Amicus Curiae Brief — Fry v. United States

Supreme Court brief1975

Ask Donna

What actually matters in this document.

Text

Pe ee eae SM moe

em ES Bom:

TABLE OF CONTENTS

Opinion Below

Jurisdiction

Constitution and Statutory Provisions

Involved

Questions Presented

Interest of Amicus Curiae

Summary of Argument

Argument

The Principles Inherent in the

Tenth Amendment to the United

States Constitution Preclude

Congressional Regulation of

Salaries Paid to Employees of

Sovereign States of the Union

Conclusion

Appendix A

Economic Stabilization Act of

1970, as amended, 12 U.S.C,

§ 1904 (Supp. II, 1972)

Appendix B

Consents of Parties to Piling of

Brief by Amicus Curiae California

State Employees' Association

Page

TABLE OF AUTHORITIES

Cases Page

A.L.A. Schechter Poultry Corp. v.

United States, 295 U.S. 495 (1935) 12,22

Allen v. Regents of the University

System, 304 U.S. 439 (1938) 15

Amalgamated Meat Cutters and Butcher

Workmen v. Connally, 337 F.Supp.

737 (D.D.C. 1971) 22

Ashton v. Cameron County District,

298 U.S. 513 (1936) 12

Atlanta Motel v. United States,

379 U.S. 241 (1964) 8

California v. United States,

320 U.S. 577 (1944) 19

California v. Zook, 336 U.S. 725

(1949) 17,18

Case v. Bowles, 327 U.S. 92 (1946) 16,20

Coan and California State Employees'

Association v. State of California,

Cal.3d (1974) : Passim

Conn. Light and Power Co. v. Power

Commission, 324 U.S. 515 (1945) 18

Day-Brite Lighting v. Missouri,

342 U.S. 421 (1952) 25

Employees of Dept. of Public Health

and Welfare v. Missouri, 411 U.S.

279 (1973) 17,20

SoS RE ee MT TE EES LE GE TLE EE IIB IL LTS SRE TCL ate _4 Pera «,

Cases Cont'd Page

Fahey v. Mallonee, 332 U.S, 245 (1947) 22

Farmers & Mechanics Bank v. Minnesota,

232 U.S. 516 12

Federal Radio Commission v. Nelson

Brothers, 289 U.S. 266 (1933) 21,

Hampton v. United States,

276 U.S. 394 (1928) ; 22

Heiner v. Donnan, 285 U.S, 312

(1932) 24

Helvering v. Gerhardt, 304 U.S, 405

(1938) 15

Kelly v. Washington, 302 U.S, 1 (1937) 18

Kotch v. Board of River Port Pilot

Commissioners, 330 U.S, 552 (1947) 8

Lichter v. United States, 334 U.S. 742

(1948) 21

Maryland v. Wirtz, 392 U.S. 183 |

(1968) | Passim

Maurer v. Hamilton, 309 U.S. 598

(1940) 18

McCulloch v. Maryland, 4 Wheat. 316 12

Mintz v. Baldwin, 289 U.S, 346 (1933) 18

Mugler v. Kansas, 123 U.S, 623 (1887) 26

Muller v. Oregon, 208 U.S. 412 (1908) 26

a iii

EINE Me

Cases Cont'd 7 Page

Murray's Lessee v. Hoboken Land and

Improvement Co., 18 How. 272 (1855) 25

National-Broadcasting Company v. United

States, 319 U.S, 190 (1943) 21

Nebbia v. New York, 291 U.S. 502

(1934) 24

Newton v. Commissioners, 100 U.S.

$48 (1880) 7

New York v. United States, 326 U. Ss, .

572 (1946) 10,15

O'Donoghue v. United States,

289 U.S. 516 (1933) 21

Panama Ref. Co. v. Ryan, 293 U. S. .

- 388 (1935) 22

Parker v. Brown, 317 U.S, 341

(1943) 17,18,19

‘Penn Dairies v.: Milk Control

Commission, 318 U.S, 261 (1943) 17,18

Perez v. United States, 402 U.S. 146 .

