METROPOLITAN LIFE INSURANCE CO. v. WARD 470 U.S. 869 (1985)

This decision departed from a long series of Supreme Court decisions upholding the constitutionality of state taxes against attack under the equal protection clause. Alabama taxed the gross premiums of insurance companies by imposing a one percent tax on companies organized in Alabama, and a tax of three percent or four percent on companies organized in other states. In an opinion by Justice lewis f. powell, the Supreme Court held, 5–4, that this discrimination failed even the rational basis test, because its only articulated purpose—to create a tax advantage for domestic economic interests over out-of-state interests—was illegitimate. Congress, in its 1945 act permitting the states to discriminate in favor of local insurance companies, had insulated such laws from attack under the commerce clause, but had not purported to speak to any issue of equal protection.

In an unusual division of the Court, Justice sandra day o'connor dissented, joined by Justices william j. brennan, thurgood marshall, and william h. rehnquist. Justice O'Connor pointed to previous decisions recognizing the legitimacy of state efforts to promote domestic industry, and made the unanswerable point that Alabama's tax scheme was rationally related to such a purpose. Furthermore, she said, Congress in 1945 understood that it was authorizing laws of this very kind. She also accused the majority of reviving active judicial scrutiny of state economic regulation. Although the latter prediction seems unlikely to come true, the fear that it expresses is not dispelled by the majority's opinion.

Kenneth L. Karst
(1986)

Bibliography

Cohen, William 1985 Federalism in Equality Clothing: A Comment on Metropolitan Life Insurance Company v. Ward. Stanford Law Review 38:1–27.