Regulation

Does the Constitution Allow State Governments to Grant "Special Benefits" to Favored Industries? Louisiana Says Yes

|

Last week the Louisiana State Board of Embalmers and Funeral Directors asked the U.S. Supreme Court to uphold the state's requirement that only licensed funeral directors be permitted to sell caskets within the state, thereby preventing the unlicensed monks of Saint Joseph Abbey from selling traditional handmade wooden caskets at an affordable price to willing buyers.

Although Louisiana does not regulate caskets in any other fashion—there are no design or construction requirements and it's perfectly legal to either build your own casket or be buried without one—the State Board has nonetheless attempted to pass the law off as a public health measure. That flimsy rationale did not stand up to scrutiny at the U.S. Court of Appeals for the 5th Circuit, however, which ruled in favor of the monks earlier this year and denounced the State Board for its "nonsensical explanations for naked transfers of wealth."

This time around, the State Board has largely dropped its pretense of acting in the public interest and is now openly advocating in favor of special interest legislation. "Economic protectionism," the State Board tells the Supreme Court in its petition, "occurs in so much legislation, both intentionally and unintentionally, so much so that it may be practically
impossible to avoid it." In fact, the brief continues, "the idea that courts — Federal or State — could change this perhaps regrettable truth is just unworkable."

As an authority for this argument, Louisiana cites a 2004 decision from the 10th Circuit called Powers v. Harris. Just like the Saint Joseph Abbey case, Harris centered on a state licensing law designed to protect the funeral industry from outside competition. But unlike the 5th Circuit's recent ruling, the 10th Circuit upheld the casket licensing law, even while admitting that the regulation was an act of economic protectionism. "While baseball may be the national pastime of the citizenry, dishing out special economic benefits to certain in-state industries remains the favored pastime of state and local governments," that court wrote. And unfortunately for the state's taxpayers and entrepreneurs, "protecting or favoring one particular intrastate industry…is a legitimate state interest."

So the Supreme Court not only faces the question of whether Louisiana imposed an illegitimate and unnecessary licensing scheme, it also faces the larger issue of whether state and local governments possess the lawful authority to pass regulations whose sole purpose is the protection of favored industries. The fact that the 5th and 10th Circuits are split on that fundamental question only adds to the urgency.

We'll know in a few months if the Supreme Court decides to take the case.

NEXT: UK Has Better Economic Prospects in EU, Says Government

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Does the Constitution Allow State Governments to Grant “Special Benefits” to Favored [Inter-peronal Relationships]?

  2. The sad thing is, this will probably not be a slam dunk decision for the justices to make.

  3. Lousiana: FYTW.

    Supreme Court: Accepted

  4. Yes, it does.

    Should it do so? No.

  5. “the idea that courts ? Federal or State ? could change this perhaps regrettable truth is just unworkable.”

    Actually, I’m kind of impressed. If they win this case on that argument, I’ll actually sleep better at night knowing we’re fucked, and there’s nothing we can do about it.

    1. I’ll actually sleep better at night knowing we’re fucked, and there’s nothing we can do about it.

      Not exactly a Thomas Paine moment you’re having there, is it

  6. I don’t see how the federal Constitution would apply here. However:

    “Economic protectionism,” the State Board tells the Supreme Court in its petition, “occurs in so much legislation, both intentionally and unintentionally, so much so that it may be practically impossible to avoid it.” In fact, the brief continues, “the idea that courts ? Federal or State ? could change this perhaps regrettable truth is just unworkable.”

    Even accepting this dubious assertion for the sake of argument, this is a clear case where the economic protection is intentional and easily avoidable by repealing an unnecessary licensure regime.

    1. I tend to agree that economic protectionism occurs in so much legislation. The answer is to put the breaks on legislation (and regulations).

  7. “protecting or favoring one particular intrastate industry…is a legitimate state interest.”

