9/26/2016

Commerce Clause and Spotting Constitutional Issues Dormant

• Congress shall have the power "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." • Article 1, Section 8, Clause 3 • Grant of power to Congress; not an express limit on the power of the states

Lisa Soronen, State and Local Legal Center Fred Messerer, California Legislative Counsel

Dormant Commerce Clause

• Are in‐state and out‐of‐state economic interests treated differently? • “Negative converse” of the Commerce Clause • Example‐‐milk cases • Not in the text of the Constitution • Dean Milk v. Madison (1951)—Madison could not prohibit the sale of milk • Some people think it is made up (Justice Thomas) bottled more than five miles from the city center • First case: Reading Railroad v. Pennsylvania (1873) • Two tests • State legislation cannot improperly burden or discriminate against • Simple economic protection—virtually per se invalid interstate commerce • Balancing test (burden weighed against benefits) applies where “other legislative objectives are credibly advanced and there is no patent discrimination against interstate trade”—Pike v. Bruce Church (1970)

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Dormant Commerce Clause Dormant Commerce Clause

• Facially neutral laws aren’t spared • Market Participant and California’s proposed initiative, Proposition 61 • So. Pacific Co. v. Arizona (1945)—Court applied balancing test to Arizona law • Prop 61 has two substantive provisions: prohibiting long trains in the state (balance state’s safety interest with burden • “(a) Notwithstanding any other provision of law and insofar as may be on commerce) permissible under federal law, neither the State of California, nor any state • Market participation exception—state as a market participant may administrative agency or other state entity, including, but not limited to, the California Department of Health Care Services, shall enter into any prefer in‐state customers agreement with the manufacturer of any drug for the purchase of a • Reeves v. Stake (1980)—South Dakota may prefer to sell cement from its prescribed drug unless the net cost of the drug, inclusive of cash discounts, state‐owned cement plant to South Dakota customers free goods, volume discounts, rebates, or any other discounts or credits, as • South‐Central Timber Development v. Wunnicke (1984)—Alaska can’t insist determined by the California Department of Health Care Services, is the that purchasers of state‐owned timber agree to process some of the timber in same as or less than the lowest price paid for the same drug by the United Alaska sawmills (Alaska was attempting to control downstream commerce) States Department of Veterans Affairs.”

Dormant Commerce Clause Dormant Commerce Clause

• Subdivision (a) is attempting to apply a “market participant” • “(b) The price ceiling described in subsection (a) above also shall apply to all programs where the State of California or any state administrative exception agency or other state entity is the ultimate payer for the drug, even if it did not purchase the drug directly. This includes, but is not limited to, • White paper for the Vermont Legislature suggests even subdivision (a) California's Medi‐Cal fee‐for‐service outpatient drug program, and violates the dormant commerce clause California's AIDS Drug Assistance Program. In addition to agreements for • http://www.scotthemplinglaw.com/files/pdf/ppr_vt_prescription_drug_pricin any cash discounts, free goods, volume discounts, rebates, or any other discounts or credits already in place for these programs, the responsible g1099.pdf state agency shall enter into additional agreements with drug manufacturers for further price reductions so that the net cost of the drug, as determined by the California Department of Health Care Services, is the same as or less than the lowest price paid for the same drug by the United States Department of Veterans Affairs. The requirements of this Section shall not be applicable to drugs purchased or procured, or rates developed, pursuant to or under any Medi‐Cal managed care program.”

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Dormant Commerce Clause Special Issues

• Subdivision (b) implementation: • State tax • How will “ultimate payer” be determined? • Complete Auto Transit v. Brady (1977) (four factors to judge if a tax violates the Commerce Clause) • State reimbursed by the federal government? • International tax • State employee benefit packages? • Japan Lines v. County of Los Angeles (1979) (state taxes on international commerce cannot create a substantial risk of multiple taxation or prevent the federal government from speaking with one voice)

Special Issues Hot Topic

• Local processing requirements • Overturning Quill v. North Dakota (1992) (out‐of‐state retailers don’t • Tons of these cases over the years have to collect use tax) • United Haulers Association v. Oneida‐Herkimer (2007) (okay to require solid • South Dakota, Alabama, (and Colorado) are well on their way waste to be delivered to a publicly owned and operated local facility) • California requires use tax to be collected if the retailer has a • Health and safety requirements substantial nexus to the state (Sec. 6203, Cal. Rev. & Tax Code), aka • States get more leeway to regulate the “Amazon Tax.” • Where is the line? Exxon v. Maryland (1978) (Maryland could bar petroleum • Implemented a one‐year delay in exchange for Amazon opening multiple producers from operating retail service stations) fulfillment centers within California

