New State Ice Company v. Liebmann (1932)
In this case the Supreme Court manifested its historic dedication to the protection of economic liberty under the Due Process Clause of the Fourteenth Amendment. At issue was a 1925 Oklahoma statute that declared the manufacture and sale of ice to be a “public business” and prevented persons from engaging in this activity without a license. The law further forbade the grant of new licenses to sell ice except upon proof of a necessity for an ice supply in a particular community. Enacted at the behest of major ice firms, the practical effect of the regulation was to shut out new enterprises and thus confer a de facto monopoly on the existing businesses. New State Ice Company brought suit under the statute to enjoin Ernest Liebmann from selling ice in Oklahoma City without a license. Liebmann insisted that he had a liberty interest protected by the Due Process Clause to engage in a common calling.
Finding that the Oklahoma law unreasonably curtailed the common right to engage in a lawful business, Justice George Sutherland, speaking for a 6–2 majority of the Court, held that the license requirement violated the Due Process Clause. He insisted that a state legislature could just declare by fiat that a line of ordinary business was affected with a public interest and then impose anticompetitive regulations. Sutherland specifically noted that the challenged regulations hurt the interests of the consuming public. Underscoring the high constitutional standing of property rights, he equated economic liberty and freedom of expression. “The opportunity to apply one’s labor and skill in an ordinary occupation with proper regard for all reasonable regulations,” Sutherland observed, “is no less entitled to protection” than freedom of the press. Sutherland’s analysis was consistent with the views of the framers of the Constitution and Bill of Rights, who did not differentiate between property ownership and other individual rights.
In a lengthy dissenting opinion citing abundant social science data, Justice Louis D. Brandeis argued that the need to eliminate “destructive” competition was primarily a matter for legislative determination. Brushing aside concerns that the statute fostered monopoly, he maintained that federal and state governments must have the power “to remould, through experimentation, our economic practices and institutions to meet changing social and economic needs.” In often-quoted language, Brandeis asserted, “It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” The Brandeis dissent reflected his personal support for an enlarged regulatory role for government, and his devotion to federalism. As he saw it, states should be free to fashion new solutions to economic and social concerns.
New State Ice was a classic defense of economic freedom by the pre–New Deal Court. Although never overruled, it has been effectively superseded by decisions that recognize broad legislative authority to regulate business enterprise and back away from reviewing economic legislation under the Due Process Clause. Some scholars, however, have recently defended New State Ice on grounds that the Oklahoma statute was nothing more than an arbitrary entry barrier that burdened consumers in order to protect established ice companies from competition.
Hadley Arkes, The Return of George Sutherland: Restoring a Jurisprudence of Natural Rights (Princeton, NJ: Princeton University Press, 1994); James W. Ely Jr., The Guardian of Every Other Right: A Constitutional History of Property Rights, 2nd ed. (New York: Oxford University Press, 1998); and Michael J. Phillips, The Lochner Court, Myth and Reality: Substantive Due Process from the 1890s to the 1930s (Westport, CT: Praeger, 2001).
James W. Ely Jr.
Last Updated: 2006