L7 P1: Federal Economic Powers

Article I. Section 10

-States:

• No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin; ex post facto law; or law impairing the obligation of contracts, or grant any title of nobility.

-Framers isolated matters of currency, credit, and commerce from the control of state government

-Framers were concerned over state policies that might threaten commerce and economic wellbeing

Contract Clause (Art. I, Sec. 10)

Prohibits states from interfering in contract obligations

Procedural Due Process

Procedures and legal processes that ensure tha fair treatment of individuals

Substantive Due Process

Specific rights of liberties that exist within the concept of Due Process

Economic Substantive Due Process*******

-Subclass of Substantive Due Process that deals with economic and corporate liberties

• MAIN FOCUS

The Slaughterhouse Cases Facts & Case History

A series of Supreme Court cases in 1873 that dealt with the right to work and economic liberty, focusing on the implications of the Fourteenth Amendment on state laws regulating businesses.

• 1896 Louisiana act regulated slaughterhouses in New Orleans

• Act gave a single company a monopoly in the slaughterhouse industry by requiring all of the other slaughterhouses to use its facilities on a fee basis

• The Butcher’s Benevolent Association sued a lost in state court in 3 separate cases. 

1896 Louisiana Act

-Regulated slaughterhouses in New Orleans

-Gave a single company a monopoly in the slaughterhouse industry by requiring all of the other slaughterhouses to use its facilities on a fee basis

Butcher’s Benevolent Association

A group of small slaughterhouse operators and butchers

Butcher’s Arguments

-The Louisiana act violated the 13th Amendment, Privileges and Immunities, Due Process, and Equal Protection clauses of the 14th Amendment

Court’s Ruling in the Slaughterhouse Cases

-The 13th and 14th Amendments provide protections for freed slaves from racially discriminatory state and local legislation, but not butchers

-Affected rights related to national citizenship; the state’s right to regulate in this area is unaffected 

-A narrow interpretation of these Amendments preserves the state power

***The Louisiana Act is constitutional and the Butcher’s arguments are invalid.

The Slaughterhouse Cases Court Rationale

•13^th Amendment – meant to declare freedom to American slaves; it is not related to private property.

•14^th Amendment – Privileges and Immunities Clause is NOT applied identically in reference to U.S. and state citizenship.

• ---

  -

•In other words, the 14^th Amendment’s Privileges & Immunities Clause cannot be applied to oppose state regulatory legislation.

•If SCOTUS were to apply to the 14^th Amendment. Privileges & Immunities Clause to state regulations, then SCOTUS and Congress would have unlimited authority to subordinate the states to federal regulation.

•The act did not deprive individuals of property.

13th Amendment

Meant to declare freedom to American slaves; it is not related to private property.

14th Amendment in Slaughterhouse Cases

The Privileges and Immunities Clause is NOT applied identically in reference to U.S. and state citizenship.

-This Amendment’s Privileges & Immunities Clause cannot be applied to oppose state regulatory legislation. 

-If SCOTUS were to apply this amendment’s privileges & immunities clause to state regulations, then SCOTUS and Congress would have unlimited authority to subordinate the states to federal regulation

-The act did not deprive individuals of property 

-Procedural Due Process (not Substantive Due Process) guarantees procedural protections before the law

Equal Protection Clause in the Slaughterhouse Cases

SCOTUS said it only applies to matters involving race

Freedom of Contract

-A liberty that gives individuals the freedom to enter into contracts, especially employment contracts, and to find employment

-SCOTUS struck down a state insurance regulation law because of this liberty that limits government interference in personal agreements. Allgeyer v. Louisiana.

Allgeyer v. Louisiana 

A case that invalidated state legislation on Substantive Due Process grounds. 

Lochner v. New York

A landmark case in which the Supreme Court struck down a New York law setting maximum working hours for bakers, emphasizing the right to contract and limiting state intervention in the workplace.

• NY passed a law prohibiting bakery employees from working more than 10 hours a day or 60 hours a week.

• Joseph Lochner violated this and got fined $50

• Court’s Ruling: Overturned Lochner and upheld the right of employers and employees to freely contract the terms of their employment

• Court’s Rationale: Police powers had surpassed their constitutional limits and the NY act could not be justified as a health law to preserve the health of bakery employees.