Opinion ID: 216184
Heading Depth: 3
Heading Rank: 1

Heading: The Scope of Rational Basis Review

Text: In his motion for summary judgment, the Treasurer argued that the 2008 amendment survives rational basis scrutiny because: (1) Kentucky has a legitimate interest in taking possession of abandoned property; and (2) this purpose is rationally related to the seven-year presumptive abandonment period for traveler's checks. The district court found that this interest cannot be considered a legislative purpose behind the 2008 amendment. Instead, the district court determined that, in light of the 2008 amendment's legislative history and the Franklin Circuit Court's factual findings relating to the 2006 amendment, it is clear that the state's objective [in passing the 2008 amendment] was to raise revenue rather than to reunite citizens with lost property. Hollenbach, 630 F.Supp.2d at 764. The district court then concluded that [s]hortening the presumptive abandonment period from fifteen to seven years is not `rationally related' to raising revenue for the state, even if revenue raising were a legitimate state purpose or objective. Id. The district court erred in deciding that it could not consider Kentucky's interest in assuming possession of unclaimed property as a purpose supporting the 2008 amendment. As the Supreme Court often has reiterated, the party challenging a legislative enactment subject to rational basis review must `negative every conceivable basis which might support it.' See, e.g., Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356, 364, 93 S.Ct. 1001, 35 L.Ed.2d 351 (1973) (quoting Madden v. Kentucky, 309 U.S. 83, 88, 60 S.Ct. 406, 84 L.Ed. 590 (1940)). Under rational basis review, it is `constitutionally irrelevant [what] reasoning in fact underlay the legislative decision.' Craigmiles, 312 F.3d at 224 (alteration in original) (quoting R.R. Ret. Bd. v. Fritz, 449 U.S. 166, 179, 101 S.Ct. 453, 66 L.Ed.2d 368 (1980)). [W]e will be satisfied with the government's `rational speculation' linking the regulation to a legitimate purpose, even `unsupported by evidence or empirical data.' Id. (quoting FCC v. Beach Commc'ns, Inc., 508 U.S. 307, 313, 113 S.Ct. 2096, 124 L.Ed.2d 211 (1993)). Thus, if a statute can be upheld under any plausible justification offered by the state, or even hypothesized by the court, it survives rational-basis scrutiny. See Berger, 154 F.3d at 624-26 (speculating as to the City Council's possible motivations for passing the challenged ordinance). In concluding that the 2008 amendment should not be evaluated under this very permissive rational basis test, the district court relied on the following statement in United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 26, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977): [C]omplete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State's self-interest is at stake. A governmental entity can always find a use for extra money, especially when taxes do not have to be raised. See Hollenbach, 630 F.Supp.2d at 763. However, in United States Trust Co., the Court was considering a Contracts Clause challenge to New Jersey legislation abrogating the state's contractual obligations, not a substantive due process challenge to a statute premised on the state's general interest in raising revenue. Applying heightened scrutiny to every law that generated revenue for the state would affect the constitutionality of a wide range of legislation, contravening Supreme Court precedent applying the standard rational basis test to such measures. See, e.g., Fitzgerald v. Racing Ass'n of Cent. Iowa, 539 U.S. 103, 106-10, 123 S.Ct. 2156, 156 L.Ed.2d 97 (2003) (applying rational basis review in Equal Protection challenge to Iowa's tax on adjusted revenues from slot machines); Nordlinger v. Hahn, 505 U.S. 1, 11, 112 S.Ct. 2326, 120 L.Ed.2d 1 (1992) (stating that rational basis review is especially deferential in the context of classifications made by complex tax laws). For these reasons, there is no basis to import the heightened scrutiny standard, delineated in U.S. Trust Co., to the substantive due process claim here. Am. Express Travel Related Servs. Co. v. Sidamon-Eristoff, 755 F.Supp.2d 556, 581 (D.N.J.2010) (declining to follow Hollenbach when addressing the likelihood that American Express will succeed on its substantive due process challenge to New Jersey legislation shortening the presumptive abandonment period for traveler's checks to three years). The district court also read Anderson National Bank v. Luckett, 321 U.S. 233, 64 S.Ct. 599, 88 L.Ed. 692 (1944), as imposing specific standards for the validity of a state's presumptive abandonment period. Hollenbach, 630 F.Supp.2d at 762. It drew these standards from two of the Court's statements in Anderson