State Court Docket Watch

Institute For Responsible Alcohol Policy v. Oklahoma ex rel. Alcohol Beverage Laws Enforcement Comm.

June 16, 2020

Docket Watch 2020

By Jarrett Dieterle

In January 2020, the Oklahoma Supreme Court upheld a challenge under the Oklahoma Constitution to a state law concerning so-called “forced sale clauses”[1] under the state’s system of regulation for alcoholic beverages.[2] The story traces back to 2016, when the Oklahoma Legislature passed a joint resolution to place State Question 792 on the November ballot that year. The ballot question was approved by a majority of voters, and it took effect in October 2018.

State Question 792 sought to replace and update Article 28 of the Oklahoma Constitution—involving the control and regulation of alcoholic beverages—with a new section titled Article 28A. One of the main goals of the proposed change was to repeal Oklahoma’s so-called “weak beer” law, which restricted the ability of grocery and convenience stores in the state to sell beer over 3.2 percent ABV.[3]

The ballot question also addressed other features of the state’s alcohol regulation system, including proposing a new provision in Article 28A of the Oklahoma Constitution that specified that a manufacturer of alcohol “may sell” its brand of beverages to a licensed wholesaler in the state.[4] This contrasted with the old Article 28 of the Oklahoma Constitution, which included a “forced sale clause” stating that a manufacturer “shall be required to sell” its brand to any wholesaler who desired to purchase it.[5]

Shortly after the ballot question was approved, the state legislature passed SB 608, a law which re-instituted a new type of forced sale clause specifying that any wine or spirit product that constituted a “top brand” (defined as any brand in the top 25 of sales) “shall be offered by the manufacturer for sale” to every licensed wholesaler in the state.[6]

SB 608 was promptly challenged by various companies and organizations, including numerous alcohol manufacturers, wholesalers, and retailers (collectively, appellees), who argued that it directly contradicted the recently enacted language in Article 28A stating that alcohol producers had discretion (i.e., “may sell”) when it came to selling to wholesalers. The law was defended by Oklahoma’s Alcoholic Beverage Laws Enforcement Commission as well as several other alcohol wholesalers in the state (appellants), who argued that Article 28A and SB 608 were not in direct conflict and that SB 608 was a proper use of legislative authority under the anti-competitive provisions of the Oklahoma Constitution.[7]

The district court held that the forced sale clause of SB 608 was in direct conflict with the language in Article 28A of the Oklahoma Constitution. Appellants appealed, and the Oklahoma Supreme Court agreed to hear the appeal.[8] The Oklahoma Supreme Court upheld the district court’s opinion, agreeing that SB 608 was unconstitutional under Article 28A of the state constitution.[9]

The majority opinion started by noting that when a statute is challenged under the state constitution, the court “looks first to [the constitution’s] language, which if unambiguous, binds the Court.”[10] A statute should be upheld “unless it is ‘clearly, palpably and plainly’ inconsistent with the Constitution.”[11]

Because the “clear and ordinary language” of Article 28A of the Oklahoma Constitution states that alcohol manufacturers “may sell such brands” to alcohol wholesalers, and because the word “may” denotes that “an action is permissive or discretional, and not mandatory,” any statute that contradicts that language runs afoul of the constitution. Therefore, SB 608’s forced sale clause, which states that manufacturers of the top 25 brands “shall” sell those products to all wholesalers, is unconstitutional.[12]

The court also addressed the appellants’ additional argument that SB 608 was a proper use of legislative authority under the anti-competitive provisions of the Oklahoma Constitution—namely, Article V, Sections 44 and 51, which bar unlawful monopolies or trusts and prohibit any laws that grant corporations exclusive rights or privileges. The court held that if a statute like SB 608 violates one part of the Oklahoma Constitution (such as Article 28A) it cannot be saved by other provisions elsewhere in the constitution.[13] Regardless, the majority held that Article 28A was not in conflict with the anti-competitive provisions of the Oklahoma Constitution since prior court cases had declined to find antitrust violations for situations in which an alcohol producer granted a single wholesaler the exclusive rights to distribute its product.[14]

The majority decision sparked two dissents. First, Justice Kauger argued that the majority incorrectly found an irreconcilable conflict between SB 608 and Article 28A. Justice Kauger argued the text of Article 28A was ambiguous given that it also specified that producers must sell their products to wholesalers “without discrimination,” and only selling to one wholesaler at the exclusion of others could be construed as a type of discrimination.[15] 

Justice Kauger urged a consideration of the “intention of the framers” of Article 28A, which should govern over “technical rules” regarding statutory construction. When considering the entirety of State Question 792, which implemented Article 28A—including analyzing the Final Ballot Title and the “gist” of the ballot question as they appeared on the electoral ballot—Justice Kauger concluded that the state legislature was primarily concerned with three things: preventing the formation of monopolies, preventing discrimination and retaining legislative authority to regulate the sale of alcoholic beverages. Therefore, when “the resolution, the title, and the gist, are read collectively, it is apparent the voters were voting on these same three things, [whereas] voters were not notified about whether [the ballot question would] allow a manufacturer to sell to only one wholesaler.”[16]

Under Justice Kauger’s analysis, SB 608 was a valid use of legislative authority. The primary goal of SB 608 was to prevent wholesaler monopolies from arising if all wholesalers were not allowed to sell the top 25 brands in the marketplace.[17]

A second dissent, authored by Justice Barnes, argued that the Oklahoma Constitution must be construed “as a consistent whole,” thus the Court must “attempt to harmonize” Article 28A with the anti-competitive provisions of the constitution. Given the broad powers the legislature is recognized to have over alcoholic beverage regulation, in conjunction with the broad anti-competitive and anti-monopoly powers granted to the legislature under the constitution, exercises of legislative power like SB 608 are “not plainly and clearly prohibited.” Therefore, the dissent argued, any doubt should be resolved in favor of the legislature’s actions, which means SB 608 should be upheld.[18]

While it’s hard to know if the Oklahoma Supreme Court’s decision will be the concluding chapter in the state’s long saga concerning State Question 792, it definitively concludes that legislation forcing alcohol producers to sell their products to wholesalers violates the state constitution.

To view this article on the Federalist Society’s website, click here.

