Economic Equal Protection

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ECONOMIC EQUAL PROTECTION

During the heyday of the doctrine of economic due process, the equal protection clause took a backseat to the due process clause. In buck v. bell (1927), Justice oliver wendell holmes, jr. , called an argument that a law was invalid because its application was confined to an unreasonably small number of people "the usual last resort of constitutional arguments." still, the "last resort" succeeded, and laws were invalidated under the equal protection clause when burdensome business regulations unreasonably (in the court's view) exempted some businesses from the burden. inSmith v. Cahoon (1931), for example, the Supreme Court invalidated a law requiring compulsory insurance for trucks because it exempted those carrying agricultural products. The next-to-last decision of this kind was Hartford Steam Boiler Inspection & Insurance Co. v. Harrison (1937). The Court held that a law forbidding stock insurance companies from acting through salaried agents violated equal protection because the restriction did not apply to mutual insurance companies.

Since 1937, the Court has invalidated an economic regulatory law on the basis of similar reasoning only once: Morey v. Doud (1957) struck down an Illinois law regulating the sale of money orders because American Express money orders were exempted by name. In new orleans v. dukes (1976) the Court characterized Morey as "the only case in the last half century to invalidate a wholly economic regulation solely on equal protection grounds" and overruled it.

Since 1976, two cases have applied the equal protection clause to "wholly economic regulations," but each case was unique. In metropolitan life insurance company v. ward (1985), a bare majority of the Court invalidated a tax on insurance companies because local companies were exempted. This discriminatory tax statute would have been invalid under the commerce clause, except that Congress had authorized states to impose taxes that burdened outof-state insurance companies. The Court concluded that discrimination against out-of-state business was nonetheless prohibited by the equal protection clause. Allegheny Pittsburgh Coal Co. v. County Commission of Webster County (1989) invalidated a tax assessor's practice of valuing recently sold property at its sale price for property tax purposes, while valuing property that had not changed hands at a level far below its present market value. In a footnote, the Court commented that its decision was only applicable to an "aberrational" administrative practice that was illegal under state law. The Court did not decide whether the assessor could justify an identical but legally authorized practice on the ground that it was unfair to tax "unrealized paper gains in the value of property."

In a much-cited concurring opinion in an earlier case, Justice robert h. jackson argued that there was a substantial difference between economic due process, which the Court had appropriately rejected, and economic equal protection. In railway express agency v. new york (1949), the Court upheld a law that prohibited advertising signs on vehicles, but exempted a sign advertising the business of the vehicle owner. The Court lamely concluded that the distinction between signs advertising the vehicle owner's own business and those advertising some other business was reasonable, because New York could reasonably conclude that the latter signs were more distracting. Concurring, Justice Jackson concluded that signs of both classes were equally distracting, but argued that a better reason to uphold the distinction was that New York could decide that it was fair to exempt those who advertised their own businesses. In a much-quoted obiter dictum he argued that a requirement of equality should be given more than lip service in cases of economic regulation : "There is no more effective practical guaranty against arbitrary and unreasonable government than to require that the principle of law which officials would impose upon a minority must be imposed generally.… Courts can take no better measure to assure that laws will be just than to require that laws be equal in operation."

Justice Jackson's dictum has had only a minor influence on Supreme Court decisions. Government lawyers rarely respond to equal protection challenges with the bald reply that the difference in treatment between groups is simply the outcome of interest group politics. Most often, there is an attempt to justify a particular group's exemption from a burden with the argument that exemption promotes a praiseworthy public purpose. The Court has uniformly credited those arguments, no matter how farfetched, in economic regulation cases. In williamson v. lee optical company (1955), for example, the Court sustained a law prohibiting opticians from duplicating eyeglasses without a prescription from an ophthalmologist or optometrist. The Court said that a legislature might conclude that although the optician had the ability to duplicate the lenses without a prescription, the prohibition would encourage people to have their eyes examined more often. It is easy enough to show that the public health justification in Williamson was an afterthought to uphold a law that the legislature passed to protect the business of two groups of eye-care professionals from competition of a third.

Much contemporary legislation is, in fact, based on interest-group politics. But because the Court has rejected the free-market constitutional command of economic due process, it is doubtful that the Court would accept the argument of a few legal commentators that it should seriously ask whether the outcomes of interest-group pressures further the public good. Questions about whether it is fair to promote the interests of one economic group at the expense of another will likely be left to the political processes for the foreseeable future.

One prominent argument in this area begins by conceding the point that laws can be justified as the outcomes of interest-group politics. So long as government lawyers seek to uphold a law's exemptions and classifications on good-government grounds, however, courts should limit themselves to those arguments and insist that there be a "real and substantial" relationship to those good-government grounds. Critics of this approach argue, among other things, that its adoption would only promote more elaborate legislative "boilerplate," to supply stronger less-than-candid good-government justifications to explain the outcomes of interest-group politics.

Be that as it may, in cases involving economic regulation, economic equal protection has met the same fate as economic due process.

William Cohen
(1992)

(see also: Economic Freedom; Economy.)