New State Ice Company versus Liebmann
is a very fascinating case decided
by the Supreme Court in 1932.
The facts of the case are fairly straightforward.
Mr. Liebmann was selling ice in blocks in Oklahoma City.
He did not, as required by law,
have a license to do this,
but the New State Ice Company had a license
obtained under a 1925 state statute.
It naturally went to court and tried
to stop Mr. Liebmann from opening a rival business.
The question in the case is whether the Due Process Clause
of the Fourteenth Amendment permits Oklahoma
to enact a state statute requiring
a certificate of public interest and convenience,
in other words, a license, to sell blocks of ice.
The holding of the case is that
the Oklahoma statute
violated something that was called substantive due process.
The idea at the time was that the Due Process Clauses,
the Fifth Amendment, the Fourteenth Amendment
vis-a-vis the states,
also protected certain private expectations:
freedom of contract, liberties of an economic kind.
Substantive due process most frequently acted as a check
on various forms of state economic regulation:
minimum wage requirements, maximum hour requirements,
market controls and entry, anything of that sort.
Unlike some decisions of that era,
Justice Sutherland's opinion in this case
is actually quite modest.
The state can impose all kinds of regulations,
health and safety regulations, purity regulations,
and so forth, even on the ordinary private businesses.
A state may also require certain businesses
to obtain a license, a certificate
of public convenience and necessity.
Those were usually industries
that were natural monopolies or public utilities,
something of the kind or very peculiar professions,
lawyers, doctors, and so forth.
But those kinds of restrictions on market entry,
the majority said are unwarranted
when you're dealing with an ordinary business.
At some level, the dispute between the majority
and the dissenters, you can understand it
as simply a question of, look,
how closely do we look at the rationales
that the legislature has proffered?
Justice Brandeis's dissent foreshadows
what in later decades became
a rational basis test of review.
That is to say, so long as the legislature
gives us some reason, any reason almost,
and so long as it's economic legislation,
we'll let it pass.
And one of the great advantages of our federalism,
Justice Brandeis famously wrote,
is that states can serve as laboratories
of democracy and experiment
with various forms of regulation.
New State Ice versus Liebmann was one
of the last substantive due process decisions.
It has never been formally overruled,
but it has been abrogated and superseded,
and that happened very, very fast.
What the two opinions, the majority opinion
and Justice Brandeis's dissent bring into sharp focus,
and what is worth thinking about, are two subjects.
One is sort of the nature and scope of
economic liberty, let's call it that.
To what extent does the United States Constitution
protect those kinds of liberties and how?
And that is a very live question.
And that question overlaps with the federalism angle
that is emphasized in Justice Brandeis's dissent.
To what extent do you want states to let experiment
with particular forms of regulation?