Note from the Editor: The Federalist Society takes no positions on particular legal and public policy matters. Any expressions of opinion are those of the author. We do invite responses from our readers. To join the debate, please email us at

[1] In this context, a forced sale clause means a requirement in a commercial transaction that one party (here, an alcohol producer) sell their products to another party (such as an alcohol wholesaler).

[2] Institute For Responsible Alcohol Policy v. Oklahoma ex rel. Alcohol Beverage Laws Enforcement Comm., Case Number 118209, (Okla. Jan. 22, 2020), available at

[3] Id. ¶4.                                                                             

[4] [Citation] (emphasis added).

[5] Id. ¶13.

[6] Id. ¶6.

[7] Id. ¶8.

[8] Id. ¶9.

[9] Id. ¶22.

[10] Id. ¶12.

[11] Id.

[12] Id. ¶14-¶17.

[13] Id. ¶18.

[14] Id. ¶20.

[15] Id.,¶2 (Kauger, J., dissenting).

[16] Id. ¶11-12. (Kauger, J., dissenting).

[17] Id. ¶15-17.

[18] Id. ¶4, ¶15-16 (Barnes, J., dissenting).

In re Salon a la Mode, et al.

June 8, 2020

Docket Watch 2020

By Ken Paxton

In response to the global pandemic caused by COVID-19, local authorities in Texas, like local authorities across the country, issued a variety of orders with the goal of flattening the curve. Many of those orders prevented “non-essential” businesses from operating and limited the ability of individuals to travel freely. In late April, a group of small businesses in Texas, along with two individuals, filed an original mandamus petition in the Texas Supreme Court, arguing that a number of those local orders violated Texas statutory law and the Texas Constitution.

The Texas Supreme Court denied the mandamus petition without an opinion.[1] Justice Blacklock wrote a concurring opinion that was joined by three other Justices to make three points: (1) courts must enforce the Constitution during a pandemic, (2) governments must demonstrate that restrictions on liberties are necessary, and (3) the judicial process must consider all relevant facts.

As to the first point, the concurrence began with the court’s declaration from a prior case that “[t]he Constitution is not suspended when the government declares a state of disaster.”[2] While expressing hope that many of these conflicts could be decided in the public square rather than a courtroom, the concurrence acknowledged that courts must not uncritically defer to the other branches of government or shrink from their duty to interpret and apply the Constitution.[3] Commending the “sovereign people” for enduring the suspension of their civil liberties, the concurrence reminded them that duly elected officials were making difficult decisions in difficult circumstances.[4] But the concurrence went on to encourage the people, the courts, and all branches of government to insist that government action comply with the Constitution, as tolerating unconstitutional orders out of expediency or fear risks “abandon[ing] the Constitution at the moment we need it most.”[5]

The concurrence did not purport to choose a legal standard for judging the constitutionality of government actions taken during a pandemic. But it indicated that the burden would be on the government to justify any restrictions on liberties, positing strict scrutiny or another “rigorous form of review.”[6] The concurrence reasoned that governments should welcome the opportunity to demonstrate that restrictions on liberties are “absolutely necessary to combat a threat of overwhelming severity” and that no less restrictive measures would suffice.[7] 

Finally, the concurrence’s analysis suggested that a thorough discussion of the facts is a necessary part of this “rigorous” review. Indeed, the lack of a factual record was one of the reasons cited by the concurrence for denying mandamus.[8] The concurrence noted the change in circumstances from the pandemic’s early stages, when the people did not know enough facts to second-guess lockdowns and other local orders, to the present, when they have more information about the threat posed by COVID-19 and specific ways to respond to it.[9] The concurrence hypothesized that the additional knowledge may alter the balance between local orders and civil liberties.[10]

Ultimately, the concurrence concluded that, because the Constitution still limits government action during a pandemic, the court must also comply with the limits on its authority.[11] Because the court’s jurisdiction was doubtful and it lacked a factual record, denial of the mandamus petition was appropriate.[12] Instead, the case should have been brought in district court.[13]

To view this article on the Federalist Society’s website, click here.

Note from the Editor: The Federalist Society takes no positions on particular legal and public policy matters. Any expressions of opinion are those of the author. We do invite responses from our readers. To join the debate, please email us at

[1] In re Salon a la Mode, No. 20-0340, 2020 WL 2125844, at *1 (Tex. May 5, 2020).

[2] Id. (Blacklock, J., concurring) (quoting In re Abbott, No. 20-0291, 2020 WL 1943226, at *1 (Tex. Apr. 23, 2020)).

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id. at *2.

[9] Id. at *1.

[10] Id.

[11] Id. at *2.

[12] Id.

[13] Id.

Morrisey v. West Virginia AFL-CIO

May 27, 2020

Docket Watch 2020

By Elbert Lin

Just over four years after its enactment, West Virginia’s Right to Work law (the Act) has been definitively upheld by the State’s highest court.  In February 2016, the West Virginia Legislature passed the Act, overrode the Governor’s veto, and made West Virginia the 26th state to enact right-to-work legislation.  Among other things, the law bans collective bargaining agreements that require non-union employees to pay any dues or fees as a condition of employment.  Labor unions challenged the law as violating the West Virginia Constitution.   On April 21, 2020, the West Virginia Supreme Court of Appeals conclusively rejected these arguments, overturned the trial court for the second time, and remanded the case for judgment to be entered for the State.[1] 

The State’s highest (and sole) appellate court had previously found the unions’ constitutional arguments likely to fail.  In September 2017, the Supreme Court of Appeals reversed a preliminary injunction of the Act.  The high court concluded that the unions “had failed to establish, beyond a reasonable doubt, any likelihood of success on the merits as to any of the three theories they argued in support of a finding that the Act is unconstitutional.”[2]  But on remand, the trial court proceeded to enter a permanent injunction, despite “the absence of any additional evidence or arguments,” leading to the second appeal.[3] 

Joined by four of the five justices, the majority opinion in the latest appeal held that “the Act does not violate constitutional rights of association, property, or liberty.”[4]  In so doing, the majority noted that states are “expressly authorized” by the National Labor Relations Act to enact right-to-work laws, that seventeen have laws “like” West Virginia’s, and that no appellate court anywhere has found a right-to-work law unconstitutional.[5]  The majority also stressed that the trial court “clearly erred in its application of” the high court’s previous reversal of the preliminary injunction.[6]

