Valid rule due process challenges: Bond v. United States and Erie's constitutional source.

Author:Roosevelt, Kermit, III

TABLE OF CONTENTS INTRODUCTION I. ALLGEYER AND LOCHNER A. Allgeyer B. Lochner II. ERIE III. LOPEZ AND MORRISON IV. OVERBREADTH, THIRD-PARTY STANDING, AND BOND A. Overbreadth and Third-Party Standing B. Bond v. United States 1. Regulated Individuals and Total or Partial and Relevant Invalidity 2. Regulated Individuals and Partial and Irrelevant Invalidity 3. State-Regulated Individuals and Commandeering Claims 4. Unregulated Individuals CONCLUSION Introduction

What is wrong about law without a lawmaker? One response, and I think a fair one, is that the main difficulty of law without a lawmaker is that it does not exist. But my purpose in this Article is not to argue for that view. (1) I will assume, as our domestic legal system generally does, that a law is something that has legal effect, and it has that effect because it was created or adopted by an entity with the power to create rights or impose obligations. (2) "Law" that does not have the backing of some sovereign is not law, at ]east not domestically. (3) The questions I want to pursue are the following: If we accept this view, which we can loose]y terra positivist, what problem would law without a lawmaker pose? Would the Constitution restrain courts or other government actors from purporting to enforce such "law"?

The question might seem a surprising one to ask. Why should the Constitution protect us from something that does not exist? If it shields us from law without a lawmaker, why not Santa Claus and zombies as well? (4) But it turns out that this actually is an issue that the Constitution addresses and about which it gives a relatively clear answer. If there is no law without a lawmaker--if, as Holmes said, "law in the sense of which courts speak of it today does not exist without some definite authority behind it"--then its purported enforcement is coercion without law. (5) It is the government using its power to compel an individual to do something--to take an action, or refrain from acting, or possibly to pay money if he is the target of a suit for damages--in the absence of any legal warrant for the compulsion. That amounts to a deprivation of liberty or property without law. With no law, there cannot be due process of law, so what we have is a relatively clear violation of the Due Process Clause. (6) The issue is not a lack of procedure, so the violation is of what we now tend to call substantive due process. Thus, the substantive aspect of the Due Process Clause protects us from government coercion that is not backed by a valid law. I will call this a "valid rule" due process argument. (7)

This model of substantive due process as restraining government action unauthorized by law might seem odd. It is not the modern doctrinal formulation, which tends to work instead in terms of fundamental rights that trump otherwise valid laws. (8) But my aim in this Article is to show that this form of argument is much more common than supposed. The due process prohibition of compulsion without law is the invisible thread that connects doctrinal areas often thought of as quite distinct: Erie, Lochner-era substantive due process, overbreadth, and modern federalism decisions such as United States v. Morrison, (9) United States v. Lopez, (10) and Bond v. United States. (11) In what follows, I will explain how those different doctrinal areas conform to this model, and what their connection means.

  1. Allgeyer and Lochner

    Nowadays, it is conventional to call cases such as Allgeyer v. Louisiana (12) and Lochner v. New York (13) substantive due process decisions. (14) So claiming that they should be understood as the product of a principle I have identified as substantive due process is neither novel nor controversial. What is slightly more controversial is my description of that principle as a restraint on government action unauthorized by law. Modern substantive due process cases are concerned with the question of whether the interest asserted by an individual qualifies as a fundamental right. (15) if it does, it is typically protected by the demanding strict scrutiny test: it can be abridged only if such abridgment is necessary to serve a compelling state interest. (16) If the necessity or the compelling interest is lacking, an otherwise valid law--one concededly within the power of government to enact--will be trumped by the fundamental right. (17) Fundamental rights, we could say, carve islands of individual liberty out of the stream of government power.

