Section 1 Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof. Section 2 The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States. A Person charged in any State with Treason, Felony, or other Crime, who shall flee from Justice, and be found in another State, shall on demand of the executive Authority of the State from which he fled, be delivered up, to be removed to the State having Jurisdiction of the Crime. No Person held to Service or Labour in one State, under the Laws thereof, escaping into another, shall, in Consequence of any Law or Regulation therein, be discharged from such Service or Labour, But shall be delivered up on Claim of the Party to whom such Service or Labour may be due. Section 3 New States may be admitted by the Congress into this Union; but no new States shall be formed or erected within the Jurisdiction of any other State; nor any State be formed by the Junction of two or more States, or parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress. The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States; and nothing in this Constitution shall be so construed as to Prejudice any Claims of the United States, or of any particular State. Section 4 The United States shall guarantee to every State in this Union a Republican Form of Government, and shall protect each of them against Invasion; and on Application of the Legislature, or of the Executive (when the Legislature cannot be convened) against domestic Violence.
Article 7
The Ratification of the Conventions of nine States, shall be sufficient for the Establishment of this Constitution between the States so ratifying the Same. Done in Convention by the Unanimous Consent of the States present the Seventeenth Day of September in the Year of our Lord one thousand seven hundred and Eighty seven and of the Independence of the United States of America the Twelfth. In Witness whereof We have hereunto subscribed our Names. [The names of those who signed were as follows:]
George Washington - President and deputy from Virginia New Hampshire - John Langdon, Nicholas Gilman Massachusetts - Nathaniel Gorham, Rufus King Connecticut - William Samuel Johnson, Roger Sherman New York - Alexander Hamilton New Jersey - William Livingston, David Brearley, William Paterson, Jonathan Dayton Pennsylvania - Benjamin Franklin, Thomas Mifflin, Robert Morris, George Clymer, Thomas Fitzsimons, Jared Ingersoll, James Wilson, Gouvernour Morris Delaware - George Read, Gunning Bedford Jr., John Dickinson, Richard Bassett, Jacob Broom Maryland - James McHenry, Daniel of St Thomas Jenifer, Daniel Carroll Virginia - John Blair, James Madison Jr. North Carolina - William Blount, Richard Dobbs Spaight, Hugh Williamson South Carolina - John Rutledge, Charles Cotesworth Pinckney, Charles Pinckney, Pierce Butler Georgia - William Few, Abraham Baldwin Attest: William Jackson, Secretary
West Coast Hotel Co. v. Parrish, 300 U.S. 379 (1937)
Case Name: West Coast Hotel Co. v. Parrish
Citation: 300 U.S. 379 (1937)
Issue: Whether the Washington minimum wage law violates the Due Process Clause of the 14th Amendment.
Facts: Minimum wage law created by the state of Washington. Elsie Parrish was a chambermaid and sued to recover the difference between her wages and the state minimum wage ($14.50 per week of 48 hours). The hotel alleged that the minimum wage regulation is a deprivation of freedom of contract.
Holding: The minimum wage law was upheld and found to be within the state’s legislative power.
Reasoning: The Court believed that this subject should receive “fresh consideration” from previous decisions. The Constitution does not speak of “freedom of contract” but it does speak of “liberty and prohibits the deprivation of liberty without due process of law.”
The state is able to protect the public interest and “what can be closer to the public interest than the health of women and their protection from unscrupulous and overreaching employers?” The requirement of a minimum wage is an admissible means to the end of protecting women. The Court also discussed the “evils” of current employment conditions of women in sweatshops and how they have unequal bargaining power so freedom of contract is really a misnomer.
Another policy reason: The exploitation of workers also casts a direct burden upon the community for their support. Taxpayers are called to pay additional wages to the workers in order for them to meet the bare cost of living. Shouldn’t the manufacturer pay for these costs directly because they are receiving the benefit of selling goods in the marketplace?
