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We hope this session of Congress will enact legislation along the lines of S. 1732.

Sincerely yours,

MATTHEW E. WELSH,

Governor.

CONSTITUTIONAL BASES FOR THE PUBLIC ACCOMMODATIONS BILL-A BRIEF ON THE CONSTITUTIONAL ISSUES PREPARED AT THE REQUEST OF THE COMMITTEE BY PROF. PAUL A. FREUND OF HARVARD LAW SCHOOL

I. THE COMMERCE POWER

1. Objectives of legislation enacted under the Commerce Clause

The mobility of persons and goods in our society has marked many problems, otherwise local, as issues of national concern. Time and again Congress has responded by legislating under the Commerce Clause of the Constitution, to reach what it regarded as an abuse or an evil in the State of origin or production or in the State of destination or consumption. To cope primarily with abuses in the State of origin Congress has enacted such statutes as the Sherman Act, the child-labor law, the Fair Labor Standards Act, and the Labor Relations Act. To deal with abuses or injuries in the State of destination we have had the lottery ticket law, the Mann Act, the pure food and drug legislation, the Federal Trade Commission Act and its supplements. It is clear that the power under the Commerce Clause is adapted to a wide variety of ends; goods may be excluded from interstate commerce though they are harmless in themselves, if they may be used for harmful or immoral purposes by the recipient (e.g., lottery tickets), and local activities may be regulated even though they do not affect interstate commerce in a competitive way, if they involve a hazard to the consumer of goods that have utilized the channels of interstate commerce (e.g., the retailing of foods and drugs).

More particularly, discrimination of one kind or another has been a common target of legislation under the Commerce Clause, quite apart from the conspicuous case of carriers and facilities connected therewith. Antiunion discrimination in the hiring or discharge of employees is the major object against which the Labor Relations Act is directed. Discrimination in pricing among purchasers is the object against which the Robinson-Patman Act is leveled. Similarly, the protection of consumers or patrons is the aim of much legislation under the commerce power: the protection of the ignorant or gullible against deception, in laws requiring labeling of foods or of textiles and in laws dealing with the marketing of securities; the protection of the physically susceptible against organic harm, in the pure food and drug laws; the protection of the financially incapable against their own propensities, in the lottery law.

Thus the objective of the public accommodations bill-protection against discrimination, and protection at the point of destination of persons or goods, when they are consumers or patrons, is by no means an unparalleled one in the exercise of the commerce power. It remains to consider more closely the patterns of legislation under the clause and the question of coverage, as they bear on the pending bill.

2. Patterns of legislation

Two major legislative techniques have been employed under the Commerce Clause. One is to regulate practices local in themselves that substantially affect commerce among the States. Familiar instances are the antitrust laws (as applied to contracts, boycotts, or strikes), the Federal wage and hour legislation, and the guarantee of collective bargaining. As the Court said in United States v. Darby, 312 U.S. 100, 119 (1941), “But long before the adoption of the National Labor Relations Act this Court had many times held that the power of Congress to regulate interstate commerce extends to the regulation through legislative action of activities intrastate which have a substantial effect on the commerce or the exercise of the congressional power over it." The second pattern or technique of legislation under the clause is to prohibit the use of the channels of interstate commerce where such use facilitates or makes more profitable an evil or abuse such as child labor in the State of origin or mislabeling in the State of consumption. The Fair Labor Standards Act utilizes both techniques.

The bill follows the first of these patterns. Its findings are well within the legislative models that rest on the effects of local practices on commerce among the States. In this connection it is worth noting that the constitutional test takes account not merely of the effects of the individual practices of a particular establishment but of the aggregate or cumulative effect of such practices on a national scale. The Supreme Court had occasion just this year to restate this proposition, in a case arising under the National Labor Relations Act. The proceeding involved a New York retailer of fuel oils, whose operations were local, and who had purchased within the State a "substantial amount" of oil products from a supplier who in turn had purchased most of its products from sellers outside the State. The labor practices of the retailer were held to fall within the statute and the constitutional range of Federal power. The Court said, quoting the earlier decision in Polish National Alliance v. N.L.R.B., 322 U.S. at 648: “Whether or no practices may be deemed by Congress to affect interstate commerce is not to be determined by confining judgment to the quantitative effect of the activities immediately before the Board. Appropriate for judgment is the fact that the immediate situation is representative of many others throughout the country, the total incidence of which if left unchecked may well become far reaching in its harm to commerce." N.L.R.B. v. Reliance Fuel Oil Corp., decided January 7, 1963, unanimously and per curiam, 371 U.S. 224.

