Overruled
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Another key influence on Bolick’s thinking at that time came from reading the work of George Mason University economist Walter Williams, whose 1982 book The State against Blacks argued that government restrictions on economic liberty were particularly harmful to African Americans and other disadvantaged groups.15 A child of Philadelphia’s Richard Allen housing projects, where his neighbors included a young Bill Cosby, Williams combined scholarly analysis with his own first-hand insights into the economic obstacles facing black Americans. “There are many laws in the United States that systematically discriminate against the employment and advancement of people who are outsiders, latecomers and poor in resources,”16 Williams argued, pointing to various licensing restrictions placed on occupations such as electrician, plumber, and taxi cab driver. Those regulations may not explicitly mention race, Williams observed, but “they are discriminatory in the sense that they deny full opportunity for the most disadvantaged Americans, among whom blacks are disproportionately represented.”17 Williams wanted to see those regulatory obstacles struck from the books, and Bolick became determined to see that result achieved through litigation.
Armed with such ideas, and with Clarence Thomas serving as both boss and mentor at the EEOC, Bolick began putting the whole thing together into a coherent legal philosophy, ultimately writing a book on the subject called Changing Course: Civil Rights at the Crossroads, which appeared in 1988. If Unfinished Business was IJ’s original strategic litigation blueprint for advancing economic liberty, then Changing Course was the first draft of that strategy. “The civil rights movement should seek to reverse The Slaughter-House Cases, which upheld the power of government to create monopolies and impede entrepreneurial opportunities,”18 Bolick wrote in Changing Course. But in order for that to happen, he continued, the doctrine of judicial deference must be rejected. “What the advocates of judicial abstinence overlook is the crucial role assigned by the Constitution to the judiciary in the protection of civil rights, without which the state will be free—as in the Jim Crow era—to subvert civil rights virtually unchecked.”19 In short, Bolick argued, the libertarian legal movement must embrace “the necessity of judicial action.”20
Three years later, with Mellor at the helm and Bolick serving as second-in-command, the Institute for Justice opened its doors and began putting that libertarian strategy into practice.
“Sympathetic Clients, Outrageous Facts, Evil Villains”
You know an IJ case when you see one. “We start with the principle we seek to vindicate,” Chip Mellor explained, “and the issue that enables us to do it. And then we look for sympathetic clients, outrageous facts, evil villains.” Take the principle of economic liberty, which IJ lawyers seek to vindicate by overturning economic regulations in court. The typical IJ client in such cases is a fledgling entrepreneur or small-business owner battling a government agency over some sort of preposterous red-tape requirement. But the real issue at stake, IJ’s lawyers always tell the presiding judge, is the right to earn an honest living, a fundamental civil right that is eminently worthy of judicial respect and protection.
For instance, in the first case IJ filed back in 1991, Taalib-Din Abdul Uqdah v. District of Columbia, the Institute represented the owner of an African hair-braiding salon, Cornrows & Co., who had run afoul of the District’s requirement that he obtain a government-issued cosmetology license. That requirement made no sense, Mr. Uqdah tried explaining to city officials, because the lengthy (and costly) licensing process never once touched on even the rudiments of hair braiding or related techniques, and focused instead on things like chemical treatments and the execution of out-of-date hair styles that had been popular when the regulation first went into effect in the 1930s, such as “finger waves” and “pin curls.” In other words, the regulation had nothing to do with his business and did nothing to protect the health, welfare, or safety of anybody involved in the process of traditional African hair braiding. All it did was interfere with his ability to earn a living and pay his employees.
IJ agreed with that assessment, and on November 1, 1991, the Institute filed suit on Uqdah’s behalf in the U.S. District Court for the District of Columbia. In the meantime, the D.C. City Council, spurred to action by the unwelcome media attention generated by the case, started rethinking its whole approach to cosmetology licensing. A little more than a year after the lawsuit was filed, the City Council voted to repeal the regulation. Thanks to the Institute for Justice, Cornrows & Co. was back in business.
