Judicial Review of State Legislation: An Ironic Return to Lochnerian Ideology When Public Sector Labor Contracts Are Impaired

Article excerpt


Rochelle Johnson is a state worker in Sacramento, California. Ms. Johnson's $38,000 annual salary has been cut by approximately fourteen percent due to the state's mandate that more than 200,000 workers take three unpaid days off per month.1 While her modest salary never allowed her to live in luxury, Ms. Johnson now struggles just to keep the power on in her home and to provide basic necessities for her two children.2 About her ability to make ends meet, Johnson professed, "I just feel like I'm less than a parent."3 Though the reduction in liquidity has threatened the sustainability of Ms. Johnson's already conservative lifestyle, the slow stripping away of her dignity is perhaps her greatest loss of all.

California's furloughs-or involuntary,4 unpaid days off from work5-are not a national outlier. In fact, twenty-five other states have resorted to some type of furlough program in an effort to reduce enormous budget gaps.6 As half of the states project a cumulative budget shortfall of $145 billion for fiscal year 2010,7 the states' desires to expeditiously identify and implement measures to reduce these deficits are apparent. However, some of the means chosen to achieve this goal-laws that impose furloughs or wage freezes on unionized public sector employees-may be an abuse of states' police powers and an unconstitutional impairment of public sector labor contracts.

In response to these laws, labor unions across the country have sued, alleging that the furloughs and wage freezes violate the Contract Clause of the United States Constitution, which proscribes states from enacting laws that impair contractual obligations.8 Most recently, a United States district court in Maryland found that an employee furlough plan implemented by Prince George's County was unconstitutional under the Contract Clause.9 Many unions view the Prince George's decision as a collective victory not only because the court invalidated the furloughs but also, and perhaps more importantly, because the court was willing to strictly scrutinize the furlough legislation.10

Indeed, before ultimately concluding that the furloughs were unconstitutional, the court undertook a rather extensive analysis of the furlough legislation, throughout which the court examined whether the law was reasonable and necessary to serve an important public purpose.11 The court showed great sympathy for the policymakers' plight of closing soaring budget gaps amidst this "global recession" and acknowledged that a certain degree of deference must be accorded to lawmakers' fiscal decisions The court also noted, however, that it "cannot merely give lip service to the fundamental principles that undergird the Contract Clause of the United States Constitution" and that "[t]o do otherwise, even in these severe economic times, would sanction the County running roughshod over the Unions, who in good faith negotiated a binding contract with the County."12 The Prince George's Court's refusal to allow state legislatures to run "roughshod"13 over public sector unions through an unchecked use of police power and under the guise of fiscal necessity is strikingly reminiscent of the now infamous, widely criticized, and allegedly abandoned judicial activism of the "Lochner era," spawned by the 1905 Supreme Court decision, Lochner v. New York.14

The labor unions' Prince George's victory, however, was short-lived. On June 23, 2010, the United States Court of Appeals for the Fourth Circuit reversed the district court in a nine-page opinion.15 Nevertheless, the district court's opinion is groundbreaking in its scrutiny of state legislation, instructive to other courts analyzing similar issues and, indeed, the focus of this Note.16 While the Fourth Circuit's opinion will be discussed only briefly, it is further evidence of the rift among the courts in their willingness to strictly scrutinize state legislation under Lochner-like jurisprudence.

In addition to the Prince George's courts, other state, district, and appellate courts around the country have elected to review state legislation that impairs public contracts with greater scrutiny. …