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May|June 2005
The Brains Behind Blackmun By David J. Garrow
Readers Respond: Justice Blackmun
Unbecoming Justice Blackmun By William Saletan
A Measure Of Truth By Kermit Roosevelt
The Federalist Capers By Roderick M. Hills, Jr.
A Dirty Little Secret By Eric Redman
Justice on the Half Shell By Aaron Kuriloff
The Prince of Darknet By Joseph D. Lasica

The Federalist Capers

What history can teach Democrats about surviving a Republican federal government.

By Roderick M. Hills, Jr.

IMAGINE THAT A REPUBLICAN PRESIDENT, FAMOUS FOR HIS GARBLED PROSE and pro-business views, has just won the White House, after eight years of a progressive Democratic presidency. Imagine, also, that the Republicans have won control of both houses of Congress. Republican presidents have appointed all but two of the justices on the United States Supreme Court, and the new Republican president will soon replace the aging chief justice—an arch-conservative friend of business—with a Republican politician also notorious for his pro-business views.

To a Democrat, this sounds like a combination of the nightmarish election realities of 2000 and 2004. But, nightmare or not, it is also the historical reality of 1920, when Warren G. Harding and the Republican Party took control of the national government, inaugurating a regime of chamber of commerce domestic policy. In 1921, Harding appointed former president William Howard Taft to replace Edward Douglass White as chief justice of the U. S. Supreme Court, expanding a Republican dominance of the court that would last for the next decade. Overall, between 1872 and 1932, the Republicans lost control of the White House for only 16 years.

Whether 1920 or 2005, when the national government is thoroughly dominated by Republicans, the thoughts of Democrats naturally turn to federalism and to the hope that the party's views might find some refuge in the state governments. In the wake of President George W. Bush's re-election, it should be no surprise that prominent Democratic politicians have rediscovered the virtues of state and local government. Representative Barney Frank, the Democrat from Massachusetts, has denounced Bush's proposed federal ban on same-sex marriage by praising the federal system's capacity to let states make their own choices on the issue. Eliot Spitzer, the attorney general of New York, has criticized the federal government's pre-emption of state laws protecting consumers. He has declared that New York's lawsuits against insurers, utilities, and other businesses are examples of the sort of federalism that Ronald Reagan preached about.

With this new Democratic enthusiasm for federalism, some questions naturally arise: Would a conservative, Republican-appointed court enforce federalism on behalf of Democratic causes? Might history provide any lessons? Did the Taft, White, Fuller, or Waite Courts—all pre-New Deal courts dominated by Republican appointees—ever protect states' rights for the sake of progressive issues, and are there signs that the current court might do so as well?

The answer to all of these questions is a qualified yes. Two factors seem to have had a big effect on whether the court has protected federalism for causes with which a majority of the justices probably disagree substantively. First, the court has tended to protect federalism in a politically neutral manner when the president or Congress has sought to override state policies to which constituencies powerful at the state level were deeply attached. Second, when faced with conflicts between big business and the states, even the most conservative courts have exercised remarkable self-restraint, refusing to find that state laws were preempted either by federal statutes or by the Constitution itself. The effect was to give the progressives and populists during the late 19th century an opportunity to regulate businesses at the state level. This forced those businesses to abandon their preferred laissez-faire position in favor of uniform national legislation to protect themselves from state laws. Something similar could well happen today.

THE BEST EXAMPLE TO ILLUSTRATE THIS PATTERN is that of the railroads versus the populists between the late 1870s and 1890s. The basic tenet of the populist movement was that the owners of large-scale capital—banks, factories, and especially railroads—had unjustly amassed power at the expense of the working man and, in particular, the farmer. Railroads were the special target of the populists, who believed that railway companies used their economic power to dominate farmers. Populists complained that railroads were giving big interstate shippers like John D. Rockefeller secret rebates and other price breaks while stiffing short-haul shippers like small farmers and small businesses.