National Bank: first, that it is no longer open to doubt that a state, by a procedure satisfying constitutional requirements, may compel surrender to it of deposit balances, when there is substantial ground for belief that they have been abandoned or forgotten,  321 U.S. at 240, 64 S.Ct. 599 (emphasis added); and second, that [w]ith respect to the statutory rebuttable presumption of abandonment[,] . . . we are unable to say that the legislative determination is without support in experience,  id. at 241, 64 S.Ct. 599 (emphasis added). To the extent that these statements are inconsistent with the permissive rational basis test employed by this Court and the Supreme Court, the Supreme Court's numerous and more recent articulations of the parameters of rational basis review should control. There was a time when the Due Process Clause was used by [the Supreme] Court to strike down laws which were thought unreasonable, that is, unwise or incompatible with some particular economic or social philosophy. Ferguson v. Skrupa, 372 U.S. 726, 729, 83 S.Ct. 1028, 10 L.Ed.2d 93 (1963). Now, the Court ha[s] returned to the original constitutional proposition that courts do not substitute their social and economic beliefs for the judgment of legislative bodies, who are elected to pass laws. Id. at 730, 83 S.Ct. 1028; see also Williamson v. Lee Optical of Okla., Inc., 348 U.S. 483, 488, 75 S.Ct. 461, 99 L.Ed. 563 (1955) (The day is gone when this Court uses the Due Process Clause of the Fourteenth Amendment to strike down state laws, regulatory of business and industrial conditions, because they may be unwise, improvident, or out of harmony with a particular school of thought.). American Express offers a third argument in support of the district court's heightened rational basis scrutiny, citing past cases from the Supreme Court and this Court rejecting the government's proffered legitimate objectives when the challenged legislation appeared to be based on an illegitimate purpose. See City of Cleburne, Tex. v. Cleburne Living Ctr., 473 U.S. 432, 447-50, 105 S.Ct. 3249, 87 L.Ed.2d 313 (1985); Zobel v. Williams, 457 U.S. 55, 61-64, 102 S.Ct. 2309, 72 L.Ed.2d 672 (1982); U.S. Dep't of Agric. v. Moreno, 413 U.S. 528, 533-38, 93 S.Ct. 2821, 37 L.Ed.2d 782 (1973); Craigmiles, 312 F.3d at 224-29; Berger, 154 F.3d at 624-26; Burstyn v. City of Miami Beach, 663 F.Supp. 528, 533-37 (S.D.Fla.1987); see also Romer v. Evans, 517 U.S. 620, 631-35, 116 S.Ct. 1620, 134 L.Ed.2d 855 (1996). While the review applied in the cases on which American Express relies seems less deferential than the traditional rational basis standard associated with cases like Carolene Products and Lee Optical, see, e.g., Kenji Yoshino, The New Equal Protection, 124 Harv. L.Rev. 747, 759-60 (2011) (noting that the level of scrutiny applied by the Court in Cleburne, Moreno, and Romer depart[s] from the usual deference associated with rational basis review and commentators have correctly discerned a new rational basis with bite standard in such cases), there is an outcome-determinative distinction between those rational basis with a bite decisions and the instant matter. In each of the former, the Supreme Court or this Court concluded that the legislation at issue was in fact intended to further an improper government objective. [2] In contrast, [r]evenue raising is certainly a legitimate legislative purpose. United States v. Carlton, 512 U.S. 26, 40, 114 S.Ct. 2018, 129 L.Ed.2d 22 (1994) (Scalia, J., concurring in judgment) (citing U.S. Const. art. I, § 8, cl. 1). American Express attempts to demonstrate that, despite this general proposition, revenue raising is an illegitimate legislative objective in the context of the 2008 amendment, which is an escheat law enacted pursuant to the General Assembly's police powers. [3] This argument must fail; not only has the Supreme Court clarified that a state may use its legislative power to dispose of property within its reach, belonging to unknown persons, it has sanctioned this practice, reasoning that [s]uch property thus escapes seizure by would-be possessors and is used for the general good rather than for the chance enrichment of particular individuals or organizations. Standard Oil Co. v. New Jersey ex rel. Parsons, 341 U.S. 428, 436, 71 S.Ct. 822, 95 L.Ed. 1078 (1951). Accordingly, the mere fact that [Kentucky] generates revenue by escheating abandoned property does not run afoul of any substantive due process safeguards. Sidamon-Eristoff, 755 F.Supp.2d at 582. The 2008 amendment will pass constitutional muster if it survives scrutiny under the traditional, deferential rational basis standard. See, e.g., Carolene Prods., 304 U.S. at 152, 58 S.Ct. 778 ([T]he existence of facts supporting the legislative judgment is to be presumed. . . .).