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Topic 6: Economic Rights and Liberties

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Title: Topic 6: Economic Rights and Liberties


1
Topic 6 Economic Rights and Liberties
  • Economic SDP, the Contracts Clause, the Takings
    Clause
  • (also revisiting IV.2 PI, the DCC and the
    Commerce Power)

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

4
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

7
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

8
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

9
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

10
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

11
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

12
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

13
The Latest Wrinkle Philip Morris
  • In a 2007 tobacco case (5-4) involving punitive
    damages in the area of 100 times compensatory
    damages, the Supreme Court remanded the case not
    on the disparity issue, but on the question of
    whether Defendant was being punished for conduct
    relating to parties not before the Court
  • Does this mean that Alioto and Roberts (in the
    majority here) are cool to a revival of economic
    SDP?

14
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 . . .

15
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?

16
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

17
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 . . .

18
Allied Structural Steel, 1978Hiccup or Serious
Indigestion?
  • An unusual instance in which a states law
    (regarding forced vesting of pension benefits
    against a job-exporting employer) is struck . . .

19
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 . . .

20
Taking Stock of Economic Rights
  • Commerce Clause limited stomach for restraining
    unbridled federal economic reg
  • DCC and Article IV PI relatively more interest
    in restraining the states from their instincts
    toward economic protectionism
  • 14th Amendment P or I unfulfilled promise of
    protecting U.S. citizens in economic, other ways
  • Lochner a failed experiment in SDP as a basis
    for limiting economic regulation reviving?
  • Contracts clause 100 years full, 100 empty

21
And Now, the Takings Clause
  • Text . . . nor shall private property be taken
    for public use without just compensation.
  • What is the significance of its placement in the
    5th Amendment (addressing personal rights)
    instead of in Article I (addressing congressional
    powers)?
  • Note This was the first right incorporated
    against the states in 1897. Was it therefore
    among the most fundamental of personal rights?
  • If so, its also-ran status today is ironic . . .

22
The Big Picture Why Are Takings So Rarely Found
Compensable?
  • Consider the basic trilogy of rights found
    pre-constitutionally, in the original
    constitution (5th Amendment), and in the 14th
    Amendment after the Civil War life, liberty and
    property
  • Note the illogic of the protection of life and
    liberty on the same plane as property if property
    can include human life (i.e., slavery)
  • Jefferson acknowledged what would later be the
    Constitutions original sin when, in the
    Declaration of Independence, he substituted
    pursuit of happiness for property

23
The Black-Letter Elements of a Taking
  • Is there . . .
  • (1) a taking (in either the possessory or
    regulatory senses)?
  • (2) of property?
  • (3) for a public use?
  • (4) for which just compensation is lacking?

24
Is There a Possessory Taking When the
Encroachment is Minor?
  • Loretto, 1982 cable wire placement in an
    apartment building?
  • Held, yes, even a modest physical encroachment on
    property is a taking (especially in light of the
    fact that payments for the right had been made
    prior to the law prohibiting such payments)
  • Could a city achieve the result of
    no-rent-for-running-cable-wire without
    characterizing it as a taking?

25
Does a Billboard Amortization Law Take the
Billboard?
  • Most states hold no, it is personalty and retains
    value
  • But Georgia is in a minority, holding Private
    property is the antithesis of Socialism or
    Communism.  Indeed, it is an insuperable barrier
    to the establishment of either collective system
    of government. . . . The thoughtless, the
    irresponsible, and the misguided will likely say
    that this court has blocked the effort to
    beautify and render our highways safer.  But the
    actual truth is that we have only protected
    constitutional rights by condemning the
    unconstitutional method to attain such desirable
    ends, and to emphasize that there is a perfect
    constitutional way which must be employed for
    that purpose.  State Highway Department v.
    Branch, 152 S.E.2d 372 (Ga. 1966), reaffirmed in
    Lamar v. City v Albany, 389 S.E.2d 216 (Ga. 1990)

26
Is there a taking when regulation (not utter
displacement of the owner) burdens property
rights?
  • Penn Coal v. Mahon, 1922 the first recognized
    regulatory taking case (Justice Holmes for the
    Court) if regulation goes too far it will be
    recognized as a taking
  • But note Brandeis in a dissent that comes true
    the concept of a regulatory taking is so
    potentially significant that one can predict very
    limited application of the concept

27
Is there a taking when government acts to avert
ecological danger?
  • Miller v. Schoene, 1928 a governmental order to
    cut trees to prevent tree disease held NO taking
  • The follow-up question Does classification as a
    taking depend on the urgency and seriousness of
    the governments concern?
  • Might the possibility of global warming mean that
    a prohibition against, say, coal mining would not
    be a taking of an existing coal mine?

28
Whats the test for whether theres been a
taking by government?
  • Connollys calculus (1986)
  • Could the complaining property owner have
    expected regulation?
  • How extensive is the governments regulation?
  • What is the practical effect on the propertys
    value to the owner?
  • Weigh the three factors to find an answer . . .