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Due Process Due Process

• Four protections: • Fifth and Fourteenth Amendments say: • Procedural due process (in civil and criminal proceedings) • “[N]or shall any person . . . be deprived of life, liberty, or property, • Substantive due process without due process of law . . . .” • Prohibition against vague laws • Vehicle for incorporating the Bill of Rights

Due Process Due Process

• Must be a deprivation of life, liberty, or property • Required procedures vary • Property interests come from state law and common law • Mathews v. Eldridge (1976): “Due process, unlike some legal rules, is • Liberty interests come from the constitution—are vague not a technical conception with a fixed content unrelated to time, • Procedures are required place, and circumstances.” • Importance of the interest to the individual • Will additional procedures increase accuracy of fact finding? • Governments interest in administrative efficiency • Circuit court precedent is relevant

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Due Process Due Process

• Check your state constitution! • Generally required—Goldberg v. Kelly (1970) • California’s Due Process requirement has been interpreted to add to • Notice the Matthews standards: • Hearing • The “dignitary interest in informing individuals of the nature, grounds, and • Impartial decision maker consequences of the action and enabling them to present their side of the • Confront and cross examine story before a responsible government official” • Decision on the record • Saleeby v. The State Bar of California (1985) 39 Cal.3d 547, 565 • Counsel

Hot Topic: Incarcerating the Poor Because DOJ Ferguson Investigation They Can’t Pay Fines & Fees • People can’t be incarcerated solely because of inability to pay a fine • Court system exists to maximize revenue not accomplish justice or fee • Have to appear before the court for many offenses • Bearden v. Georgia (1983) (due process and equal protection • Don’t “appear” you get a high fine, your ability to pay isn’t determined, and a principles of the Fourteenth Amendment prohibit “punishing a warrant is issued for your arrest person for his poverty”) • If you are arrested, you may be jailed just because you can’t pay without your ability/inability determined • Turner v. Rogers (2011)(due process requires notice that the ability to pay is a critical issue, and a meaningful opportunity to be heard about financial circumstances)

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Dear Colleague Letter Dear Colleague Letter

• Courts must not incarcerate a person for nonpayment of fines or fees • Courts must not use arrest warrants or license suspensions as a without first conducting an indigency determination and establishing means of coercing the payment of court debt when individuals have that the failure to pay was willful not been afforded constitutionally adequate procedural protections • Courts must consider alternatives to incarceration for indigent • Courts must not employ bail or bond practices that cause indigent defendants unable to pay fines and fees defendants to remain incarcerated solely because they cannot afford • Courts must not condition access to a judicial hearing on the to pay for their release prepayment of fines or fees • Courts must safeguard against unconstitutional practices by court • Courts must provide meaningful notice and, in appropriate cases, staff and private contractors counsel, when enforcing fines and fees

Drafting Tips Anyone Seeing Legislation Over this Issue?

• Account for the ability or inability to pay: • “A chief probation officer may charge persons on probation for the costs of any form of supervision that utilizes continuous electronic monitoring devices that monitor the whereabouts of the person pursuant to this chapter, upon a finding of the ability to pay those costs. However, the department shall waive any or all of that payment upon a finding of an inability to pay.” • Sec. 1210.15, Cal. Penal Code • Prohibit the court from denying protections based on financial status: • “[N]o defendant shall be denied probation because of his or her inability to pay the fine permitted under this section.” • Sec. 647.1, Cal. Penal Code

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Vesting Rights: Contracts Clause Contracts Clause

• “No State shall . . . pass any . . . Law impairing the Obligation of • Almost died in the 1930s Contracts.” • Home Building & Loan Ass’n v. Blaisdell (1934) (Court upheld Minnesota’s • Article I, Section 10, Clause 1 two‐year mortgage foreclosure moratorium) • Revived and reinvigorated in the 1970s • U.S. Trust Co. of New York v. New Jersey (1977) (limits are stricter when the state seeks to abrogate its own (public) contracts); • Test: whether the challenged state law “substantial[ly] impair[s] a contractual relationship” and whether the impairment is “reasonable and necessary to serve an important public purpose”