It was a genuine libertarian victory over arbitrary government, and IJ’s lawyers were thrilled to score their first win right out of the gate. But it was a legislative fix, not a judicial one, and IJ’s long-term agenda centered on securing greater judicial protection for economic liberty. So the hunt for the next test case continued. “All along the issue of occupational licensing was at the heart of our economic liberty work,” Mellor explained. “And so we were always looking for different occupations that were suffering from unreasonable licensing laws where there wasn’t a fit between any arguable legitimate public health and safety rationale and the means by which the government is seeking to achieve that.”
That search ultimately led Mellor and his colleagues to the state of Tennessee, where, according to a law called the Funeral Directors and Embalmers Act, only state-licensed funeral directors were permitted to sell coffins to paying customers. And that government license did not come cheap. Would-be license holders had two options: either complete one year of classroom work and a one-year apprenticeship under a licensed funeral director, or forgo the classroom entirely in favor of a two-year apprenticeship. In either case, the training process required many hours of labor and study, including the embalming of twenty-five human bodies. “In order to sell a box, you had to be a fully licensed funeral director,” Mellor recalled, laughing in disbelief. “Once I saw that, it just jumped out.”
Mellor had no problem with the idea of requiring actual funeral directors to carry a license—after all, their work did involve legitimate public health issues such as handling human remains and embalming dead bodies. But this statute went far beyond that and applied to any retail entrepreneur who simply wanted to sell caskets for a living, and who never once came in contact with a dead body as part of her job. Meanwhile, as Mellor discovered, established funeral directors throughout the state were marking up the price of coffins by as much as 600 percent, yet thanks to the burdensome licensing requirements, upstart competitors were effectively barred from coming in to offer a better price. And while state officials claimed the law was there to protect the health and safety of the public, Mellor learned that Tennessee placed no regulations of any kind on the design or manufacture of caskets. Indeed, it was perfectly legal in Tennessee to build your own casket for burial (with or without a sealed lid) or to be buried without a casket. “You start looking into it,” he said, and “it was just the perfect no-fit between any legitimate health and safety reason and all these burdens they are putting on.”21
So in September 1999 IJ filed suit in federal district court on behalf of several local entrepreneurs looking to break into the coffin business, including the case’s lead client, the Reverend Nathaniel Craigmiles of Chattanooga, who had cofounded an operation called Craigmiles Wilson Casket Supply in order to offer his parishioners and their families a more affordable alternative. Eleven months later, IJ won the first round in the case. Despite the pro-government deference mandated by the rational-basis test, the federal district court struck down the regulation.
Tennessee promptly appealed the loss, and on December 6, 2002, the U.S. Court of Appeals for the Sixth Circuit came down with its decision on the matter in Craigmiles v. Giles. Once again, IJ was victorious. Having reviewed the evidence before him, wrote Judge Danny Boggs for a unanimous three-judge panel of the Sixth Circuit, he saw no reason to defer to the state’s assertion that it had a rational basis for enacting the licensing law. “Tennessee’s justific
ations,” Boggs declared, “come close to striking us with the force of a five-week-old, unrefrigerated dead fish.”22
Not since the New Deal had a federal appellate court (the highest level short of the U.S. Supreme Court) struck down an economic regulation for violating the economic liberties secured by the Fourteenth Amendment. And it had done so in spite of the extraordinary judicial deference it was required to extend to lawmakers under the rational-basis test. “This measure,” the Sixth Circuit announced, “is not animated by a legitimate governmental purpose and cannot survive even rational basis review.”23
