June 20, 2012

From activism to abdication: The Ninth Circuit upholds a law protecting ophthalmologists from legitimate competition.

By From activism to abdication: The Ninth Circuit upholds a law protecting ophthalmologists from legitimate competition.

Over the years, the Ninth Circuit has developed a reputation in some circles for Judicial Activism (i.e. substituting its opinion for that of the legislature in matters that are none of its concern). However, last week the court’s opinion in National Association of Optometrists v. Harris showed that it is just as apt at avoiding ruling on matters that it should, as it is alleged to be at sticking its nose where it doesn’t belong.

At issue, was a law which makes it illegal for optometrists to partner with ophthalmologists to sell glasses at the same location in which an eye exam takes place, but allows ophthalmologists to sell glasses at their facilities without similar restrictions. In short, the law removes any competition with ophthalmologists from optometrists in the “one-stop shopping” eye care market.

Lenscrafters, an out of state company that provides on site optometrists and ophthalmologist services, challenged the law as violating the Dormant Commerce Clause– an often confusing legal doctrine that forbids states from passing regulations that discriminate against out of state business or substantially burden interstate transactions.

Lenscrafters argued that 1) the challenged laws discriminate against interstate companies by preventing such companies from offering one-stop shopping in California, which is the dominant form of eye-wear retailing in other parts of the country; and 2) interstate firms would incur a great financial loss as a result of the challenged laws.

The court rightly rejected the first claim. As the Supreme Court has explained, a law does not discriminate against interstate commerce merely because it discriminates universally against a “particular structure or methods of operation in a retail market.”  In other words, just becasue one-stop shopping is a popular method of retail in other states doesn’t mean a ban on that method of retail in Californian amounts to discriminating against out of state business.

However, at that point the Ninth Circuit opinion begins to go awry. Under the Dormant Commerce Clause, a law will be struck down if it 1) does not “effectuate a legitimate local public interest,” 2) discriminates against out of state business on its face, or 3) “the burden imposed [on commerce] is clearly excessive to the putative local benefits.” Finding that there was no discrimination or substantial effect on interstate commerce, the court declared that it need not concern itself with whether or not the law was aimed at a “legitimate local public interest,” and therefore, found the law to be constitutional. Nothing could be further from the truth.

The first question in all Constitutional analysis is necessarily one of authority– i.e. does the government actor have the authority to act in this area? If not, then the law is unconstitutional. Indeed, even under rational basis scrutiny, the most lenient of all constitutional tests, the Court has made clear that challenged regulations must “serve a legitimate public purpose.”  The key word being public.

States have broad authority to regulate in order to protect health and safety and to prevent fraud and abuse, but government shouldn’t be in the business of picking winners and losers in the marketplace. Consequently, even the Ninth Circuit has, in prior cases, recognized that economic “protectionism is not a legitimate state interest” and laws aimed merely at protecting a discrete group from competition violate the Constitution.

Notwithstanding this history, the Ninth Circuit punted in this case. It looked at a law that, on its face, serves as a shield of protectionism around ophthalmologists, and declared that it need not even question whether that law serves a legitimate public purpose before declaring it to be constitutional. Granted, a legitimate public reason for the law may exist, and examining the question may have amounted to little more than a formality. But the court, as guardians of the rule of law, still had a duty to address the question. In failing to do so, the Justices of the Ninth Circuit forsook their oath to defend the Constitution. That’s not judicial activism…it’s not even judicial restraint…it’s judicial abdication.

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