Under our constitutional system, which separates powers among the branches of government, it is the role of the courts to interpret the meaning of the law. But since the 1940s, some courts have abdicated this duty and disturbingly deferred to unelected bureaucrats’ interpretation of the law.
When “judicial deference” occurs, and courts abandon their duty to say what the law is, agencies end up wielding too much power, and individuals lose.
The case of Xerox Corp. v. Wisconsin Dept. of Revenue highlights the problematic use of this practice. It all began when the state’s Department of Revenue wanted to require property taxes on multifunction copier/printer/scanner/fax devices (MFDs). In 2001, when filing its property tax returns, Xerox claimed that the MFDs were exempt from taxation under a statutory exception, but the department ruled that they were not.
Xerox took the department to court.
Taxing a printer like a house seems like an obvious abuse of power, but the Wisconsin Supreme Court deferred to the Department of Revenue, allowing them to proceed with the enforcement of the rule.
At the Wisconsin Supreme Court, the department’s argument was based on a Wisconsin statute that allows an exemption on “mainframe computers, minicomputers, personal computers, networked personal computers, servers, terminals, monitors, disk drives, electronic peripheral equipment, tape drives, printers, basic operational programs, systems software, and prewritten software.”
The statute does not grant the exemption to “custom software, fax machines, copiers, equipment with embedded computerized components or telephone systems.” The agency stated that the MFDs are not exempt under the statute because they can function as fax machines and copiers. Xerox pointed to the devices’ other functions.
When it first argued the case in front of the Tax Appeals Commission, the company used the testimony of industry experts to prove that MFDs are tax exempt because they can function as computers, electronic peripheral equipment, and printers.
Based on the expert testimony, Xerox further contended that the agency did not understand the technology thoroughly enough to correctly interpret what technology should not be exempt. However, when the case reached the Wisconsin Supreme Court, the judges didn’t grapple with the expert testimony or independently and fairly decide the statute’s meaning.
Instead, the court gave “great weight” to the department’s interpretation. The court acknowledged that while the department does not have technical expertise on MFDs, it does possess expertise in interpreting the tax code.
The central problem with that reasoning is that the department is biased about what interpretations expand its own power. In short, the courts should not defer to taxing authorities about their power because they frequently read statutes to expand their power.
The court also admitted that it gives “great weight” to an agency’s interpretation if it is “reasonable, even if a more reasonable interpretation exists.” The court noted that even “[i]f Xerox’s interpretation is also reasonable, the statute would be ambiguous” and the department would prevail. “If the interpretation adopted by [the department] is the only reasonable interpretation,” the court reasoned, “then the statute is unambiguous,” and Xerox would lose. This “heads I win, tails you lose” approach is, sadly, not uncommon when courts review actions by agencies.
As this case highlights, judges at both the state and federal levels have frequently and wrongly deferred to a regulatory agency’s interpretation of laws it is charged with carrying out. Judges tend to defer in cases where the legislature has not specifically delegated statutory authority to the agencies to carry out and create regulations.
When judges do this, they abdicate their duty to “say what the law is.” They also fail to render independent, impartial judgments when they put a thumb on the scale in favor of the government.
While this case ended badly for Xerox, some courts have stood up to agencies and fulfilled their constitutional duty to say what the law is. The Domestic Violence Survivors’ Support Group is a non-profit organization that aids victims of domestic violence. The organization applied for a behavioral health center license so it could provide counseling services to victims. In 2012, the West Virginia Department of Health and Human Resources, Office of Health Facility Licensure and Certification, denied the support group’s application because its counselor did not have a professional counseling license.
The organization took the West Virginia agency to court on the grounds that counselors working for non-profits are exempt from the personal licensing requirement.
The agency based its denial on its interpretation of only two of three relevant statutes. The first statute declares that “it is unlawful for any person to practice or offer to practice professional counseling or marriage and family therapy in this state without a license.” The second states that “all professional staff and consultants of the Center shall be in compliance with applicable State professional licensure requirements.”
The agency argued that under both statutes, the group could not obtain the behavioral health center license without its counselor having a professional counseling license. It further claimed that the second statute is ambiguous and that, as such, the court should defer to the agency’s interpretation that the counselor needed to acquire a license.
Based on a more specific statute, the support group argued that it did not matter whether its counselor possessed an individual license, because the third statute states that “professional counselors…in any public or private nonprofit corporations” are “exempt from the provisions of” the first statute.
Fortunately, the court stood its ground and did not defer to the agency’s erroneous interpretation of the laws.
In 2017, the court struck down the DOH’s interpretation of the second statute by declaring that the agency failed to demonstrate how the statute is “ambiguous.” The court further stated that due to the non-profit exemption in the third statute, the “applicable licensing requirements” under the second statute were that the group’s counselor did not need a professional counseling license.
In rejecting the agency’s groundless statutory interpretation, the court allowed the support group to continue its important work helping those who needed it most.
Fortunately, other state courts are also getting it right. In Epstein v. Benson, the Wisconsin Court of Appeals reversed a Wisconsin Department of Public Instruction order that kept a teacher from working.
In 1992, Jerry Lu Epstein, a public school teacher, shot and killed her son-in-law, who was threatening the life of her daughter and grandchildren. The incident was an act of defense for her family. Before the shot was fired, she had warned her son-in-law that if he did not stop endangering her family, she would be forced to pull the trigger. While she tried to aim for his leg, the bullet fatally wounded the man, but Epstein was acquitted of all criminal charges—except for carrying a concealed weapon.
As a result of the shooting, the department revoked Epstein’s teaching license two years later. In response, she took the department to court.
In 1995, the case reached the Court of Appeals for the first time, which ruled that the department should reinstate Epstein’s license. The department refused and the legal battle continued for another five years.
In 2000, the case came before the Court of Appeals again. The department argued that under the pertinent Wisconsin statute, it had the power to revoke Epstein’s license because she participated in “immoral conduct,” which the statute defines as “conduct or behavior that is contrary to commonly accepted moral or ethical standards and that endangers the health, safety, welfare or education of any pupil.” It further claimed that both the shooting and the carrying of a concealed weapon qualified as “immoral conduct.”
The court noted that it generally gives “due weight” to the Wisconsin Department of Public Instruction’s decision to revoke a teacher’s license based on immoral conduct. But in this instance, the court rejected its interpretation of “immoral conduct” because it “provide[d] no authority” supporting that conclusion.
“[A]s a matter of law,” the court held, “the evidence utterly fails to establish Epstein’s [behavior] was immoral.” Thanks to the court fulfilling its constitutional duty by not blindly deferring to the department, Jerry Lu Epstein was able to continue teaching.
The former two cases show that, had the courts deferred to the agencies in question, Americans would have been harmed in the process. While these examples offer an optimistic outlook on the future of judicial deference, there is still much work to be done.
More states need to end the unlawful practice of judicial deference and ensure that the courts are doing the job the Constitution assigns them.
Fortunately, there is a growing movement against judicial deference. Eleven states have banned judges from wrongly deferring to agencies by statute or constitutional amendment, or in judicial opinions. Twenty other states have banned certain forms of deference or are questioning the propriety of deference in court opinions.
PLF is working hard to end judicial deference at the state and federal levels. Read more about deference and the separation of powers in PLF’s “explainer” series.