Con Law (Chapter 8: Judicial Intervention And Economic Regulation)

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Procedural Due Process

Back 1

If a state is going to take away your life, liberty, or property, they have to afford you certain procedures to ensure a fair trial

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Substantive Due Process

Back 2

- Is not concerned about the fairness of the process, but rather the fairness of the outcome

- Prohibits arbitrary governemntal interference with certain protected interest in life, liberty, or property regardless of the fairness of the procedures. Due process provides a heightened protection agaisnt governemtn interference with certain fundamental rights and interests

- No equal protection clause for the federal, only for the state

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Munn

Back 3

- Court emphasized that the police power included regulation of individual use of property “when such “regulation becomes necessary for the public good.”

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Mugler

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- Although the Court sustained a law prohibiting intoxicating beverages, it announced that it would examine the substantive reasonableness of state legislation

- (3) Not every statute enacted ostensibly for the promotion of the public morals, the public health, or the public safety would be accepted as a legitimate exertion of the police powers of the State. The courts would not be misled by mere pretenses; they were would obligated to look at the substance of things.

- If a purported exercise of the police powers “has no real or substantial relation to those objects, or is a palpable invasion of rights secured by the fundamental law, it is the duty of the courts to so adjudge.” And facts “within the knowledge of all” would be relied on in making that determination.

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Allgeyer

Back 5

- First time court invalidated a state law on substantive due process grounds

- statute that prohibited certain out of state insurance companies from doing business within the state

- Court said that "liberty" protected by Due Process Clause includes right to contract, which was abridged by state insurance regulation

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Lochner

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NOT LOOKED HIGHLY UPON

- Held that a law limiting the number of hours that bakers could work unreasonably interfered with “the freedom of master and employee to contract in relation to their employment”

- The freedom to contract may be restricted through the state’s police power to protect public health, safety, welfare, or morals, but the MEANS used by this statute (limiting baker’s hours) were not reasonably related to such ends. Rather, this was purely a labor law and the government had no legitimate purpose in this type of regulation

- The general right to contract in business is clearly part of the individual liberty protected by the 14th Amendment. However the right to hold both property and liberty is subject to reasonable conditions as may be imposed by a government pursuant to its police powers.

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Lochner Test

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- act must have reasonable relationship to goal (ends must be appropriate & legitimate) must be a tight fit
o “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 of an individual to be free in his person and his power to contract in relation to his own labor.”

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Adair

Back 8

- Right of a person to sell his labor upon such terms as he deems proper is the same as the right of the purchaser of labor prescribe the conditions. The employer and the employee have equality of right, and any legislation that disturbs that equality is an arbitrary interference with the liberty of contract

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Things immune from a general Due Process Clause attack

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1) public health and safety measures

- Business regulations:
1) Price Controls (Nebbia)
2) Trade Practices
3) Wage and Hour laws (West Coast Hotel)
4) Bans on discrimination against union or nonunion employees
5) Limitations on engaging in certain occupations (Williamson)

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Nebbia

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- NY passes a law establishing min and max retail prices for milk

- Purpose of statute was to aid the dairy industry, which was in a desperate situation because hte prices received by farmers for milk were below the cost of production

- As long as the law has a reasonable relationship to a proper legislative purpose, is not arbitrary or discriminatory, and is reasonably related to achieving its purpose, it does not offend the due process

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West Coast Hotel

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- The court found that the only issue for consideration was whether the legislative act was arbitrary or capricious and concluded that the legislature had the right to consider min wage requirements as an important means of implementing its policy of protecting abused workers

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Carolene Products Co.

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- Congress adopted a statute prohibiting the interstate shipment of skimmed milk that has been combined with any fat or oil other than milk fat so as to resemble milk or cream

- The existence of facts supporting the legislation is to be presumed, for regulatory legislation affecting ordinary commercial transactions is not to be pronounced unconstitutional unless facts are shown that preclude the assumption that it rests on some rational basis

- Burden of proof wil be on the person challenging the law

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Rational Basis Test for Economic and Social Legislation

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- A challenged economic or social legislation will be upheld unless no reasonable conceivable set of facts could establish a rational relationship between the challenged regulation and a legitimate governmental end

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Williamson

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- Although the law may exact a needless, wasteful requirement in many cases, the legislature, not the courts, must balance the advantages and disadvantages of a new requirement

- The Court will not strike down state laws regulatory of business and industrial conditions merely because they may be unwise, improvident, or out of harmony with a particular school of thought. The people as voters, not the courts, are the protection against legislative abuse

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Ferguson

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- Kansas statute made it a misdemeanor for any person to engage in the business of "debt adjusting"

- The Court will not “weigh the wisdom” of such legislation or substitute its own judgment for that of the legislative body

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Factors Court looks at in determining whether the Defendant had adequate notice that a severe penalty might be imposed (BMW of NA)

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1) the degree of reprehensibility of the defendant's conduct
2) the disparity between the actual or potential harm suffered by the plaintiff and the amount of punitive damages awarded
3) The difference between the punitive damages awarded and the criminal and civil penalties authroized for comparable misconduct

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BMW of NA

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- Paint on a new $40k BMW was damaged during shipment and BMW repaired the damge for $601 and sold the car as new without giving any notice of the damage

- Jury awarded $4,000 compensatory damages and $2 million punitive damages

- Court found the award excessive under the Due Process Clause between BMW’s actions were not terribly reprehensible (the damage to the car was purely economic and did not involve performance, safety, or appearance), there was a large disparity between the punitive damages awarded and the harm suffered (a ratio of 500 to 1) and the civil and criminal sanctions available (Alabama’s max fine for deceptive trade practices here was $2,000)