Illinois required firms selling or issuing money orders to obtain licenses and submit to extensive regulation, including fees, bonding, insurance, inspections, and restrictions against operating as part of another business. The statute expressly exempted money orders of the American Express Company from those requirements. Appellees planned to sell Bondified money orders through agents in retail drug and grocery stores, but the Act prevented such sales unless the outlets became separately licensed exchanges and met the Act's other requirements. American Express, however, could sell its money orders in similar retail outlets without licenses, fees, bonding, insurance, or the Act's community-convenience showing.
Issue
Whether Illinois denied appellees equal protection of the laws by subjecting their money-order business to licensing and regulation while exempting the money orders of the American Express Company by name.
Rule
Under the Equal Protection Clause, a State may classify for purposes of economic regulation, and the challenger bears the burden of showing the classification lacks any reasonable basis. But a statutory discrimination must be based on differences reasonably related to the purposes of the Act, and unusual discriminations such as a closed-class exception singling out one named business entity require careful scrutiny for arbitrariness.
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One of 10 multiple-choice questions for this case. Pick an answer to see why.
Ohio requires any business that sells prepaid transit vouchers to obtain a state license, post a bond, file annual reports, and operate from a stand-alone office rather than inside another retail store. The statute expressly exempts vouchers issued by Lakefront Traveler Association, a single named company, whose vouchers are sold through convenience stores in Cleveland and Columbus. A rival issuer, Red Maple Payment Services, wants to sell similar vouchers through pharmacies and challenges the law.
Under the majority's approach, which is the strongest argument that the exemption violates equal protection?
Explanation. The majority accepted broad legislative power to classify in economic regulation, but required that a statutory discrimination rest on differences reasonably related to the Act's purpose. A named-company exemption that creates a closed class is an unusual discrimination warranting careful scrutiny. Here, the statute permanently exempts one identified firm from licensing and outlet restrictions even though the law's purpose is continuing protection of the public. That mismatch makes the exemption arbitrary under the majority's reasoning.