Is Judge Janice Rogers Brown Rehabilitating Lochner?

April 13th, 2012

I suppose then-Senator Obama may have been right when he said ” one of the things that is most troubling is [then-California Supreme Court] Justice Brown’s approval of the Lochner era of the Supreme Court.” Her concurring opinion, joined by Chief Judge Sentelle in Hettinga v. United States sure seems like it.

The facts are not unusual–dairy farmers challenged the Milk Regulatory Equity Act of 2005 (sounds like something out of Atlas Shrugged)—which imposed additional regulations on milk producers to benefit entrenched interests–as an unconstitutional Bill of Attainder and a violation of Equal Protection.

The opinion for the court, per curiam, found that under rational basis review the statute survived rational basis scrutiny:

Regardless of how Justice Blackmun characterized rational basis review, the Supreme Court’s subsequent decisions in Beach makes clear that “not toothless” does not mean “growling.” Here, the government provided a rational explanation for its decision to close two loopholes in the AMAA scheme—that large dairy businesses have used the exemptions to gain a substantial—and ultimately disruptive— competitive advantage over their regulated competitors. Beach requires us to accept this explanation and end our inquiry here. See Beach Commc’ns, 508 U.S. at 313–14. Although the classification might indeed be unfair to the Hettingas, mere disparity of treatment is not sufficient to state an equal protection violation.

As a preview of things to come, the per curiam opinion cites Nebia (!) to show the federal government had a rational basis to pass this law:

Here, the government provided an explanation that is not only rational on its face, but also has been consistently recognized by the courts as legitimate. See, e.g., Nebbia v. New York, 291 U.S. 502, 529–37 (1934); Lamers Dairy, Inc. v. Dep’t of Agric., 379 F.3d 466, 473 (7th Cir. 2004); Shamrock Farms Co. v. Veneman, 146 F.3d 1177, 1183 (9th Cir. 1988).

The per curiam is straightforward. The party starts in her concurring opinion, joined by Chief Judge Sentelle.

I agree fully with the court’s opinion. Given the long-standing precedents in this area no other result is possible. Our precedents forced the Hettingas to make a difficult legal argument. No doubt they would have preferred a simpler one—that the operation and production of their enterprises had been impermissibly collectivized—but a long line of constitutional adjudication precluded that claim.

My George Mason JD started to glow when I read that.

The Hettingas’ sense of ill-usage is understandable. So is their consternation at being confronted with the gap between the rhetoric of free markets and the reality of ubiquitous regulation. The Hettingas’ collision with the MREA—the latest iteration of the venerable AMAA—reveals an ugly truth: America’s cowboy capitalism was long ago disarmed by a democratic process increasingly dominated by powerful groups with economic interests antithetical to competitors and consumers. And the courts, from which the victims of burdensome regulation sought protection, have been negotiating the terms of surrender since the 1930s. 

Holy economic protectionism BatMan! Holy cow. Did RIchard Epstein sneak into the D.C. Circuit’s printing office and enter his opinion before anyone noticed?!?

Then, Judge Brown takes us on a tour through the Supreme Court’s abdication of any protections for economic liberty–from Nebbia, to Carolene Products, to Vance v. Bradley:

First the Supreme Court allowed state and local jurisdictions to regulate property, pursuant to their police powers, in the public interest, and to “adopt whatever economic policy may reasonably be deemed to promote public welfare.” Nebbia v. New York, 291 U.S. 502, 516 (1934). Then the Court relegated economic liberty to a lower echelon of constitutional protection than personal or political liberty, according restrictions on property rights only minimal review. United States v. Carolene Products Co., 304 U.S. 144, 152–53 (1938). Finally, the Court abdicated its constitutional duty to protect economic rights completely, acknowledging that the only recourse for aggrieved property owners lies in the “democratic process.” Vance v. Bradley, 440 U.S. 93, 97 (1979). “The Constitution,” the Court said, “presumes that, absent some reason to infer antipathy, even

improvident decisions will eventually be rectified by the democratic process and that judicial intervention is generally unwarranted no matter how unwisely we may think a political branch has acted.” Id.