As to associational rights, the majority looked to two decisions of the U.S. Supreme Court, after concluding that the West Virginia Constitution provides no greater protection “in the context of the instant matter” than the U.S. Constitution.[7]  First, the majority held the unions’ position foreclosed by the U.S. Supreme Court’s seventy-year-old decision in Lincoln Federal Labor Union v. Northwestern Iron & Metal Co.,[8] which “rejected the argument that the government infringed upon the rights of the labor organizations by refusing to compel union membership as a condition of employment.”[9]  Second, the majority also found support in Janus v. American Federation of State, County & Municipal Employees,[10] in which the U.S. Supreme Court recently “highlighted the importance of protecting the rights of workers to be free from financially supporting labor organizations whose views they do not share.”[11]  The majority acknowledged that Janus concerned public-sector unions, but explained that “[w]orkers in the private sector have no less of a right than public sector employees to be free from forced association with a labor organization.”[12]

As to property rights, the majority rejected on several grounds the unions’ argument that, by depriving unions of non-member fees, the Act effectuates an uncompensated taking because unions must still provide services to non-member employees.  For one, the majority explained that the obligation on unions to represent all employees is imposed by federal law, not by the Act.  Moreover, unions “actually do receive compensation for their duty to represent all employees in a bargaining unit.”[13]  As explained in Janus, unions receive “exclusive” bargaining status in exchange for that duty, giving them “a privileged place in negotiations over wages, benefits, and working conditions”—a “tremendous increase” in power.[14]

As to liberty rights, the majority was brief.  The trial court found the Act arbitrary and violated substantive due process because it requires unions “to provide expensive services for nothing.”[15]  The majority reiterated that “[t]he obligation to provide services to nonmembers is imposed on labor organizations by federal law, not the Act, and they are compensated for those services.”[16]

Two justices wrote separately.  Justice Hutchison joined the majority in full, but concurred in a short opinion to stress his duties as a justice.  After extolling the virtues of unions, Justice Hutchison explained that he “do[es] not approach this question as a legislator or as a private citizen,” but as a justice.[17]  As such, he must respect that “[w]ith almost clarion unity, courts repeatedly hold that legislatures may give rights to unions and can just as quickly take those rights away with constitutional impunity.”[18]

Justice Workman “reluctantly” concurred in the judgment only.[19]  She thought the trial court’s “carefully crafted decision” was “absolutely correct in its associational rights and takings analyses … at the time it was written, in a pre-Janus world.”[20]  And even though Janus was “wrongly decided” by the U.S. Supreme Court, it now “compel[s]” the majority’s outcome.[21]  Justice Workman criticized the majority for giving short shrift to whether the West Virginia Constitution provides more protection to unions than the U.S. Constitution as interpreted in Janus, but she ultimately could not “say with certainty” that the West Virginia Constitution should be so construed, as striking down a right-to-work law would make West Virginia an “outlier” on a “long, lonely limb.”[22]  Justice Workman also disagreed that the Act “was enacted for a beneficial purpose.”[23]  In her view, the law reflects “a mad rush in state legislatures, including our own, to choke off the lifeblood of labor unions” and “was intended to sound the death knell for both public and private workers’ unions in West Virginia.”[24]

To view this article on the Federalist Society’s website, click here.

Note from the Editor: The Federalist Society takes no positions on particular legal and public policy matters. Mr. Lin represented the U.S. Chamber of Commerce as amicus curiae in the case, and at the preliminary injunction stage was the WV Solicitor and counsel for the State. Mr. Lin’s views expressed here are his own and do not necessarily reflect the view of his clients.

[1] Morrisey v. West Virginia AFL-CIO, No. 19-0298, 2020 WL 1982284 (W. Va. Apr. 21, 2020) (Slip opinion available at

[2] Slip op. at 18.

[3] Id. at 1.

[4] Id. at 2.

[5] Id. at 33-34.

[6] Id. at 64.

[7] Id. at 26.

[8] 335 U.S. 525 (1949).

[9] Slip op. at 38.

[10] 138 S. Ct. 2448 (2018).

[11] Slip op. at 45.

[12] Id.

[13] Id. at 53.

[14] Id. at 53-54 (internal quotations omitted).

[15] Id. at 61 (internal quotations omitted).

[16] Id. at 64.

[17] Slip op. (Hutchison, J., concurring) at 5 (available at

[18] Id.

[19] Slip op. (Workman, J., concurring and dissenting) at 1 (available at

[20] Id. at 2.

[21] Id. at 1-2.

[22] Id. at 17.

[23] Id. at 6.

[24] Id. at 4, 10.

Newell Normand, Sheriff & Ex-Officio Tax Collector for the Parish of Jefferson v., USA LLC

May 12, 2020

Docket Watch 2020

By Adam A. Millsap & Lee A. Steven an e-commerce platform operated by Walmart, Inc. In addition to products offered for sale directly from Walmart, the site allows third-parties to sell products using the digital infrastructure. Pursuant to contract, third-party retailers are “the sellers of record.”[1]’s service includes connecting customers to retailers, providing a checkout system, processing payments, and protecting against fraud.[2] Although retailers may authorize to collect sales taxes on items sold, they are not required to do so and remain responsible for any tax liabilities, including sales taxes, related to their sales on[3]

In Normand v., the Louisiana Supreme Court overturned lower court decisions that found liable for the payment of sales tax on items sold on its online marketplace by third-party retailers.[4] The case was brought on behalf of the tax collector for Jefferson Parish for unpaid sales taxes from 2009 to 2015. Although paid the sales tax due on the sale of its own items, it had not paid or reported sales tax due from online sales made by third party retailers.

The case turned on the interpretation of the word “Dealer” under La. R.S. 47:301(4)(l).[5] Under that statute, a dealer is defined broadly to include retail sellers, manufacturers and producers, lessors and lessees, service providers, recipients of services, and certain persons who make deliveries. The definition also encompasses out-of-state sellers who operate in Louisiana. The statute imposes on the dealer the responsibility for collecting and paying sales tax. Notwithstanding the broad definition, the court held that the statute does not apply to the facilitator of a sale between two parties, such as an online marketplace. was therefore not liable for the taxes at issue.

