[SOUND] I'm now at the seventh major part of my lecture, focusing on individual liberties under the Constitution. If I were to go out onto the street and ask people, what's the most important function of the Constitution, they would likely say protecting individual rights and liberties. I want to speak in detail of the rights that are protected under the Constitution. I'm not going to cover here first amendment rights. That will be parts nine and ten of my lecture. Nor here I'm going to be covering the right of criminal defendants in criminal trials. That's all about a subject called criminal procedure, and I'll set that aside. But other than the first amendment, and the rights in criminal trials, and of criminal defendants, I want to talk about the liberties protected by the Constitution. Now I want to start in talking about the liberties protected by the Constitution by noting that the Constitution provides only minimal protection for economic liberties. What does this mean? Why does it matter so much? Well, in the late 19th In early 20th century the Supreme Court interpreted the word liberty in the due process clause as protecting as a fundamental right freedom of contract. And so between about 1985 and 1936 the Supreme Court declared unconstitutional over 200 federal, state, and local laws regulating the economy. When it came to federal laws, as I discussed earlier in my lecture, the Supreme Court would often strike them down as exceeding the scope of Congress's power. For state and local laws, the Supreme Court repeatedly invalidated them on the ground that they interfered with freedom of contract. Let me give you some examples. The most famous case was, Lochner v New York in 1905. Lochner involved a New York statute that limited the number of hours that a baker could work. Prevented bakers working within 10 hours a day, more than 60 hours a week. And the challenge was brought to this by bakers and by bakery owners. They said, they had freedom of contract. That if a baker wanted to sell his labor or her labor and work more than 10 hours a day or 60 hours a week, that actually be his or her right. And they challenged the law as interfering with freedom of contract protected under the liberty of the due process clause. In Lochner v New York, the Supreme Court struck down the New York statue, saying it interfered with freedom of contract. Now remember what I said earlier in a lecture. If Congress try to prohibit child labor or create a minimum wage that would be struck down as exceeding Congress's power. But if a state of a local government tried to do these things then it would be struck down as an infertering with freedom of contract. For 200 federal, state and local laws get struck during the time as interfering with freedom of contract. So when the government tried to create a minimum wage law, it was often done at the time as minimum wage for women. The Supreme Court struck it down as unconstitutional for interfering with freedom of contract. In 1937, the Supreme Court abruptly changed course. As I mentioned earlier, after running and winning reelection for president in 1936, Franklin Roosevelt proposed court packing, adding additional justices on to the court for everyone over the age of 70. Very quickly after doing this, one of the justices on the court, Owen Roberts shifted his vote. He went from a dissenter, he from the majority that had been limiting freedom of contract, limiting protection, he went from the majority that he had been striking down laws, on the grounds that they interfered with freedom of contract. And joined who had been the dissenters who wanted to uphold the law to create a new majority that was upholding the laws. He did this with regard to Congress's commerce power. He did this with regard to freedom of contract. And so in 1937, in West Coast Hotel versus Parrish the Supreme Court upheld a state law that mandated that women be paid a minimum wage. The government actually argued to the Supreme Court that if women weren't paid a minimum wage, they would have to look to earn money in illicit ways. And the Supreme Court accepted this and upheld the law. Most important, West Coast Hotel versus Parrish unequivocally signalled that the court was going to repudiate the Lochner era and move to a new era of jurisprudence. The court in West Coast Hotel versus Parrish said what is freedom of contract? The court said the government should be able to regulate for any reason. Now during the Lochner era from 1895 to 1936, the Supreme Court said the government couldn't try to equalize bargaining power between workers and business by things like minimum wage and maximum hour loss. But in West Coast Hotel versus Parrish the Court said the government wants to legislate to equalize bargaining power that's in its prerogative. Since 1937 when West Coast Hotel versus Parrish was decided not one federal, state or local law has been struck down for infringing freedom of contract under the liberty of the due process clause. The Supreme Court has very much repudiated the Lockner era jurisprudence when it comes to government economic regulations. Regulations of work, regulation that who can practice a trade, consumer protection laws, they will be upheld so long as they are rationally related to a legitimate government purpose and they virtually always meet the standard. Remember what I said a moment ago, since 1937 not one government economic regulation has been struck down as violating freedom of contract. In fact, in 1938 in a very famous case, the United States versus Carolene Products, the Supreme Court articulated the framework for judicial review that's been used to this day. The Supreme Court said generally there should be a presumption in favor of laws adopted by a legislature. And the presumption should be a strong one. It's embodied rational basis review. But the Court says, sometimes it's necessary to be suspicious of government. If government is interfering with a fundamental right, if government is discriminating against discrete/insular minorities, such as on the basis of race. Then it's going to have to meet strict scrutiny. Then it's going to have to be necessary to achieve a compelling purpose. The Supreme Court articulated this dual standard in Footnote Four in the Carolene products case. Isn't it amazing that a framework for judicial review that's been followed for almost 70 years, it's more than 70 years now, this is 1937, has originally