The Future Trump’s Judges Want

Real estate interests are suing to get New York’s new tenant protection statute ruled unconstitutional. The arguments are, under the current controlling doctrine, frivolous. But they also represent the kind of arguments the legal scholars who most influence the judges who get Federalist Society approval are trying to make respectable:

The lawsuit against New York City and New York state, filed by a collection of real estate interests, is asking the court to hold the entire new rent regulation statute unconstitutional and alleges two constitutional violations. First, the plaintiffs argue that the law deprives them of the “due process of law” guaranteed by the 14th Amendment. And second, the plaintiffs argue that the law represents a de facto expropriation of their property without compensation in violation of the “takings” clause of the Fifth Amendment. Both of these arguments would, in a rational legal universe, be considered frivolous.

In the late 19th and early 20th centuries, the federal courts read the due process clause as preventing states from passing many regulations on businesses that violated a judicially invented “liberty of contract.” The most famous of these cases, Lochner v. New York, struck down a state law that capped the maximum number of hours bakers could work. However, the courts have long since abandoned the Lochner doctrine, holding instead that economic regulations are presumptively constitutional unless there is no rational relationship between the regulation and a legitimate state interest.

The lawsuit asserts that the tenant protection law is unconstitutional under the “rational basis” standard, asserting it is an “irrational, arbitrary, and demonstrably irrelevant means to address its stated policy ends.” But this argument is silly. High rents, illegal evictions and other related problems that the bill intended to address are certainly legitimate state interests. And rent stabilization regulations, additional legal protections for tenants and other similar measures in the law are certainly a rational means of addressing the problem. (It is worth emphasizing that under this “rational basis” test, lawmakers do not have to show that measures are optimal or even effective, merely that there is some kind of reasonable relationship between the means and the ends, so one’s views about the policy merits of rent regulations are irrelevant.) Indeed, even in 1921, when the U.S. Supreme Court was much more sympathetic to legal claims like these, it rejected the theory that rent control measures were a violation of due process.

The argument that the law constitutes an illegal taking isn’t much more plausible. At the time the Fifth Amendment was ratified, only a literal physical expropriation of property was considered a “taking.” But starting in the 20th century, the Supreme Court developed the concept of a “regulatory taking,” holding that in certain extreme cases a regulation could render property so economically unviable as to effectively have been taken by the state. But the New York law’s effects do not come close to meeting this stringent standard. The plaintiffs have not shown that the regulations will effectively destroy the value of their real estate, as opposed to marginally reducing their profits. If a regulation having a mere adverse marginal impact on profits constitutes a “taking,” a great deal of the contemporary regulatory state is unconstitutional.

The scary thing, however, is that to an increasing number of American conservatives, this would be more of a feature than a bug. Prominent conservative legal academics have published arguments that Lochner has been unfairly maligned and that most of the contemporary welfare and regulatory state violates the takings clause. And these arguments are beginning to find some traction among the staunchly conservative judges appointed by George W. Bush and Donald Trump. Indeed, last term the conservatives on the Supreme Court strongly indicatedthat they would revive the “nondelegation” doctrine – holding that some delegation of powers to the executive branch are unconstitutional because they give “legislative” power to the executive branch – that had laid dormant for more than eight decades.

I don’t think this is the case that will usher in the new Lochner era. But these kinds of lawsuits are going to start getting some sympathetic hearings in lower courts, and if a Republican president is able to replace RBG and/or Breyer look out below.