*UPDATE* High Court Asked to Decide if Pure Economic Protectionism is Constitutional

Is picking Winners and Losers a legitimate function of government?

Update 3/16/16 – On Feb.29, the Supreme Court denied the Sensational Smiles, LLC v. Mullen Petition for certiorari, kicking it back to a lower court.

Law360, New York — The U.S. Supreme Court on Monday declined to hear the appeal of a teeth-whitening clinic that’s challenging a Connecticut rule that limits the services it can provide.

The court didn’t publish an opinion with its denial, opting not to review whether or not Nutmeg State law can prohibit non-dentists like Sensational Smiles LLC from positioning LED lights in front of customers’ mouths to whiten their teeth. Sensational Smiles had argued, in part, that laws intended only to stifle competition and benefit a particular group — in this case, dentists — are unconstitutional.

Although the Second and Tenth circuits have held that such “pure economic protectionism” is a legitimate government interest, the Fifth, Sixth, and Ninth circuits have held the opposite, Sensational Smiles said when in its October petition, asking the high court to revive the split.

Paul Sherman of the Institute for Justice, a lawyer for Sensational Smiles, told Law360 that the issue isn’t going away, and that at some point, the high court will have to review the issue of economic protectionism. He’s confident that when it does, it will hold that it’s not a legitimate use of government power.

Post Scriptum
If the clinic hadn’t closed, its owners Tasos Kariofyllis and Steve Barraco and their employees would’ve been subject to up to $25,000 in fines or five years in jail per customer, the Institute for Justice said in a statement.

October 20, 2015 @ 14:06:24

Imagine for a minute you own a small business. Your business sells items that are legal, but it also provides a comfortable area for customers to use the item, as well as guidance from your employees on how to use it correctly.

Now imagine a government agency passes a regulation decreeing what you’re doing is illegal and a felony. You’re being put out of business because a protected group issued a decree making what you do illegal.

They didn’t do it to protect the consumer. They did it to protect themselves.

You decide to fight the regulation in court, but the court decides the regulation stands, not because what you’re doing requires years of specialized training. They actually admit they decided against you because they see protectionism as a legitimate function of government.

Now you have some understanding of what Tasos Kariofyllis and Steve Barraco, co-owners of Sensational Smiles LLC, have been dealing with since 2011.
Smile Bright

They sell an over the counter teeth whitening product and provide assistance using the product, along with a comfortable place to use it.

CSDA-logoTheir business was targeted by the Connecticut Dental Commission, which declared that only licensed dentists could provide certain teeth whitening services. In other words, helping someone use a product they can buy in Wal-Mart and use at home was now illegal and carried a punishment of up to $25,000 in fines and five years in jail — per customer.

Kariofyllis and Barraco challenged the Connecticut Dental Commission and the Second Circuit Court of Appeals decided against them.

In the decision, Senior Judge Guido Calabresi wrote, “[E]ven if the only conceivable reason for the LED restriction was to shield licensed dentists from competition, we would still be compelled by an unbroken line of precedent to approve the Commission’s action.”

Paul Sherman is a senior attorney at the Institute for Justice and lead council on Sensational Smiles, LLC v. Mullen.

Institute for Justice. Paul Sherman
Institute for Justice. Paul Sherman

“What the Second Circuit said is, ‘This is a rationale of protecting dentists from competition and it’s a rational means of giving dentists a monopoly on teeth whitening,” he said. “This is a pretty astonishing position, because what it’s really saying that it’s legitimate for the government to impose burdens on people purely for the purpose of enriching one private group at the expense of consumers in another private group.”

He’s petitioned the Supreme Court to review the case. Sherman says it’s exactly the kind of thing the Court likes to review because of the different decisions in the Circuit Courts. Five Circuit Courts have ruled on exactly this issue.

“The Second Circuit and the Tenth Circuit have said that economic protectionism is a legitimate government interest,” he explained. “The Fifth, Sixth and Ninth Circuits have said it is not a legitimate government interest. That’s what we refer to as a Circuit split. Those are the kinds of questions that the Supreme Court likes to take up because after all the Constitution should mean the same thing throughout the country.”

There’s clearly a fundamental legal disagreement between the Circuit Courts. Writing at The Huffington Post, Evan Bernick, Assistant Director at the Institute of Justice, explained the rulings Sherman mentioned above:

In Powers v. Harris (2004), the Tenth Circuit Court of Appeals concluded that a state could forbid non-funeral directors from selling caskets simply to give state-licensed funeral directors a lucrative monopoly on that trade. Judge Deanell Tacha quipped that “while baseball may be the national pastime of the citizenry, dishing out special economic benefits to certain in-state industries remains the favored pastime of state and local governments.”

By contrast, in St. Joseph Abbey v. Castille (2013) and Craigmiles v. Giles (2002), the Fifth and Sixth Circuit Courts of Appeal displayed the kind of judicial engagement required to ensure that any restrictions on the right to earn a living are justified by legitimate government ends. Both the Fifth and Sixth Circuits have rejected the notion that naked protectionism is constitutionally legitimate.

Sherman emphasized the importance of the Supreme Court taking this case.

“It’s very important that we get an answer to this question of whether pure economic protectionism is legitimate,” he said. “Because if it is, then there’s essentially no Constitutional check on licensing boards that are captured by people who are in the industry imposing regulations to shut down their competition.”

Meanwhile, licensing boards across the country continue to erect barriers to entry, again, not in order to protect consumers, but to protect themselves. Consumers are then often left with fewer choices, lower quality and higher prices.

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