As Herbert Hovenkamp, a law professor at the University of Iowa, has observed, the populist complaint was economically unjustified. The railroads were forced to offer big shippers rebates and other price breaks on the long-haul interstate routes because these routes tended to be competitive: Several different lines shipped to the same major cities. Such competition tended to be destructive—"ruinous," in the popular 19th-century phrase—because railroads' fixed costs for their tracks and cars were much higher than their marginal costs for sending a train on one trip. Railroads could not recover their fixed costs by offering prices that covered only the marginal costs of the interstate trip. Yet competition drove each railroad to offer such prices to interstate shippers in order to capture business from competing lines. By contrast, each railroad tended to monopolize the shipping business on the short-haul, intrastate lines between small towns. Understandably, they would use their monopoly on short-haul shipping to raise prices to help improve their overall profits, which were hurt by long-haul competition.

The natural solution to the problem would have been to treat the railroad as a nationally regulated utility under which companies could form interstate "pools" to avoid competition, regulated by some federal agency. But Congress ducked the issue. Any comprehensive federal regulation of the rails would force Congress to resolve a conflict between major interests—the shippers, large and small, and the railroads—and Congress apparently lacked the stomach and desire to do so. Absent such federal leadership, the railroads took matters on themselves and attempted to recover their fixed costs from small, short-haul shippers. This solution was more efficient than wholesale bankruptcy of the rail system, but it was hardly a model of how to allocate costs fairly.

Enter the states. Unlike Congress, rural states like Wisconsin and Iowa did not face the problem of gridlock induced by mutually antagonistic interests. They could single-mindedly (and parochially) focus on protecting their own farmers, who were largely short-haul shippers. Starting in the 1870s, a few rural states enacted the so-called Granger Laws, which regulated railroad rates aggressively by placing ceilings on rates and preventing price discrimination against short hauls. In response, the railroads petitioned the U.S. Supreme Court to declare that these laws amounted to impermissible regulations of interstate commerce.

You might have expected the Waite Court, being dominated by pro-business Republicans, to side with the railroads. Cooley v. Board of Wardens, which was the reigning precedent about the meaning of the commerce clause, would have permitted the court to find that railroad routes required nationally uniform treatment. But federalism won out and the Waite Court upheld Wisconsin's regulation of railroad rates in Peik v. Chicago & N. W. R. Co., because "[t]he law is confined to State commerce, or such inter-state commerce as directly affects the people of Wisconsin." For the next decade, the railroads labored under state regulation, finally convincing the court in 1886 to forbid state regulation of rates on interstate routes. Since the states could still regulate the railroads' intrastate operations, the railroads had a big incentive to seek federal regulation.

Viewed economically, this joint state-federal system was irrational. However, viewed politically, the court's refusal completely to pre-empt state law focused Congress's attention on the railroad issue. In 1887, prodded by farmers and the railroads themselves, Congress enacted the Interstate Commerce Act, authorizing federal rate regulation on interstate lines. The railroads continued to lobby for federal protection from state law, and Congress or the Interstate Commerce Commission gradually delivered this protection over the next three decades, creating a comprehensive system of rail regulation by 1920. In the end, federalism caused the railroad barons to lose their love for federal laissez-faire.

THE COURT FOLLOWED THE SAME PATTERN when dealing with unions. In theory, the Sherman Antitrust Act might apply to union efforts to organize the labor force. After all, a union is a cartel that restrains trade in labor in order to increase labor's price. However, in 1895 in United States v. E. C. Knight, the court refused to permit the act to be enforced against manufacturing, reasoning that manufacturing did not fall within Congress's power to regulate "commerce . . . among the several states."

As a practical matter, this decision meant that absent some proof that the striking union sought to influence interstate trade, neither Congress nor the U.S. Department of Justice could use antitrust laws to attack strikes at factories or coal mines. That proof was sometimes not difficult to find. In 1908, the court found that a hatters' union in Danbury, Conn., had violated the Sherman Act by organizing a boycott of wholesalers in other states who purchased hats from the manufacturer who brought the case. But this sort of proof was not always easy. In several 1920s cases, the court held that the Sherman Act could not be enforced against "local strikes" without proof that the local union leaders intended to obstruct interstate commerce.

