How IJ Defends Economic Liberty

February 1, 2000

February 2000

How IJ Defends Economic Liberty: A Constitutional Primer, Part One

By Dana Berliner

In our very first case at the Institute for Justice, Uqdah v. District of Columbia Board of Cosmetology, we challenged regulatory barriers to entrepreneurship. That case involved a licensing scheme that prevented African-style hairbraiders from starting braiding businesses, and we succeeded in significantly deregulating the braiding profession in D.C. It wasn’t a coincidence that our first case focused on economic liberty. Indeed, we launched the Institute with the goal of restoring constitutional protection for economic liberty as a cornerstone of our strategic mission.

Since then, we have pursued this goal tenaciously, representing a wide variety of clients across America. Our clients have included taxi-drivers, limousine operators, barbers, van entrepreneurs, casket sellers, and other hairbraiders. All of them share a common aspiration of securing a better life for themselves and their families through honest enterprise, and all have been thwarted by arbitrary and excessive government regulations. They also are people of modest means seeking to pursue occupations ideally suited to people with less capital or formal education. Their stories vividly demonstrate why free enterprise is so vital for people from all walks of life.

While our goal stays constant, and the clients share many common traits, the legal issues and constitutional provisions we use can vary considerably from case to case. The Founding Fathers and the drafters of the Fourteenth Amendment all intended that there be strong protection for the right of individuals to pursue their chosen profession. But courts have not always given this crucial right the respect it deserves. That is why IJ has taken up the fight to restore economic liberty as one of our fundamental constitutional rights, and we will use every constitutional tool we can in that task.

We are often asked about our legal and constitutional strategies, so in this and the next issue of Liberty & Law, we will identify and discuss the various constitutional provisions that may be used to protect economic liberty and how they fit into our quest for justice.

Our most common economic liberty case involves three clauses of the Fourteenth Amendment: equal protection, due process, and privileges or immunities.

Passed in 1868, the Fourteenth Amendment was intended to force states to recognize the same protections as the federal government for individual rights. The Equal Protection and Due Process clauses of the Fourteenth Amendment have evolved as the primary protections for economic liberty in the absence of the Privileges or Immunities Clause (discussed below), which is the more logical locus of economic liberty protection. In all three areas, courts consistently have deferred to government decision makers, so we have to overcome decades of bad precedent. Here is how we are doing it.

[N]or shall any State deny to any person within its jurisdiction the equal protection of the laws. U.S. Constitution, Amendment XIV

A law can violate equal protection either by treating things that are the same differently or by treating different things the same. In the economic realm, courts require that laws that treat different things the same (or similar things differently) must have a “rational basis” for doing so. To illustrate, in our hairbraiding cases, we argue that the state irrationally treats hairbraiders the same as cosmetologists, although they have different occupations. Our most recent economic liberty decision, in the San Diego hairbraiding case, agreed. In our Tennessee casket retailing case, we also argue that the state treats funeral homes and casket sellers the same, even though they are quite different. But we also argue that other, similar retail occupations do not require a lengthy training period and licensure, and in that way, Tennessee treats casket selling differently than any other kind of retail.

[N]or shall any State deprive any person of life, liberty, or property, without due process of law. U.S. Constitution, Amendment XIV

IJ also argues that depriving someone of the right to pursue his chosen occupation deprives that person of a fundamental liberty without due process. The courts use the same standard to evaluate this claim as the Equal Protection claim, and in practice, courts often treat the inquiry as identical. As under the Equal Protection clause, there must be a “rational relationship” between the purpose of the legislation and the means employed. For example, in our New York jitney case, we challenge the complex and detailed process that a would-be jitney van driver must follow to get a license. We argue that these requirements are excessive and violate due process. That is a basic economic liberty claim, but we also make other arguments under the due process clause. For example, in our Las Vegas limousine case, we represent people who want to drive limousines but are faced with an extremely onerous licensing process. In addition, Nevada’s Transportation Services Authority, which is the agency that regulates limousines, issues citations and high fines for driving a limousine without the appropriate license. It gets to keep all of the fines it collects for future enforcement. We argue that because the Transportation Services Authority gets to keep any money from fines, the TSA officers deciding whether to fine unlicensed limousine drivers have a distinct financial incentive to issue the fines. The decision-making in fining drivers therefore is biased and violates due process.

No State shall make or enforce any law which shall abridge the Privileges or Immunities of citizens of the United States. U.S. Constitution, Amendment XIV

IJ is perhaps best known for bringing claims that occupational licensing laws or regulations violate the Privileges or Immunities Clause. We assert this claim in every economic liberty case, from hairbraiding to van driving to casket sales. The right to earn a living in one’s chosen occupation was unquestionably one of the rights intended to be guaranteed by the Privileges or Immunities clause. Courts have held that this clause protects rights or activities that were generally recognized at the time of the passage of the Fourteenth Amendment, and much of the purpose of the Fourteenth Amendment was to prevent states from prohibiting newly freed slaves from undertaking occupations previously reserved for white workers. Protecting citizens’ right to choose their own occupation was thus one of the most important purposes of the Privileges or Immunities Clause. In The Slaughterhouse Cases, however, the U.S. Supreme Court gave scant protection to the right to pursue one’s profession as a privilege of citizenship. It upheld a government grant of a monopoly to a single slaughterhouse, thus forcing the other slaughterhouses in New Orleans to close. Many scholarly articles have called on the court to reinvigorate the Privileges or Immunities Clause, and last term, the Supreme Court breathed some life into the clause in Saenz v. Roe, a case dealing with welfare laws. IJ filed an amicus brief in the case discussing the importance of the Privileges or Immunities Clause, and we hope that the courts will now recognize the importance of this clause and address it in our future cases.

The Institute for Justice’s effort to vindicate the right to economic liberty is a long-term fight. It will continue to require creativity, tenacity and adherence to constitutional principle. In the next Liberty & Law we will describe the other constitutional provisions, such as the Contracts Clause and the Privileges and Immunities Clause, that we use less frequently, but are nevertheless key weapons in our litigation arsenal.

Dana Berliner is an Institute for Justice senior attorney.

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