Specifically, the court noted that pursuant to its contract with third-party retailers, “ never had title or possession of the property being sold by third party retailers and did not transfer title or possession of the property to purchasers.”[6] It therefore concluded that “an online marketplace is not a party to the underlying sales transaction between the third party retailers and their customers, but rather a facilitator of the sale.”[7] The court also reviewed related statues and regulations to explain that:

it is the seller of merchandise, the performer of taxable services, and the rentor or lessor of property as parties to the underlying transactions that are liable for collection of the tax. The statutory and regulatory scheme does not contemplate the existence of more than one dealer that would be obligated to collect sales tax from a purchaser. An online marketplace in its role as a facilitator for sales of third party retailers does not fall in these groups.[8]

The court also discussed the special statutory provisions relating to auctioneers, who are responsible under Louisiana law for the collection and payment of sales taxes. The court acknowledged that, like an online marketplace, auctioneers are facilitators between the seller and purchaser. Because of the unique nature of that relationship, specific legislation was required to obligate auctioneers to collect and pay sales taxes. No such legislation exists for online marketplaces, and absent that legislation:

double taxation could result if both online marketplaces and third party retailers are obligated to collect sales tax on the same transaction. It is not in the province of the judiciary to create an exception (in the context of a retail sale) to the seller’s obligation to collect sales tax for a marketplace facilitator, similar to that legislatively enacted for auctioneers.[9]

Finally, the court looked to the contract between and third-party retailers to find that, “Wal did not contractually assume the obligation of the third party retailers, as dealers, to collect and remit sales tax.”[10] Therefore, the third-party retailers remained liable for the payment of sales tax.

The decision of the majority earned a dissent from the court’s chief justice, who argued that should be considered a dealer within the meaning of the statute. The dissent argued that the definition of dealer in the statute was sufficiently broad to encompass an online marketplace such as It focused on the fact that controlled all aspects of the online sales experience, including the collection of any payments. “ processes all payments and collects all proceeds from the sales, thereby retaining exclusive actual control over the collection of sales taxes from customers for all online market sales transactions, yet refuses to collect those taxes unless expressly requested to do so by the third party seller.”[11] Finding to be a dealer would “eliminate[] this problem and increase[] compliance with sales/use tax collection and remittance, allowing these tax proceeds to benefit the citizens of Jefferson Parish as intended.”[12]

In the wake of the Supreme Court’s decision in South Dakota v. Wayfair, which found that states may impose sales tax on purchases made from out-of-state sellers without a physical presence in the state, this case raises the broader question of whether and to what extent an online marketplace that facilitates third-party transactions should be responsible for the collection of sales tax on those transactions. State legislatures that want to increase the collection of sales tax revenues may start amending their statutes to place the obligation to collect and pay the sales tax directly on online marketplaces.

To view this article on the Federalist Society’s website, click here.

Note from the Editor: The Federalist Society takes no positions on particular legal and public policy matters. Any expressions of opinion are those of the author. We do invite responses from our readers. To join the debate, please email us at

[1] Normand v. USA, LLC, No. 2019-C-00263, slip op. at 27 (La. Jan. 29, 2020).

[2] Id. at 4.

[3] Id. at 27.

[4] The decision was issued on January 29, 2020.  On April 9, 2020, the Louisiana Supreme Court denied an application for rehearing.

[5] The case also involved a detailed issue of procedural law relating to tax collection, discussed at length by both the majority and a dissent.

[6] Normand v. USA, LLC, No. 2019-C-00263, slip. op. at 17 (La. Jan. 29, 2020).

[7] Id.

[8] Id. at 23.

[9] Id. at 26.

[10] Id. at28.

[11] Id. at 3 (Johnson, C.J., dissenting).

[12] Id. at 4.

Indiana Department of Natural Resources v. Kevin Prosser

April 14, 2020

Docket Watch 2020

By Prof. Aaron Nielson

If you are like most people, when you hear the words “administrative law,” you think about big buildings in Washington D.C. where everyone wears suits and speaks in acronyms. Your mind probably does not turn a property owner seeking to install 117 feet of concrete seawall on Lake Manitou in Rochester, Indiana.[1] Yet administrative law is everywhere, including on the shore of Lake Manitou.

On February 24, 2020, the Indiana Supreme Court denied review in Indiana Department of Natural Resources v. Prosser, a case about concrete seawall.[2] The legal issue in Prosser is a familiar one in administrative law: What does “substantial evidence” review require?

 In 2015, Kevin Prosser needed a permit under state law to install a concrete seawall on his property.[3] After the permit was denied, Mr. Prosser sought review from an administrative law judge (“ALJ”).[4] The ALJ concluded that because Mr. Prosser’s property is not “developed,” it is subject to special requirements, including that a seawall must be built with bioengineered materials.[5] Mr. Prosser argued, however, that the area is developed.[6] Both sides agreed that the relevant area had been excavated in 1947.[7] The question was whether that excavation “result[ed] in an increase in the total length of shoreline around the lake.”[8] According to Mr. Prosser, the shoreline was extended, and he had two eyewitnesses (who were children at the time) to prove it.[9] Aerial photos also arguably supported that position.[10] The State, however, offered evidence of its own that cast doubt on Mr. Prosser’s position.[11] The ALJ concluded that there was “insufficient” evidence that “the shoreline of Lake Manitou was increased . . . by dredging or other means” and that the eyewitness testimony was not dispositive.[12]

Mr. Prosser sought judicial review—at first, successfully.[13] He appealed the ALJ’s ruling to the trial court, which concluded that the State’s evidence was insufficient to overcome the eyewitness testimony.[14] The appellate court, however, disagreed.[15] The court reasoned that it was “bound by the agency’s findings of fact if those findings are supported by substantial evidence,” which standard, under both Indiana and federal precedent, is “more than a scintilla, but something less than a preponderance of the evidence.”[16] Applying that deferential standard, the court sided with the State.[17] After all, as the court explained, “it was ALJ’s job to evaluate the testimony of witnesses and other evidence for credibility and weight, and the ALJ’s evaluation of their evidence strikes us as neither arbitrary nor capricious.”[18] The Indiana Supreme Court denied review.[19]

Prosser is especially noteworthy because of a concurrence by Justice Geoffrey Slaughter. Although Slaughter agreed with his colleagues not to hear Prosser, he wrote separately to express concern about substantial evidence review itself.[20] Slaughter observed that “what qualifies as ‘substantial’ evidence is not substantial at all.”[21] Rather, “if there is sufficient evidence in the record, a reviewing court must defer to an agency’s factfinding,” with no de novo review by a jury or judge.[22] Slaughter also expressed discomfort with deference more generally and explained that in a future case he is “open to entertaining legal challenges to this system.”[23] Presumably litigants in Indiana will now begin formulating arguments in response to Slaughter’s call. What those arguments will be remains to be seen. But it is safe to say that administrative law creates difficult questions. Coming up with the right answers will be even more difficult.[24] But it is important to ask questions—and Indiana isn’t a bad place to start.

