Speaker 1: And we returned to our American stories. And now it's
Speaker 1: time for another rule of law story. As a part
Speaker 1: of our Rule of Law series, where we show what
Speaker 1: happens when there's either an absence or presence of the
Speaker 1: rule of law in our lives. Here's a story about
Speaker 1: a landmark case on economic freedom in the state of Texas.
Speaker 2: My name is Wesley Hottett. I'm a senior attorney with
Speaker 2: the Institute for Justice. I've worked at IJ since I
Speaker 2: graduated from law school in two thousand and eight, and
Speaker 2: my first job was at ij's then New Texas office
Speaker 2: in Austin. I was working there a little bit late
Speaker 2: one night, I think it was around six point thirty,
Speaker 2: and a couple of guys came into the office after
Speaker 2: everyone else had left. I didn't know them, but I
Speaker 2: went out to the front and introduced myself. They were
Speaker 2: Ash Patel and and ver Eli Satani, to business owners
Speaker 2: who said that they had a problem with the state
Speaker 2: and they wanted to know if I would agree to
Speaker 2: talk to them about it. From there, I learned that
Speaker 2: their business was being threatened with being shut down because
Speaker 2: they employed eyebrow threaders. These are typically South Asian women
Speaker 2: who use a beauty technique involving nothing but a single
Speaker 2: strand of cotton thread. They put tension on that form
Speaker 2: a kind of lasso, and it allows you to precisely
Speaker 2: remove hair around the eyebrows for beautification. And when ash
Speaker 2: and had set up their business, they told me they
Speaker 2: looked at Texas's cosmetology laws and saw nothing specifically about threading.
Speaker 2: They plowed ahead like all good entrepreneurs do, without asking permission,
Speaker 2: and it turned out that the Texas Department of Licensing
Speaker 2: and Regulation had, after the fact, decided that they thought
Speaker 2: threading was cosmetology. It followed that everyone that worked for
Speaker 2: ash and Anver needed a cosmetology license. None of them
Speaker 2: had one. And as we later discovered, the cosmetology schools
Speaker 2: weren't teaching threading or testing anyone. They were going to
Speaker 2: go learn other people's cosmetology techniques. They were going to
Speaker 2: go learn other people's jobs just to qualify to continue
Speaker 2: doing their jobs. And you're talking about women that had
Speaker 2: been doing this professionally for thirty years discovering, you know,
Speaker 2: at the age of forty, that the state expected them
Speaker 2: to go back to school. Now we all understand that
Speaker 2: that could be impossible for a variety of reasons. We're
Speaker 2: talking nine months of schooling in a licensed cosmetology school.
Speaker 2: They're almost always private businesses. At a minimum for some
Speaker 2: people it takes two years, depending on what license they're
Speaker 2: trying to get. You've got to pay that private business
Speaker 2: quite a bit of money, you know. It usually ranges
Speaker 2: from like seven thousand dollars to fifteen thousand dollars. You
Speaker 2: can't work while you're going to this school because again
Speaker 2: you've got to be there full time. You probably will, however,
Speaker 2: work for the private cosmetology school which has people come
Speaker 2: in and pay for cosmotology services, but they keep the money.
Speaker 2: At the end of all of that, you have to
Speaker 2: take a couple of exams. There's almost always a practical
Speaker 2: component where you have to show that you know how
Speaker 2: to do the basic techniques, and there's almost always a
Speaker 2: written component, like a test you would take in school
Speaker 2: about how bacteria grow, where different styles originated from what
Speaker 2: people mean when they say things like a beehive or cornrows.
Speaker 2: So this is an example of what we call occupational licensing.
