Overruled (18 page)

It was the 1984 Epstein-Scalia debate all over again, except this time Scalia was a justice on the U.S. Supreme Court, and he was fighting a rearguard action to keep the libertarian insurgency at bay. Nor would it be the last time that Scalia and his fellow justices found themselves under fire from the libertarians. Over the coming decade, on issues ranging from property rights to gun control to medical marijuana, the libertarian legal movement would push the Supreme Court repeatedly to endorse its broad constitutional vision of personal and economic freedom. The battle for control of American law was about to heat up.

Five

Litigating for Liberty

A funny thing happened one day in April 2012. Judge Janice Rogers Brown, an outspoken conservative who sits on the U.S. Court of Appeals for the District of Columbia Circuit, aggressively criticized a federal regulation for harassing entrepreneurs, ripping off consumers, and enriching a small group of politically connected insiders. But then, once she got that out of her system, Judge Brown went ahead and upheld the regulation anyway.

At issue in the case of
Hettinga v. United States
was a federal regulatory scheme first put in place during the New Deal in order to control the price of milk. Under the terms of the Agricultural Marketing Agreement Act of 1937, minimum milk prices were set throughout various geographical areas around the country. Most of the dairy industry fell under the direct control of this system, and still remains so today, though an exemption was originally granted for what's known in the trade as “producer-handlers,” who are basically dairy farmers who also bottle and distribute their own milk.

In the early 2000s, Sarah Farms, an Arizona-based producer-handler owned and operated by Dutch immigrant Hein Hettinga and his wife, Ellen, made a splash with consumers throughout Southern California when they started selling their milk for a lower price than the federally fixed minimum on the shelves of Costco and other popular retailers. In response, the Hettingas' competitors turned to the government for help. As the
Washington Post
described it, “a coalition of giant milk companies and dairies, along with their congressional allies, decided to crush Hettinga's initiative. For three years, the milk lobby spent millions of dollars on lobbying and campaign contributions and made deals with lawmakers, including incoming Senate Majority Leader Harry M. Reid (D-Nev.).”
1

The final result of that lobbying was the Milk Regulation Equity Act of 2005, which, among other things, imposed minimum milk pricing on all producer-handlers operating out of Arizona that distribute at least 3,000,000 pounds of fluid milk per month. Not coincidentally, Sarah Farms was the only producer-handler in the entire state that fit that description. The 2005 law also imposed new minimum price rules on all handlers selling prepackaged milk in California—a provision that also applied to just one existing business, the Arizona-based bottling facility GH Dairy, which also happened to be owned and operated by the Hettingas.

So the family brought suit in federal court, charging the U.S. government with singling out their businesses for abuse and violating their rights under the Constitution. In response, the government argued that the new law was rationally related to its interest in regulating the dairy industry, and was therefore entitled to significant deference from the courts. When Judge Brown finally reviewed the government's justifications, however, she rejected them as pure fantasy, likening the 2005 law to forced collectivization and describing it as a naked wealth transfer that came at the expense of both the Hettingas and the
milk-drinking public. So what explains Brown's decision to reaffirm the law despite her obvious distaste for it? “Given the long-standing precedents in this area,” she complained, “no other result is possible.”
2

Brown was referring to the rational-basis test, the highly deferential approach to economic regulations the courts have been using since the New Deal. In the 1938 case of
United States v. Carolene Products Co.,
for example, the Supreme Court held that “the existence of facts supporting the legislative judgment is to be presumed” in all cases dealing with “regulatory legislation affecting ordinary commercial transactions.”
3
Sixteen years later, in the case of
Williamson v. Lee Optical Inc.,
the Court dug in even further, announcing that when it came to the constitutionality of economic regulations, “It is enough that there is an evil at hand for correction, and that it might be thought that the particular legislative measure was a rational way to correct it.”
4
In short, so long as lawmakers
might
have had a “rational basis” for their actions, the courts are supposed to let those actions stand.