To view this article on the Federalist Society’s website, click here.

Note from the Editor: The Federalist Society takes no positions on particular legal and public policy matters. Any expressions of opinion are those of the author. We also invite responses from our readers. To join the debate, please email us at

[1] See Ind. Dep’t of Nat. Resources v. Prosser, 132 N.E.3d 397 (Ind. App.), trans. denied 139 N.E.3d 702 (Ind.

App. 2019).

[2] See Prosser,139 N.E.3d at 702.

[3] See Prosser,132 N.E.3dat 398; see also Olivia Covington, Slaughter Invites Challenges to Reviews of Agency Adjudications,


[4] Prosser,132 N.E.3dat 398.

[5] See id. at 399-400.

[6] See Brief of Appellee at 13, Prosser, 132 N.E.3d 397 (No. 18A-MI-02644).

[7] Id. at 16.

[8]Appellant’s Response to Appellee’s Petition to Transfer at 7, Prosser, 132 N.E.3d 397 (No. 18A-MI-2644).

[9] See Prosser, 132 N.E.3d at 399.

[10] Id.

[11] Id.

[12] Id. at 400.

[13] Id.

[14] Id.

[15] Id. at 402.

[16] Id. at 401; see also, e.g., Fla. Gas Transmission Co. v. FERC, 604 F.3d 636, 645 (D.C. Cir. 2010).

[17] See Prosser, 132 N.E.3d at 399, 402.

[18] Id.

[19] Prosser, 139 N.E.3d at 702.

[20] Id. (Slaughter, J., concurring).

[21] Id.

[22] Id.

[23] Id.

[24] See, e.g., Aaron L. Nielson, Confessions of an “Anti-Administrativist”, 131 Harv. L. Rev. F. 1, 12 (2017 (“Because administrative law is complex, there are many ideas, some better and some worse—and all needing further thinking.”).

Brush & Nib Studio v. City of Phoenix

April 3, 2020

Docket Watch 2020

By Jonathan Scruggs

For the last decade, courts and commentators have penned many pages about anti-discrimination norms and religious liberty. Since the U.S. Supreme Court decided Masterpiece Cakeshop v. Colorado Civil Rights Commission,[1] lower courts have tried to balance these interests and begun to protect creative professionals from anti-discrimination laws that force them to speak messages against their conscience. The Arizona Supreme Court’s decision in Brush & Nib Studio v. City of Phoenix exemplifies this trend.[2]

Brush & Nib involved two artists who operate a Phoenix art studio called Brush & Nib Studio.[3] Brush & Nib offers both pre-made artwork and custom commissioned artwork, such as paintings for home decor, hand-lettered signs, wedding vows, and wedding invitations.[4] And though Brush & Nib offers to sell its artwork to anyone, its artists do not create artwork conveying messages contrary to their religious beliefs—such as artwork promoting racism, demeaning others, or celebrating same-sex weddings.[5]

Phoenix has a law forbidding public accommodations from discriminating on the basis of sexual orientation.[6] The law penalizes violators up to $2500 and six months in jail for each day of non-compliance.[7]

Brush & Nib and its artists brought a pre-enforcement challenge to stop the law from forcing them to create custom artwork celebrating same-sex weddings.[8] Forcing them to do so, they argued, would compel them to speak, substantially burden their religion, and therefore violate both the Arizona Constitution’s Free Speech Clause and Arizona’s Free Exercise of Religion Act (FERA)[9]—the Arizona version of the Religious Freedom Restoration Act.

Phoenix countered that (1) the artists and their studio lacked standing; (2) its law regulated discriminatory business activity and only burdened speech incidentally; (3) its law did not compel Brush & Nib’s speech because people would attribute that speech to Brush & Nib’s clients; (4) its law merely required equal treatment and that its effect on the artists was too attenuated to substantially burden their religious beliefs about marriage; and (5) applying its law to the studio served the compelling interest of stopping discrimination and helped prevent widespread discrimination.[10]

Rejecting these arguments, the Arizona Supreme Court ruled 4-3 that Phoenix would unconstitutionally compel speech and violate FERA by forcing Brush & Nib to create custom wedding invitations celebrating same-sex weddings.[11]

As for standing, the majority only analyzed Brush & Nib’s wedding invitations because its other artwork did not sufficiently appear in the record. But the majority found a credible threat that Phoenix would prosecute the artists for declining to create same-sex wedding invitations, particularly because Phoenix conceded its law required this.[12]

As for compelled speech, the majority emphasized that public accommodations laws facially and typically regulate discriminatory business conduct. But these laws still compel speech when applied to “speech itself”—in this case when compelling artists to write words and paint paintings they disagree with. These artists did not forfeit their free speech rights by offering to create speech on commission.[13]

Nor did Brush & Nib’s artwork speak only for their clients. The majority cited tattoo artists, parade organizers, and professional fundraisers as proof that speakers often work with others to create expression. Even when collaborating, artists still have an interest in choosing what they write, paint, or say.[14]

As for religious exercise, the majority found a substantial burden because the law’s steep penalties forced the artists to do something they considered religiously objectionable. Citing Burwell v. Hobby Lobby Stores, Inc.,[15] the majority refused to dismiss this objection as too attenuated from the artists’ fundamental religious beliefs. Doing that would force the court to question the reasonableness of their religious beliefs—something courts should not and cannot accurately do.[16]

And finally, the majority recognized Phoenix’s interest in stopping discrimination but denied its relevance here. Because the studio objected to conveying a message celebrating same-sex marriage for anyone and served LGBT persons generally regardless of their status, the studio did not discriminate against anyone. So compelling the studio to speak did not further Phoenix’s anti-discrimination interest.[17]

