Judicial Federalism, Equal Protection, and the Legacy of Racing Association of Central Iowa

• Author: Brett F. Roberts
• Position: J.D. Candidate, The University of Iowa College of Law, 2010
• Pages: 1731-1757

Brett F. Roberts. J.D. Candidate, The University of Iowa College of Law, 2010; B.A., The University of Iowa, 2007. This Note received the Randy J. Holland Award for Corporate Scholarship, an honor awarded annually by the faculty of the University of Iowa College of Law to recognize the best paper written by a graduating law student on corporate law for a law journal, a seminar, or an independent research project. For their love, encouragement, and patience, I thank my parents, Rod and Trish. For sharing their time, advice, and humor, I thank Professors Todd E. Pettys and Randall P. Bezanson. And for their diligence and helpful comments, I thank the editors and student writers of Volumes 94 and 95 of the Iowa Law Review. Any errors or omissions are my own.

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I Introduction

It is a truism of American democracy that laws should treat everyone equally. Regardless, a law may require males to register for the Selective Service (and not females),¹ prohibit judges from working past a certain age (and not other professionals),² or require certain employers to pay workers a minimum wage (and not other employers).³ Indeed, law-making bodies generally possess the power to classify and treat separated groups differently. However, this power is not unbounded. One restraint is the constitutional requirement of equal protection.

Iowa laws that contain classifications treating groups differently must satisfy two constitutional equal-protection provisions: the federal provision from the Fourteenth Amendment (“Equal Protection Clause”) and the state provision from article I, section 6.⁴ Historically, Iowa courts have said that the state constitution’s equal-protection provision restricts Iowa laws in the same way as the federal provision.⁵ However, at least for economic classifications (e.g., minimum-wage or tax laws),⁶ this may be changing.⁷

This Note examines a 2004 Iowa Supreme Court case that suggests that Iowa’s equal-protection provision prohibits more economic classifications than the Federal Equal Protection Clause. In Racing Ass’n of Central Iowa v. Fitzgerald (“RACI I”), the Iowa Supreme Court held that a law which taxed riverboat casinos at a different rate than land-based, racetrack casinos violated the state and federal equal-protection provisions.⁸ After the U.S. Supreme Court unanimously reversed the decision insofar as it rested on thePage 1734 Federal Equal Protection Clause,⁹ the Iowa Supreme Court reinstated its decision and held the classification at least violated the state provision.¹⁰ By squarely disagreeing with the U.S. Supreme Court, the Iowa Supreme Court made clear that the state equal-protection provision is substantively different than the federal provision.

The Racing Ass’n (“RACI”) cases illustrate what scholars call “judicial federalism”: the process of state supreme courts interpreting state constitutional provisions as having a different substantive import than analogous federal provisions.¹¹ When interpreting state constitutional provisions that are analogous to federal provisions, state courts generally have three options: (1) apply federal rules and seek congruency with federal outcomes,¹² (2) independently apply federal rules without being obligated to reach federal outcomes,¹³ or (3) apply state-created rules in lieu of federal rules.¹⁴ The latter two types of review exemplify judicial-federalism methods. The result of judicial federalism may mean that a criminal punishment¹⁵ or school-financing scheme¹⁶ may be valid under the U.S. Constitution, but invalid under a state constitution.

The judicial-federalism movement has grown since the 1970s.¹⁷ Leading American judges on both ends of the ideological spectrum have applaudedPage 1735 the doctrine’s emergence.¹⁸ This support, coupled with the fact that many of today’s state-supreme-court judges grew up and were educated during the Warren Court era of judicial activism, may help explain why judicial federalism has emerged.¹⁹ Regardless of the reasons for its emergence, however, the rise of judicial federalism has made state constitutional law a relevant and powerful tool for the recognition and vindication of civil rights in the twenty-first century.