(1971) 8

Railroad Retirement Board v. Alton R.°

Company, 295 U.S. 330 (1935) 24

Secretary of Agriculture v. Central Roig.

ne Co., 338 U.S. 604 (1950) 24

South Carolina v: United ection.

199 U.S. 437 (1905). : 8,15

Cases Cont'd Page

State of California and California

State Employees’ Association v.

United States of America,

USDC No. Civ S74-27 3

Taylor v. Beckham, 178 U.S. 548 (1900) 7

United Public Workers v. Mitchell,

330 U.S. 75 (1947) 21

‘United States v. California,

297 U.S. 175 (1936) 9,16,19

United States v. Carolene Products

Co., 304 U.S, 144 (1938) 24,25,26

United States v. Mine Workers A

330 U.S. 258 (1947) 17

United States v. Ohio, 487 F.2d 936

(Em.App. 1973) 1,8,12,20

United States v. Rock Royal Co-op, |

307 U.S. 533 (1930) ; 22

Williamson v. Lee Optical of Oklahoma,

348 U.S. 483 (1955) 24

Wilmette Park District v. Campbell;

338 U.S. 411 (1949) 15

Yakus v. United States, 321 U.S. 414

(1944) 22

Youngstown Sheet & Tube Co. v. Sawyer,

343 U.S. 579 (1952) 23

Ziffrin v. Reeves, 308 U.S, 132 (1939) B

68 PNG Ri A OS DORA oe Mp, EOD LSS, ~~

Constitution and Statutes

California Government Code § 18850

Economic Stabilization Act of 1970,

as amended, 12 U.S.C. § 1904

(Supp. II, 1972)

Economic Stabilization Act,

Amendments of 1973, P.L. 93-28,

§ 8; 87 Stat. 27, 29 (1973)

Fair Labor Standards Act,

29 U.S.C. § 201, et seq.

Page's Ohio Revised Code Annotated,

§ 143.101 (Anderson 1972)

United States Constitution

Article I, § 8, Clause l

Article I, § 8, Clause 3

(Commerce Clause)

First Amendment

Fifth Amendment

(Due Process Clause)

Tenth Amendment

Miscellaneous

Page

29,30

Passim

9,11

28,29

Passim

California State Personnel Board, Standards

and Survey Division, Salary Setting in

~ 11,31

California State Civil Service (1969) ~

Galbraith, John Kenneth, The Affluent

Society (Houghton Mifflin Co.,

1960

32,33

mee

Miscellaneous Cont'd Page

Schneider, B.V.H., "Prevailing Rates

in Galifornia; A Symposium" ,

California Public Employee Relations,

Institute of Industrial Relations,

University of California, Berkeley,

CPER Series No. 9 (June 1971) 26,27,28,

29,30

I Schwartz, A Commentary on the

Constitution of the United States 15

State of California Department of Finance;

U.S. Department of Labor, Bureau of

Labor Statistics, Current Wage

Development 34

"State Salary Policies and Practices" ;

Report of the Assembly Interim

Committee on Governmental

Efficiency and Econom (Sacramento:

February 1953) 30,31

3 Sutherland, Statutory Construction |

(3rd ed. , Horock ed. 1943)§ 6302 19

he,

vii

TREE IRONY, OP A AL AML oe RPT AA GABE Pore ge NOM xo ‘ pers) ae . :

No. 73-822

In the

Supreme Court of the United States

OCTOBER TERM, 1973

ERNEST FRY and THELMA BOEHM, PETITIONERS

Vv.

UNITED STATES OF AMERICA, RESPONDENT

ON WRIT OF CERTIORARI

TO THE TEMPORARY EMERGENCY

COURT OF APPEALS

OPINION BELOW

The Temporary Emergency Court of Appeals

rendered a judgment on October 25, 1973. The

opinion of the court is reported at 487 F.2d 936

(Em.App.. 1973) and a copy thereof is attached to

the Petition for Writ of Certiorari as Appendix A.