This point also negated any slippery-slope concerns. According to the majority, Phoenix can still use its laws to stop actual status-based discrimination. It just cannot use its laws in the rare situation when doing so would compel speech, like writing words or creating paintings. For the majority, this struck the right balance of respecting freedom while still allowing the government to stop status discrimination.[18]

In response to these conclusions, three dissenting opinions echoed arguments made by Phoenix. The first two dissents emphasized that Phoenix’s law textually regulated discriminatory conduct, and that it did not require the artists to endorse any view but merely required them speak their clients’ views, and therefore only burdened speech incidentally—a burden justified by the state’s compelling interest in stopping status discrimination.[19]

These two dissents also denied any substantial burden on the Brush & Nib artists, saying the law did not affect “fundamental tenets” of their beliefs and that courts should inquire into the “nexus” between a religious belief and a particular practice to decide whether a substantial burden exists.[20]

And all three dissents raised line-drawing and slippery-slope concerns: that the majority opinion would open the door to discrimination of different sorts in the future, whether based on sexual orientation, race, or religion.[21]

The Brush & Nib decision will have far-reaching consequences inside and outside Arizona. In its 52-page decision, the Arizona Supreme Court tackled most of the arguments in this controversial area of law and provided a blueprint for balancing anti-discrimination norms and constitutional rights—protecting dissent and good-faith disagreement on one hand yet still giving officials the tools to stop status discrimination on the other. And because the majority relied almost entirely on federal caselaw, other courts will surely cite and grapple with the Brush & Nib analysis when similar questions pop up elsewhere.

Note from the Editor: The Federalist Society takes no positions on particular legal and public policy matters. Alliance Defending Freedom represented Brush & Nib Studio and the studio’s artists in their case against the City of Phoenix, with Mr. Scruggs serving as lead counsel throughout the litigation. Mr. Scruggs’ view expressed here are his own and do not necessarily reflect the view of his clients.

To view this article on the Federalist Society’s website, click here.

[1] Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Comm’n, 138 S. Ct. 1719 (2018).

[2] Brush & Nib Studio, LC v. City of Phoenix, 448 P.3d 890 (Ariz. 2019).

[3] Id. at 898.

[4] Id. See also; (depicting some of these art pieces).

[5] Brush & Nib, 448 P.3d at 897-98.

[6] Id. at 898.

[7] Id.

[8] Id. at 899.

[9] Id. at 899-900.

[10] Id. at 900, 905, 911-12, 916, 920-21, 923.

[11] Id. at 926.

[12] Id. at 901-02.

[13] Id. at 914, 928-29.

[14] Id. at 907-08, 910-11.

[15] Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014).

[16] Brush & Nib, 448 P.3d at 919-22.

[17] Id. at 909-10, 914-15, 922-26.

[18] Id. at 908, 916, 923-26.

[19] Id. at 929-34, 937-38.

[20] Id. at 934-35, 939-40.

[21] Id. at 937-39, 941.

Zarate v. Tennessee of Cosmetology and Barber Examiners

November 30, 2018

Why should a barber have to graduate high school? Barbers cut hair. They don’t need to know calculus, or explore themes of alienation in King Lear. So why does Tennessee require barbers have a high school diploma or a GED even before they can attend barber school? And then once in barber school, barbers are still required to get 1,500 of training, and then pass a state exam. Won’t that ensure everything a barber could possibly need to know to ensure public safety? This is the question posed in Tennessee in Zarate v. Tennessee of Cosmetology and Barber Examiners.

The high school requirement appears irrational enough on its own. But when compared to other professions that do not require a high school degree, it becomes downright mind-blowing. Cosmetologists don’t need to graduate high school and they have virtually the same job description. Other jobs in Tennessee that a person can do without a high school degree include Emergency Medical Responders, who provide lifesaving interventions in emergency situations, as well as governor, senator, and representative. If Elias wanted to save a life or write a law, his educational level would not disqualify him. Unfortunately, it does disqualify him from cutting hair.

Elias is the picture of the American determination, with a particular kind of spirit only found in a city as soulful as Memphis. He has not had an easy life. When he was a boy, his mother was pushing their stranded car off a busy road when a truck slammed into the back of the car, crushing her and sending Elias into a coma. Not long after, his father abandoned the family. At age thirteen (13), Elias was on his own in the streets of Memphis. Grandparents first cared for his younger brother and sister, but the situation was to get still worse.

Elias, although essentially homeless, still made it to his senior year of high school, attending classes by day, working odd jobs at night, and couch surfing when he needed sleep. But he had to drop out to begin assuming care of his brother and sister. His academic career was derailed for good. In the middle of his senior year, he dropped out and dedicated himself solely to their needs.

Now, ten (10) years later, Elias is settled down and a father of his own baby girl. He is ready for something more satisfying than just a job. He wants a career. And he has always had a dream of becoming a barber.

When he was a boy, he grew up around barbershops. He found the calling endlessly fascinating. He loves the scissors, the gowns, the white shirt, and the barber pole. Barbering is the perfect career for someone like Elias who is likeable, creative, hardworking and social. And it is one of the few stable professions with a pathway to business ownership available to persons without a high school degree. So why would Tennessee deny that to him?

Nothing is more American than Elias’s relentless determination to rise in the face of this adversity. He wants nothing other than to redeem the most American of promises – to make sure that his family has it better than he did. He has sacrificed enough by delaying his dream in service of others. This would be his time, but for a Tennessee law with no legitimate justification.

It is hard not to see the hand of protectionism behind the scenes. The challenge is to try and even dream up another justification other than protecting licensed barbers from upstarts. And the high school requirement is not some relic; it was passed in 2015 as part of a sprawling “clean up” bill that never even mentioned that it was upping the standards for barbers. The legislators didn’t even seem to know about it. Unsurprisingly, there is no record of consumer complaints over insufficiently educated barbers mentioned in the legislative record.

Typically, review of economic liberty claims falls under the rational basis test. Under this form of review, the government is given extreme latitude, a fact the government makes evident when responding to these claims. The government will argue that there is no such thing as a constitutionally arbitrary law when it comes to taking away a person’s right to earn a living. Why should that be when we spend most of our time at our jobs? After our families, what else is more important? And even more arbitrary is the decision to a greater burden on barbers then are placed on other jobs, including ones that would seem to pose an equal (cosmetology) or greater (EMR) risk to public safety. If any case was calculated to test for whether such a thing as a constitutionally arbitrary law exists, this is it.