IJ had just scored a landmark victory, but there was no time to rest on its laurels. Indeed, the game was now afoot. In Oklahoma, a similar IJ lawsuit was then underway against that state’s nearly identical casket-sale licensing regulation. But in an unwelcome twist, the U.S. Court of Appeals for the Tenth Circuit voted in August 2004 to uphold the Oklahoma statute in the case of Powers v. Harris. To add insult to injury, Mellor was blindsided by that outcome. “During the oral argument it went so well in our favor, in terms of just the dynamic in the courtroom and everything,” he recalled, “that the attorney for the state of Oklahoma came up afterwards and all but admitted defeat.” As Mellor later acknowledged, he felt great when he stepped out of the courtroom that day. “And then not only did we lose, we lost three-zip.”24
In retrospect, that feeling of optimism makes sense. In its ruling, the Tenth Circuit essentially agreed with IJ’s main argument and conceded the state’s failure to provide any sort of rational public health or safety justification for its licensing law. But then the Tenth Circuit turned the tables and said the government had yet another arrow in its quiver of conceivable justifications: the economic protection of the state’s funeral industry from unwelcome competition. “While baseball may be the national pastime of the citizenry, dishing out special economic benefits to certain in-state industries remains the favored pastime of state and local governments,”25 the Tenth Circuit observed. And under the judicial deference demanded by the rational-basis test, the court held, those lawmakers are fully entitled to dish out the goods. “As a creature of politics, the definition of the public good changes with the political winds,” the Tenth Circuit wrote. “There simply is no constitutional or Platonic form against which we can (or could) judge the wisdom of economic regulation.”26 Put differently, it remained illegal in Oklahoma to sell a box without a government-issued license.
No lawyer likes to lose a big case, and this was no exception. But Mellor and his colleagues did identify one potential upside to the Tenth Circuit’s ruling. As Clint Bolick had argued in Unfinished Business, from the perspective of a public-interest litigator, every losing case is also a potential winner, since that loss may still be appealed to a higher court, and perhaps even reach the U.S. Supreme Court. So the loss in Powers v. Harris still fit within the organization’s long-term litigation strategy. What’s more, IJ’s loss at the Tenth Circuit had created what’s known as a “circuit split,” meaning the Tenth Circuit and the Sixth Circuit had now issued clashing opinions on the same legal issue, a fractured state of affairs that normally prompts the Supreme Court to step in to settle the controversy.
Thanks to IJ’s litigation, the stage was now at least partially set for a showdown before the highest court in the land. The Tenth Circuit’s ruling “creates a split on the basic question of whether pure economic protectionism is a legitimate state interest under the rational basis test,” IJ told the Supreme Court in a November 2004 petition seeking review of the case. “If permitted to stand, the Tenth Circuit’s decision would drain rational basis review of all content and would convert the right to earn a living—which this Court has consistently recognized since its earliest days—into a mere privilege.”27
Unhappily for IJ, however, the justices declined to take the case. As is customary, the Court gave no explanation for its rejection of the appeal, though the most likely reason is the Court’s deeply ingrained habit of judicial restraint. The justices did not wish to enter the thicket.
The Institute for Justice lost that battle, but the larger campaign is far from over. In a span of just five years, IJ’s lawyers secured not only a landmark victory for economic liberty at the Sixth Circuit, they presented the Supreme Court with a clear circuit split on the same issue. Those libertarian precedents remain on the books, ready to be used by a future Supreme Court that is willing to grapple with the issue of economic liberty and the Fourteenth Amendment.
“Taken for a Public Use”
The rational-basis test has been a thorn in the libertarian side since the New Deal. It has been a pain in property-rights cases for nearly as long.
According to Footnote Four of the famous 1938 Carolene Products decision, while the Supreme Court would henceforth presume the constitutionality of economic regulations and grant significant deference to the lawmaking bodies that passed them, “more exacting judicial scrutiny” would still be appropriate in other types of cases. For instance, “when legislation appears on its face to be within a specific prohibition of the Constitution, such as those of the first ten amendments,”28 the Court would carefully examine the government’s actions to make sure no part of the Bill of Rights had been violated.