(1)

JURISDICTION

The jurisdiction of the Supreme Court is con-

ferred by Section 211(g) of the Economic Stabili-

zation Act, as amended, 12 U.S.C. § 1904

(Supp. II, 1972).

CONSTITUTION AND STATUTORY

PROVISIONS INVOLVED

The provisions of the United States Constitution

involved are Article I, Section 8, Clause 3, which

provides as follows:

The Congress shall have Power. . . To

regulate commerce . . . among the several

States;"

and the Tenth Amendment which provides as follows:

The powers not delegated to the United

States by the Constitution, nor prohibited

by it to the States, are reserved to the

States respectively, or to the people.

The statutory provisions involved are Sections

202, 203(a)(1), (b) and (h) of the Economic

Stabilization Act of 1970, as amended, 12 U.S.C,

§ 1904 (Supp. II, 1972), the texts of which are

contained in Appendix A, attached hereto.

‘ QUESTIONS PRESENTED

1. Whether the Tenth Amendment to the United

States Constitution precludes congressional

regulation of salaries paid to employees of

sovereign States of the Union.

A. Whether Tenth Amendment principles

limit congressional power under the Commerce

Clause to regulate and control governmental

activities of the States.

B. Whether Congress Clearly manifested its

intent to subject salaries paid state employees to

the powers of the Economic Stabilization Act of

1970.

C. Whether congressional delegation of

power to control state salaries to the Executive

Branch was proper.

D. Whether there was a rational basis for

federal regulation of state employees' salaries in

view of the principles of the Tenth Amendment.

INTEREST OF AMICUS CURIAE

Amicus Curiae California State Employees'

Association is an employee organization of in

excess of 100,000 members consisting of civil

service employees of the State of California, and

employees of the University of California and State

College and University systems. The issues

involved in this case directly affect California State

Employees’ Association and its members in that pay

increases enacted into law by the California Legis-

lature and concurred in by the Governor have been

withheld by virtue of an order of the Cost of Living

Council purportedly issued pursuant to the

Economic Stabilization Act of 1970, as amended,

12 U.S.C. § 1904 (Supp. II, 1972). Amicus Curiae

California State Employees’ Association was a party

plaintiff in a case recently decided by the

California Supreme Court (lames oan and California

State Employees' Association v. State of California

et al., California Supreme Court No. SAC 7987), |

California State Employees’ Association v. United

States of America, et al., No. Civ S74-27). Both

cases deal with questions similar to those involved

in this instant proceeding.

Amicus Curiae California State Employees'

Association has obtained the written consent of the

parties to this action, which consents are filed

Pee eee ti an Neat a

Tre sash tte hirbwitis Agia Sided aaah Rex ale” eae:

‘ty

Pe hey Ghee ep Cre

és

‘ herewith. Copies of the written consents are

attached hereto as Appendix B.

Amicus Curiae California State Employees'

Association files thiss brief in support of the

position of the Petitiiooners, Ernest Fry and Thelma

Boehm.

SUMMARY OF ARGUMENT

The principles of federalism inherent in the

Tenth Amendment to tthe United States Constitution

reserve to the States the power to regulate and

control salaries paid: employees of the States, and

hence preclude such regulation by Congress. The

Commerce power does not reach those activities

sought to be controlled here - the regulation of

state employees' saliaries - since the Commerce

power, like the tax mower, does not reach those

activities which are ‘unique to a State and essential

to its preservation.

In enacting the Economic Stabilization Act of

1970, Congress did mot clearly manifest its intent

to make the States swbject to the salary control

portions of that legis;slation. Since the case law

establishes that congressional intent to regulate

the internal affairs of the States will not lightly be

inferred, Congress ciannot be deemed to have under-

taken the exercise off this power which has

traditionally been exercised by the States.