Tennessee typically follows the example of federal courts when it comes to economic liberty claims, but it has not really been put to the test recently. Of course, the states have their own constitutions. Those can and often do have different constitutional protections for liberty as befits a separate and equal sovereign. There’s no reason why Tennessee or any other state should feel obligated to give the government this much rope to intrude on one of our most precious rights – the right to earn a living.

Tennessee was one of the first states created after the original thirteen. The principle interests of its founders were all economic as small farmers streamed across the Appalachian Mountains in search of good land after the Revolutionary War. Its people had a different experience. Its Constitution is a reflection of a distinct heritage. Economic liberty should be considered a vital and fundamental right in Tennessee.

What is at stake for Elias sure feels like a fundamental right. He can only hope that Tennessee courts recognize the importance of economic liberty, if not as a matter of federal law, then as a matter of Tennessee state law. He has sure earned it.

Herr v. U.S. Forest Service

November 30, 2018

On Monday, the U.S. Supreme Court denied certiorari in SWC, LLC v. Herr, ending a 25-year battle for property rights in Michigan’s Upper Peninsula.   The case concerned the U.S. Forest Service’s (“USFS”) criminal prohibition on motorboat use on Crooked Lake, where private landowners share the lake with a national wilderness.   At issue was whether Congress delegated the full scope of its Property Clause power in Article IV, Section 3 to the USFS when it passed the Michigan Wildness Act (“MWA”).

Congress passed the MWA in 1987, designating lands as the Sylvania Wilderness and placing them in the National Wilderness Preservation System.  Section 5 of the MWA provides: “[s]ubject to valid existing rights, each wilderness area designated by this Act shall be administered by the Secretary of Agriculture in accordance with the provisions of the Wilderness Act ….” 101 Stat. at 1275–76.  The saving clause, “subject to valid existing rights,” is frequently used by Congress and the Executive Branch to protect existing rights and legitimate expectations from subsequent changes in the law.

Approximately 95% of Crooked Lake is within the boundaries of the Sylvania Wilderness. There are approximately a dozen private lots along the north shore of the lake that are outside the wilderness.  Respondents David and Pamela Herr own two of these lots.

The legal battle began in 1992 when the USFS prohibited the use of sailboats and houseboats on the portions of Crooked Lake within the Sylvania Wilderness.  Landowners sued, claiming that the restrictions infringed upon their littoral rights in violation of the saving clause, “[s]ubject to valid existing rights.”  Stupak-Thrall v. United States, 843 F. Supp. 327, 328–29 (W.D. Mich. 1994), aff’d, 70 F.3d 881 (6th Cir. 1995), vacated, 81 F.3d 651 (6th Cir. 1996), aff’d by an equally divided en banc court, 89 F.3d 1269 (6th Cir. 1996) (“Stupak-Thrall I”).

In May 1995, while Stupak-Thrall I was pending, the USFS issued another rule, which prohibited the use of gas-powered motorboats on those portions of Crooked Lake within the wilderness.  In Stupak-Thrall II, the plaintiffs challenged those restrictions on the grounds that the restrictions also infringed on their littoral rights in violation of the saving clause.  Stupak-Thrall v. Glickman, 988 F. Supp. 1055 (W.D. Mich. 1997) (“Stupak-Thrall II”).  The district court recognized that, under Michigan law, littoral landowners “share in common the right to use the entire surface of the lake for boating and fishing, so long as they do not interfere with the reasonable use of the waters by the other riparian owners[,]” and that this right includes the right to use gas-powered motorboats.  Because the USFS’s authority to manage the wilderness is “subject to valid existing rights,” the court ruled that the USFS lacked the authority to restrict the plaintiffs’ ability to use gas-powered motorboats on Crooked Lake.  Accordingly, the court declared the restrictions invalid and permanently enjoined the USFS from enforcing its restrictions against the plaintiffs.

But the saga would not end there.

In 2010, David and Pamela Herr purchased two littoral lots on Crooked Lake with the specific intent to use gas-powered motorboats over the entire surface of Crooked Lake.  In 2013, however, the Herrs received a letter from the USFS stating that it planned to enforce the same motorboat restriction against them—a criminal penalty.  It claimed the Stupak-Thrall II ruling did not apply to the Herrs because they purchased the property in 2010.

The Herrs filed suit under the Administrative Procedure Act.  The district court granted summary judgment in favor the USFS and Intervenors.  Although the court recognized that the Herrs’ littoral rights granted them the right to use their gas-powered motorboat, it ruled that they were not protected by the saving clause, because the Herrs did not own those rights in 1987 when the MWA was enacted.

The Herrs appealed to the Sixth Circuit.  In a 2-1 decision, the Sixth Circuit reversed the district court and found that the motorboat restrictions violated the MWA’s saving clause because they infringed on the Herrs’ rights under well-established Michigan property law.  The Sixth Circuit found that “Michigan courts have repeatedly indicated” that recreational boating “amounts to a reasonable use.”  Moreover, those property rights run with the land and were thus transferred to the Herrs upon purchase.

The U.S. Forest Service did not seek certiorari.  However, a coalition of environmental groups that had intervened in the case did.  Petitioners alleged that the Sixth Circuit’s opinion conflicted with the Supreme Court’s decisions in Camfield v. United States, 167 U.S. 518 (1897) and Kleppe v. New Mexico, 426 U.S. 529 (1976) because it was a direct challenge to Congress’s exercise of its Property Clause power.  Respondents argued that, unlike in Kleppe and Camfield, the Sixth Circuit’s decision had nothing to do with the constitutionality of a statute.  Rather, the crux of Herr was the MWA’s saving clause and littoral rights under Michigan law.

In denying certiorari, the U.S. Supreme Court affirmed a huge property rights victory for Michigan landowners.

Christian B. Corrigan is an attorney at Mountain States Legal Foundation, a nonprofit, public interest law firm which has represented Respondents David and Pamela Herr in their battle against the U.S. Forest Service.  He is a member of the Federalism and Separation of Powers Practice Group Executive Committee.  

State of Indiana v. Norfolk S. Ry. Co., 2018 Ind. LEXIS 560

November 30, 2018

The Indiana Supreme Court unanimously held that Indiana’s blocked-crossing statute is expressly preempted by the Interstate Commerce Commission Termination Act (“ICCTA”). Indiana’s blocked-crossing statute prohibits railroads from blocking highway grade crossings for more than ten (10) minutes. A violation is a Class C infraction and subject to a $200 fine.

