Nine Stories of Baby Ninths: Four—Illegal Cost Cutting

[This is the fourth in a series of nine posts on nine stories of how Baby Ninth Amendments made a difference in real cases. They’re part of the lead-up to the publication of the book Baby Ninth Amendments: How Americans Embraced Unenumerated Rights and Why It Matters.]

Charging too little isn’t a complaint you hear from many customers. Have you ever got a haircut or picked up your laundry and demanded to pay the barber or cleaner more than they asked for? Yeah, me neither. Amazingly, though, sometimes the government passes laws requiring those same businesses to charge you more.

Actually, it’s not amazing at all when you learn those laws are enacted at the behest of established companies who don’t like the competition. “Ruinous competition,” so they claim.

These laws still exist even in today’s enlightened times. Especially in certain industries such as transportation. At one time they were even more common, most notoriously in the Great Depression when the Roosevelt Administration sought to divide American industry into price-controlled cartels.

But the federal government wasn’t the only one enforcing minimum prices at that time. Among many other examples, another was the city of Mobile, Alabama. And there a barber and a cleaner needed some help in providing lower prices to their customers. They got that help from Alabama’s Baby Ninth Amendment.

Shave and a haircut, no less than six bits

Pat Rouse ran a barber shop in Mobile. One day upon offering a service, likely a haircut (it’s unknown how good it was) the city cited him for violating an ordinance mandating minimum prices for a host of services. Meanwhile, somewhere else in town, A.E. Gibson was in the laundry business and “accepted for pressing and cleaning, and did press and clean a suit of men’s clothes for the charge of fifty cents,” which was less than the ordinance allowed. In the spirit of good uses of government power, the city issued Mr. Gibson a citation as well.

At trial both men argued that the law violated various provisions of the Alabama Constitution and the Fourteenth Amendment to the U.S. Constitution. The trial court agreed, ruling the ordinance unconstitutional. The city appealed and lost again at the intermediate court of appeals. The case then went to the state supreme court which essentially framed the issue as whether it was constitutional for the government to impose a minimum price “in an inherently lawful occupation.”

What did that last phrase mean? Essentially an occupation that is commonly practiced and isn’t “affected by a public interest.” Courts had already said at the time that governments had some leeway in setting minimum prices to protect “ruinous competition” in certain sensitive areas, especially capital-intensive areas such as railroads. Some courts, most prominently the U.S. Supreme Court in the 1934 milk case Nebbia v. New York, had cast aside that distinction, making it much easier for the government to regulate prices in any kind of industry. But to the Alabama court in 1937 that distinction still held. Otherwise, explained the court, the justification for meddling with the freedom to set prices knew no bounds.

The court swiftly found that the justification of protecting established businesses from ruinous competition did not justify restricting Rouse and Gibson from charging their customers cheaper prices. The ruling was broad, invoking the Fourteenth Amendment and quoting from the expansive language of the 1923 foreign language case Meyer v. Nebraska. But it also used Alabama’s Baby Ninth Amendment.

The state’s Baby Ninth is the first sentence of Section 36 of the state’s declaration of rights:

That this enumeration of certain rights shall not impair or deny others retained by the people; and, to guard against any encroachments on the rights herein retained, we declare that everything in this declaration of rights is excepted out of the general powers of government, and shall forever remain inviolate.

The Baby Ninth part of this refers to “others,” other rights that are not enumerated in the constitution but that, the court explained, are not given over to the government but retained by the people and also protected by the constitution. Since the right to work an inherently lawful occupation was one of the “others” “retained” the court said this arbitrary restriction on working such an occupation was unconstitutional.

General powers, but not all powers

That’s the Baby Ninth. But let’s dwell for a moment on the second half of Section 36, that is everything after the semicolon. In my book I describe it as a “Baby Tenth.” Originally inspired by the Tenth Amendment when the first version was drafted in Pennsylvania in December 1789, it refers to the powers that the people delegate to the government. Unlike with the federal government, however, to which the people delegate enumerated powers, here the people have delegated general powers. And this is in keeping with the standard understanding of the powers that state governments have. Today we’d call these general powers the “police power.”

But note that “the people” who adopted this language were a bit nervous about these “general powers of government.” The Baby Tenth recognizes that there can be “encroachments” on rights, specifically “the rights herein retained.” And to guard against that “everything in this declaration of rights”—both enumerated rights earlier in the declaration and these unenumerated “retained” rights—are “excepted out” of the state’s powers and even “remain inviolate” forever. It’s almost as though the Constitution recognizes that the government is a dangerous animal and has to be kept on a short leash. Imagine that!

Pat Rouse and A.E. Gibson, presumably, were able to go on charging their customers prices that their customers preferred after this ruling. The reasoning did not spread any higher, however. Just days after the Alabama Supreme Court’s opinion came out the U.S. Supreme Court made its famous “switch in time,” junking both the doctrine of enumerated powers and the limits on the police power under the Fourteenth Amendment that Alabama’s Baby Ninth was a cousin of. In the future litigants increasingly only had state constitutions to turn to to protect their economic liberty. And even then the results were increasingly worse.

But maybe things are changing in that regard. After all, as I explain in the book, two-thirds of all states explicitly recognize our rights “retained by the people.” We simply need judges to read their constitutions, like the one in City of Mobile v. Rouse.

Anthony Sanders is the Director of the Center for Judicial Engagement at the Institute for Justice.