Week 7 Economic Rights and Liberties

1
Week 7 Economic Rights and Liberties

• Economic SDP, the Contracts Clause, the Takings
  Clause
• (also revisiting IV.2 PI and the DCC)

2
The Rights Definitional Problem, Again

• By reference to the individuals conduct in
  isolation?
• Or by reference to a limitation on state power in
  a particular zone of state action?

3
Previous Brushes With Economic Rights

• An example of economic rights exhibiting more of
  a sense of personal conduct?
• Privileges and Immunities of IV.2 (the right to
  work in a common calling) and the Privileges or
  Immunities of U.S. citizenship noted in the 14th
  Amendment and Saenz
• An example of economic rights exhibiting more of
  a sense of a limit on state action?
• the Dormant Commerce Clause

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Due Process

• Suggests procedural scrutiny are the methods of
  governmental action fair?
• In the aftermath of the Slaughter-House Cases, a
  bigger role for DP dawned (even though SDP was
  rejected as an alternative theory in that case)
• We saw it in the incorporation cases that held
  states to respect fundamental constitutional
  rights, beginning about 1903 formally
• During the same period, SDP emerges

5
The Early Near-Hits

• Munn, 1876 (states price caps challenged on DP
  grounds, but upheld)
• Railroad Commission Cases, 1886 (states rr rate
  regulation challenged on DP grounds, but upheld)
• Mugler, 1887 (states prohibition of alcohol
  sales challenged on DP grounds, but upheld)

6
The Earliest Teeth in Economic SDP

• Chicago, Milwaukee and St. Paul Railway, 1890
  states railroad rate regulation struck as
  violating DP
• Allgeyer, 1897 states rule that an outside
  companys letter to someone regarding that
  citizens contract made outside the state amounts
  to doing business in the state, struck as
  violating DP

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Lochner, 1905

• Case striking New Yorks 10-hour limit on bakers
  workdays
• Holmes dissents on SOP judicial deference to
  legislature
• Harlan dissents on federalism grounds federal
  deference to the states

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Some Lochner-Era Highlights

• Coppage, 1915 no protection of unions
  (following the Adair case of 1908 finding the
  same result against the federal government)
• Muller, 1908 maximum hours provision for women
  upheld aberration?
• Adkins, 1923 minimum wage law for women struck
• Weaver, 1926 consumer protection law struck

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The Demise of Lochner

• Nebbia, 1934 price controls for milk upheld
• West Coast Hotel, 1937 Roberts switches votes
  to uphold minimum wage law for women

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The Post-Lochner World

• Carolene Products, 1938 upholding federal
  filled milk prohibition
• Footnote 4s window to the future after Lochner
  there may be a narrower scope for the
  presumption of constitutionality when legislation
  appears on its face to be within a specific
  prohibition of the Constitution, such as those of
  the first ten Amendments, when incorporated.
  more exacting judicial scrutiny for
  restrictions on political processes like voting,
  info, political organizations, assembly. Also
  more exacting review for statutes directed at
  particular religious . . . or racial minorities
• Or more searching judicial inquiry in the wake
  of prejudice against discrete and insular
  minorities tending seriously to curtail the
  operation of those political processes ordinarily
  to be relied on to protect minorities

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Economic Regulation Post-Lochner

• Williamson v. Lee Optical, 1948 mere rational
  basis review appropriate even for apparently
  protectionist regulation
• In other words, look for legitimate state purpose
• Coupled with means reasonably related to
  achieving that purpose

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A Revival of Economic SDP?

• Gore, 1996 state cannot order exorbitant
  punitive damages consistently with SDP
• In evaluating the constitutionality of punitive
  damage awards, consider degree of
  reprehensability, disparity between actual harm
  and punishment, and awards in comparable cases
• State Farm, 2003 (supplement) disparity between
  punitives and actual damages set at something
  less than a factor of 10

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The Contracts Clause

• Art I, Section 10 No State shall . . . pass any
  . . . Law impairing the obligation of Contracts.
• Framers intent to ensure that
  pre-constitutional debts be perpetuated after the
  new constitution was adopted
• But was expanded pre-Lochner (pre-1905) to limit
  state economic regulation
• Lochner made it largely superfluous
• Lochners demise brings it back into focus . . .

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An Overview of the Doctrine

• Does a contract already exist?
• Has it been impaired?
• How substantial is the impairment in light of the
  parties actual expectations, core exchange,
  economic return, and regulatory setting?
• Assuming a contract has been impaired to some
  degree of substantiality, is the states
  justification for its action in light of its core
  reserved police powers legit, and is means
  reasonable?

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Home Building Loan v. Blaisdell, 1934

• Same term as the Nebbia case signaling an end to
  SDP with respect to economic liberty of contract
  . . .
• Does a states impairment of mortgage obligations
  violate the Contracts Clause?
• Held, no . . .
• Less than fully substantial impairment, coupled
  with strong state justification

16
Energy Reserves Group, 1983

• An example of a typical Contract Clause case with
  the result that a states natural gas price
  regulation scheme is upheld . . .

17
Allied Structural Steel, 1978

• An unusual instance in which a states law
  (regarding forced vesting of pension benefits
  against a job-exporting employer) is struck . . .

18
U.S. Trust v. New Jersey, 1977

• An example of one of the two main types of
  situations in which the government is itself a
  party to a contract . . .
• Where the state is acting as a private
  contracting party with relatively pure financial
  interests at stake, its impairments will get
  heightened scrutiny
• Contrast cases in which the state via contract is
  giving away basic police powers . . .

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Next Takings

• Text nor shall private property be taken for
  public use without just compensation. 5th
  Amendment.
• It was the first right incorporated against the
  states in 1897.

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The Elements of a Taking

• Is there . . .
• (1) a possessory or regulatory taking
• (2) of property
• (3) for a public use
• (4) for which just compensation is lacking.

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Is There a Taking?

• Loretto, 1982 cable wire placement? yes
• Penn Coal v. Mahon, 1922 first regulatory
  taking case (Holmes for the Court) if
  regulation goes too far it will be recognized as
  a taking (Brandeis in dissent)
• Miller v. Schoene, 1928 order to cut trees to
  prevent tree disease held not a taking
• Connollys calculus (1986) expectation, action,
  effect
• Penn Central, 1978 historic preservation not a
  taking

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More on Is There a Taking?

• Lucas, 1992 sacrifice of all economically
  beneficial use of property, even for a limited
  time, constitutes a taking
• Blackmun in dissent Today the Court launches a
  missile to kill a mouse.
• Zoning cases like Village of Euclid no taking
• Nollan Conditions on development that serve same
  purposes as development ban okay
• Dolan rough proportionality for conditions

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Of Property?

• Phillips, 1998 interest on IOLTA funds are
  property

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For a Public Use?

• Hawaii Housing, 1984 forced transfers of land
  held to be a public use

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Without Just Compensation?

• Measured how?
• Ex ante former holder, ex ante taker?
• Ex poste former holder, ex ante taker?
• Measure at value to the former holder at the time
  of the taking . . . (ex ante former holder rule)

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Trends in Takings Jurisprudence

• Palazzolo, 2001 though decisions limiting
  development are vague, the case is still ripe,
  and though the purchaser of the property bought
  after the imposition, still no taking claim here
  where the imposition does not affect the entire
  parcel of property
• Tahoe-Sierra, 2003 32-month moratorium not
  permanent
• Brown, 2003 taking IOLTA causes no loss

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Next Week Equal Protection, Part 1
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