And she cites favorably the dissent from Nebbia from our favorite anti-semitic horseman, Justice McReynolds:

As the dissent predicted in Nebbia, the judiciary’s refusal to consider the wisdom of legislative acts—at least to inquire whether its purpose and the means proposed are “within legislative power”—would lead to only one result: “[R]ights guaranteed by the Constitution [would] exist only so long as supposed public interest does not require their extinction.” 291 U.S. at 523. In short order that baleful prophecy received the court’s imprimatur. In Carolene Products (yet another case involving protectionist legislation), the court ratified minimalist review of economic regulations, holding that a rational basis for economic legislation would be presumed and more searching inquiry would be reserved for intrusions on political rights. 304 U.S. at 153 n.4.

And she really hits in on Footnote Four, and the bifurcation of rights (somewhere Roger Pilon is having a toast):

Thus the Supreme Court decided economic liberty was not a fundamental constitutional right, and decreed economic legislation must be upheld against an equal protection challenge “if there is any reasonably conceivable state of facts that could provide a rational basis” for it. FCC v. Beach Commc’ns, Inc., 508 U.S. 307, 313 (1993). See also Pac. States Box & Basket Co. v. White, 296 U.S. 176, 185–86 (1935); Steffan v. Perry, 41 F.3d 677, 684–85 (D.C. Cir. 1994) (en banc).

Next, she talks about how the founding of this country was based on capitalism and rugged individualism, not collectivism:

This standard is particularly troubling in light of the pessimistic view of human nature that animated the Framing of the Constitution—a worldview that the American polity and its political handmaidens have, unfortunately, shown to be largely justified. See James Madison, Notes of Debates in the Federal Convention of 1787, at 39, 42 (W. W. Norton &


Co. 1987). Moreover, what the Framers theorized about the destructive potential of factions (now known as special or group interests), experience has also shown to be true. The Federalist No. 10, at 78, 81 (James Madison) (Clinton Rossiter ed., 1961). The judiciary has worried incessantly about the “countermajoritarian difficulty” when interpreting the Constitution. But the better view may be that the Constitution created the countermajoritarian difficulty in order to thwart more potent threats to the Republic: the political temptation to exploit the public appetite for other people’s money—either by buying consent with broad-based entitlements or selling subsidies, licensing restrictions, tariffs, or price fixing regimes to benefit narrow special interests.

That is an interesting taking on the countermajoritarian difficulty. For some time, I have wanted to write about Federalist 10, Factions, and Rent-Seeking. This seems to jive with what I thought, so it must be right.

Brown made the point that there is always some economic reason or “crisis” to justify protectionist regulations:

Very little seems to have changed since the Supreme Court’s initial confrontation with the regulation of milk pricing in Nebbia. The state of New York, responding to falling prices caused by the Great Depression, created a Milk Control Board, which proposed to remedy weak demand by establishing a minimum price for milk, and making sale of milk at any lower price a crime. 291 U.S. at 515, 519. Leo Nebbia sold two quarts of milk and a five-cent loaf of bread for eighteen cents, and was convicted of violating the board’s order. Id. at 515.

Even Justice McReynolds saw the irony. The law, he said, “impose[d] direct and arbitrary burdens upon those already seriously impoverished” to give special benefits to others. Id. at 557. “To him with less than 9 cents it says: You cannot procure a quart of milk from the grocer although he is anxious to accept what you can pay and the demands of your household are urgent! A superabundance; but no child can purchase from a willing storekeeper below the figure appointed by three men at headquarters!” Id. at 557–58.

