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p agreement containing a provision requiring him to abstain from working in his own business as a tile layer or helper. workers as against that already possessed by their employers. 124 The Court did, however, on occasion sustain measures affecting the employment relationship, such as a statute requiring every corporation to furnish a departing employee a letter setting forth the nature and duration of the employee’s service and the true cause for leaving. 125 In Senn v. Tile Layers Union, 126 however, the Court began to show a greater willingness to defer to legislative judgment as to the wisdom and need of such enactments. The significance of Senn 127 was, in part, that the case upheld a statute that was not appreciably different from a law voided five years earlier in Truax v. Corrigan. 128 In Truax, the Court found that a statute forbidding injunctions on labor protest activities was unconstitutional as applied to a labor dispute involving picketing, libelous statements, and threats. The statute subsequently upheld in Senn, on the other hand, authorized publicizing labor disputes, declared peaceful picketing and patrolling lawful, and prohibited the granting of injunctions against such conduct. 129 The difference between these statutes, according to the Court, was that the law in Senn applied to ‘‘peaceful’’ picketing only, while the law in Truax ‘‘was . . . applied to legalize conduct which was not simply VerDate Aug<10>2004 02:45 Sep 16, 2004 Jkt 077500 PO 00000 Frm 00028 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 AMENDMENT 14—RIGHTS GUARANTEED 1699 130 Railway Mail Ass’n v. Corsi, 326 U.S. 88, 94 (1945). Justice Frankfurter, concurring, declared that ‘‘the insistence by individuals of their private prejudices . . . , in relations like those now before us, ought not to have a higher constitutional sanction than the determination of a State to extend the area of nondiscrimination beyond that which the Constitution itself exacts.’’ Id. at 98. 131 335 U.S. 525 (1949). 132 335 U.S. 538 (1949). 133 335 U.S. at 534, 537. In a lengthy opinion, in which he registered his concurrence with both decisions, Justice Frankfurter set forth extensive statistical data calculated to prove that labor unions not only were possessed of considerable economic power but by virtue of such power were no longer dependent on the closed shop for survival. He would therefore leave to the legislatures the determination ‘‘whether it is preferable in the public interest that trade unions should be subjected to state intervention or left to the free play of social forces, whether experience has disclosed ‘union unfair labor practices,’ and if so, whether legislative correction is peaceful picketing.’’ Inasmuch as the enhancement of job opportunities for members of the union was a legitimate objective, the State was held competent to authorize the fostering of that end by peaceful picketing, and the fact that the sustaining of the union in its efforts at peaceful persuasion might have the effect of preventing Senn from continuing in business as an independent entrepreneur was declared to present an issue of public policy exclusively for legislative determination. Years later, after regulations protective of labor allowed unions to amass enormous economic power, many state legislatures attempted to control the abuse of this power, and the Court’s new found deference to state labor regulation was also applied to restrictions on unions. Thus the Court upheld state prohibitions on racial discrimination by unions, rejecting claims that the measure interfered unlawfully with the union’s right to choose its members, abridged its property rights, or violated its liberty of contract. Inasmuch as the union ‘‘[held] itself out to represent the general business needs of employees’’ and functioned ‘‘under the protection of the State,’’ the union was deemed to have forfeited the right to claim exemption from legislation protecting workers against discriminatory exclusion. 130 Similarly, state laws outlawing closed shops were upheld in Lincoln Federal Labor Union v. Northwestern Iron & Metal Company 131 and AFL v. American Sash & Door Co. 132 When labor unions attempted to invoke freedom of contract, the Court, speaking through Justice Black, announced its refusal ‘‘to return . . . to . . . [a] due process philosophy that has been deliberately discarded. . . . The due process clause,’’ it maintained, does not ‘‘forbid a State to pass laws clearly designed to safeguard the opportunity of nonunion workers to get and hold jobs, free from discrimination against them because they are nonunion workers.’’ 133 VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00029 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 1700 AMENDMENT 14—RIGHTS GUARANTEED more appropriate than self-discipline and pressure of public opinion. . . .’’ Id. at 538, 549–50. 134 336 U.S. 245 (1949). 135 336 U.S. at 253. See also Giboney v. Empire Storage Co., 336 U.S. 490 (1949) (upholding state law forbidding agreements in restraint of trade as applied to union ice peddlers picketing wholesale ice distributor to induce the latter not to sell to nonunion peddlers). Other cases regulating picketing are treated under the First Amendment topics, ‘‘Picketing and Boycotts by Labor Unions’’ and ‘‘Public Issue Picketing and Parading,’’ supra. 