3. Statutory coverage; the question of vagueness; suggestions for drafting

The operative definitions in the bill are contained in section 3. Subsections (1) and (2), relating to places of lodging for transient guests and places of entertainment, are straightforward and should not produce any troublesome doubts concerning coverage. The more complex definition relates to retail establishments of various kinds, described in subsection (3). Of the four alternative criteria provided for such establishments, the second (paragraph (ii)), should afford clear guidance for a great many; i.e., those which sell goods a "substantial portion" of which has moved in interstate commerce. Where this criterion is satisfied, no further test of coverage need be considered.

The problem of vagueness really centers on paragraph (iii), a kind of residual clause for retail establishments: "the activities of such place of business otherwise substantially affect interstate travel or the interstate movement of goods in commerce." Certain points can be made in mitigation, or extenuation, of the element of indefiniteness here. Since this is meant to be coextensive with constitutional power, the decisions under such statutes as the Sherman Act and the Labor Relations Act, which are similarly based, will be useful guides. Moreover, the sanctions provided in the bill are limited to injunctive relief, so that there would be a judicial determination and warning of coverage before anv penalties attached for violation; in this respect the problem of indefiniteness is much less severe than, for example, in the Sherman Act, which carries criminal sanctions as well.

Nevertheless, after making these allowances, the question remains whether paragraph (iii) of section 3 (a) (3) is really necessary, and whether a different kind of residual clause might be included that would avoid such vagueness as the paragraph entails. The substitution of a phrase such as "in interstate commerce" would aggravate rather than mitigate the difficulty, in view of the wavering and uncertain lines that have been drawn in the application of that concept under the Federal Trade Commission Act and early versions of the Federal Employers Liability Act. See, e.g., F.T.C. v. Bunte Bros., 312 U.S. 349 (1941); F.T.C. v. Cement Institute, 333 U.S. 683 (1948); Shanks v. Delaware, L. & W. RR., 239 U.S. 556 (1916). A more useful substitute would be a clause providing that in the case of any establishment described in section 3(a) (3) which does not meet the criteria of paragraphs (i), (ii), or (iv), and which has engaged or is about to engage in prohibited practices, it shall be enjoined, while such praetices occur, from selling goods that have moved in interstate commerce and from acquiring such goods through the channels, directly or indirectly, of interstate commerce. This provision might be added to section 5, the enforcement section. The constitutional basis for such a provision is found in what was described above as the second pattern of legislation under the Commerce Clause. In the interest of consumers Congress has recognized the integral nature of the process of distribution, as in the food and drug legislation, and the Court has sanctioned this exercise of power. In an early case under the Food and Drugs Act, the Court held the application of the labeling provisions of the act to a retailer

even after the articles were removed from their original package for sale to local purchasers. McDermott v. Wisconsin, 228 U.S. 115 (1913). It is now established that the act may be applied to the retailer even though he has purchased the articles from a local wholesaler or distributor, where they reached the wholesaler from another State, and even though they were properly labeled when they reached the retailer. U.S. v. Sullivan, 332 U.S. 689 (1948).

Such a provision would in principle be a counterpart of the child-labor section of the Fair Labor Standards Act (29 U.S.C. sec. 212), which prohibits the interstate shipment of goods produced in any establishment where within 30 days prior to removal therefrom "any oppressive child labor has been employed." All products of such an establishment are kept out of interstate commerce, not merely those products on which child labor has been employed. If a producer wishes to preserve the supposed advantages of child labor, he must confine himself to a market in his own State. Under the suggested provision, if a retail establishment not otherwise subject to the commerce definitions of the act wishes to preserve the supposed advantages of a racially selected clientele, it must confine itself to dispensing products of its own State. The interstate shipper himself could be brought into the plan by requiring him to obtain a warranty of nondiscriminatory merchandising from his purchaser, and so on down the line, but this would be needlessly cumbersome and is adverted to here only to show that a more formal linkage to the shipper is possible without varying the substance of the regulation.

Adoption of such a proposal would by no means obliterate the limits on congressional power under the Commerce Clause. Like the great variety of regulations that have been sustained, this one rests on a functional relationship between the facilities of interstate commerce and the abuse or evil at which the Federal measure is directed. It would thus differ fundamentally from hypothetical excesses of Federal authority such, for example, as a Federal code of marriage or divorce enforced by the closing of the channels of interstate commerce to violators of the code.

The committee may wish to consider two or three other suggestions for drafting, for the sake of greater assurance and clarity. It has been assumed that section 3(a) (3) (iii), as drawn, is an alternative and independent catchall provision, not limiting or qualifying the preceding paragraphs (i) and (ii); that is, that the phrase "otherwise substantially affect interstate commerce" does not imply that in the case of an establishment meeting the tests of (i) and (ii) it must also be shown that its individual practices "substantially affect" interstate commerce. It would be helpful if the findings in section 2 made this plainer, by stating that the cumulative and aggregate effect of the described practices substantially affects commerce among the several States. Cf. N.L.R.B. v. Reliance Fuel Oil Corp., discussed above.

