X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Alan Merrifield doesn’t believe in pesticides. He thinks they’re dangerous, ineffective, and bad for the environment. In any case, he doesn’t deal with bugs. He helps people keep common pests such as raccoons and birds away from their homes, using only traps, screens, and spikes. Nonetheless, California state bureaucrats insist that the 68-year-old Merrifield — who already holds five state pest control licenses — needs another license, called a Branch 2 license, before he can install spikes on buildings to keep pigeons away. To get such a license, one must spend two years learning how to handle pesticides — pesticides Merrifield doesn’t use — and then take a 200-question multiple-choice examination — which does not contain a single question about spikes or pigeons. It gets worse. The law applies only to people who work on pigeon, mouse, or rat problems. In other words, someone who installs spikes on a bridge to keep seagulls from roosting there doesn’t need a Branch 2 license. But install the same spikes on the same bridge to keep pigeons away, and you do. The penalties can amount to fines of $1,000 per violation and even jail time. That’s why Merrifield this month asked judges on the U.S. Court of Appeals for the 9th Circuit to declare the licensing law unconstitutional. According to government lawyers, the law exists to protect consumers. But like many occupational licensing requirements, its real purpose is more sinister: to protect established, politically influential companies against having to compete against entrepreneurs with new ideas. And thanks to court decisions from the 1930s, particularly those that created the so-called rational-basis test, government bureaucrats now think that it’s their job to decide how to divide up a market. ADMITTEDLY IRRATIONAL Astonishingly, in Merrifield’s case, the government’s own expert witness actually testified three times under oath that the licensing law is irrational. But, he explained, the requirement was the result of a political fight from a decade ago, when California lawmakers considered eliminating the licensing requirements for people who don’t use pesticides. This made sense — if the license exists to ensure that those who use dangerous chemicals know what they’re doing, then there’s no reason to require one for people who don’t use those chemicals. But when politically connected pest control companies heard of the proposal, they descended on Sacramento like a swarm of bees. The expert testified that he had brokered a deal with the legislator who proposed the bill so that the companies he represented could monopolize the pest control business. Because rats, mice, and pigeons are “a larger percentage” of the pest control business, he testified, he and his colleagues asked lawmakers to “divide” the trade. Licensed practitioners could “keep the pigeons,” because they are “a larger percentage” of the market for pest control services. The state legislature sealed the deal, thus ensuring that established companies would retain their control over the main part of the pest control business and that entrepreneurs like Merrifield would be relegated to the less common pests, such as raccoons and skunks. ABUSIVE LICENSING Unfortunately, the Merrifield case is an all-too-typical example of the abuse of occupational licensing to prevent fair economic competition. Such laws often bar honest Americans from earning a living and providing consumers with useful goods and services. As a result, the entrepreneurial spirit at the heart of American enterprise suffers, and the rule of law is transformed into a game in which powerful companies can exploit legislatures for their own benefit. As Supreme Court Justice John Paul Stevens noted 20 years ago, “private parties have used licensing to advance their own interests in restraining competition at the expense of the public interest.” Alas, thanks to the “rational-basis scrutiny” that courts have applied to economic regulations, judges presume strongly against entrepreneurs like Merrifield. Plaintiffs are required to prove that there is no conceivable ground on which the law could be considered rational — that is, to prove a negative — before a court will protect their constitutionally protected right to earn a living. The rational-basis test was devised in a series of cases in the 1930s. The right to earn a living had been considered a fundamental part of the common law for more than three centuries before that — England’s Chief Justice Edward Coke wrote in 1615 that “at the common law, no man could be prohibited from working in any lawful trade, for the law abhors idleness, the mother of all evil.” But in Nebbia v. New York (1934), the Supreme Court justices held that from then on, courts would presume that economic regulations are constitutional except in the most extreme cases. In Nebbia, the Court upheld a New York law that prohibited the sale of milk at less than eight cents per quart. A law forbidding the sale of milk at low prices during the Great Depression might strike some as absurd, but this was typical of the extreme lengths to which courts will go to uphold laws under the rational-basis test. In practice, though, “rational basis” usually means “anything goes.” Although courts still acknowledge that the 14th Amendment protects Americans’ right “to follow any lawful calling, business, or