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Ribnik v. McBride

Supreme Court of the United States · 1928 · Constitutional Law

Constitutional LawDue ProcessPrice RegulationPolice PowerFreedom of ContractFourteenth Amendmentdue processprice fixing

Facts

A New Jersey statute required employment agencies to obtain a license from the Commissioner of Labor and to file a schedule of proposed fees for approval, with any changes also subject to approval. Plaintiff in error complied with all statutory conditions and submitted a written application for a license. The Commissioner denied the license only because he considered some proposed fees for permanent positions excessive and unreasonable. The state courts construed the statute as authorizing the Commissioner to fix and limit the charges of the applicant and upheld that power against a due process challenge.

Issue

Does the Due Process Clause of the Fourteenth Amendment permit a state to confer on its labor commissioner the power to fix the fees that a private employment agency may charge for its services? More specifically, is the business of an employment agency so affected with a public interest that legislative price fixing is constitutionally permissible?

Rule

Price-fixing legislation affecting a private business is valid only if the business is affected with a public interest—i.e., if it has been devoted to a public use and an interest in that use has in effect been granted to the public. The power to require a license for and regulate the conduct of a business is distinct from, and does not itself justify, the power to fix the prices the business may charge.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Ohio requires apartment-locating agencies to obtain annual licenses, keep client records, and post bonds. The statute also authorizes the housing commissioner to deny a license unless the agency submits a commission schedule the commissioner finds reasonable, and Maya Ortiz is denied a license in Cleveland solely because her proposed commissions are deemed too high.

If Maya challenges the fee-approval provision under the Fourteenth Amendment as interpreted by the Court's majority rule, which is the strongest argument for invalidating the statute?

Explanation. The majority drew a sharp distinction between the conceded power to license and regulate a business and the separate power to fix its prices. A broker-like intermediary business is essentially private, and public concern with housing does not itself make it 'affected with a public interest' in the constitutional sense required for price fixing. The defect is not administrative discretion as such, nor does the majority require proof of confiscation.