Assuming both comgressional power to regulate

state salaries, and Congress’ intent to do act, the

subject act contravemes the conditional doctrine of

Separation of Powers by reason of the unguided

delegation of power to the Executive Branch. Since

the purported delegation of power to the Executive

Branch to regulate amd control salaries did not

contain quidelines to sufficiently mark the field

with regard to public sector regulation, the

federal action is invalid.

Congress had no rational basis to regulate the

salaries paid by States to their employees, and

PML ATELIER PARE 0 FR FAAS a DRE ADT AT Se

hence congressional action violates both the Due

Process Clause of the Fifth Amendment and the pro-

visions of the Tenth Amendment. In this case the

Federal Government has attempted to usurp the

role as arbiter of a sovereign State's relations with

its employees without a rational basis to justify

such action. Salary setting in the public sector

differs substantially from such action in the private

sector. The public sector, including the State of

Ohio, is concerned primarily with paying prevailing

wages, i.e., establishing salaries on the basis of

the amounts being paid in other sectors of the

economy. For this reason, the noncollective

bargaining public sector is a follower, and not a

leader, with regard to wage scales. Control of the

private sector leads automatically to control of the

public sector. Establishing controls over noncol-

lective bargaining States has the effect of

regulating the States twice.

ARGUMENT

THE PRINCIPLES INHERENT IN THE

TENTH AMENDMENT TO THE UNITED

STATES CONSTITUTION PRECLUDE

CONGRESSIONAL REGULATION OF

SALARIES PAID TO EMPLOYEES OF

SOVEREIGN STATES OF THE UNION

A. CONGRESSIONAL POWER TO REGULATE AND

CONTROL GOVERNMENTAL ACTIVITIES OF

THE STATES UNDER THE COMMERCE POWER

(U.S. CONST., ARTICLE I, SECTION B,

CLAUSE 4) IS LIMITED BY THE PRINCIPLES

INHERENT IN OUR SYSTEM OF FEDERALISM

EXEMPLIFIED BY THE TENTH AMENDMENT

TO THE UNITED STATES CONSTITUTION —

The central, overriding issue presented by this

case is whether the United States Congress has the

authority under its Commerce power to regulate the

internal governmental affairs of a sovereign State.

It is recognized that congressional power under

the Commerce Clause is broad indeed; however,

the power is not without limitations. Although this

Court has- not specifically defined the line which

separates a valid exercise of the Commerce power

from an unconstitutional usurpation of state govern-

mental functions, it must be assumed that such a

line exists and is capable of definition. In fact,

this Court has acknowledged that congressional

power under the Commerce Clause does have limits,

but determined that the limitation had not yet been

reached by the case under consideration. E.g.,

Maryland v. Wirtz, 392 U.S. 183, 196 (1968).

Without such a border, there would be no need for

the separate fifty State governments, for Congress

could conceivably take over all their functions

acting under an unchecked Commerce power. Indeed,

as the Wirtz Court recognized, "[t]he Court has

ample power to prevent. . . ‘the utter destruction

of the State as a sovereign political entity.'"

392 U.S. at 196. This case calls upon the Court

to exercise that power and define the limits of the

Commerce Clause. It is submitted that an

’ appropriate limitation on the exercise of the

Commerce power with respect to state activities

would preclude federal regulation of those activities

which are unique to a State and are essential to its

preservation as a viable political sovereign.

The purported application to the States of the

Economic Stabilization Act of 1970, as amended,

12 U.S.C. § 1904 (Supp. II, 1972), upheld by the

Court below, constitutes an unwarranted invasion

by the Federal Government of sovereign govern-

mental activities which are unique to States and

essential to their preservation. and es such

destroys the constitutional principle of federalism.

Such action cannot be justified by congressional

power to regulate commerce, especially in view of

the existence of the Tenth Amendment.

The Tenth Amendment to the United States

Constitution provides as follows:

The powers not delegated to the United

States by the Constitution, nor prohibited

by it to the States, are reserved to the

States respectively, or to the people.

