Meet The Lawsuit That Will Repeal The Twentieth Century

You knew this was going to happen. Part of Seattle's new $15 an hour minimum wage law classifies franchise restaurants such as McDonald's as large businesses that employ over 500 employees, and therefore subject to the $15 an hour law.

Well. The lobby group International Franchise Association, representing such local businesses as McDonald's, Taco Bell, and others, filed a lawsuit challenging the law.

On the one hand, this suit should have no chance of succeeding at all.

Part of the argument is that the law

...violates the First Amendment because “by increasing the labor costs of franchisees, the Ordinance will reduce the ability of franchisees to dedicate funding to the promotion of their businesses and brands.” In other words, the law requires businesses to spend money paying workers a living wage that they could otherwise spend on advertising, and this somehow violates the Constitution’s guarantee of free speech. If this were actually what the Constitution required, then any law imposing costs on anyone would be unconstitutional, including all taxes. After all, every dollar paid in taxes is a dollar that can’t be spent to buy an ad promoting the deliciousness of the Big Mac.

But that's not the most insidious part. The main thrust of the lawsuit deals with the way the law treats franchised businesses as opposed to other types of companies. The law has two different schedules--one for large businesses, one for small. The large business (defined as companies with over 500 employees) must be at $15 per hour by 2017. Small businesses must be there by 2021. Franchises, like an individual McDonald's, are treated as part of the larger company. So, because McDonald's is a large business, each individual franchise falls under the same schedule that applies to large businesses.

So, the suit first claims that by treating franchisee restaurants of out-of-state companies like McDonald's differently than mom-and-pop places, the law violates a constitutional doctrine prohibiting discrimination against out-of-state commerce. Which would have merit if Starbuck's were treated differently. Which it's not.

HOWEVER:

The suit does contain two claims, however, that are entirely plausible — if this were 1905. In the Nineteenth and early Twentieth Centuries, judges frequently invoked open-ended doctrines that have largely been discarded as unworkable. One of these was a prohibition on “class legislation,” defined as “legislation that picks out a group of people for special benefits or special burdens without adequate public justification.” On the surface, this seems reasonable, but it turned out that nearly any law can be characterized as discriminatory if a judge tries hard enough — laws banning murder, after all, discriminate against killers. If judges have the final word on which laws have an “adequate public justification,” then they have an effective veto power that they could and did use quite arbitrarily. In an infamous New York case, one judge claimed that a law prohibiting bakery owners from overworking their workers was unconstitutional class legislation in large part because it only applied to the “small fraction of the community who happen to conduct bakeries or confectionery establishments.”

When the New York bakery case reached the United States Supreme Court, it became what is now known as Lochner v. New York. Lochner is widely taught in law schools, often alongside cases upholding separate-but-equal segregation or Japanese detention camps, as an example of how judges must not behave. It was what legal scholars often refer to as “anti-canon”— a decision that is instructive only because it warns the reader that judges wield tremendous power that can be used in terrible ways.

And we all know what happened because of Lochner. Minimum wage laws were repealed, labor laws were struck down, unions were forbidden to organize, and so on. It took FDR appointing new Justices to the Court to repeal Lochner.

Here is the most dangerous part of the suit:

Which brings us back to the much more recent Seattle lawsuit. The plaintiffs in this lawsuit do not simply want to resurrect a very Lochnerian notion of freedom of contract, they want to inject it with steroids and then send it on a rampage through the American system of law. According to these plaintiffs’ complaint, they are subject to a franchise contract that “comprehensively define[s] the rights and obligations of each party.” Seattle’s minimum wage ordinance, they argue, “will make it difficult—if not impossible—for the franchisees to continue to meet their obligations in terms of operating hours and product quality due to the increased costs imposed by the Ordinance.”

It is certainly true that, if a business has higher labor costs then it will have less surplus cash lying around enabling it to meet its other financial obligations. But, once again, if a law became unconstitutional simply because it imposes financial obligations on businesses, than taxing or regulating businesses would be impossible. McDonald’s franchises are also subject to a web of health regulations, and they could presumably save money if they were allowed to serve diseased meat that they could purchase at a discount. That doesn’t make food safety regulations unconstitutional.

The Seattle lawsuit seeks to revive something very close to antiquated notions regarding class legislation. The ordinance engages in unconstitutional discrimination, according to the lawsuit, because it “arbitrarily and irrationally discriminates against small franchisees, i.e., those that employ 500 or fewer workers but are associated with a franchise network that collectively employs more than 500 workers.”

See that gentleman in the photo above? that's Paul Clement, the "solicitor general of the Republican Party". He's the guy that nearly got the Affordable Care Act declared Unconstitutional. He's the guy who argued for Hobby Lobby against the contraception mandate. He's a lawyer who makes ridiculous arguments sound plausible to conservative judges.

But there’s also a reason why lawyers do not typically make the kind of arguments that Clement signed his name to in the Seattle case. A lawyer’s most important commodity is his or her credibility before the judges that hear their cases. Attorneys, or, at least, attorneys of Clement’s caliber, do not typically argue that the First Amendment prohibits the government from costing businesses money because this argument is so ridiculous that it undermines the lawyer’s credibility with the court. If an attorney is willing to make an argument that is this outlandish, how can judges trust anything else he has to say? Clement, however, is such a successful attorney in large part because he has his finger on the pulse of the conservative legal thinkers who dominate the Supreme Court of the United States. He is a better judge of how far he can push the justices than nearly anyone else in the country. And, if he thinks that the kind of arguments that he makes in his brief can be made with a straight face, then that is saying something quite significant.

The conventional wisdom, based not just on speculation but on the justices’ own statements, is that the Roberts Court is quite conservative but it certainly isn’t prepared to revive the judicial overreach that pervaded the Lochner Era. One of the best lawyers in the country, however, appears to have concluded that this conventional wisdom is wrong. If Clement turns out to be correct, that should frighten anyone who works for a living.

And I don't think there's anyone on this site who doubts that at least Scalia and Thomas wish to return to Lochner.