To be sure, the economic climate in which the New York legislature enacted the law at issue in Nebbia was truly dire, but 78 years later, the same tired trope about “disorderly market conduct” is still extant. The Hettingas built their business on an exemption—one that was profitable for them and beneficial for consumers. The government acknowledged that the decision to eliminate the exemption was based on evidence that large producer-handlers were obtaining a “decisive competitive advantage” over fully-regulated handlers, Appellees’ Br. at 7, and were causing a measurable and “significant[]” decrease in the blend prices being paid to

regulated handlers. See 70 Fed. Reg. 74,166, 74,186 (Dec. 14, 2005). As another court has noted, federal regulation of milk pricing “is premised on dissatisfaction with the results of competition.” Alto Dairy v. Veneman, 336 F.3d 560, 562 (7th Cir. 2003). “[M]ilk price discrimination is intended to redistribute wealth from consumers to producers of milk.” Id. Once again, the government has thwarted the free market, and ultimately hurt consumers, to protect the economic interests of a powerful faction. Neither the legislators nor the lobbyists broke any positive laws to accomplish this result. It just seems like a crime. 

That last bit reads like it is from an IJ brief.

And, just so the other members of the vast libertarian conspiracy don’t feel left out, there are citations to Barnett and Somin:

The judiciary justifies its reluctance to intervene by claiming incompetence—apparently, judges lack the acumen to recognize corruption, self-interest, or arbitrariness in the economic realm—or deferring to the majoritarian imperative. But see The Federalist No. 78, at 467 (Alexander Hamilton) (Clinton Rossiter ed., 1961).

This is an important point. Judges claim to lack the expertise to judge economic issues, but have the expertise to judge all other really tough things–abortion, same sex marriage, detainee rights, the list can go on and one. I raised this point to my colleague David Schraub, and he said with those cases, courts aren’t actually judging abortion, sodomy, etc, but are judging constitutional and legal principles like due process and equal protection. Fair enough. Here, Brown would argue that judges are judging the liberty interests protected by the due process clause–and footnote 4 is no barrier, as the Constitution is Supreme.

The practical effect of rational basis review of economic regulation is the absence of any check on the group interests that all too often control the democratic process. It allows the legislature free rein to subjugate the common good and individual liberty to the electoral calculus of politicians, the whim of majorities, or the self-interest of factions. See Randy E. Barnett, Restoring the Lost Constitution: The Presumption of Liberty 260 (2004).

The hope of correction at the ballot box is purely illusory. See generally Ilya Somin, Political Ignorance and the Counter-Majoritarian Difficulty: A New Perspective on the Central Obsession of Constitutional Theory, 89 Iowa L. Rev. 1287 (2004). In an earlier century, H. L. Mencken offered a blunt assessment of that option: “[G]overnment is a broker in pillage, and every election is a sort of advance auction sale of stolen goods.” On Politics: A Carnival of Buncombe 331 (1996). And, as the Hettingas can attest, it’s no good hoping the process will heal itself. Civil society, “once it grows addicted to redistribution, changes its character and comes to require the state to ‘feed its habit.’” Anthony De Jasay, The State 226 (1998). The difficulty of assessing net benefits and burdens makes the idea of public choice oxymoronic. See id. at 248. Rational basis review means property is at the mercy of the pillagers. The constitutional guarantee of liberty deserves more respect—a lot more. 

What kind of liberty? Oh. Liberty of contract you say? Rehabilitating Lochner?

Judge Griffith’s concurring opinion is a bit of a WTF:

GRIFFITH, Circuit Judge, concurring: I, too, agree fully with the per curiam opinion, but do not join my colleagues’ concurrence with its spirited criticism of the Supreme Court’s long-standing approach to claims of economic liberty. Although by no means unsympathetic to their criticism nor critical of their choice to express their perspective, I am reluctant to set forth my own views on the wisdom of such a broad area of the Supreme Court’s settled jurisprudence that was not challenged by the petitioner.

I heard Judge Brown give the keynote address at the 2008 Institute for Justice Law Student Conference. I did not record it, nor had I a blog then, so my recollection is hazy, but I remember her strongly walking back some of the things she said around the time of her confirmation about economic liberty and an engaged judiciary. The tenor of the room was one fo disappointment. I suspect the Merry Band of Litigators in Ballston is cheering after this one.