To be sure, the court did not always act as an impartial umpire: Some progressives grumbled that the court was more willing to allow the Sherman Act to be used against striking workers than against conspiracies of businessmen forming cartels. However, there is no doubt that the court did enforce federalism principles to protect strikes from federal injunctions. Until Congress enacted the Norris-LaGuardia Act in 1932, stripping federal courts of jurisdiction to enjoin certain strikes, the federal courts' loyalty to federalism was the only principle that protected labor from the hated injunctions. Moreover, it was Chief Justice William Howard Taft, the leader of pre-New Deal American conservatism, who played the role of Nixon going to China. Taft led the judicial effort in the 1920s to enforce federalism principles impartially on behalf of unions as well as business. This effort provoked Justice Louis Brandeis to remark that his conservative colleagues would not take progressive federalism from him when they would not take it from Taft.

In short, between 1877 and 1932, progressive and populist movements could find some refuge in the principles of federalism, even when conservative judges were the referees protecting state power. But federalism afforded only modest protections, and those came at a price. The same judicial doctrines that prevented federal interference with strikes or state railroad regulation also led the court to strike down two pieces of federal legislation favored by liberals: the Federal Employers' Liability Act of 1906, regulating tort liability of railroads to their employees, and a 1918 ban on child labor. But, in an era when neither the president nor the Republican-dominated Congress were delivering any great boons to the left, the court's willingness to exercise self-restraint or to rein in the Justice Department was a welcome departure from Republican hegemony.

BY CONTRAST WITH THE COURT'S RECORD IN ECONOMIC MATTERS, the pre-New-Deal court was oddly reluctant to impose any limits on federally sponsored cultural conservatism. The Mann Act, which prohibited any person from aiding in the interstate transportation of a "woman or girl" for "prostitution, or debauchery, or for any other immoral purpose," provides a useful illustration of the limits that judicially enforced federalism will go to.

Congress enacted the Mann Act in 1910 by comfortable majorities, in the wake of a national furor over allegations that young women were being kidnapped by syndicates of brothels and forced to work as prostitutes. In retrospect, historians explain the panic over "white slavery" as largely attributable to anxieties over immigration (the syndicates were said to be run by foreigners, especially foreign Jews) and urbanization, which led to a rise in the numbers of unaccompanied single women visible in public places.

Although the act was inspired by fears of coerced prostitution, it was soon enforced by the federal government as part of a crusade against nonmarital sex in general. As David Langum has shown in Crossing Over the Line, a large majority of the FBI's Mann Act investigations during the 1920s was for noncommercial offenses, typically prosecutions of unmarried but romantically involved couples who crossed state lines. Even the purpose of protecting women from coercion was soon dropped. The Department of Justice took the view that the female "victim" should generally be prosecuted as a co-conspirator if she consented to "immoral" travel. Charges were frequently foregone if the "victim" married the perpetrator, suggesting that the statute was really a federal effort to protect males' control over their wives and daughters. Though the federal government abandoned the effort to enforce the Mann Act in the 1930s against noncommercial sex, J. Edgar Hoover later used it in raids on brothels to collect information about public persons, like Charlie Chaplin, whom he regarded as subversive.

In short, the Mann Act was everything that you would expect from centralized enforcement of sexual morality—oppressive, gratuitous, and subject to all the abuses of prosecutorial discretion. The regulation of interstate transportation was a thin pretext for federal intervention, given that the act's authors surely were not concerned that the states were somehow incompetent to regulate sexual morality within their boundaries.

In light of all of these concerns, you might expect that the Supreme Court would have found the Mann Act to be an easy case for invalidation under principles of federalism. But the court unanimously upheld the act in 1913 in Hoke v. United States, and then also upheld its application to noncommercial consensual sexual liaisons four years later in Caminetti v. United States.