Hot Topic: Retirement Issues Hot Topic: Retirement Issues

• Big questions: do retirement plans of state and local governments • Is California Rule sacrosanct? give rise to contractual rights within the scope of the ? • Modest change to restrict certain enumerated payments for inclusion in • 12 states currently follow the “California Rule” compensation for retirement purposes did not violate the contracts clause • In California, retirement benefits vest on the first day of employment, • Marin Association of Public Employees v. Marin County Employees’ Retirement and cannot be reduced retroactively or prospectively for those who Association (August 17, 2016) • started employment under the statute (e.g. Kern v. City of Long Beach California First District Court of Appeals • http://www.courts.ca.gov/opinions/documents/A139610.PDF (1947) 29 Cal.2d 848, 853; Olson v. Cory (1980) 27 Cal.3d 532, 538). • • As a result, most retirement legislation in California changes prospectively for Court focused on the public good (reducing pension spiking) and expanded new employees only (see Assembly Bill 340 (2012). view of offsetting employee benefit (employees’ net pay increased because retirement contributions were no longer deducted for those enumerated payments)

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Equal Protection Equal Protection

• “Nor [may a state] deny to any person within its jurisdiction the equal • Of all the constitutional provisions discussed today equal protection protection of the laws.” might: • Section 1 of the Fourteenth Amendment • Come up the most often • Have the broadest reach (undocumented students; right to die; voter ID) • Subject to (some of the) vaguest standards

Key Concepts Levels of Scrutiny

• Strict scrutiny—race protected Protected classes • • Interstate travel • Race Intermediate scrutiny—gender • • Parent one's children • Sex Rational basis • Privacy • Religion • Liberty • Sexual orientation • Marriage

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Other Important Concepts Drafting Issues

• Disparate treatment • California had a state prison alternative custody program • Disparate impact open to male inmates who were the primary caregiver • Affirmative action prior to incarceration and all female inmates (SB 1266 • Voting rights (2010); Sec. 1170.05, Cal. Penal Code) • Bill included legislative findings relative to disparate treatment that 2/3 of female inmates were low risk offenders and 70% of the female state prison inmates were nonviolent offenders • In 2012, Section 1170.05 was amended to limit the program to female inmates only (SB 1021)

Drafting Issues First Amendment

• Male inmate sued, arguing that SB 1021 violated the equal • “Congress shall make no law respecting an establishment of religion, protection clause (Sassman v. Brown (E.D. Cal. 2015) 99 or prohibiting the free exercise thereof; or abridging the freedom of F.Supp.3d 1223. But for his gender, male inmate met all the requirements of the program. Court found a violation of equal speech, or of the press, or the right of the people peaceably to protection: assemble, and to petition the Government for a redress of • Alternative custody program was highly individualized and managed, so gender was grievances.” an “unnecessary proxy.” • State had insufficient evidence to support female only program and relied on overly‐ • Complicated, incoherent, every SCOTUS Justice has his or her own broad generalizations views on the subject • State offered no justification for excluding male inmates • Remedy ‐‐ rather than strike down the statute, the court expanded eligibility to all male inmates who otherwise met the eligibility requirements of the program

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Important Concepts Related to Speech Reed v. Town of Gilbert, Arizona

• Basic question: Is government limiting speech? • Latest big First Amendment case (2015) • If so: • Court holds: treating temporary directional, political, and ideological • What kinds of speech is it? (political, commercial speech, school, obscenity, signs differently is a content‐based regulation subject to strict scrutiny defamation) • What test applies? • How does it play out? • Circuit court precedent is going to matter

Reed v. Town of Gilbert, Arizona Proposition One

• What we knew before • Content‐based distinctions are subject to strict scrutiny • Treating speech differently based on content was disfavored • Compelling government interest • What we know now • Narrowly tailored • It is really disfavored • Practically speaking, content‐based distinctions are unconstitutional

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Reed v. Town of Gilbert, Arizona Proposition Two

• What we weren’t sure of before • Content‐based is defined very broadly • Is content‐based broad or narrow? • “Government regulation of speech is content based if a law applies to • What we know now particular speech because of the topic discussed or the idea or • It is very broad message expressed”

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State Legislation Struck Down Speech Hot Topics