The Court overruled Adkins stating that it “was a departure from the true application of the principles governing the regulation by the state of the relation of employer and employed.”
Williamson v. Lee Optical of Oklahoma, Inc., 348 U.S. 483 (1955)
Case Name: Williamson v. Lee Optical of Oklahoma, Inc.
Citation: 348 U.S. 483 (1955)
Facts: An Oklahoma law made it unlawful for any person who is not a licensed optometrist or ophthalmologist to fit lenses for someone or replace lenses unless they received a written prescription from an Oklahoma licensed optometrist or ophthalmologist. The goal of this law was to forbid opticians from fitting or duplicating lenses without a prescription.
Procedural Posture: The District Court held the Oklahoma law unconstitutional under the Due Process Clause of the 14th Amendment. The District Court did concede that the state has police power to regulate the examination of the eyes but did not agree that a state could require a prescription just “to take old lenses and place them in new frames and then fit the completed spectacles to the face of the eyeglass wearer.” It held that this requirement was not “reasonably and rationally related to the health and welfare of the people.”
Holding: The law was upheld. “The day is gone when this Court uses the Due Process Clause of the 14th Amendment to strike down state laws.”
Reasoning: This law may be a needless requirement; however, it is for the legislature, not the courts, to balance the advantages and disadvantages of these requirements. “The law need not be in every respect logically consistent with its aims to be constitutional. It is enough that there is an evil at hand for correction,” and [that the legislation was a] rational way to correct it.”
Quoting Chief Justice Waite in Munn v. State of Illinois, “For protection against abuses by legislature the people must resort to the polls, not to the courts.”
BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996)
Case Name: BMW of North America, Inc. v. Gore
Citation: 517 U.S. 559 (1996)
Issue: Whether a $2 million punitive damages award to the purchaser of one car exceeds the constitutional limit created by the Due Process Clause of the 14th Amendment which prohibits a State from imposing a “grossly excessive” punishment on a tortfeasor.
Facts: Gore purchased a BMW sports sedan for forty thousand dollars from an authorized BMW dealer in Alabama. Nine months later, he found his car had been repainted by BMW and sued for suppression of a material fact and asked for $500,000 in compensatory and punitive damages.
BMW acknowledged that it had a nationwide policy that if a car was damaged in the course of manufacturing and the cost of repairing the damage exceeded 3 percent of the car’s retail price, the car would be sold as used. If the repair cost did not exceed 3 percent of the suggested retail price, it would be sold as new without advising the dealer that any repairs had been made. The cost of repainting Gore’s car was only 1.5 percent of the retail price.
Gore asserted that the repainted car was worth less than a car which had not been refinished. He showed $4,000 of actual damages. For punitive damages, Gore introduced evidence of BMW selling 983 refinished cars since 1983 (only 14 were sold within Alabama) without disclosing that the cars had been repainted.
Procedural Posture: The jury returned a verdict for $4,000 in compensatory damages and $4 million in punitive damages. The Alabama Supreme Court rejected BMW’s claim that this exceeded the constitutionally permissible amount but did find the jury miscalculated the damages and held that “a constitutionally reasonable punitive damages award in this case is $2 million.”
Holding: The punitive damage award was grossly excessive and exceeds the constitutional limit.
Reasoning: Gore argued that the large punitive damages award was necessary to induce BMW to change the nationwide policy that it adopted in 1983. However, by attempting to alter BMW’s nationwide policy, Alabama would be infringing on the policy choices of other states. One state cannot impose economic sanctions on violators of its laws with the “intent of changing the tortfeasor’s lawful conduct in other States.”
In addition, the Court gave three guideposts for reviewing punitive damages:
- the degree of reprehensibility of the defendant’s misconduct,
- the ratio of punitive damages to actual damages (here it is 500 to 1 which does not bear a “reasonable relationship.”), and
- the difference between punitive damages awarded by the jury and civil penalties authorized or imposed in comparable cases (here, Alabama’s Legislature authorizes a maximum $2,000 penalty of $2,000 through its Deceptive Trade Practices Act. In Alabama, there were only 14 violations).