Speaker 2: It's the requirement that before you can do something to
Speaker 2: pursue a living. Even though we all consider that thing
Speaker 2: to be legal, you need the government's permission. Now, there
Speaker 2: are a lot of professions that automatically come to mind
Speaker 2: when we think about occupational licensing. Doctors, lawyers, engineers, and
Speaker 2: indeed the licensing of those professionals has been around for
Speaker 2: a long time. But in the nineteen fifties in this country,
Speaker 2: it was about five percent of the American workforce that
Speaker 2: required some form of occupational licensing. Today it's much closer
Speaker 2: to twenty percent, and that has profound social and economic impacts,
Speaker 2: particularly for people who are on the margins of society
Speaker 2: and on the margins of where it makes sense to
Speaker 2: begin licensing people for things. Cosmatology is a good example
Speaker 2: of this, because it's often the first wrong of the
Speaker 2: entrepreneurship ladder, especially for people from other countries who don't
Speaker 2: have a lot of language skills and a lot of
Speaker 2: other opportunities. Right. This is perhaps why you see recent
Speaker 2: Asian immigrants predominating in places like nail salons, or why
Speaker 2: you see recent African immigrants predominating in places like hair
Speaker 2: braiding salons. It's because they have a marketable skill that
Speaker 2: people will pay for. It's just they've really only got
Speaker 2: one and cosmetology licensing in the twenties might have been
Speaker 2: about basic sanitation, but as time has gone on, it's
Speaker 2: become more about incumbent control of the industry. I mean
Speaker 2: there's in every state there's a committee who has jurisdiction
Speaker 2: over an executive agency whose responsibility it is to regulate
Speaker 2: the cosmetology industry. Usually by law, that agency has to
Speaker 2: be run by cosmetologists, you know, everyone that's on the
Speaker 2: board of the Texas Department of Licensing and Regulation. There's
Speaker 2: supposed to be at least some people who are cosmatologists
Speaker 2: and some people who represent other walks of life. And
Speaker 2: so that agency will go to the relevant lawmaking committee
Speaker 2: and say, we think there need to be more restrictions on,
Speaker 2: for example, this new practice of threading that we're only
Speaker 2: beginning to see in our state. And the people who
Speaker 2: will be in the audience to sort of provide public
Speaker 2: comment will be you know, beauty school owners and other cosmetologists.
Speaker 2: And that means that the people who control the policy
Speaker 2: outcomes are the people who stand to gain or lose
Speaker 2: the most. And I mean the motivation is obvious. You
Speaker 2: want to keep new competition out of the market so
Speaker 2: that you can charge. More so, their basic question that
Speaker 2: night was can you help us? And you know, I
Speaker 2: sort of gleefully said we might be able to because
Speaker 2: I had been studying up on the Texas Constitution and
Speaker 2: was familiar with a line of cases on the one
Speaker 2: hand that provided very robust constitutional protection against irrational regulations
Speaker 2: like this, And on the other hand, I was aware
Speaker 2: of another line of cases that hewed much more closely
Speaker 2: to the federal constitutional standard for economic regulations, namely, the
Speaker 2: rational basis test is there any conceivable justification? And if
Speaker 2: there is, the economic regulation is constitutional. So I was
Speaker 2: aware of the tension between these two lines of cases,
Speaker 2: and I wanted a case involving an economic regulation that
Speaker 2: would allow us to tease them out. And I immediately
Speaker 2: saw the potential in ashen anvers predicament.
Speaker 1: And when we come back more with our American Stories
Speaker 1: and with Wesley Huttit and he's an attorney with the
Speaker 1: Institute for Justice defending Ash Patel who runs an eyebrow
Speaker 1: threading business in Texas, And we're back with our American
Speaker 1: Stories and our Rule of Law series, and the story
Speaker 1: of the Ash Patel case as told by his attorney
Speaker 1: Institute for Justice lawyer Wesley Huttitt. When we last left off,
Speaker 1: Ash Patel, a man who employed eyebrow threaders, had been
Speaker 1: told he'd have to shut down his operation and send
Speaker 1: all of his threaders back to Cosmic Potology school for
Speaker 1: anywhere between nine months and two years of courses that
Speaker 1: didn't have anything to do with their craft. It seemed burdensome,
Speaker 1: and there was a disconnect between Texas's laws and the
Speaker 1: federal laws on economic freedom. So Wesley thought he might
Speaker 1: have a case. Let's continue with the story.
