Rational Basis Reignited: a roadmap for judicial engagement emerges.
For years the entrepreneurial community has lamented both judicial activism and over-regulation. The problem has been particularly acute in states seen as unfriendly to business, for example, CA, IL, NY, NJ. Caught between a spate of unfriendly laws and an ideological reluctance to pursue judicial remedies, a host of innovators and entrepreneurs languished in the regulatory wasteland. Recent developments, however, illuminate a path forward. First, as many scholars have noted, particularly Professor Randy Barnett at Georgetown University Law Center, judicial engagement – attacking unconstitutional laws with the Constitution, is neither activist nor controversial. Indeed, the progressive Left has and continues to, use the courts to defeat popularly enacted laws. Two recent decisions, one a prime example of the latter strategy, mark the starting line in the new wave of public policy litigation.
Bloomington Illinois refused to permit Julie Owen to operate a late night ride service, its City Council concluding the vehicle hiring market was saturated. Ms. Owen sued, and a State Court agreed the City’s actions were arbitrary and unconstitutional. (http://www.championnews.net/?p=37884) Particularly, the Court noted “A city cannot enact a law for the sole purpose of protecting a special-interest group from competition.” Simply, cronyism is not a rational basis for government action.
In Florida, the State Supreme Court declared the State law capping non-economic damages in medical malpractice cases unconstitutional, but the “why” is infinitely more intriguing than the outcome. (http://www.tcpalm.com/news/2014/mar/13/state-supreme-court-strikes-down-cap-on-medical/) The Court based its Equal Protection finding on the state’s failure to demonstrate a rational basis for the law. Particularly, the Court examined the law’s purported legislative business and concluded that the law [capping damages] had no rational relation to the purported medical malpractice insurance crisis which the law sought to correct. While this author disagrees with the decision, excessive medical malpractice awards are a factor in physician flight from certain states such as Nevada, and damages caps are a reasonable policy election to combat that effect, the Court’s decision brightly marks a new opportunity for economic. liberty litigation.
Although the Illinois and Florida cases were based on State constitutions, state courts typically follow the federal courts in interpreting constitutional questions. For more than half-century, constitutional challenges to economic legislation have been tasked with rational basis review, entitling the legislature to deference in its policymaking. (See, Williamson v. Lee Optical348 U.S. 483 (1955). The Florida decision, in particular, opens a new front in the war against the regulatory state. In other words, many local ordinances and actions, as well as state laws and administrative actions, are the product of special interest lobbying, not rational or prudent legislative deliberation. If the courts, as demonstrated in IL and FL, are open to constitutional challenges which measure the ends and means of legislation without overarching deference to legislative bodies, then you have a whole new ball game.
Consider, for example, state gasoline taxes which do not actually provide revenues for infrastructure improvements, professional licensing laws for a multitude of jobs, environmental and zoning laws which neither produce cleaner environments nor better housing, or FDA regulation of cancer drugs which kills thousands. Moreover, such litigation evinces its own political accountability. Legislators who know their laws will be subject to a rigorous ends/means test will be compelled to produce better laws, or forfeit the rewards cronyism currently provides.
Particularly, entrepreneurs and innovators trapped in blue-state regulatory schemes should take note. Revolutionary ideas and business models need no longer fear the bureaucratic leviathan.
McClelland Advocacy is a Sacramento-based law firm with expertise in public policy and Constitutional litigation and challenges to state and local government actions.