“The practical effect of rational basis review of economic regulation,” Brown complained in her
Hettinga
opinion, “is the absence of any check on the group interests that all too often control the democratic process. It allows the legislature free rein to subjugate the common good and individual liberty to the electoral calculus of politicians, the whims of majorities, or the self-interest of factions.” But because she was duty-bound as a federal appellate judge to follow Supreme Court precedent, she continued, her hands were tied. “Rational basis review means property is at the mercy of the pillagers,”
5
Brown concluded.

Her language was certainly provocative, but Brown's analysis had merit. The rational-basis test does indeed stack the deck in favor of lawmakers. That's the whole reason the Supreme Court adopted it in the first place. It evolved directly from the judicial deference long championed by Justice Oliver Wendell Holmes and his Progressive
and New Deal allies, best captured by Holmes's oft-quoted maxim that the judiciary had no business interfering with “the right of a majority to embody their opinions in law.”
6
For those plaintiffs unfortunate enough to come up against the rational-basis test in court, the odds are purposefully piled up against them. As the Supreme Court once described it, “the burden is on the one attacking the legislative arrangement to negative every conceivable basis which might conceivably support it.”
7
In other words, plaintiffs and their lawyers must not only defeat the government's
stated
rationale for the contested regulation, they must also defeat any
hypothetical
rationale that a government lawyer, or even the presiding judge, might “conceivably” imagine in defense of the statute during trial.

To say the least, that is a rocky road to travel on the quest to invalidate a statute. But it is not an impossible road to travel, as has been proved repeatedly in recent years by a small band of libertarian lawyers employed by the Institute for Justice (IJ), an Arlington, Virginia–based outfit that styles itself as “the nation's only libertarian, civil liberties, public interest law firm.” Over the past two decades, the Institute for Justice has defeated government regulations in dozens of major cases, including winning the first victory for economic liberty at the federal appellate court level since the New Deal. On top of that, IJ lawyers have won four times at the U.S. Supreme Court, including a 2005 decision invalidating protectionist state laws that banned the direct sale of wine to consumers from out-of-state wineries. And they have triumphed in such cases despite the extraordinary disadvantages they face under the rational-basis test and other widely practiced forms of judicial restraint.

If the libertarian legal movement is waging an insurgency, then the lawyers at the Institute for Justice comprise the elite core of its front-line fighters. Their mission is to defeat the enemy on its own ground and persuade deferential judges to overrule government actions. And
while they don't win every case, they have found more than a few ways to advance the cause.

“A Clarence Darrow Type”

The Institute for Justice was founded in Washington, D.C., in 1991 under the leadership of William H. “Chip” Mellor, a veteran litigator with deep roots in the libertarian and conservative legal movements. Mellor's interest in politics dates back to his undergraduate years at Ohio State University in the early 1970s, when he was a student protestor raging against the Vietnam War. “During that time,” he later remembered, he had “a bit of an epiphany, and that was that both the left and right were really seeking the same thing, which was to use power in order to force others to do their bidding.” That realization sent him on a quest to find a better approach to politics, one more attuned to the rights of the individual. Eventually he would discover the works of libertarian writers such as Milton Friedman and Ayn Rand. “That convinced me that libertarianism had a lot to offer and that the arena in which I thought that was most potentially effective was the courtroom.”

So Mellor enrolled in law school at the University of Denver with the express purpose of becoming a crusading libertarian lawyer. “I thought I'd be like a Clarence Darrow type,” he recalled, referring to the famous defense attorney, and “ride into court and advocate on behalf of these wonderful clients and change the world.” He graduated in 1977 and quickly discovered that the pressing requirements of private practice left him little time to fight the good fight. But then a chance encounter changed everything. On a visit to his old law school campus that year, Mellor noticed a job listing for the position of law clerk at an organization called the Mountain States Legal Foundation. That ad featured one phrase in particular that caught Mellor's eye: “free markets, private property rights, and individual liberty.” “I'd never seen
anything remotely like that
anywhere,
” he remembered with a laugh. “So I came up short and said, ‘Whoa, I've got to find out more about this.'” He went by the group's office the next day to drop off his résumé in the hope that they might someday need another lawyer; when the spot for a new staff attorney soon opened up, he eagerly signed on.