started in a foot note, Footnote Four. But the Court said dual standard of review for economic liberties, for social welfare legislation, defer to the government. Court, get involved. Use heightened scrutiny only when it's a fundamental right. Only when it's a form of discrimination against the suspect classification. And that's the framework for modern Constitutional law. All Constitutional laws since 1937. If it's the government regulating the economy, social welfare, defer to the government, rational basis review. But, if it's civil liberties, civil rights, then there's not deference to government. Then there's much more extensive judicial view reflected in the use of an immediate or strict scrutiny. Now that's the general principle with regard to economic liberties. There are some more specific constitutional provisions that deal with economic liberties. I want to mention two of them. The more important of the two is the takings clause in the 5th Amendment. The Constitution says that the government may take private property for public use, but it must pay just compensation. And you might think of this in terms of the government having eminent domain power. The government has the power to seize property for public use, so long as it pays just compensation to the owner. Well, courts, in applying the takings clause, often look at three stages of analysis. The first is whether the government action is a taking. Obviously the government only has to pay just compensation if it's taking private property. There's two alternative ways of finding a taking. One is the government confiscation or physical occupation of property is always a taking, sometimes called a per se or possessory taking. Whenever the government confiscates, whenever the government physically occupies property, that's a taking. So, as an example, there was a case, Loretto versus Teleprompter. New York City adopted an ordinance requiring that apartment building owners make available space for cable television boxes. The amount of space was really small, it was one cubic foot. Nonetheless, the Supreme Court said it was a taking requiring just compensation because the government had essentially confiscated, physically occupied that space. The other way of finding a taking is called a regulatory taking. Government regulation is a taking if it leaves no reasonable economically viable use of the property. Government regulation is a taking if it leaves no reasonable economically viable use of the property. To illustrate, I'll compare two Supreme Court cases. One was Penn Central versus New York City. Company bought the Grand Central Station in New York with plans to add an additional structure on top of it. After the building was purchased, it was reclassified as a historic landmark. The additional construction was not allowed. The owners sued and said the government had decreased the value of their investment, the government should have to pay. But the Supreme Court ruled in favor of the government. The Supreme Court said it's not a regulatory taking because the owners still have reasonable, economically viable use of the property that's there. They still can use Grand Central Station. The Court said in order for it to be a regulatory taking the government is going to have to leave no reason we could have a viable use for the property. Another example, to contrast, is Lucas versus South Carolina Coastal Council. David Lucas bought a piece of beachfront property in South Carolina for almost a million dollars. Subsequent to purchase a coastal protection law was adopted and it prevented any development of Lucas' property. Lucas sued and he won. The Supreme Court said the government had prevented almost all use, virtually any development. The Court said that's a regulatory taking, the government's going to have to compensate. So, a taking can be found in either of two ways. You can have a possessory taking, where the government confiscates the property or a regulatory taking, where the government regulation becomes a taking, it leaves no economically viable use of the property. If it's a taking then it's important to go to the second step of the analysis. Is it for public use? The government may take private property but only for public use. If it's not for public use the government is going to have to give the property back. There was a controversial case, Kelo versus City of Now London, Connecticut. New London's an economically depressed city. It decided to use its eminent domain power to take title away from the owners and sell then to sell the property to developers. They would pay the owners just compensation. Some of the owners got very upset because they didn't want to sell their lifelong homes. They argued that it wasn't for public use for the government to take from some owners to sell the property to others. But the Supreme Court ruled it was for public use. The Supreme Court said a taking was for public use so long as the government acts out of a reasonable belief that the taking will benefit the public. The Court said here that the city could reasonably believe that taking the property and selling to developers would lead to more jobs, greater economic growth in the city, and thus, the Court said it was for public use. Now assuming it's a taking, and it's for public use, then there's a third question. Is just compensation paid? The government can take private property for public use, like with it's eminent domain power. But the government is going to have to pay for the property. And the measure of payment is just compensation. What's key to note here is that just compensation is measured in terms of the loss to the owner in a reasonable market value terms. The gain to the government is irrelevant. Imagine a person has a piece of property worth $100,000 in terms of reasonable market value. And the government's going to take the property, and the government's going to get $10 million of benefit. What does the government have to pay? $100,000, the reasonable market value in the owner's hands. The benefit to the government is irrelevant. And so the takings clause is one of the few areas of the Constitution where economic liberties have been protected since 1937. The general rule, Constitution provides only minimal protection for economic rights, only rational basis reviews for economic liberties. The most famous, most important exception to this is the takings clause found in the fifth amendment.