10,000 fine for an act of fraud, an
amount dwarfed by the $145 million punitive damages award."
 Dissent: Scalia

the test is insusceptible of principled application
 Dissent: Thomas

"the Constitution does not constrain the size of punitive damages awards."
 Dissent: Ginsburg



punitive damages are a state concern
the court should defer to the trial court's decisions because they can better
assess the degree of reprehensibility
Philip Morris U.S.A. v. Williams (2007) Breyer
 Facts:




Williams was a smoker, who apparently did not know that smoking was
harmful, and died
his estate brought suit against Philip Morris for negligence and deceit
jury awarded the estate compensatory damages of $821,000 and punitive
damages of $79.5 million
Philip Morris objected to the non-inclusion of a jury instruction which specified
that the jury could not punish the company for injury to other persons
 the attorney for Williams had asked, "how many other Jesse Williams
there are"
 Issue: Whether the Constitution's Due Process Clause permits a jury to
base that award in part upon its desire to punish the defendant for harming
persons who are not before the court.
 Holding; Such an award would amount to a taking of "property" from the
defendant without due process
 Analysis:


the defendant had no opportunity to face or rebut the supposed third party
injuries
there is no authority supporting the position that punitive damages may be
used to punish a defendant for harming others
 Dissent: Stevens

the nuance that a jury may take into account the harm to third parties for
determining the degree of reprehensibility, yet may not award damages based
on harm to third parties eludes me
 Dissent: Ginsburg

"The right question regarding reprehensibility, the Court acknowledges, would
train on 'the harm that Philip Morris was prepared to inflict on the smoking
public at large.'"
 the Court identifies no evidence introduced and no charge delivered
inconsistent with that inquiry
 The Contracts Clause

Introduction
 Art. I, § 10: "No State shall . . . pass any . . . Law impairing the Obligation of
Contracts."





this provision applies only if a state or local law interferes with existing
contracts
challenges to federal interference with contracts must be brought under the
Due Process Clause where they will receive the deferential rational basis
review
only apples if the state or local government is interfering with performance of
already existing contracts
seems to have been motivated by a desire to prevent states from adopting
laws to help debtors at the expense of creditors
 concern was that in times of recession or depression, state legislatures
might adopt laws to protect debtors who were unable to pay what was
owed
 the Clause was meant to stop such debtor relief legislation that had the
effect of interfering with contractual rights
The Modern Use of the Contracts Clause
 Home Building & Loan Assn. v. Blaisdell (1934) Hughes

Facts:
 in response to the Great Depression, MN adopted the Minnesota Mortgage
Moratorium Law






during the emergency as defined by the legislature, relief could be had through
authorized judicial proceedings with respect to foreclosures of mortgages, and
execution sales of real estate
the sales may be postponed and periods of redemption may be extended
Part 1:
 authorized the district court of the county to extend the period of
redemption from foreclosure sales
Issue: Whether the provision for this temporary and conditional relief exceeds
the power of the state by reason of the Contracts Clause, which prohibits
impairment of the obligations of contract
Holding: "the Minnesota statute as here applied does not violate the contract
clause of the Federal Constitution."
Analysis:
 the States continue to have the police power
 the Contracts Clause and the police power must work in harmony with each
other and a temporary restraint of enforcement is not inconsistent with the
spirit and purpose of the Contracts Clause
 State power has been found to afford temporary relief during times of
natural disaster, and it follows that the same should apply during times of
economic disaster
 An emergency existed in MN which occasioned the proper use of the police
power
 the legislation was addressed to a legitimate end
 the relief was appropriate and under reasonable conditions



the interest continues to run
the validity of the sale and the right of a mortgagee-purchaser to title or to
obtain a deficiency judgment are still there
conditions of redemption stand as they were under prior law
 the legislation is only temporary

Government Interference with Private Contracts

Energy Reserves Group, Inc. v. Kansas Power & Light Co. (1983) Blackmun
 Facts:




KS statute capped the maximum price for natural gas that could be charged
Federal Statute had softened the regulation on the amount that could be
charged
private contracts between the power co. and individuals provided that the price
to be paid would be increased if government regulators fixed a higher price
than that specified in the contract
so, the state Act stopped the energy co. from charging the higher prices they
were allowed to under the contracts
 Threshold Issue: Whether the state law, in fact, operates as a substantial
impairment of a contractual relationship
 Holding: It does not, in that ERG's reasonable expectations have not been
impaired by the Act
 Analysis:

