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Analysis

The Supreme Court Case that Could Hamstring the Government’s Ability to Regulate Businesses

A Fifth Amendment case gives the Supreme Court the chance to continue its trend of favoring companies over the public.

March 18, 2021
SCOTUS
Mike Kline

Next Monday, the Supreme Court will hear oral argu­ment in a labor rights case that could make it harder for the govern­ment to regu­late busi­nesses in a wide range of areas beyond work­ers’ rights.

The case, Cedar Point Nurs­ery v. Hassid, centers on a 45-year-old Cali­for­nia regu­la­tion that gives union organ­izers limited access to agri­cul­tural work­places to talk to farm­work­ers during non-work hours. The 1975 law that author­ized this regu­la­tion was the product of a decade-long campaign in Cali­for­nia for collect­ive bargain­ing rights for agri­cul­tural work­ers, who are excluded from federal labor protec­tions due to a Jim Crow era polit­ical comprom­ise.

Thanks in part to this regu­la­tion, agri­cul­tural work­ers — who are dispro­por­tion­ately people of color and immig­rants — have success­fully bargained for substan­tial improve­ments in work­place safety, job protec­tions, and bene­fits since 1975. But now, Cedar Point Nurs­ery and another agri­cul­ture busi­ness argue that state-sanc­tioned labor organ­iz­ing viol­ates the Takings Clause of the Fifth Amend­ment, amount­ing to an uncon­sti­tu­tional govern­ment seizure of private prop­erty without compens­a­tion. And if the Court rules in their favor, it will not only damage the labor rights of Cali­for­nia agri­cul­tural work­ers but also repres­ent a broader doctrinal shift to limit the govern­ment’s capa­city to protect the public welfare.

In its inter­pret­a­tion of the Takings Clause, the Supreme Court distin­guishes between per se takings and regu­lat­ory takings. Per se takings occur when the govern­ment perman­ently occu­pies private land or deprives the prop­erty owner of all econom­ic­ally bene­fi­cial use of the land, entitling the landowner to compens­a­tion. On the other hand, regu­lat­ory takings — such as the legis­lat­ively sanc­tioned place­ment of cable boxes on private prop­erty — occur when the govern­ment limits prop­erty rights without totally depriving the landowner of the land’s value; compens­a­tion is gener­ally not awar­ded.  

In the current case, the compan­ies argue that the Court should reclas­sify per se takings to include regu­la­tions that allow for tempor­ary entrances onto private prop­erty — such as for meat and work­place safety inspec­tions — and rule the Cali­for­nia labor law uncon­sti­tu­tional. For decades, the conser­vat­ive legal move­ment has sought to inval­id­ate govern­ment regu­la­tions on similar grounds, with limited success.

With a new 6–3 conser­vat­ive major­ity, the Supreme Court made the unusual decision to hear the case, even though the busi­nesses suffer no clear negat­ive economic impact from the regu­la­tion.

The compan­ies’ argu­ment hearkens back to an era of consti­tu­tional inter­pret­a­tion when the Supreme Court routinely struck down economic regu­la­tions, such as minimum wage and child labor laws. It is referred to as the “Loch­ner era” after a 1905 case in which the Court inval­id­ated a New York State law that imposed limits on bakers’ work­ing hours, ruling that it viol­ated “liberty of contract,” which the Court stashed in the Due Process Clause of the 14th Amend­ment.

The Supreme Court aban­doned this doctrine in the late 1930s, but the increas­ingly conser­vat­ive major­ity on today’s Court has begun rely­ing on differ­ent parts of the Consti­tu­tion to achieve similar ends. If the Court rein­ter­prets the Takings Clause in Cedar Point Nurs­ery, it will repres­ent a star in an emer­ging constel­la­tion of dereg­u­lat­ory doctrines that could hamstring even the most basic and long­stand­ing govern­ment func­tions.

An addi­tional star in this constel­la­tion involves the Consti­tu­tion’s Commerce Clause, which allows Congress to “to regu­late Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” During the Loch­ner era, the Supreme Court had a limited view of Congress’s power to regu­late inter­state commerce. Start­ing in the late 1930s, however, the Court changed its tune, going so far as to hold that Congress could regu­late the activ­ity of a farmer grow­ing wheat for his own use because such activ­ity, in the aggreg­ate, would have a substan­tial effect on inter­state commerce.

Recently, the Supreme Court has curtailed this power, ruling that Congress’s inter­state commerce author­it­ies do not apply to the prob­lems of guns in schoolsviol­ence against women, and indi­vidu­als lack­ing health insur­ance cover­age — notwith­stand­ing the facts that there is a $2.7 billion school safety industry, the costs of intim­ate part­ner abuse exceed $5.8 billion a year, and health­care accounts for nearly 18 percent of Amer­ican gross domestic product.

Simil­arly, a major­ity of current justices have signaled interest in reviv­ing the nondelega­tion doctrine, which prohib­its legis­latures from deleg­at­ing their powers to other bodies. The Supreme Court has not struck down an act of Congress on these grounds since 1935, when it inval­id­ated parts of the New Deal, ruling that Congress had uncon­sti­tu­tion­ally deleg­ated legis­lat­ive power to the exec­ut­ive branch. If the Court moves in this direc­tion again, it could under­mine the abil­ity of govern­ment agen­cies to protect consumers, work­ers, public health, and the envir­on­ment.

Finally, the judi­ciary has begun, as Justice Kagan noted, weapon­iz­ing the First Amend­ment against demo­cracy in recent years, strik­ing down restric­tions on corpor­ate elec­tion expendit­ures and find­ing that public sector work­ers have a consti­tu­tional right to refuse to pay union dues, even though unions remain oblig­ated to repres­ent them. These devel­op­ments are harbingers of a larger assault on regu­lat­ory efforts to check corpor­ate power, with courts inval­id­at­ing regu­lat­ory require­ments — such as posters inform­ing work­ers of their rights and mandated disclos­ures about food — as uncon­sti­tu­tional compelled speech.

The early 20th century also provides insight into some of the legal and polit­ical strategies that might emerge or gain trac­tion if we find ourselves in a new Loch­ner era. When the Supreme Court posed an obstacle to demo­crat­ic­ally account­able govern­ment during this period, one strategy was to amend the Consti­tu­tion: over­rul­ing a Supreme Court decision, the 16th Amend­ment gran­ted Congress author­ity to levy an income tax without appor­tion­ing it among the states on the basis of popu­la­tion. Less success­ful was a push to amend the Consti­tu­tion to over­turn the Supreme Court’s rulings strik­ing down child labor laws.

The Supreme Court as an insti­tu­tion also became a target, most notably in Pres­id­ent Frank­lin Roosevelt’s 1937 plan to expand the size of the Court. While his plan received strong oppos­i­tion and ulti­mately died, the Court abruptly changed course doctrin­ally after the proposal was announced. Many schol­ars suggest that the court-pack­ing proposal was a factor in the Court’s philo­soph­ical shift.

A third, and perhaps most endur­ing, strategy was the devel­op­ment by schol­ars and activ­ists of new methods of legal inter­pret­a­tion — ones that advoc­ated judi­cial defer­ence to the polit­ical branches of govern­ment on social and economic policy, ulti­mately form­ing the found­a­tion for a post-Loch­ner juris­pru­dence.  

As the Supreme Court considers Cedar Point Nurs­ery and creates similar obstacles to demo­cratic governance today, history suggests that the Court will face popu­lar head­winds. Ulti­mately, the demo­crat­ic­ally respons­ive branches of govern­ment have to remain able to meet soci­etal needs. Indeed, that is what the Amer­ican people expect and demand.