Scalia’s Dissent (Thomas joined): The Constitution does not make excessive punitive damages any concern of the Court. There is no federal guarantee (even in the 14th Amendment) that a damages award actually be reasonable. “By today’s logic, every dispute as to evidentiary sufficiency in a state civil suit poses a question of constitutional moment, subject to review in this Court. That is a stupefying proposition.
State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003)
Case Name: State Farm Mutual Automobile Insurance Co. v. Campbell
Citation: 538 U.S. 408 (2003)
Issue: Whether $145 million in punitive damages (in relation to $1 million in compensatory damages) is excessive and in violation of the Due Process Clause of the 14th Amendment.
Facts: $145 million in punitive damages and $1 million in compensatory awarded to Campbell. Campbell was insured by State Farm and after being involved in a tragic accident, and at fault, was found liable for $185,849. Before the trial, State Farm informed Campbell that he would not be personally liable for any of the damages and that there was no need for him to get his own attorney. After the verdict, State Farm told him to “put a for sale sign on [his] property to get things moving.” The Campbells instituted an action against State Farm for bad faith, fraud, and intentional infliction of emotional distress.
Procedural Posture: “The jury awarded the Campbells $2.6 million in compensatory damages and $145 million in punitive damages which the trial court reduced to $1 million and $25 million respectively. Both parties appealed. The Utah Supreme Court reinstate the $145 million punitive damages award.”
Holding: The punitive damages away was “neither reasonable nor proportionate to the wrong committed, and it was an irrational and arbitrary deprivation of the property of the defendant.” The Court stated that “few awards exceeding a single-digit ration between punitive and compensatory damages, to a significant degree, will satisfy due process.”
Reasoning: This Court continues to state that the Due Process Clause of the 14th Amendment prohibits states from imposing grossly excessive punishments on a tortfeasor. It spoke about the “three guideposts” from BMW of North America, Inc. v. Gore. It went on to address each guidepost in detail.
In considering the degree of reprehensibility of the defendant’s conduct, a court should consider whether:
1. The harm cause was physical as opposed to economic;
2. The tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others;
3. The target of the conduct had financial vulnerability;
4. The conduct involved repeated actions or was an isolated incident; and
5. The harm was the result of intentional malice, trickery, or deceit, or mere accident.
The absence of any one of these factors renders any award suspect.
Again, the Utah Supreme Court made clear that State Farm was being condemned for its nationwide policies rather than for the conduct directed toward the Campbells.
Judgment: The Court stated that the punitive damages award should be at or near the amount of compensatory damages but the calculation should be done by the Utah courts; under the principles of the Supreme Court.
Scalia’s dissent: Reiterated his dissenting opinion from BMW of North America, Inc. v. Gore.
Thomas’ dissent: The Constitution does not constrain the size of punitive damages awards.
Ginsburg’s dissent: “The law of the particular State must suffice until judges or legislators authorized to do so initiate system-wide change.” Ginsburg goes on to tell the whole story about State Farm’s fraudulent practices and bad faith that the majority left out in its analysis of “reprehensibility.” She ended her dissent that she “would not join the Court’s swift conversion of [the three guideposts] into instructions that begin to resemble marching orders.”
Champion v. Ames, 188 U.S. 321 (1903)
Case Name: Champion v. Ames (U.S. Marshall)
Citation: 188 U.S. 321 (1903)
Key Facts: Congress enacted the Federal Lottery Act in 1895 , which prohibited the buying or selling of lottery tickets across state lines. Champion, was indicted for shipping lottery tickets from Texas to California. He challenged this on the grounds that the power to regulate commerce does not include the power to prohibit commerce of any item.
Holding: Upheld the federal law and rejected a 10th amendment challenge.