At its core, judicial federalism is the implementation of constitutional autonomy, a cornerstone of state sovereignty. Each state supreme court has the obligation to interpret the meaning of its state constitution.²⁰ Since state constitutions vary in text, purpose, and historical interpretation from the U.S. Constitution (and from state to state), the natural, logical result is that rights under state constitutions will not always be congruent with the Federal Constitution.²¹ But, this Note argues that a state supreme court’s duty should go beyond simply identifying substantive differences between state and federal constitutional provisions when appropriate; state supreme courts should also have the duty to provide the legal community with distinguishable legal standards that reflect the substantive differences between state and federal constitutional provisions.

This Note discusses the Iowa Supreme Court’s use of judicial federalism in interpreting article I, section 6 of the Iowa Constitution as prohibiting more economic classifications than the Equal Protection Clause of the U.S. Constitution. Part II of this Note discusses the RACI cases. Part III analyzes the differences between article I, section 6 and the Equal Protection Clause in text, purpose, and case law to point out the substantive support for the Iowa Supreme Court’s judicial-federalist decisions in the RACI cases. Part IV considers the two options mentioned above for implementing judicial federalism: the independent-application method and the use of state-createdPage 1736 legal rules. Finally, Part V considers whether the Iowa Supreme Court should avoid judicial federalism altogether when reviewing economic classifications and simply adhere to federal rules and outcomes.

II The Disagreement Between the Iowa Supreme Court and the U.S. Supreme Court in RACI

Both the Iowa Constitution and the U.S. Constitution contain provisions that generally guarantee citizens equal protection under the law.²² Prior to the RACI cases, the Iowa Supreme Court often viewed these clauses as placing the same limitation upon Iowa lawmakers.²³ The RACI cases from 2002 to 2004, however, are inconsistent with the notion that article I, section 6 restricts Iowa lawmakers in the same way as the Equal Protection Clause. Instead, these cases suggest that article I, section 6 prohibits more economic classifications than its federal counterpart.

A RACI I: Iowa Supreme Court Strikes Tax Law Under State and Federal Equal-Protection Clauses

The RACI cases involved taxation of casinos, which in Iowa come in two predominant forms: land-based racetracks and water-based riverboats.²⁴ In 1994, the Iowa Legislature established a different tax rate for these two types of casinos: 20% for riverboats and 22% for racetracks, with the rate for racetracks increasing by 2% each year until it reached 36%.²⁵ In the 2002 case of Racing Ass’n of Central Iowa v. Fitzgerald, a coalition of Iowa racetracks claimed the differential tax rate violated both the state and federal equal-protection laws.²⁶

The Iowa Supreme Court used the rational-basis test—which federal courts use when reviewing economic classifications under the Equal Protection Clause—to strike down the differential tax rate.²⁷ First, the court considered whether the legislature’s proffered reason for the phase-in of the differential tax scheme—to provide economic aid to the racetracks—was legitimate. The court found it “impossible to conclude the legislature actually had” this reason in mind due to the harmful effect the taxPage 1737 eventually had on the profitability of the tracks.²⁸ Second, the court found that the interest in raising revenue for the State of Iowa was not legitimate because it would authorize any discriminatory tax.²⁹ Thus, the court held by a 4–3 vote that the tax law failed the rational-basis test.³⁰

B U.S. Supreme Court Reverses RACI I

Perhaps due to the Iowa Supreme Court’s mistake of not stating that its decision rested solely on article I, section 6,³¹ the U.S. Supreme Court granted review of RACI I and reversed the Iowa Supreme Court’s holding to the extent that it was decided under the Equal Protection Clause.³² The Court found by a 9–0 vote that the differential tax scheme satisfied the rational-basis test.³³ First, the Court disagreed with the Iowa Supreme Court and found it “plausible”³⁴ that the legislature’s goal in enacting the 1994 law, when “seen as a whole,”³⁵ was to aid racetracks. Although the differential tax rate itself hurt racetracks, other parts of the 1994 law allowed tracks to begin operating slot machines, and this authorization provided assistance to the tracks.³⁶

Not content with simply reversing RACI I, the Court went on to list other goals which would have been...