Speaker 2: There was an uncertainty in Texas law. There was one
Speaker 2: line of cases that seemed to say, we do something
Speaker 2: more than what the federal government does when a person
Speaker 2: complains about a regulation that's making it too difficult or
Speaker 2: impossible to support themselves. And one line said that the
Speaker 2: government needed to have robust reasons that lined up with
Speaker 2: the real world. In other words, under Texas's culture and
Speaker 2: traditions and laws, the government had to have a good
Speaker 2: reason for requiring a restriction on someone's economic rights, and
Speaker 2: that reason had to make sense in the real world.
Speaker 2: I'll give you an example. There was a case from
Speaker 2: the sixties where a small Texas town had restricted the
Speaker 2: size of fuel tanker trucks that could come through the town.
Speaker 2: Their justification for that was that they were concerned about fires.
Speaker 2: What that required, in practical terms, was that the large
Speaker 2: tanker trucks that operate everywhere else had to stop outside
Speaker 2: of the town and transfer into two smaller tanker trucks,
Speaker 2: which the court recognized, based on testimony at a trial,
Speaker 2: was a huge risk of fire and having two trucks
Speaker 2: on the road that could go boom was worse than
Speaker 2: having one truck on a road that could go boom.
Speaker 2: So the court, in that case, it's called Humble Oil,
Speaker 2: ruled that under the Texas Constitution, the law was unconstitutional.
Speaker 2: You couldn't require that sort of irrational justification. Now, under
Speaker 2: federal law, the story has been quite different since around
Speaker 2: the New Deal period. Under federal law, we currently have
Speaker 2: an understanding of the US Constitution's protections for economic liberty
Speaker 2: as being very anemic, almost worthless. The Federal Constitution, the
Speaker 2: Supreme Court has told us, requires only some conceivable justification
Speaker 2: for a law, and so I think if we compare
Speaker 2: that to the Humble Oil case, the government's going to
Speaker 2: get a lot of leeway in determining the size of
Speaker 2: fuel tanker trucks because fuel tanker trucks go boom, and indeed,
Speaker 2: the federal case law bears out that kind of government
Speaker 2: may do anything reasoning. So that is why when Ash
Speaker 2: and an er into my office and describe their problem
Speaker 2: and said can you help, that is why I was
Speaker 2: so confident that there was a there there, Because state
Speaker 2: supreme courts exist to resolve those kinds of conflicts within
Speaker 2: their own case law. You know, lower courts are supposed
Speaker 2: to know what the law is before they can apply
Speaker 2: it correctly. And if, as in Texas, you know, you
Speaker 2: have these two lines of cases, some of them hewing
Speaker 2: to federal constitutional standards and some of them hewing to
Speaker 2: the more robust Texas standards, then there's confusion that can
Speaker 2: lead to inconsistent results depending on you know, who your
Speaker 2: judge ends up being and where you end up filing
Speaker 2: your case. The whole point of bringing this case was
Speaker 2: to establish that under the Texas Constitution, there has to
Speaker 2: be a real and substantial connection between what the government
Speaker 2: is trying to do and how the regulation works in
Speaker 2: the real world. And even if that connection exists, courts
Speaker 2: still ask is the regulation unduly burdensome in light of
Speaker 2: what the state is trying to achieve, it seems maybe
Speaker 2: like there could be a real and substantial connection to
Speaker 2: health and safety. If you go to cosmetology school, you
Speaker 2: do admittedly learn things like washing your hands. But what
Speaker 2: Texas was requiring was seven hundred and fifty hours of instruction.
Speaker 2: That's about nine months of a full time job. Two tests,
Speaker 2: neither of which had any material about eyebrow threading specifically,
Speaker 2: or about sanitation specific to eyebrow threading, And so our
Speaker 2: argument all along was it takes about an hour to
Speaker 2: learn the sanitation that you need to learn to be
Speaker 2: a safe threader. You need to wash your hands, use
Speaker 2: new thread with every customer, and keep the work area clean.
