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Economic Liberty Challenges In the 21st Century

By Drew Erteschik and J.M. Durnovich

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Introduction

Most of us left law school with the understanding that so-called “economic liberty” challenges to state regulations will generally fail under rational basis review.  That area of the law, however, has changed dramatically.

This article looks at the change in three parts:

 

The first part offers a brief refresher on the history of economic liberty challenges in the 20th century.

The second part describes a flurry of recent cases involving successful economic liberty challenges on substantive due process grounds.

The third part examines some possible legal and policy explanations for the modern trend.

20th Century Views

In 1905, the U.S. Supreme Court decided Lochner v. New York, a case that considered a state law capping the maximum hours for bakery employees.[1]  The Court struck down the law on the grounds that it violated the “right of an individual to be free in his person and in his power to contract in relation to his own labor.”[2]  Over the next thirty years—the “Lochner era”—the Supreme Court struck down a number of state laws that infringed upon economic liberty rights.[3]

The Lochner era, however, was short-lived.  Headlined by the Court’s decision in U.S. v. Carolene Products, the Great Depression ushered in the post-Lochner era—a time when the Court established a presumption of constitutionality for state regulations.[4]  Most scholars attribute the shift to non-jurisprudential reasons:  If President Roosevelt’s New Deal was to survive constitutional challenges, the Court needed to dilute Lochner’s potency.[5]

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