profession [one] may choose” ( Lowe v. Securities and Exchange Commission (1985)), no federal court ever struck down a state economic regulation for violating the due process clause between the Nebbia decision and 2002. COFFINS AND BARBERS That was the year that the 6th Circuit, in Craigmiles v. Giles, invalidated a Tennessee law that required people to have a license as a funeral director before selling coffins. The plaintiffs were not officiating at funerals or handling dead bodies, but the state law required them to spend two years learning embalming and other skills that they would never use. The state claimed that the law existed to protect consumers, but the court laughed at this excuse. The real reason for the law was to restrict competition and thus increase the prices that funeral directors could charge. Laws may restrict economic freedom to protect consumers, but “protecting a discrete interest group from economic competition is not a legitimate governmental purpose.” The Craigmiles case followed a similar case in San Diego, which held that a businesswoman named JoAnne Cornwell, who performed African hair-braiding techniques, could not be forced to undergo the extensive training regimen required for barbers in California. The barber-licensing law required years of learning about chemicals that Cornwell never used and hairstyles that Cornwell never performed on her customers. The licensing requirement was being applied in a way that merely protected barbers against competition from Cornwell’s new business idea. This violated the Constitution, according to the district court in Cornwell v. Hamilton (1999). Unfortunately, three years ago, a different federal court disagreed. In that case, also involving a state law that required casket sellers to get funeral director licenses, the 10th Circuit declared in Powers v. Harris (2004) that “absent a violation of a specific constitutional provision or other federal law, intrastate economic protectionism constitutes a legitimate state interest.” That decision was a shameful betrayal of the American dream of economic opportunity. Until then, no court had ever declared that government may exclude people from a fair chance at economic success merely because it wants to. In an influential 1984 law review article, professor Cass Sunstein explained that the Constitution prohibits the government from granting “naked preferences,” which he defined as “the distribution of resources or opportunities to one group rather than another solely on the ground that those favored have exercised the raw political power to obtain what they want.” And although courts have taken a hands-off approach to economic regulations in the years since the New Deal, they have at least required that such laws serve some general public interest. The Powers decision simply abandoned that limitation. Now lawmakers are free to choose at will what businesses are allowed to operate and not to operate. THE RIGHT TO SET UP SHOP Merrifield’s case makes it clear how abstractions like “rational basis” affect everyday people. Although defenders of the rational-basis test claim that more serious protection of economic freedom would benefit only the wealthy and powerful — because it would impose serious constitutional limits on government’s regulation of businesses — the truth is just the opposite. The right to pursue happiness by setting up shop or going into business for oneself is the very definition of the American dream for many immigrants and members of the working class who want to improve their condition and that of their families. In fact, even Justice William Douglas — no friend of the free market — declared in Barsky v. Board of Regents (1954) that the right to earn a living is “the most precious liberty that man possesses.” On this, he agreed with Justice Stephen Field, who wrote almost a century earlier that the right to earn an honest living without unreasonable government interference is “the distinguishing privilege of citizens of the United States.” While the government could protect the public from unfair or unsafe business practices, Field wrote, such laws must allow those who obey fair regulations the freedom to enter a trade. “This is the fundamental idea upon which our institutions rest, and unless adhered to in the legislation of the country our government will be a republic only in name.” Without serious constitutional protection for economic freedom, legislatures are free to hand out unlimited benefits to cronies and insiders. Meanwhile, small businesses trying to break into the market have very little chance of persuading the legislature to respect their rights. Yet courts use “strict scrutiny” to protect religious minorities — while ignoring the injuries inflicted on hard-working, risk-taking entrepreneurs. Merrifield and his fellow business owners aren’t asking for any special favors. They wish only to offer the public services they want at prices they’re willing to pay. Courts should stop manipulating the antiquated rational-basis theory to blind them to the unfairness and inequality at the heart of so many occupational licensing laws.
Timothy Sandefur is the lead attorney in the economic liberty project at the Pacific Legal Foundation. He represents Alan Merrifield. This commentary first appeared in The Recorder , an ALM publication.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.