136 94 U.S. 113 (1877). See also Davidson v. New Orleans, 96 U.S. 97 (1878); Peik v. Chicago & Nw. Ry., 94 U.S. 164 (1877); 137 The Court not only asserted that governmental regulation of rates charged by public utilities and allied businesses was within the States’ police power, but added that the determination of such rates by a legislature was conclusive and not subject to judicial review or revision. And, in UAW v. WERB, 134 the Court upheld the Wisconsin Employment Peace Act, which had been used to proscribe unfair labor practices by a union. In UAW, the Union, acting after collective bargaining negotiations had become deadlocked, had attempted to coerce an employer through calling frequent, irregular, and unannounced union meetings during working hours, resulting in a slowdown in production. ‘‘No one,’’ declared the Court, can question ‘‘the State’s power to police coercion by . . . methods’’ which involve ‘‘considerable injury to property and intimidation of other employees by threats.’’ 135 Regulation of Business Enterprises: Price Controls In examining whether the due process clause allows the regulation of business prices, the Supreme Court, almost from the inception of the Fourteenth Amendment, has devoted itself to the examination of two questions: (1) whether the clause restricted such regulation to certain types of business, and (2) the nature of the regulation allowed as to those businesses. Types of Businesses That May be Regulated.—For a brief interval following the ratification of the Fourteenth Amendment, the Supreme Court found the due process clause to impose no substantive restraint on the power of States to fix rates chargeable by any industry. Thus, in Munn v. Illinois, 136 the first of the ‘‘Granger Cases,’’ maximum charges established by a state for Chicago grain elevator companies were challenged, not as being confiscatory in character, but rather as a regulation beyond the power of any state agency to impose. 137 The Court, in an opinion that was largely dictum, declared that the due process clause did not operate as a safeguard against oppressive rates, and that if regulation was permissible, the severity thereof was within legislative discretion and could be ameliorated only by resort to the polls. Not much time elapsed, however, before the Court effected a complete withdrawal VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00030 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 AMENDMENT 14—RIGHTS GUARANTEED 1701 138 Chicago, M. & St. P. Ry. v. Minnesota, 134 U.S. 418 (1890). 139 Wolff Packing Co. v. Industrial Court, 262 U.S. 522, 535–36 (1923). 140 Munn v. Illinois, 94 U.S. 113 (1877); Budd v. New York, 143 U.S. 517, 546 (1892); Brass v. North Dakota ex rel. Stoesser, 153 U.S. 391 (1894). 141 Cotting v. Kansas City Stock Yards Co., 183 U.S. 79 (1901). 142 Townsend v. Yeomans, 301 U.S. 441 (1937). 143 German Alliance Ins. Co. v. Kansas, 233 U.S. 389 (1914); Aetna Insurance Co. v. Hyde, 275 U.S. 440 (1928). 144 O’Gorman & Young v. Hartford Ins. Co., 282 U.S. 251 (1931). from this position, and by 1890 138 it had fully converted the due process clause into a restriction on state agencies seeking to impose rates which, in a judge’s estimation, were arbitrary or unreasonable. This state of affairs continued for more than fifty years. Prior to 1934, unless a business was ‘‘affected with a public interest,’’ control of its prices, rates, or conditions of service was viewed as an unconstitutional deprivation of liberty and property without due process of law. During the period of its application, however, this standard, ‘‘business affected with a public interest,’’ never acquired any precise meaning, and as a consequence lawyers were never able to identify all those qualities or attributes which invariably distinguished a business so affected from one not so affected. The most coherent effort by the Court was the following classification prepared by Chief Justice Taft. 139 ‘‘(1) Those [businesses] which are carried on under the authority of a public grant of privileges which either expressly or impliedly imposes the affirmative duty of rendering a public service demanded by any member of the public. Such are the railroads, other common carriers and public utilities. (2) Certain occupations, regarded as exceptional, the public interest attaching to which, recognized from earliest times, has survived the period of arbitrary laws by Parliament or Colonial legislatures for regulating all trades and callings. Such are those of the keepers of inns, cabs and grist mills. . . . (3) Businesses which though not public at their inception may be fairly said to have risen to be such and have become subject in consequence to some government regulation. They have come to hold such a peculiar relation to the public that this is superimposed upon them. In the language of the cases, the owner by devoting his business to the public use, in effect grants the public an interest in that use and subjects himself to public regulation to the extent of that interest although the property continues to belong to its private owner and to be entitled to protection accordingly.’’ Through application of this formula, the Court sustained state laws regulating charges made by grain elevators, 140 stockyards, 141 and tobacco warehouses, 142 and fire insurance rates 143 and commissions paid to fire insurance agents. 144 The Court also voided VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00031 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 1702 AMENDMENT 14—RIGHTS GUARANTEED 145 Williams v. Standard Oil Co., 278 U.S. 235 (1929). 146 Tyson & Bro. v. Banton, 273 U.S. 418 (1927). 147 New State Ice Co. v. Liebmann, 285 U.S. 262 (1932). See also Adams v. Tanner, 244 U.S. 590 (1917); Weaver v. Palmer Bros., 270 U.S. 402 (1926). 148 291 U.S. 502, 531–32, 535–37, 539 (1934). 149 In reaching this conclusion the Court might be said to have elevated to the status of prevailing doctrine the views advanced in previous decisions by dissenting Justices. Thus, Justice Stone, dissenting in Ribnik v. McBride, 277 U.S. 350, 359– 60 (1928), had declared: ‘‘Price regulation is within the State’s power whenever any combination of circumstances seriously curtails the regulative force of competition so that buyers or sellers are placed at such a disadvantage in the bargaining struggle that a legislature might reasonably anticipate serious consequences to the community as a whole.’’ In his dissenting opinion in New State Ice Co. v. Liebmann, 285 U.S. 262, 302–03 (1932), Justice Brandeis had also observed: ‘‘The notion of a distinct category of business ‘affected with a public interest’ employing property ‘devoted to a public use’ rests upon historical error. In my opinion the true principle is that the State’s power extends to every regulation of any business reasonably required and appropriate for the public protection. I find in the due process clause no other limitation upon the character or the scope of regulation permissible.’’ 150 Older decisions overturning price regulation were now viewed as resting upon this basis, i.e., that due process was violated because the laws were arbitrary in their operation and effect. 151 The Court was not disturbed by the ‘‘scientific validity’’ that had been claimed for the theory of Adam Smith that ‘‘price that will clear the market,’’ and was content to note that the ‘‘due process clause makes no mention of prices’’ and that the courts are both incompetent and unauthorized to deal with the wisdom of the policy adopted or the practicability of the law enacted to forward it. The minority continued to stress the unreasonableness of any state regulation interfering with the determination of prices by ‘‘natural forces.’’ Justice McReynolds, speaking for the dissenting Justices, labeled the controls imposed by the challenged statute as a ‘‘fanciful scheme to protect the farmer against undue exactions by prescribing the price at which milk disposed of by him at will may be resold.’’ Intimating that the New York statute was as efficacious as a safety regulation which required ‘‘householders statutes regulating business not ‘‘affected with a public interest,’’ including state statutes fixing the price at which gasoline may be sold, 145 regulating the prices for which ticket brokers may resell theater tickets, 146 and limiting competition in the manufacture and sale of ice through the withholding of licenses to engage therein. 147 In the 1934 case of Nebbia v. New York, 148 however, the Court finally shelved the concept of ‘‘a business affected with a public interest,’’ 149 upholding, by a vote of five-to-four, a depression-induced New York statute fixing fluid milk prices. ‘‘Price control, like any other form of regulation, is [now] unconstitutional only if arbitrary, discriminatory, or demonstrably irrelevant to the policy the legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty.’’ 150 Conceding that ‘‘the dairy industry is not, in the accepted sense of the phrase, a public utility,’’ that is, a ‘‘business affected with a public interest,’’ the Court in effect declared that price control henceforth is to be viewed merely as an exercise by the government of its police power, and as such is subject only to the restrictions which due process imposes on arbitrary interference with liberty and property. 151 VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00032 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 AMENDMENT 14—RIGHTS GUARANTEED 1703 to pour oil on their roofs as a means of curbing the spread of a neighborhood fire,’’ Justice McReynolds insisted that ‘‘this Court must have regard to the wisdom of the enactment,’’ and must determine ‘‘whether the means proposed have reasonable relation to something within legislative power.’’ 291 U.S. 556, 558 (1934). 152 313 U.S. 236, 246 (1941). 153 The older case of Ribnik v. McBride, which had invalidated similar legislation upon the now obsolete concept of a ‘‘business affected with a public interest,’’ was expressly overruled. 277 U.S. 350 (1928). Adams v. Tanner, 244 U.S. 590 (1917), was disapproved in Ferguson v. Skrupa, 372 U.S. 726 (1963), and Tyson & Bro. v. Banton, 273 U.S. 418 (1927), was effectively overruled in Gold v. DiCarlo, 380 U.S. 520 (1965), without the Court hearing argument on it. 154 116 U.S. 307 (1886). 