    The preservation of liberty and equality before the law, however, are most certainly not in the state’s interest. They are in the interest of the people. Too bad we don’t have a government of the people, by the people, and for the people.

  8. “the idea that courts ? Federal or State ? could change this perhaps regrettable truth is just unworkable.”

    So Louisiana’s solution is to help it along?

  9. Ah Louisiana. My home state is the bastion of economic protectionism. At least they don’t make any pretense of being otherwise.

  10. Point of clarification: Louisiana tried to make this argument before the Fifth Circuit, and the Fifth Circuit rejected it:

    As a threshold argument, the State Board urges that pure economic protection of a discrete industry is an exercise of a valid state interest. It points to the Tenth Circuit’s decision in Powers v. Harris, a case in which two members of the panel said as much in turning back an attack on an Oklahoma scheme similar to Louisiana’s. Judge Tymkovich, the third member of the panel, refused to join the majority opinion’s broad approbation of “economic protectionism” as a valid governmental interest. Rather, he concurred in the judgment, persuaded that the State had otherwise identified a sufficient public purpose. The Abbey in turn points to Craigmiles v. Giles, in which the Sixth Circuit rejected “economic protectionism” as a rational basis for similar casket regulations, striking down those regulations as a denial of due process and equal protection.

    (continued)

    1. These two courts gave differing answers to the question of whether the legislation before them, both statutory schemes quite similar to that now before us, drew upon a legitimate state interest. Craigmiles found that “protecting a discrete interest group from economic competition is not a legitimate governmental purpose.” The Powers court saw the statutory scheme before it as simple economic protectionism, “the favored pastime of state and local government,” and in its mind a permissible basis for regulation. In turn, it rejected the challenge to the regulations that limited the sale of caskets to funeral directors.

      (continued… stupid character limits)

      1. The Powers court claimed that only three courts have held that “‘protecting a discrete interest group from economic competition is not a legitimate governmental purpose,'” and criticized those courts’ holdings as having no direct support in Supreme Court precedents. It then stated: “In contrast, the Supreme Court has consistently held that protecting or favoring one particular intrastate industry, absent a specific federal constitutional or statutory violation, is a legitimate state interest.” However, none of the Supreme Court cases Powers cites stands for that proposition. Rather, the cases indicate that rotecting or favoring a particular intrastate industry is not an illegitimate interest when protection of the industry can be linked to advancement of the public interest or general welfare. Craigmiles and Powers rest on their different implicit answers to the question of whether the state legislation was supportable by rational basis. Craigmiles looked for rationality and found none. Powers found economic protection to be a traditional wielding of state power and rational by definition.

        (continued… one more I think)

        1. As we see it, neither precedent nor broader principles suggest that mere economic protection of a particular industry is a legitimate governmental purpose, but economic protection, that is favortism, may well be supported by a post hoc perceived rationale as in Williamson ? without which it is aptly described as a naked transfer of wealth. Recently, we upheld against similar challenge a Houston taxi cab permitting scheme that disfavored small cab companies. Notably, we approved of the Craigmiles court’s reasoning, as it “confirm[ed] that naked economic preferences are impermissible to the extent that they harm consumers.” However, we found that even if Houston had been “motivated in part by economic protectionism, there is no real dispute that promoting full service taxi operations is a legitimate government purpose under the rational basis test.” We thus sustained the City’s measure. It follows that the State Board cannot escape the pivotal inquiry of whether there is such a rational basis, one that can now be articulated and is not plainly refuted by the Abbey on the record compiled by the district court at trial. We turn then to the State Board’s alternative argument ? that the challenged restrictions are rationally related to protection of public health, safety, and consumer welfare, beginning with some settled guiding principles.

          1. it is aptly described as a naked transfer of wealth

            Classic.

  11. It seems like a lot of “I don’t like it, so it must be unconstitutional” stuff.

    It’s none of the feds’ business.