The findings might also include a statement that concerted refusals to patronize establishments that discriminate have led to sympathetic consumer boycotts in other States, directed at establishments under the same ownership or control. The Commerce Clause speaks of commerce "among the several States," which Chief Justice Marshall took to mean "that commerce which concerns more States than one," a concept more encompassing in some respects than the familiar paraphrase "interstate commerce." See Gibbons v. Ogden (9 Wheat. 1, 194 (1824)); Hughes J., in Minnesota Rate Cases (230 U.S. 352, 398 (1913)). Another finding might state the fact that the channels of interstate commerce are used to facilitate and make more profitable the businesses practicing discrimination. That a discriminatory outlet enjoys the benefits of a nationwide source of supplies is surely relevant to the issue of Federal authority. Such a finding would be particularly relevant if the additional enforcement measure were adopted, but it would be helpful, as it is true, in any event.

4. Rights of property and freedom of association

Every exertion of power under the Commerce Clause has involved some restriction on the use of property or the exercise of liberty while at the same time enlarging the effective liberties and the proprietary interests of others. This is true of any significant regulation enacted to promote social justice. It is hardly necessary to pursue this truism here, except to underscore its pertinence to the issue of discrimination. The merchant who is forbidden by the Robinson-Patman Act to discriminate in price among his customers, and the business that is forbidden by the Labor Relations Act to discriminate on the basis of union activities among its employees, bear witness both to the congressional regulatory policy and to its constitutional validity under the guarantee that persons shall

not be deprived of liberty or property without due process of law. The employer's claim to be free to set his own terms for his employees' organizational activities, as part of his rights as owner of the business, was rejected, and not for the first time, in the Labor Board cases. The Court relied, for this issue, on an earlier decision under the Railway Labor Act, Teras & N.O. R.R. v. Brotherhood of Ry. Clerks (281 U.S. 548 (1930)). The employer's claim was pressed with special force in the Associated Press case, coupled as it was with the claim to freedom and independence of the press. But the Court again rejected it, pointing out that the act permits a discharge for any reason other than union activity. Associated Press v. N.L.R.B. (301 U.S. 103 (1937)). The problem of evidence of motive is, if anything, more intricate and difficult in such cases than in refusals to serve persons of color.

The principle of these cases is not, of course, confined to the employer's side or to the employment relationship. Labor unions themselves may be required to admit to membership on a racially nondiscriminatory basis. When a union attacked this provision of the New York civil rights law as an infringement of its rights of property and liberty, including the right to choose one's associates, the argument was sharply and unanimously rejected. Railway Mail Assn. v. Corsi, 326 U.S. 88 (1945). Mr. Justice Reed, for the Court, said (pp. 93–94): "We have here a prohibition of discrimination in membership or union services on account of race, creed, or color. A judicial determination that such legislation violated the 14th amendment would be a distortion of the policy manifested in that amendment, which was adopted to prevent State legislation designed to perpetuate discrimination on the basis of race or color." Mr. Justice Frankfurter was even more summary in a concurring opinion (p. 98): “Apart from other objections, which are too unsubstantial to require consideration, it is urged that the Due Process Clause of the 14th amendment precludes the State of New York from prohibiting racial and religious discrimination against those seeking employment. Elaborately to argue against this contention is to dignify a claim devoid of constitutional substance." The same principle, with a citation to the foregoing case, served to sustain the constitutional validity of the District of Columbia law prohibiting discrimination on account of race or color in a restaurant. District of Columbia v. John R. Thompson Co., 346 U.S. 100 (1953). The unanimous opinion, by Mr. Justice Douglas, stated (p. 109): “and certainly so far as the Federal Constitution is concerned there is no doubt that legislation which prohibits discrimination on the basis of race in the use of facilities serving a public function is within the police power of the States." On the issue of rights of property and association, the same conclusion applies as well to national legislation.