155 This was contrary to its earlier holding in Davidson v. New Orleans, 96 U.S. 97 (1877). Having thus concluded that it is no longer the nature of the business that determines the validity of a price regulation, the Court had little difficulty in upholding a state law prescribing the maximum commission which private employment agencies may charge. Rejecting contentions that the need for such protective legislation had not been shown, the Court, in Olsen v. Nebraska 152 held that differences of opinion as to the wisdom, need, or appropriateness of the legislation ‘‘suggest a choice which should be left to the States;’’ and that there was ‘‘no necessity for the State to demonstrate before us that evils persist despite the competition’’ between public, charitable, and private employment agencies. 153 Substantive Review of Price Controls.—Ironically, private businesses, once they had been found subject to price regulation, seemed to have less protection than public entities. Thus, unlike operators of public utilities who, in return for a government grant of virtually monopolistic privileges must provide continuous service, proprietors of other businesses receive no similar special advantages and accordingly are unrestricted in their right to liquidate and close. Owners of ordinary businesses, therefore, are at liberty to escape the consequences of publicly imposed charges by dissolution, and have been found less in need of protection through judicial review. Thus, case law upholding challenges to price controls deals predominantly with governmentally imposed rates and charges for public utilities. In 1886, Chief Justice Waite, in the Railroad Commission Cases, 154 warned that the ‘‘power to regulate is not a power to destroy; [and] the State cannot do that in law which amounts to a taking of property for public use without just compensation or without due process of law.’’ In other words, a confiscatory rate could not be imposed by government on a regulated entity. By treating ‘‘due process of law’’ and ‘‘just compensation’’ as equivalents, 155 the Court was in effect asserting that the imposition of a rate so low as to damage or diminish private property ceased to be VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00033 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 1704 AMENDMENT 14—RIGHTS GUARANTEED 156 Dow v. Beidelman, 125 U.S. 680 (1888). 157 134 U.S. 418, 458 (1890). 158 Budd v. New York, 143 U.S. 517 (1892). 159 154 U.S. 362, 397 (1894). 160 Insofar as judicial intervention resulting in the invalidation of legislatively imposed rates has involved carriers, it should be noted that the successful complainant invariably has been the carrier, not the shipper. 161 169 U.S. 466 (1898). Of course the validity of rates prescribed by a State for services wholly within its limits must be determined wholly without reference to the interstate business done by a public utility. Domestic business should not be made to bear the losses on interstate business and vice versa. Thus a State has no power to require the hauling of logs at a loss or at rates that are unreasonable, even if an exercise of a State’s police power and became one of eminent domain. Nevertheless, even this doctrine proved inadequate to satisfy public utilities, as it allowed courts to intervene only to prevent imposition of a confiscatory rate, i.e., a rate so low as to be productive of a loss and to amount to taking of property without just compensation. The utilities sought nothing less than a judicial acknowledgment that courts could review the ‘‘reasonableness’’ of legislative rates. Although as late as 1888 the Court doubted that it possessed the requisite power to challenge this doctrine, 156 it finally acceded to the wishes of the utilities in 1890 in Chicago, M. & St. P. Railway v. Minnesota. 157 In this case, the Court ruled that ‘‘[t]he question of the reasonableness of rates . . . , involving as it does the element of reasonableness both as regards the company and as regards the public, is eminently a question for judicial investigation, requiring due process of law for its determination. If the company is deprived of the power of charging rates for the use of its property, and such deprivation takes place in the absence of an investigation by judicial machinery, it is deprived of the lawful use of its property, and thus, in substance and effect, of the property itself, without due process of law. . . .’’ Although the Court made a last-ditch attempt to limit the ruling of Chicago, M. & S.P. Railway to rates fixed by a commission as opposed to rates imposed by a legislature, 158 the Court in Reagan v. Farmer’s Loan and Trust Co. 159 finally removed all lingering doubts over the scope of judicial intervention. In Reagan, the Court declared that, ‘‘if a carrier . . . attempted to charge a shipper an unreasonable sum,’’ the Court, in accordance with common law principles, would pass on the reasonableness of its rates, and has ‘‘jurisdiction . . . to award the shipper any amount exacted . . . in excess of a reasonable rate . . . . The province of the courts is not changed, nor the limit of judicial inquiry altered, because the legislature instead of a carrier prescribes the rates.’’ 