Reasoning: “Congress, for the purpose of guarding the people of the United States against the “widespread pestilence of lotteries” and to protect the commerce which concerns all the state, may prohibit the carrying of lottery tickets from one state to another.”
Hammer v. Dagenhart, 247 U.S. 251 (1918)
Hammer v. Dagenhart (1918)
Citation: 247 U.S. 251 (1918)
Issue: Does Congress have the authority to regulate child labor by prohibiting the interstate transportation of products that were manufactured by children?
Facts: A father filed the initial action because Congress had passed an act which prohibited the interstate trade of goods that were manufactured by children.
Procedural History: A North Carolina Court ruled it was unconstitutional and the US Attorney General (Hammer) appealed to the Supreme Court.
Holding: Production is over once the products are offered for shipment which would put them into interstate commerce. Further, the fact that the products were “intended for interstate commerce transportation does not make their production subject to federal control under the commerce power.”
Additional Contention and Answer: It was further contended that the allowance of child labor in one state was unfair because it put other states that did not allow child labor at a disadvantage. “There is no power vested in Congress to require the states to exercise their police power so as to prevent possible unfair competition….The commerce clause was not intended to give to Congress a general authority to equalize such conditions.”
Holding: Congress does not have the authority to regulate child labor in North Carolina.
Dissent (Holmes): The statute confines itself to prohibiting the shipment of goods in interstate and foreign commerce that were created by children. This is interstate commerce and Congress is given the power to regulate such commerce.
A.L.A. Schechter Poultry Corp. v. United States, 295 US 495 (1935)
Case Name: A.L.A. Schechter Poultry Corp. v. United States
Citation: 295 U.S. 495 (1935)
Issue: Whether Congress can regulate as regarding the slaughtering and selling by defendants which was solely in New York.
Facts: Schechter is a chicken slaughterhouse in New York. Almost all the poultry coming to New York is sent from other states. Schechter was convicted on eighteen counts for violating the “Live Poultry Code.”
This Code required sellers to sell only entire coops or half-coops of chickens and made it illegal for buyers to reject individual chickens as well as regulated employment (collective bargaining, prohibiting child labor, 40-hour work week, and minimum wage). Came out of the National Industrial Recovery Act.
Holding: Congress cannot regulate this because Schechter’s activities only occur in New York and only has an in-direct impact on interstate commerce.
Reasoning: The interstate commerce ended once the defendants purchased the chickens and took them to their slaughterhouse. The flow in interstate commerce (or “stream of commerce”) had ceased.
Houston, East & West Texas Railway Co. v. United States, 234 U.S. 342 (1914)
Case Name: Houston, East & West Texas Railway Co. v. United States
Citation: 234 U.S. 342 (1914)
Issue: Whether Congress can regulate pricing of a rail line completely within the borders of Texas in order to protect fair competition in interstate commerce.
Facts: Shreveport competed with Dallas for shipments from East Texas, but the skewed price structure (mandated by the Texas Railroad Commission), greatly favored shipments to and from Dallas over Shreveport. The Interstate Commerce Commission, acting on a complaint from the Railroad Commission of Louisiana, found that “an unlawful and undue preference and advantage” was thereby given to the Texas cities, ordered the company to change the rate structure to end discriminatory pricing.
In effect, the Interstate Commerce Commission was attempting to set the rate that the railroad could charge from Dallas to Marshall, a section of rail line completely within the borders of Texas. The railroads argued that “Congress is impotent to control the intrastate charges of an interstate carrier.”
Holding: Congressional authority “necessarily embraces the right to control… operations in all matters having a close and substantial relation to interstate traffic, to the efficiency of interstate service, and to the maintenance of conditions under which interstate commerce may be conducted upon fair terms.” In other words, the Court allowed Congress to regulate intrastate transactions because of their impact on interstate commerce.
Reasoning: “Congress does possess the power to foster and protect interstate commerce, and to take all measures necessary or appropriate to that end, although intrastate transactions of interstate carriers may thereby be controlled.”