SUBSTANTIVE DUE PROCSS – Fed (5th amendment) or State (14the amdnement) govt. is not allowed to deprive individual life, liberty or property without due process of law. Any time there is a limitation on any substantive right (right to yell loud, right to walk down the street, right to punch Mark in the face), as two questions: 1. Is the right a fundamental right or not? A. If not a fundamental right then apply the rational basis test 2. Does the law pass the appropriate test? A. Ration Basis Test -- any laws limiting substantive interest must rationally relate to some conceivable legitimate or permissible governmental end. 1. Ask: a. Is there a legitimate governmental end? b. Does the law conceivably advance that end/rationally relate? 2. Note that in using the RB test, all the court cares about is whether there is a legitimate end whereby it is conceivable that the law advances that end. a. Thus, even if there is evidence that a law is being passed for a bad reason (ie, the reason for a law is to please lobbyists), the court will not bother to look at that evidence if the two factors of the test can be satisfied. b. Also, the court can and will speculate as to what the legitimate governmental ends may be – the law might not say why a law is being passed c. Remember: If there is any conceivable advancement of a legitimate purpose, it is likely to pass the Rational Basis test. d. To defeat rational basis, must show that there is no possibility of any connection to legitimate ends.
CONTRACT CLAUSE: Public Purpose Balancing Test
1. Article 1 §10 of the Constitution imposes limits on the States. The principle motive was to protect economic interests, it says that : no State shall impair obligations of contract. 2. in essence, no state shall impair obligations of contract unless doing so is to advance some legitimate public purpose. 3. ONLY APPLIES TO THE STATES; ONLY APPLIES TO PRE-EXISTING CONTRACTS a. the state cannot retroactively impair State contracts or contracts between parties b. the Contract Clause only applies to State laws that retroactively impair preexisting contractual rights. c. The Contract Clause is not applicable if the law applies prospectively. d. Note that if it is a federal law impairing contractual relations, then the law does fall under the Contract Clause, but rather gets a Rational Basis level of review. 4. Public Purpose Balancing Test: a. The test where obligations of contract are impaired is the public purpose balancing test which consists of three elements: 1) there has to be substantial impairment, 2) if there is, there must be some significant and legitimate public
purpose which justifies such impairment, 3) and any new conditions imposed on pre existing contractual rights must be reasonable and those new conditions must reasonably advance whatever the public purpose might be. b. in essence, no state shall impair obligations of contract unless doing so is to advance some legitimate public purpose. c. The elements: (1) there has to be substantial impairment (a) the court will look at the severity of the impairment – some impairment is not enough, but does not have to be complete destruction of contractual rights (b) the court will look at reasonable investment based expectations (c) and the degree to which the subject has been regulated in the past I. parties should expect changes in regulation and it is harder to show substantial impairment where the industry is heavily regulated (d) this is usually not the debated part, the court will usually find substantial impairment (2) if there is substantial impairment, there must be some significant and legitimate public purpose which justifies such impairment (a) the question is how necessary is it to abridge contracts? (b) Modern cases say that that this purpose does not have to be very strong (c) The court is very permissive in this area – most cases find that the governmental interest is sufficient (d) Exception: the court will require a stronger purpose where the government is impairing its own contract. Example: State wants to improve conditions for commuters and wants bond holders
to pay for the improvements. While this is a valid public purpose, why should the bond holders have to pay for it—what is the relationship? There is no valid reason why the bond holders should bear the cost to advance commuter transit.
(3) any new conditions imposed on pre-existing contractual rights must be reasonable and those new conditions must reasonably advance whatever the public purpose might be (a) must assess the degree to which the court reasonably balances the harm done to the contract versus promoting the public interest