Between December 2014 and December 2015, Norfolk Southern Railway Company (“Norfolk Southern”) received twenty-three (23) citations for blocking railroad crossings near its train yard in Northeastern Indiana. Norfolk Southern moved for summary judgment on the citations for violations arguing that the ICCTA and Federal Railroad Safety Act (“FRSA”) expressly preempted Indiana’s blocked-crossing statute. The trial court granted summary judgment finding that the ICCTA and the FRSA preempt the blocked-crossing statute. The State appealed, and the Court of Appeals reversed because neither the ICCTA nor the FRSA explicitly list blocked-crossing statutes as preempted.

The issues considered by the Indiana Supreme Court were: 1) whether the presumption against preemption applied in this case; and 2) whether the ICCTA and the FRSA expressly preempted Indiana’s railroad blocked-crossing statute. The Court applied the presumption against preemption, and held that the blocked-crossing statute is expressly preempted by the ICCTA without addressing the FRSA.

First, the Court determined that the presumption against preemption applied. Generally, there is a strong presumption, rooted in federalism, against preemption. An exception to the rule applies in instances where the conduct being regulated has historically been within the purview of the federal government. United States v. Locke, 529 U.S. 89, 108 (2000). Norfolk Southern argued that the presumption should not be applied since rail transportation has historically been regulated by the federal government.  In the case of railroads, the federal government has for well over a century provided regulation and oversight. However, while the Court considered the federal government’s long-standing regulation of railroads, the Court distinguished between the regulation of railroads and the regulation of railroad crossings.  Indiana has regulated blocked railroad crossings, the regulation of which remains a part of the State’s police power, going back to the 1860s, and the blocked-crossing statute in its current form goes back to 1972. Because of the State’s longstanding concern with blocked crossings, the Court applied CSX Transp., Inc. v. Easterwood, and held that the presumption against preemption applies since the presumption covers those matters that are traditionally regulated by the State as railroad crossings are. 507 U.S. 658 (1993).

Second, the test applied by the Court was whether Indiana’s blocked-crossing statute had “the effect of managing or governing rail transportation.” Delaware v. Surface Transp. Bd., 859 F.3d 16, 19 (D.C. Cir. 2017) (internal quotations omitted). The ICCTA provides that the Surface Transportation Board’s (“STB”) jurisdiction over transportation by rail carriers and the remedies provided under the ICCTA are “exclusive and preempt the remedies provided under . . . State law.” 49 U.S.C. § 10501(b). The Court held that because Norfolk Southern would have to have shorter trains, move at faster speeds, or otherwise change its operational choices to comply with the statute, the blocked-crossing statute regulates transportation. The State argued that the ICCTA would only preempt the blocked-crossing statute if the regulatory impacts were economic, but the Court rejected that argument because the plain text of the ICCTA does not limit preemption to economic regulations. However, the Court was clear that State maintains its traditional authority over rail crossings. Because the ICCTA preempts Indiana’s blocked-crossing statute, the Court did not address the FRSA.

Over the last year, several municipalities in and around central Indiana have had problems with trains blocking crossings for extended periods of time. Given the Court’s ruling, municipalities have little recourse other than to, as the Court suggested, file complaints with the STB’s Rail Customer and Public Assistance Program. Meanwhile, frustrated commuters are at the mercy of Congress and the federal government to provide relief at blocked railroad crossings.

1A Auto, Inc. v. Sullivan

November 30, 2018

Massachusetts law bans for-profit corporations and other business entities from contributing to political candidates and committees. And, unlike federal law, it doesn’t even allow businesses to make contributions indirectly through a PAC.

On the other hand, Massachusetts allows unions to give as much as $15,000 to the political candidates, committees, and parties they favor, and it allows them to create PACs to give even more.

In 2015, two small businesses represented by the Goldwater Institute sued to challenge this scheme for violating their rights under the First Amendment, the Equal Protection Clause of the Fourteenth Amendment, and similar provisions of the Massachusetts Constitution. In September 2018, the Massachusetts Supreme Judicial Court ruled against them.

The Massachusetts court concluded it was bound to uphold the ban under FEC v. Beaumont, in which the U.S. Supreme Court rejected a First Amendment challenge to the federal ban on corporate political contributions.

But the court did note that “the landscape of campaign finance law has changed significantly since Beaumont,” particularly with Citizens United v. FEC. And it acknowledged that Beaumontupheld the federal ban based partly on two supposed government interests that Citizens Uniteddeclared to be illegitimate purposes for campaign finance rules: protecting dissenting corporate shareholders and countering the “misuse” of corporate wealth to wield “undue influence [over] an officeholder’s judgment.” Still, the court believed it had to follow Beaumont because Citizens Uniteddidn’t overrule it.

The plaintiffs, however, maintain that Beaumont shouldn’t have doomed their claims in any event because the federal ban it upheld differed from the Massachusetts ban in two key respects: It gave corporations the option to make contributions indirectly through a PAC, and it applied equally to corporations and unions.

The Massachusetts court also rejected the plaintiffs’ equal protection claim. It concluded that, if the ban on corporate contributions would tend to prevent corruption or the appearance of corruption at all (as the court assumed it would), it could survive the less-than-strict scrutiny the Supreme Court prescribed for challenges to campaign-contribution limits in Buckley v. Valeo. The court saw no problem with the state’s failure to likewise limit unions, citing a Supreme Court decision stating that “policymakers may focus on their most pressing concerns.”

A separate opinion from Massachusetts Chief Justice Scott L. Kafker concurred in the result but criticized the majority for so easily brushing aside the statute’s discrimination in favor of unions and against businesses. But he too found Beaumont controlling unless and until the Supreme Court applies the reasoning of Citizens United to subject corporate-contribution bans to greater scrutiny.

The plaintiffs will file a petition for certiorari asking the U.S. Supreme Court to take their case on December 5.  If accepted, the case could give the Court the opportunity to: (1) clarify that Beaumontdoesn’t require courts to automatically uphold state bans on corporate contributions; and (2) direct lower courts to subject campaign finance schemes that favor some donors over others to more rigorous scrutiny than the Massachusetts court (among others) has given them.