One reason for this judicial capitulation might have been that the court did not regard the enforcement of a national moral consensus as any threat to federalism. In rejecting the idea that men and women might have some right to travel free from the harassment of federal vice squads, Justice Joseph McKenna blandly declared in Hoke that "a right exercised in morality" could not "sustain a right to be exercised in immorality." The court thus sidestepped the critical issue of whether the Constitution's commerce clause gave the federal government the authority to act as national arbiters of morality.

One explanation is that, unlike farmers and trade unionists, sexual nonconformists did not have enough of a following to legitimize their opposition to majority norms. The court might resist enforcing the Sherman Act on behalf of trade unions and allow populist states to disrupt the national rail system because unions and farmers had substantial political clout. Even a pro-business judge might, out of loyalty to the value of federalism, grudgingly feel compelled to respect these constituencies' state-level political victories. By contrast, the scattered supporters of sexual freedom hardly looked like they represented any concerted state policy whose pre-emption would violate federalism principles.

THERE ARE SEVERAL LESSONS THAT DEMOCRATS TODAY could draw from this history. First, expectations should be low that the court will enforce constitutional doctrines against the national government's efforts to enforce consensus morality. For example, it is extraordinarily unlikely that today's court will strike down federal efforts to prosecute the medical use of marijuana in the recently argued Raich v. Ashcroft. The doctrinal basis for such a constitutional limit is plausible: The court has declared that it will not defer to the federal government's judgment that regulation of "non-economic" activities is necessary to control interstate commerce. You might think, if anything is "non-economic," that Angel Raich's use of homegrown pot qualifies. But today's court might predictably refuse to confront the federal government on a policy of national morality as firmly ensconced as the war on drugs, just as the White Court refused to take on the Mann Act.

Second, the Democrats might still find refuge in federalism where there is a hotly contested controversy between the federal government and state-level constituencies. The current court has declared that state governments have primary responsibility over family law and education. Given the close division among the public on the issue and the court's own doctrinal commitments, it is almost inconceivable that the court would uphold any federal statutory ban on same-sex marriage. Thus, if the Bush Administration decides that it wants to pursue that goal again, it will have to undertake the onerous task of amending the Constitution. If such an amendment were to prove impossible to enact, then the Massachusetts Supreme Judicial Court's protection of same-sex marriage would be immune from the Republican Congress and President Bush—a result for which supporters of same-sex marriage would have the Rehnquist Court and its principles of federalism to thank.

Finally, it remains an open question whether the court will interpret federal statutes to pre-empt state efforts to regulate business. Attorneys general like New York's Spitzer are currently enforcing state laws against a wide range of industries, including polluting utilities, conspiring insurers, cancer-causing tobacco companies, and the monopolistic Microsoft. As with the Waite and Fuller Courts' review of state railroad regulation, the current court's review of whether state regulations conflict with federal law will tend to be a technical, case-by-case inquiry. Some of these enforcement efforts conflict with federal statutes or regulations. But the federal statutes are typically ambiguous enough to permit a principled legal decision not to interfere with the states. Nevertheless, some recent Rehnquist Court decisions have been quick to infer that federal laws pre-empt state lawsuits, like Geier v. Honda Motor Co., in which the court found that federal airbag safety standards pre-empted state-law products liability lawsuits against car makers.

Spitzer and his fellow state attorneys general would do well to remind the Supreme Court of the track record of the late 19th-century courts. The court itself might believe that inconsistent state regulation undermines the coherence of a federal regulatory scheme. But it does not follow that the court should be the entity that ends up fixing such lack of uniformity. By tolerating state regulation, the court gives a political minority an outlet for activity denied to them at the national level. At the same time, the very lack of uniformity prompts the burdened business to seek national legislation, thus forcing Congress to address an issue that it could otherwise duck. These are benefits of federalism that transcend political ideology. By enforcing them impartially, the current court can show that it transcends ideology as well.

Roderick M. Hills, Jr. is a professor of law at the University of Michigan Law School.

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