• Implications are well beyond sign codes • Government speech • A number of circuit courts of appeals have struck down restrictions on • Walker v. Texas (2015) panhandling • Right to work/fair share • Anti‐robocall statute struck down • Friedrichs v. California Teachers Association (2016) • Statute preventing photos of ballots and posting them online struck down • Sex offenders • California’s ban on violent video games found unconstitutional • Packingham v. North Carolina (cert petition) • Criminalizing poverty • Mostly ordinances not state laws (food sharing, camping/sleeping, panhandling) • Religion: Blaine Amendments • Trinity Lutheran v. Pauley (2017)

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Drafting Tips Second Amendment

• California’s Proposition 35 in 2012 required that registered sex offenders register • “A well regulated Militia, being necessary to the security of a free their Internet identifiers and a list of Internet service providers with local law enforcement, and required sex offenders to notify local law enforcement within State, the right of the people to keep and bear Arms, shall not be 24 hours of a change to his or her account, screen name, ISP, etc. (see Secs. infringed.” 290.014, 290.015, Cal. Penal Code). • Registered offenders sued under the First Amendment because Prop. 35 prohibited being able to advocate anonymously, such as by making comments on blogs, news articles, forums, etc. • Ninth Circuit granted an injunction, using intermediate scrutiny (Doe v. Harris (9th Cir. 2014) 772 F.3d 563, 569). Prop. 35 violated the First Amendment because: • It did not make clear what sex offenders are required to report • There were insufficient safeguards preventing the public release of reported information • The 24–hour reporting requirement was onerous and overbroad

Guns, Guns and More Guns! Guns, Guns and More Guns!

• Heller, McDonald and Silence • Two big questions: • District of Columbia v. Heller (2008), the Court held the Second • Is the right to have a gun confined to the home? Amendment protects an individual’s right to possess a gun for • Which guns, if any, can be banned? traditionally lawful purposes, such as self‐defense, within the home • McDonald v. Chicago (2010), the Court held that the Second Amendment right of individuals to keep and bear arms in self‐defense is incorporated through the Fourteenth Amendment to apply against state and local government as well as the federal government • Ideologically split issue (both cases 5‐4)

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Guns, Guns and More Guns! Guns, Guns and More Guns!

• Gun decisions in the lower courts are hot—here are some headlines • Really isn’t a circuit split to resolve these issues • 5th Circuit: You have no constitutional right to own a machine gun • Federal circuits have been more than happy to strike down conceal‐carry laws and uphold • Second Circuit: No Second Amendment right to carry concealed firearms in banning of semiautomatic weapons public • Split over the standard to apply to ban semiautomatic weapons • 9th Circuit Court of Appeals Says No Right to Concealed Gun Carry • When you advise your clients think about the future Supreme court • More liberal court will not expand Heller • Would Heller be in trouble?

More than Just Guns! Fourth Amendment

• California just enacted a series of laws that requires pre‐registration • “The right of the people to be secure in their persons, houses, papers, before purchasing ammunition on and after January 1, 2018 and effects, against unreasonable searches and seizures, shall not be • At what stage would an ammunition restriction violate the Second violated, and no Warrants shall issue, but upon probable cause, Amendment? supported by Oath or affirmation, and particularly describing the • Governor Brown vetoed a bill that would make it a crime to fail to place to be searched, and the persons or things to be seized.” report the theft, loss, or recovery of a lost or stolen firearm • California law makes it a crime to keep a loaded firearm where children are present and knowingly keeps the firearm in a place where the child is likely to gain access to the firearm • Sec. 25100, Cal. Penal Code

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Fourth Amendment Fourth Amendment

• Basic question: Is a warrant required for a search? • Supreme Court takes a ton of search cases • Tricky area of the law: • A surprising amount arise in the context of statutes • Tons of exceptions to warrant requirement • Maryland v. King (2013) (DNA testing of arrestees) • Supreme Court has been less than coherent on the Fourth Amendment • Los Angeles v. Patel (2015) (hotel registry statutes/ordinances) • Birchfield v. North Dakota (2016) (criminalizing refusal to consent to BAC testing) • If you think a warrant is required does it have to be included in the statute; might be an issue of practice? • Good issue to flag regardless

Fourth Amendment

• Many of the conflicts going forward will involve applying the Fourth Amendment to new technology • Body cameras • Cell site location information • Riley v. California (2014) (police generally need a warrant to search a cell phone incident to an arrest) and United States v. Jones (2012) (putting a GPS devise on a car constitutes a search) illustrate that the Roberts Court isn’t going to allow new technology to undermine traditional Fourth Amendment protections

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