"In determining the extent of the impairment, we are to consider whether the
industry the complaining party has entered has been regulated in the past."
 it is a heavily regulated industry
 State authority to regulate natural gas is well established
 the very existence of the price regulator clause demonstrates that ERG
knew that it was operating in a highly-regulated field
 ERG knew its contractual rights were subject to alteration by state price
regulation
 Issue #2: Does the State have a significant and legitimate public purpose
behind the regulation?
 Holding: Yes. "The the extent, if any, the Kansas Act impairs ERG's
contractual interest, the Kansas Act rests on, and is prompted by,
significant and legitimate state interests."



the elimination of unforeseen windfall profits is a recognized legitimate state
interest
"The State reasonably could find that higher gas prices have caused and will
cause hardship among those who use gas heat but must exist on limited fixed
incomes."
KS also has an interest in correcting the imbalance between the interstate and
intrastate markets by permitting intrastate prices to rise only to the Act's level
 Issue: #3: Whether the adjustment of "the rights and responsibilities of
contracting parties is based upon reasonable conditions and is of a
character appropriate to the public purpose justifying the legislation's
adoption"
 Holding: It is.
 Analysis:

the means are not deficient, "particularly in light of the deference to which the
Kansas Legislature's judgment is entitled."


TEST: when a state or local government interferes with existing private
contracts
 Is there a substantial impairment of a contractual relationship?
 If so, does it serve a significant and legitimate public purpose?, and
 If so, is it reasonably related to achieving the goal?
There is only one case since 1934 where the Supreme Court has declared
unconstitutional a state law that interfered with private contracts . . .
 Allied Structural Steel Co. v. Spannus (1978) Stewart






Facts:
 Allied is an Ill. company with an office in MN
 Allied provided their employees with pension plans funded by
contributions from the company into a trust
 MN enacted legislation which required that employers who closed a place
of business be subject to a "pension funding charge" if the pension funds
were not sufficient to cover all employees who had worked at least 10
years
 this was different than the plan which Allied was using at the time, and
they were subject to the charge
 they were charged $185,000
Issue: Whether the application of the Act to Allied violates the Contract Clause
Holding: "Minnesota could not constitutionally do what it tried to do to the
company in this case."
Analysis:
 Is there a substantial impairment of a contractual relationship? =
Yes
 it very much altered the contract that it had with its employees,
which was voluntary on the party of the company
 the company had no reason to anticipate that its employees'
pension rights could become vested except in accordance with
the terms of the plan
 a basic term of the pension contract - one which the company
had relied on for 10 years - was substantially modified
 reliance on the company's plan for future payouts is vital
 does it serve a significant and legitimate public purpose? = No
 "This legislation, imposing a sudden, totally unanticipated, and
substantial retroactive obligation upon the company to its
employees, was not enacted to deal with a situation remotely
approaching the broad and desperate emergency economic
conditions of the early 1930s - conditions of which the Court in
Blaisdell relied."
 the Act doesn't deal with a broad economic or social problem
 it does not operate in an area in which there were already
substantial governmental regulations
Dissent: Brennan
 this case should be dealt with from a Due Process perspective
 the social problem that the legislature was dealing with was far
more serious than the Court gives credit
Government Interference with Government Contracts

United States Trust Co. v. New Jersey (1977) Blackmun
 Facts:

In 1962, NJ and NY adopted laws prohibiting the use of toll revenues from the
Port Authority of the states from being used to subsidize railroad passenger

service
during the energy crisis of the 1970s, the states adopted laws to repeal the
earlier prohibition and to permit the use of toll funds to improve rail transit
 Issue #1: Does the repeal impair the contractual obligation created by the
1962 laws (which created a contract)?
 Holding: "the repeal of the 1962 covenant is to be seen as a serious
disruption of the bondholder's expectations."
 Analysis:

it repealed the contract itself
 New Test?


"When a State impairs the obligation of its own contract, the reserved power
doctrine has a different basis."
"complete deference to a legislative assessment of reasonableness and
necessity is not appropriate because the State's self-interest is at stake."
 Issue: Is the plan necessary to the achievement of the end?
 Holding: "the repeal was neither necessary to achievement of the plan nor
reasonable in light of the circumstances
 Analysis:


total repeal was not necessary
without repeal, the states could have attained the goal of shifting private
travelers to public transportation in any number of other ways