5. An issue of legislative policy, not constitutional power

The judicial history of the Commerce Clause has been, with the rare exceptions (like the ill-starred child-labor decision, later overruled), a record of support of Congress in dealing with commerce that concerns more States than one. At each step there was a vigorous effort by counsel to limit the power on the ground that in some aspect the application of the power was novel. Thus it was argued, on various occasions, that the power to regulate did not include the power to prohibit; that only articles harmful or noxious in themselves could be excluded; that commerce signified goods, not the movement of persons; that after goods were removed from their original package and held for local sale they were in the sole control of the State legislature; and that this was true at all events if the goods were both acquired and sold within the State. All of these contentious efforts proved unavailing in the face of a genuine occasion for national regulation. Fifty years ago, in the white-slave case, Justice McKenna remarked impatiently on these attempts to circumscribe the power of Congress (Hoke v. U.S., 227 U.S. 308, 320): "Congress is given power to regulate commerce with foreign nations and among the several States. The power is direct, there is no word of limitation in it, and its broad and universal scope has been so often declared as to make repetition unnecessary. And besides, it has had so much illustration by cases that it would seem as if there could be no instance of its exercise that does not find an admitted example in one of them. Experience, however, is the other way, and in almost every instance of the exercise of the power differences are asserted from previous exercises of it and are made a ground of attack. The present case is an example."

The issue is one of legislative policy, not constitutional power. "The authority of the Federal Government over interstate commerce," the Supreme Court has said, "does not differ in extent or character from that retained by the States

over intrastate commerce." U.S. v. Rock Royal Co-operative, 307 U.S. 533, 569 (1939). The question is whether the same power that has been used in the interest of preventing deception, disease, and immorality, as well as discrimination against members of unions and against small business, shall be utilized in the interest of preventing discrimination among patrons of establishments whose practices have repercussions throughout the land and which take advantage of the facilities of our national commercial market for their patronage or their supplies or both.

Perhaps a word should be added about the refusal of the Supreme Court in the Civil Rights Cases of 1883 to uphold the Civil Rights Act of 1875 by virtue of the Commerce Clause. That act was addressed to carriers, hotels and inns, and public places of entertainment. It would undoubtedly have been more difficult then than now, given the nature of the Nation's economy, to frame an effectively comprehensive law under the commerce power. However, that may be, the short answer is that the act was not so framed, it was a criminal statute, and the Court was unwilling to recast the operative definitions of coverage in what would have been an ex post factor act. The Court regarded the applicability of the commerce power as "a question which is not now before us, as the sections in question are not conceived in any such view" (109 U.S. 19).

II. THE 14TH AMENDMENT

The relevant provisions of the amendment are contained in section 1, in the form of prohibitions against the States; and section 5, which empowers Congress to "enforce, by appropriate legislation, the provisions of this article." The immediate purpose of the amendment was to validate the Civil Rights Act of 1866, which was directed to acts under color of State law. When in 1875 Congress undertook to prohibit, not acts under color of State law, but discriminatory practices by public carriers, inns, and theaters, the statute was held to exceed the authority conferred by the amendment (Civil Rights Cases, 109 U.S. 3 (1883)). That decision has not been overruled. When it is asked why this is so, and what the prospects of overruling are, the best clues to an answer lie in the cloudiness of the meaning of "overruling" the decision. It is easy enough to state the principle on which the cases were decided: that only acts for which the State is in fact responsible, through one of its agencies, are comprehended by the amendment. But to state the principle that would underlie an overruling

is far from easy. The dissent of Justice Harlan is itself not wholly clear, but at all events he did not take the position that all private action could be reached by Congress. What is involved is not simply an ad hoc determination, or an appeal to moral sentiment, or a problem of choice between the slogan of property rights and the slogan of public responsibility of public enterprises. Because the 14th amendment is spacious in its guarantees (equal protection and due process), and is cast largely in terms of prohibitions that are self-executing (by way at least of injunctive relief and defenses to legal claims, without enforcement legislation), any decision overruling the Civil Rights Cases has implications for judicial power and duty that transcend the immediate controversy. Such a decision would have a momentum of principle that might carry it far beyond the issue of racial discrimination or public accommodations. The point is not that the step should therefore be rejected; it is that if the step is taken, it should be done with clear awareness of its larger implications. In this respect it differs qualitatively from a step taken under the Commerce Clause, for that is primarily a grant of legislative power to Congres, which can be exercised in large or small measure, flexibly, pragmatically, tentatively, progressively, while guaranteed rights, if they are declared to be conferred by the Constitution, are not to be granted or withheld in fragments. Therefore it is necessary to arrive at some conception of the range of rights which an overruling of the Civil Rights Cases would create for the courts and the Congress to enforce. 1. Equal protection and due process

These are the guarantees of the amendment which have been most intensively applied against official State action. In considering their possible applications following an overruling of the Civil Rights Cases, three levels of questions are raised: To what enterprises, to what activities of those enterprises, and by what standards shall the applications be made?

(a) What enterprises.—If the extension were limited to public utilities in the strict sense, those enterprises having a duty, under the common law or statutes of the State which created them, to serve the public generally, there might be