The conservative legal movement was still in its infancy in 1977, and the Denver-based Mountain States Legal Foundation was one of just a handful of organizations then focused on promoting a right-of-center agenda in court. Founded that year thanks to seed money provided by the beer magnate Joseph Coors, a prominent supporter of conservative causes who also sat on the foundation's original board of directors, Mountain States pursued a now-familiar conservative program, targeting environmental regulations, affirmative action policies, and government infringements on the free enterprise system. Mellor initially found it to be a decent fit for his admittedly non-mainstream views, although by no means a perfect one. “The people who were running it had never heard the term ‘libertarian' before,” he recalled with a wry smile.

The first signs of real trouble came in the fall of 1982, when Mountain States launched a high-profile lawsuit against the city of Denver over its decision to award a single private company, Mile Hi Cablevision, the exclusive franchise to wire the entire city for cable television. It “sounds very quaint today,” Mellor explained, but cable television was a cutting-edge technology in those days, and the city's plans were very ambitious. The real problem, as Mellor saw it, was the granting of the exclusive franchise, which violated the rights of “small guys trying to break into the oligopoly or monopoly situation.”

So Mellor and his colleagues filed suit against the city and promptly found themselves on the receiving end of national media attention, a most welcome development. Looking back today, Mellor still thinks it was a great lawsuit, “except for one thing.” It “ran up against, and
challenged, the interests of the powers-that-be in Colorado, who happened to be very Republican at that time. And Mountain States was very connected to the Republican Party.” The decision to pursue the case had sparked heated disagreement within the organization, ultimately leading Joseph Coors to resign from the board of directors. In the end, Mountain States dropped the litigation. “We were right on the issue, but we were wrong on the politics,” Mellor said. “And that ultimately led to my leaving Mountain States under less than happy circumstances.”

It was a difficult experience for the idealistic young lawyer, but it turned out to be an invaluable one. For one thing, it impressed upon Mellor the fact that libertarianism was not synonymous with the interests of big business, including businesses being run by Republicans. But perhaps more important, it taught him an organizational lesson he would never forget. “Funding must never drive case selection,” he explained. “You must have a principled, long-term, philosophically and tactically consistent approach to litigation, rather than an ad hoc, reactive, and defensive one.” The Institute for Justice would eventually be founded on those very insights.

The Center for Applied Jurisprudence

In the meantime, Mellor needed a job, so he moved east to Washington in order to take up a post in Ronald Reagan's Department of Energy, where he would remain until 1986. One day in 1985, Mellor received a surprise phone call from Antony Fisher, a philanthropist and activist heavily involved in the creation of several pioneering free-market think tanks and research outfits, including the Institute of Economic Affairs in London and the Manhattan Institute in New York City. Fisher was calling to gauge Mellor's interest in running the Pacific Research Institute (PRI) in San Francisco, which specialized in economic analyses of public policy
issues, particularly in the areas of monetary and environmental policy. “I said to Antony, ‘I'm very flattered,'” Mellor recalled, but he told him, “‘I've got a dream, and what I intend to do is establish a libertarian public interest [legal] organization.' And he said, ‘OK, thanks for your time.'”

But then Fisher called back a week or so later and repeated the offer, with some added incentives to sweeten the proposal. He told Mellor there was room for growth at the Pacific Research Institute, and as long as he kept everything else on track, there was no reason why Mellor could not also begin to develop his dream legal outfit under the PRI wing. That sealed the deal.

According to Mellor, one of the key lessons he took away from his less-than-happy break with the Mountain States Legal Foundation was that while the potential for libertarian public interest law was there, it would only work if it was done right. “And I swore at that moment I was gonna do it the right way sometime, I just had to figure out how.” Now settled in at the reins of the Pacific Research Institute, Mellor got serious about solving the how problem. Under the rubric of PRI, Mellor established a Center for Applied Jurisprudence, which would serve as the base of operations for his first foray into libertarian legal planning. The next step was a frank assessment of the strengths and weaknesses of the concept to date. “My belief was that there was no single individual who knew exactly what to do when it came to any one issue, much less than when it came to the strategic approach to litigation I was trying to pursue,” he explained. Mellor had his own ideas, of course, “but I believed that there were others out there whose wisdom and expertise we could draw on.”