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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
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.