    At least, that is the modern analysis of substantive due process. The principle I have identified is rather different. It is not concerned with identifying islands of liberty or fundamental rights that trump otherwise valid laws. The importance of the individual's interest is largely irrelevant. Instead, the approach I have described seeks to find and enforce limits on government power--the banks of the stream. Government power is delegated by the people; it is limited; and if those limits are exceeded, the purported law is simply void. It is no law at all, and no attempt to enforce it can be dignified with the name "due process of law." This model of substantive due process has a long history in American jurisprudence--longer, in fact, than the fundamental rights version. It can be traced back to Justice Chase's opinion in Calder v. Bull, where Chase noted that

    [t]he purposes for which men enter into society will determine the nature and terms of the social compact; and as they are the foundation of the legislative power, they will decide what are the proper objects of it: The nature, and ends of legislative power will limit the exercise of it. ... There are acts which the Federal, or State, Legislature cannot do, without exceeding their authority. ... An ACT of the Legislature (for I cannot call it a law) contrary to the great first principles of the social compact, cannot be considered a rightful exercise of legislative authority. (18) Which of these versions of substantive due process is at work in Lochner-era cases? The question is disputed in the literature, but I believe an examination of Allgeyer and Lochner will suggest the latter.

    1. Allgeyer

      In 1894, the Louisiana legislature passed a law that imposed a thousand-dollar fine on anyone who issued or obtained marine insurance from a company that had not complied with all elements of Louisiana's insurance regulation. (19) The statute specified its scope: it reached anyone who issued an insurance certificate "in this State" or took any other act in-state to effect insurance "on property, then in this State." (20) E. Allgeyer & Co., a company exporting cotton from New Orleans to Europe, bought insurance for a cotton shipment from the Atlantic Mutual Insurance Company, a New York corporation. (21) The contract was executed in New York, but the cotton was in New Orleans at the time of the transaction. Allgeyer sent a description of it from New Orleans to New York. (22)

      Louisiana deemed the transmission of the description an "act in this State to effect ... insurance on property, then in this State," in the words of the statute and accordingly sought to impose the thousand-dollar fine on Allgeyer. (23) When the case reached the Supreme Court, all the Justices agreed that the Constitution barred liability. (24) But why?

      There is certainly language in Allgeyer that seems to suggest something like the modern conception of rights as trumps. (25) Fourteenth Amendment liberty, the Court announced,

      means not only the right of the citizen to be free from the mere physical restraint of his person, as by incarceration, but the term is deemed to embrace the right of the citizen to be free in the enjoyment of all his faculties, to be free to use them in all lawful ways, to live and work where he will, to earn his livelihood by any lawful calling, to pursue any livelihood or avocation, and for that purpose to enter into all contracts which may be proper, necessary and essential to his carrying out to a successful conclusion the purposes above mentioned. (26) But these are not rights that necessarily trump an otherwise valid state law. As the Court put it, "We do not intend to hold that in no such case can the State exercise its police power. When and how far such power may be legitimately exercised with regard to these subjects must be left for determination to each case as it arises." (27) These liberties may be restrained, as the words of the Constitution make clear, by due process of law.

      The key issue in Allgeyer is why the Louisiana regulation did not constitute due process of law. What was wrong with Louisiana's attempt to demand compliance with its marine insurance regulations? The answer is not that liberty of contract is a fundamental right that cannot be restrained in the name of state regulation of the insurance industry. (28) It is quite clear from the Court's opinion that New York could have enacted and enforced an identical statute---it could have set requirements for the issuance of marine insurance and fined either party to the contract if Atlantic Mutual did not meet those requirements. (29) It is equally clear that Louisiana could enforce its statute against people who formed contracts in Louisiana or contracted with companies that did business there. (30) The law was not invalid in toto, but it could not be enforced against Allgeyer. The problem, the Court said, was that Louisiana's demand was made with respect to "a valid contract made outside the State and with reference to a company which [was] not doing business within its limits." (31) Louisiana exceeded the limits of its power because those limits coincided with the borders of the state.

      Allegeyer relied, then, on the principle that state legislative jurisdiction was territorially bounded. (32) Louisiana lacked the power to regulate a contract formed and performed outside the state, and a statute purporting to do so was no law but, in Chase's words, a mere "act." (33) We no longer...

To continue reading