The Volokh Conspiracy
Mostly law professors | Sometimes contrarian | Often libertarian | Always independent
Since the 1950s, federal equal protection clause challenges to state economic regulations have been subject to a very forgiving rational basis test. In essence, if a court can come up with any rationale as to why a challenged law may operate to any degree in the public interest, the law passes the rational basis test and will be upheld—even if there is no evidence that the legislature that passed the law relied upon, or even considered, the rationale advanced by the court.
Over the last decade or so, however, a split among the federal appellate courts has developed over whether courts are obligated to uphold laws for which the court is unable to find any public-spirited rationale, laws that instead seem to embody naked economic protectionism favoring an incumbent professional group seeking to stifle upstart competitors. The leading example of such legislation are laws limiting the sale of caskets to licensed morticians. The Fifth and Sixth Circuits have each held that such legislation has no public health or safety rationale, but is instead designed solely to protect a lucrative profit center for politically powerful morticians. Both circuits held that such laws therefore failed the rational basis test. The Tenth Circuit, by contrast, has held that "intra-state economic protectionism, absent a violation of a specific federal statutory or constitutional provision, is a legitimate state interest," and therefore casket-selling restrictions pass rational basis scrutiny even if they exist solely to help morticians at the expense of the public.
In August, the Second Circuit weighed in on the issue of economic protectionism, in a case involving a Connecticut law limiting dental-whitening services to licensed dentists. The court unanimously held that the law had sufficient public-interest implications that it should be upheld on that basis. In an opinion written by Judge Guido Calabresi (my Torts professor in law school whom I admire greatly, my disagreement on this issue notwithstanding), two judges gratuitously added that even if the sole purpose of the "restriction was to shield licensed dentists from competition," it would still pass constitutional muster.
In agreeing with the Tenth Circuit on this matter, Judge Calabresi first relies on a series of Supreme Court cases. As Judge Droney explains in his concurring opinion, however, none of these cases actually stand for the broad proposition for which Calabresi cites them.
Next, Judge Calabresi explains that a "simple preference for dentists over teeth-whiteners would suffice" because "to hold otherwise would be to interpret the Fourteenth Amendment in a way that is destructive to federalism and to the power of the sovereign states to regulate their internal economic affairs. As Justice Holmes wrote over a century ago, "[t]he 14th Amendment does not enact Mr. Herbert Spencer's Social Statics.' Lochner v. New York, 198 U.S. 45, 75, 25 S.Ct. 539, 49 L.Ed. 937 (1905) (Holmes, J., dissenting). Nor does it endorse Sidney and Beatrice Webb's Fabianism. Choosing between competing economic theories is the work of state legislatures, not of federal courts."
If I nitpicked that Social Statics was a work of libertarian political philosophy, not economic theory, that might seem petty, but in fact it's a good segue to my ultimate problem with Calabresi's opinion. We need to understand the underlying theory behind our equal protection jurisprudence to understand why he's wrong. [The below relies on David E. Bernstein & Ilya Somin, The Mainstreaming of Libertarian Constitutionalism, 77 L & Contemp. Probs. 43 (2014).]
Equal protection doctrine evolved between Reconstruction and the New Deal to ban states from engaging in "arbitrary" classifications when they pass laws, which was known as the ban on "class legislation." The problem courts faced is that almost every law could be said to classify on some basis or other. Courts were not in much of a position to distinguish between classifications that served a public interest and classifications that were arbitrary, especially because in those days they declined to consider legislative history. The net result was that the Supreme Court endorsed rather few equal protection challenges to economic legislation, and eventually limited the scope of the doctrine primarily to taxation cases, in which obvious and blatant differences in tax rates among industries could reasonably be attributed to legislative arbitrariness.
Some leading Progressives, like Louis Brandeis, advocate repeal of the equal protection clause, because they thought that despite its limited scope, it gave judges too much discretion in distinguishing between arbitrary and non-arbitrary legislation. The New Dealers, however, embraced equal protection, creating three-tier test we are familiar with today. This test is broadly consistent with the concern for class legislation that motivated pre-New Deal equal protection jurisprudence.
It can be explained in these terms: the Equal Protection Clause bans arbitrary classifications. The judiciary has neither the mandate nor the expertise to determine whether each piece of legislation that might be challenged involves an arbitrary or non-arbitrary classification. Instead, the courts use heuristics. They utilize a strong presumption that classifications, in general, are legitimate. A classification by race or alienage, however, raises the suspicion that the classification is arbitrary. Being a resident alien or a member of a racial class seems like an inherently arbitrary reason for classification, and such classifications are especially likely to result from prejudice rather than a reasoned attempt to serve the public good. Therefore, such classifications are presumptively invalid and can survive only if they pass "strict scrutiny" review. Similarly, given the long history of unjust and arbitrary discrimination against women, the courts have reason to suspect the legitimacy of classifications by sex. But because men and women, unlike whites and blacks, are intrinsically different in some important ways, a midlevel standard of review, instead of strict scrutiny, has been deemed appropriate for sex classifications. Other sorts of legislative classifications, however, get a strong presumption of constitutionality.
Thus, rather than seeing modern equal protection jurisprudence as a novel departure from pre-New Deal classical liberalism, it is better conceived as a modern liberal reinterpretation of the jurisprudence that the Supreme Court adopted in the late 19th and early 20th century. If anything, this understanding is reinforced by such recent decisions as Romer v. Evans, United States v. Windsor, and Obergefell v. Hodges where the Supreme Court, taking Justice Kennedy's lead, has in practice ignored the tiered-scrutiny approach that would have required extremely deferential rational basis review. Instead, the Court has applied a standard akin to the Old Court's class-legislation methodology: If the government is classifying people for arbitrary reasons not clearly related to any legitimate government interest, then the law violates the Equal Protection Clause.
Even the debates over the constitutionality of university affirmative action preferences can be understood in this light: The conservative justices believe that such preferences amount to arbitrary classifications that violate the equal protection clause, while the more liberal justices believe that the classifications are not in fact arbitrary, either because they enhance diversity which improves education, or because unlike classifications adopted for invidious purposes, classifications that favor historically disfavored minority groups should not be subject to a strong presumption of arbitrariness.
The long and the short of it is that one need not revive Lochner or indeed change modern equal protection jurisprudence at all to find that naked economic protectionism violates the equal protection clause. Morticians want to prevent lower-cost providers from selling caskets. The legislature passes a law prohibiting such competition, thereby instituting a classification between those allowed to sell caskets (licensed morticians) and everyone else. This classification is subject to a strong presumption of constitutionality. But this presumption is can be rebutted if the court is unable find a non-arbitrary rationale for the law.
Calabresi writes that "much of what states do is to favor certain groups over others on economic grounds. We call this politics." But these politics are only constitutional if there is at least a patina of public-spirited rationale to what the legislature has done. Blatantly favoring one group over another for no reason other than that the former has more political power is the essence of what has always been considered arbitrary class legislation. Therefore, unless and until the Supreme Court ever expressly changes equal protection doctrine, laws that exist solely to restrict competition to favor a politically powerful incumbent group violate the equal protection clause.