29
Does historical, cultural or aesthetic regulation
constitute a taking?
  • Penn Central, 1978 Does a law prohibiting
    exploitation of the development rights over Grand
    Central station amount to a taking?
  • Held, no one can live as a property owner of a
    historic site with regulations against its
    alteration without letting that history deprive
    the owner of that site of a real present value

30
Is a Short-Term Taking a Taking?
  • Lucas, 1992 sacrifice of all economically
    beneficial use of property, even for a limited
    time, does constitute a taking
  • Blackmun in dissent Today the Court launches a
    missile to kill a mouse. Overstated?

31
The Lucas Property Since Then
32
Is zoning a taking?
  • A perhaps-more-meaningful and broadly instructive
    case from the 1920s, the Village of Euclid
  • Zoning is NOT a taking
  • Hugely important result
  • See Harvard Prof. Ed Glaesers studies on whether
    zoning may be responsible for soaring housing
    prices despite ample land overall

33
Is a Development Condition a Taking?
  • In Dolan (1994), the Dolans wanted to expand
    their store, and the city sought land for a bike
    path as a condition for approving the expansion

34
New Rules on Development Conditions Nexus
Proportionality
  • Nollan and Dolan together stand for the rule that
    there must be an essential nexus between the
    public interest and the condition, and some rough
    proportionality between them
  • The Dolans claimed to have been willing to sell
    the land for 14,000 for the path, but ended up
    accepting 1.4 million from the city to settle

35
Can a Taking Occur Even if the Owner Bought After
the Reg?
  • Palazzolo (2001) involved another problem with
    beachfront development
  • The Court held that a buyer who might know of the
    potentially problematic can still challenge it as
    a taking

36
On second thought, maybe no missile . . .
Tahoe-Sierra
  • Tahoe-Sierra, 2003 a 32-month moratorium on
    development of property held not permanent and
    not a taking compensating for delays would
    render routine governmental processes
    prohibitively expensive or hasty

37
Is the taking one of Property?
  • Phillips, 1998 interest on IOLTA funds is
    property
  • But see Brown, 2003 taking IOLTA funds causes
    no loss
  • Do you have a property right in your legal
    education?
  • The Court of Appeals of NY assumed that Susan M.
    did by the time of her second year . . .

38
Is the taking for a Public Use?
  • Hawaii Housing v. Midkiff, 1984 forced transfers
    of land, from lessors to lessees, so to reduce
    concentration of Hawaiian land ownership that was
    a holdover from pre-state times, held to be a
    public use
  • A court must be convinced of a palpable
    impossibility of the use being for the public
    good to find a violation of the use clause

39
Must the taking substantially advance the
public interest?
  • Lingle, 2005 Hawaii limited the amount of rent
    an oil company could charge a dealer
  • Held not to be a taking, and that there is no
    requirement that the taking substantially
    advance any public interest claimed
  • Governor Lingle and a Hawaiian Chevron Station

40
Is Use of the Eminent Domain Power for Private
Development a Public Use?
  • Kelo, 2005
  • New London CT gave the eminent domain power to a
    development authority to prepare a large parcel
    to attract Pfizer
  • Held, such a use is public

41
State Responses to Kelo
  • States are free to interpret their own takings
    clauses separately, as in Michigan (the Poletown
    case) Florida banned redevelopment takings
  • Congress also considered bills like H.R. 3405
    (stripping federal funds from states that would
    take property from one private citizen and give
    to another) and passed Georgia Representative
    Gingreys resolution expressing grave
    disapproval of Kelo

42
Georgias Responses
  • A few states (like Georgia) have chosen to
    restrict their own eminent domain powers through
    law changes
  • First through a 2006 statute limiting definition
    of blight as a reason for
  • Then through a 2006 constitutional amendment
    (requiring that the power be exercised by elected
    officials, not unelected authorities, and for
    public use)
  • But Georgia in 2007 considered a grant of broad
    eminent domain to a utility for a natural gas
    line to blow through the state

43
Without Just Compensation?
  • Measured how? On the basis of the land
    pre-development (ex ante), or in light of the
    development (ex post)?
  • Held, measure at the value to the former holder
    at the time of the taking . . . (ex ante former
    holder rule) and ignore the development value
  • San Remo (2005) no standing to assert takings
    claims until state ultimately refuses compensation

44
The Trend in Takings Jurisprudence
  • Return to status quo
  • No takings revolution will likely occur
  • Another potential constitutional device for the
    elevation of economic rights and for restraint
    on regulation with economic impacts remains of
    only marginal significance

45
Next Topic, Next Week Equal Protection, Part 1
  • How did the Slaughterhouse Cases, the rise and
    fall of Lochnerism, and then, the Carolene
    Products footnote, all lead to the discovery of a
    rich new vein of constitutional rights -- the
    right to be treated equally by the government?
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