    1. It is the feds’ business when a state infringes on the liberty of others.

      1. Drinking ages are unconstitutional in your view?

        1. Yes. Age is irrelevant as to whether one has the ability to engage in a voluntary contract. Not saying that it’s moral to sell alcohol to children, but a 17 year old is generally not a child. Also, there are adults who are the mental equivalent of children, due to disability. Thus, age is irrelevant.

          1. Most adults have the mental equivalent of the hypothetical child’s mental capability.

        2. Drinking ages are unconstitutional.

    2. It’s none of the feds’ business.

      I’m not entirely clear under which provision of the Constitution this can be struck down. Dormant Commerce Clause is a possibility, but as the feds don’t regulate the casket biz, that doesn’t seem to apply.

      I’m just not seeing it.

    3. It’s none of the feds’ business, but it’s also none of the state’s business.

  12. “Look, no matter what laws we make, some people are going to get hurt. So why shouldn’t legislators be allowed to throw rocks at random passers-by for sport?”

    1. The fact that we throw rocks at random passers-by is just a regrettable truth. We feel so regretful of it that we propose to throw the rocks harder.

  13. This case keeps getting more interesting.

    So essentially they are arguing that the government simply transferring property from one private entity to another, for no public purpose at all, is a legitimate exercise of authority, because the state has a “legitimate” interest in arbitrarily favoring some private entities over others.

    Why even bother with the “public use” aspect of the eminent domain clause?

    1. You’ve got to give them credit for chutzpah.

  14. Apparently, despite winning below, the monks are not going to argue that the Supreme Court shouldn’t take the case. Anyone here have any idea why?

    1. As monks, they really aren’t in any position to say that people shouldn’t appeal to a higher power?

    2. The case is IJ driven. This is IJ’s dream to get the Sup. Ct. to take up the matter on the argument that pure economic motive can sustain government action/classification. That would be the death knell to thousands and thousands of local ordinances. The Monks received free representation, is my guess, and part of the deal is getting as much precedent out of it as possible

  15. Could someone weigh in on why there should be judicial relief here?
    Instead of a political solution? If the people cannot coral their individual representative to correct this, than the people deserve the abuse they allow.

    1. The people who consented deserve the abuse they allow. Just because a law passed doesn’t mean that its unanimously accepted by everyone in the state.

    2. The 14th Am was ratified in 1868 in response to violations of civil rights by states following the Civil War. Some people argue the 14th Am was only meant to protect blacks, but that argument conflicts with the relevant text and the relevant history, which shows that many violations (including censorship, disarmament, and violations of property rights) were perpetrated against white Unionists and supporters of racial equality.

      Although people who dislike the idea of federal courts protecting individual rights from violation by state officials tend to ignore it, the history of the 14th Am and the weight of scholarship strongly support this view. The idea that economic liberty and property rights are excluded from the broad set of natural rights protected by the 14th Am (including the right to travel, to have and raise one’s own children, and the right not to be sterilized for eugenic purposes -none of which are specifically enumerated in the Constitution, but all of which are understood to be judicially enforceable rights nonetheless) is an invention of the New Deal era. The Supreme Court’s attempt to read economic liberty out of the 14th Am has been only partly successful, which explains why there is a circuit split regarding whether states may interfere with people’s occupational freedom for nakedly protectionist purposes, as Louisiana has done here.

      Good articles on the subject:
      http://tinyurl.com/k9ua7bp
      http://tinyurl.com/kzrpuea

    3. huh? Government has no power to legislate outside of its authority. If you cannot, as an aggrieved party, get declaratory relief on that ground then what is to stop the incumbents from banning further voting? Or extending their terms to 500 years ex-post? These are bureaucratic regulations. Nobody is getting voted out of office over casket monopolies.

  16. “the idea that courts ? Federal or State ? could change this perhaps regrettable truth is just unworkable.”

    His name is Raaaaaaaallllph.

  17. Jumpin Jack Flash is just cool like that.

    http://www.Webz-Anon.tk

Please to post comments

Comments are closed.