160 Reiterating virtually the same principle in Smyth v. Ames, 161 the Court not VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00034 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 AMENDMENT 14—RIGHTS GUARANTEED 1705 a railroad receives adequate revenues from the intrastate long haul and the interstate lumber haul taken together. On the other hand, in determining whether intrastate passenger railway rates are confiscatory, all parts of the system within the State (including sleeping, parlor, and dining cars) should be embraced in the computation, and the unremunerative parts should not be excluded because built primarily for interstate traffic or not required to supply local transportation needs. See Minnesota Rate Cases (Simpson v. Shepard), 230 U.S. 352, 434–35 (1913); Chicago, M. & St. P. Ry. v. Public Util. Comm’n, 274 U.S. 344 (1927); Groesbeck v. Duluth, S.S. & A. Ry., 250 U.S. 607 (1919). The maxim that a legislature cannot delegate legislative power is qualified to permit creation of administrative boards to apply to the myriad details of rate schedules the regulatory police power of the State. To prevent a holding of invalid delegation of legislative power, the legislature must constrain the board with a certain course of procedure and certain rules of decision in the performance of its functions, with which the agency must substantially comply to validate its action. Wichita R.R. v. Public Util. Comm’n, 260 U.S. 48 (1922). 162 Reagan v. Farmers’ Loan & Trust Co., 154 U.S. 362, 397 (1894). And later, in 1910, the Court made a similar observation that courts may not, ‘‘under the guise of exerting judicial power, usurp merely administrative functions by setting aside’’ an order of the commission merely because such power was unwisely or expediently exercised. ICC v. Illinois Cent. R.R., 215 U.S. 452, 470 (1910). This statement, made in the context of federal ratemaking, appears to be equally applicable to judicial review of state agency actions. 163 This distinction was accorded adequate emphasis by the Court in Louisville & Nashville R.R. v. Garrett, 231 U.S. 298, 310–13 (1913), in which it declared that ‘‘the appropriate question for the courts’’ is simply whether a ‘‘commission,’’ in establishing a rate, ‘‘acted within the scope of its power’’ and did not violate ‘‘constitutional rights . . . by imposing confiscatory requirements.’’ The carrier contesting the rate was not entitled to have a court also pass upon a question of fact regarding the reasonableness of a higher rate the carrier charged prior to the order of the commission. All that need concern a court, it said, is the fairness of the proceeding only obliterated the distinction between confiscatory and unreasonable rates but contributed the additional observation that the requirements of due process are not met unless a court further determines whether the rate permits the utility to earn a fair return on a fair valuation of its investment. Early Limitations on Review.—Even while reviewing the reasonableness of rates the Court recognized some limits on judicial review. As early as 1894, the Court asserted that ‘‘[t]he courts are not authorized to revise or change the body of rates imposed by a legislature or a commission; they do not determine whether one rate is preferable to another, or what under all circumstances would be fair and reasonable as between the carriers and the shippers; they do not engage in any mere administrative work; . . . [however, there can be no doubt] of their power and duty to inquire whether a body of rates . . . is unjust and unreasonable . . . and if found so to be, to restrain its operation.’’ 162 One can also infer from these early holdings a distinction between unreviewable fact questions that relate only to the wisdom or expediency of a rate order, and reviewable factual determinations that bear on a commission’s power to act. 163 VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00035 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 1706 AMENDMENT 14—RIGHTS GUARANTEED whereby the commission determined that the existing rate was excessive, but not the expediency or wisdom of the commission’s having superseded that rate with a rate regulation of its own. 164 Des Moines Gas Co. v. Des Moines, 238 U.S. 153 (1915). 165 Minnesota Rate Cases (Simpson v. Shepard), 230 U.S. 352, 452 (1913). 166 Knoxville v. Water Co., 212 U.S. 1 (1909). 167 Willcox v. Consolidated Gas Co., 212 U.S. 19 (1909). However, a public utility which has petitioned a commission for relief from allegedly confiscatory rates need not await indefinitely for the commission’s decision before applying to a court for equitable relief. Smith v. Illinois Bell Tel. Co., 270 U.S. 587 (1926). 168 174 U.S. 739, 750, 754 (1899). See also Minnesota Rate Cases (Simpson v. Shepard), 230 U.S. 352, 433 (1913). 169 San Diego Land & Town Co. v. Jasper, 189 U.S. 439, 441, 442 (1903). See also Van Dyke v. Geary, 244 U.S. 39 (1917); Georgia Ry. v. Railroad Co

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