Speaker 2: So it's just inconceivable that that could take seven hundred
Speaker 2: and fifty hours to learn. We never disputed that there
Speaker 2: could be a license for threading. It was just that
Speaker 2: this license, the seven hundred and fifty hour two examination
Speaker 2: requirement that didn't involve any instruction in threading, was obviously unconstitutional. So,
Speaker 2: like so much of public interest law, this case started
Speaker 2: out with a loss the state one. We appealed and
Speaker 2: we lost the state one. In the Intermediate Court of Appeals,
Speaker 2: and then we had to ask the Texas Supreme Court
Speaker 2: for what lawyers called discretionary review, and they agreed to
Speaker 2: take the case. We won in the Texas Supreme Court
Speaker 2: by a vote of six to three. Now, five of
Speaker 2: those justices agreed with our argument that the state constitution
Speaker 2: requires a real and substantial relationship between a regulation and
Speaker 2: how it functions in the real world, and also can't
Speaker 2: be unduly burdensome. They struck the law down based on
Speaker 2: that Texas test. One justice agreed that this law was unconstitutional,
Speaker 2: but didn't think that there needed to be an independent
Speaker 2: Texas test to make that ruling. He thought the law
Speaker 2: violated the federal rational basis test because it was just
Speaker 2: so inconceivably justified. But you know, there were three dissenters
Speaker 2: who were very vocal about the fact that they did
Speaker 2: not want to be reviewing economic regulations, did not takes
Speaker 2: seriously Texas being different from the federal government in terms
Speaker 2: of its protections for economic liberty, and thought that it
Speaker 2: was perfectly fine that threaders were being required to spend
Speaker 2: nine months in a private beauty school learning nothing about
Speaker 2: their own jobs. Now, this was a huge landmark victory
Speaker 2: for IJ It was obviously life changing for the clients
Speaker 2: in the case. It's an incredible feeling to have the
Speaker 2: patience to wait years from you know, we launched this
Speaker 2: case in two thousand and nine and we got a
Speaker 2: decision from the Texas Supreme Court in twenty fifteen, so
Speaker 2: it's about five and a half years from beginning to end,
Speaker 2: and it was mostly losing. So you know, it's an
Speaker 2: incredible feeling to have that victory call with your client.
Speaker 2: But there's so much more work that needs to be done.
Speaker 2: I mean, this is one case in a sea of
Speaker 2: burdensome economic regulations that really require court intervention, and it's
Speaker 2: very difficult to get, you know, at least judges of
Speaker 2: the current generation to unlearn what they were taught in
Speaker 2: law school that there's no economic regulation that a court
Speaker 2: can strike down. You know, what is needed here is
Speaker 2: like what is needed in so many other aspects of
Speaker 2: American life today. Nuance. Of course, it's true that the
Speaker 2: political branches have the right to decide who should get
Speaker 2: to practice what occupations, but it is also true that
Speaker 2: we should not allow them to do that at the
Speaker 2: behest of the regulated industry and only for their benefit.
Speaker 2: In the American constitutional order, courts are there to ensure
Speaker 2: that individual's rights are being honored in the lawmaking process right,
Speaker 2: and it's absolutely essential that there be more cases like Patel,
Speaker 2: where particularly state courts, but ultimately federal courts as well,
Speaker 2: takes seriously the time honored individual right to use your
Speaker 2: own labor, your own hands, to support yourself, free of
Speaker 2: any restrictions that aren't justified by a need that the
Speaker 2: public has, not a need that a particular lobbyists or
Speaker 2: lobby might have.
Speaker 1: And a special thanks to Monty Montgomery for his great
Speaker 1: work on a piece, and a special thanks to Wesley
Speaker 1: high But at the Institute for Justice attorney who you
Speaker 1: heard tell this remarkable story, this important story, another rule
Speaker 1: of law story in a part of our rule of
Speaker 1: Law series here on our American Story