June 26, 2015

Victory for economic liberty in Texas! (or, Yay! Facts matter!)

By Victory for economic liberty in Texas! (or, Yay! Facts matter!)

The Texas Supreme Court today issued its ruling in a case called Patel, which is about what you have to prove when you challenge a restriction on your economic liberty as unconstitutionally excessive. Under federal law, an entrepreneur who is deprived of the right to earn a living by a government regulation—a licensing requirement, for example—must prove that the law is absolutely irrational, a very demanding test, and one that is excessively deferential to the government. But what about Texas state law? Texas’s Constitution forbids the government from taking away people’s freedom without “due course of law.” Does that protect people more than the very lenient, pro-government federal precedent does?

In our amicus brief, we said yes: the Texas Constitution’s Due Course of Law Clause should be interpreted to protect the rights of Texans more than the lenient federal Due Process of Law Clause does. We pointed out that especially in a state like Texas, with a strong tradition of independent entrepreneurship and protections from government interference, it makes sense to read the state Constitution as a stronger protection for economic freedom. And the majority opinion today agrees. Instead of the extremely pro-government federal standard, which says that an entrepreneur seeking to defend his rights must “negative every conceivable basis” for a challenged law, the Texas Court says that under state law, a court considering the constitutionality of a restriction on economic freedom must decide

whether the statute’s effect as a whole is so unreasonably burdensome that it becomes oppressive in relation to the underlying governmental interest…. [S]tatutes are presumed to be constitutional. To overcome that presumption, [the plaintiff] must demonstrate that either (1) the statute’s purpose could not arguably be rationally related to a legitimate governmental interest; or (2) when considered as a whole, the statute’s actual, real-world effect as applied to the challenging party could not arguably be rationally related to, or is so burdensome as to be oppressive in light of, the governmental interest…. Although whether a law is unconstitutional is a question of law, the determination will in most instances require the reviewing court to consider the entire record, including evidence offered by the parties.

That last bit is particularly nice, because some federal courts have gone to the extreme of arguing that when it comes to restrictions on your economic freedom, evidence does not matter at all, and you should not be allowed to even try to argue that the law is unconstitutional (which is wrong even if you buy the whole “rational basis” thing). Today’s decision is a far cry from the “anything goes” test that federal courts and many state courts apply when upholding the constitutionality of arbitrary and unjust restrictions on the right to earn a living.

By the way, don’t miss Justice Willett’s particularly keen concurring opinion, in which he explains how licensing laws have routinely been used to prevent economic competition for the benefit of existing businesses, and at the expense of entrepreneurs and consumers. “[T]he unalienable right to pursue happiness is not merely the right to possess things or to participate in activities we enjoy,” he writes, “it necessarily includes the right to improve our lot in life through industry and ingenuity.”

Congrats to our IJ friends for this fine win.

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