Or at least that’s what the Supreme Court said. What the Court has done is something different. Consider the issue of eminent domain. According to the Fifth Amendment, “private property [shall not] be taken for public use without just compensation.” Also known as the Takings Clause, this provision authorizes the government to wield the power of eminent domain in limited circumstances. In the classic example, the government turns to eminent domain when it needs to acquire privately owned land in order to build a road or a bridge—two undeniable instances of use by the public—and then compensates the former landowner at fair market value from the public treasury.
Yet in the 1954 case of Berman v. Parker, the Supreme Court ignored its own Carolene Products framework and quietly introduced rational-basis-style deference into its treatment of the Takings Clause, despite the fact that the clause is clearly a part of the Bill of Rights. At issue in Berman was a so-called slum clearance measure from Washington, D.C. Essentially, government officials had determined that a poor neighborhood in southwest Washington was beyond repair, and they therefore wanted to seize all privately held property in the area, raze it, and start over from scratch—an approach also known as “urban renewal.” Among the properties targeted for condemnation was a department store, whose owner loudly objected to the government’s plans to bulldoze his non-blighted, non-slum property.
Writing for a unanimous Supreme Court, Justice William O. Douglas took the government’s side. According to Douglas, the judiciary had no business second-guessing whether or not a particular exercise of the eminent domain power counted as a valid public use. That determination rested solely with the legislature. “When the legislature has spoken,” Douglas wrote, “the public interest has been declared in terms well nigh conclusive.”29 Indeed, he declared, so long as just compensation has been paid, “the rights of these property owners are satisfied.”30 Although the public use requirement is a “specific prohibition of the Constitution,” the Berman Court ignored Footnote Four and failed to provide “more exacting judicial scrutiny” on its behalf.
Unsurprisingly, the lawyers at the Institute for Justice have a fundamental disagreement with this deferential approach, and from day one they were on the lookout for a property rights case strong enough to challenge the status quo. They hit the jackpot in 1994 when they took on the matter of Casino Reinvestment Development Authority v. Coking. The case originated in Atlantic City, New Jersey, where local authorities sought to condemn the home of an elderly widow named Vera Coking, who lived just off the city’s famous beachfront boardwalk, in order to turn her land into a limousine parking lot for the neighboring Trump Plaza, the high-rise hotel and casino owned by real estate tycoon Donald Trump. As
Coking saw it, there was nothing remotely public-minded about the government’s demolishing her home of more than thirty years in order to provide extra parking spots for Trump’s customers. The lawyers at the Institute for Justice could not have agreed more, so they took up Coking’s case, fought it out in court, and ultimately prevailed, allowing her to remain in her home.
It was a flagrant example of eminent domain abuse, and it was also precisely the sort of David against Goliath story that journalists love to cover. As a result, IJ also won a resounding victory in the court of public opinion, earning sympathetic coverage from outlets ranging from The Economist, which called it a battle between those who value “thrusting, self-promoting moguls” and those who value “small businesses, families and property rights,”31 to the New York Times, which described IJ’s courtroom triumph with the words “today, the little guys won.”32
But that publicity also had far-reaching consequences that extended well beyond the Atlantic City boardwalk. Some 250 miles to the north, in the modest city of New London, Connecticut, a small band of property owners were fighting their own uphill battle to save their homes and neighborhood from the forces of eminent domain. Once those folks learned about IJ’s victory over Trump, they knew right where to turn for the legal help they so desperately needed.
The Little Pink House
The saga officially began on February 3, 1998, when the pharmaceutical company Pfizer announced its plans to build a giant new research and development facility in New London, Connecticut. As part of the deal, city officials agreed to refurbish the surrounding area, including the adjacent neighborhood of Fort Trumbull, a ninety-acre working-class enclave. The idea was for New London to buy out existing property owners and then turn their land over to a private developer who would construct a new luxury hotel, apartment buildings, office towers, and other upscale amenities to complement the new Pfizer facility. This redevelopment scheme was supposed to lure new businesses to the area, create new jobs, and broaden the tax base.