Since the power to regulate and control the internal

governmental affairs of sovereign States by dic-

‘tating a ceiling on salaries that can be paid public

officials and employees is not delegated to the

United States by the Constitution, nor canlit be

implied in the Commerce Clause, such power is

reserved to the States.

1/ This Court has held that a State's powers

with respect to its officers and employees is

absolute, except as restrained by provisions of the

State's own constitution. A State may, at its sole

discretion, add officers, abolish them, increase

or lower the salary, or change the mode of compen-

sation. Newton v. Commissioners, 100 U.S, 548,

559 (1880). This Court has also held that it is

essential to the independence of the States that

such powers be exclusive and free from external

interference, except as plainly provided to the

contrary by the United States Constitution. Taylor -

v. Beckham, 178 U.S, 548, 570-71 (1900). An

The Commerce Clause reaches three main

categories of commercial activities: (1) the use of

the channels of interstate commerce, (2) protection

of the instrumentalities of interstate commerce or

: persons or things in commerce, and (3) those

activities affecting commerce. Perez v. United

é States, 402 U.S. 146, 150 (1971). The third

% category has been applied to extend the reach of

j the Commerce power to those intrastate activities

which so affect interstate commerce as to make

their regulation appropriate. Perez v. United

: States, supra, 402 U.S. 150; Atianta Motel v.

' —-—-United States, 379 U.S. 241, 258 (1964). Nocase

: has interpreted the Commerce Clause to permit the

Federal Government to supersede the governmental

4 activities of sovereign States in their local spheres.

: No decision has gone as far as the decision of the

; Court below in this proceeding, the effect of which

4 comes dangerously close to, if not actually per-

mitting "the Congress [to] virtually draw up each

State's budget to avoid' disruptive effect[s] ...

3 on commercial intercourse.' Atlanta Motel v.

United States, 379 U.S, 241." Maryland v.

Wirtz, supra, 392 U.S. 183, 205 (Mr. Justice

Douglas, Dissenting).

" ae ln

YB owe if

The decision of the Temporary Emergency Court

of Appeals (United States v. Ohio, 487 F.2d 936,

941 (Em.App. 1973), and the argument of the

Respondent United States in this Court, rest

5 primarily upon

l/ Cont'd

7 important factor in the United States Supreme

Court's determination of a State statute's con-

stitutionality is whether such legislation involves

the right and power of the State to select its own

agents and officers. Kotch v. Board of River Port

Pilot Commissioners, 330 U.S. 552, 557 (1947).

See also Ziffrin v. Reeves, 308 U.S, 132 (1939);

South Carolina v. United States, 199 U.S. 437 (1905).

this Court's opinion in Maryland v. Wirtz, supra,

392 U.S, 183. Wirtz upheld the constitutions lity

of the 1961 and 1966 amendments to the Fair Labor

Standards Act which extended the coverage of the

minimum wage and overtime provisions to schools

and hospitals, whether public or private, profit

or nonprofit, and modified the definition of

“employer” to remove the exemption of the States

and their political subdivisions with respect to ~—

certain employees of hospitals, institutions, and

schools.£/ This Court acknowledged that the

Commerce power has limits (392 Us. 196), bat. _,

found that such limits had not been exceeded. In

holding that United States v. California, 297 U.S,

175 (1936), was dispositive of the issue, the ©

Wirtz Court stated the following:

If a State is engaging in economic activities

that are validly regulated by the Federal

Government when engaged in by private

persons, the State too may be forced to

conform its activities to feds

Both the United States Congress, in

the amendments to the Fair Labor Standard Act,

and the United States Supreme Court, in upholding

their constitutionality in Wirtz, quite plainly

recognized that the activities that they were con-

cerned with were those which were engaged in by

both private persons and state and local govern-

ments. Both commonly operate hospitals and

2/ Congress has recently amended the Fair

Labor Standards Act, 29 U.S.C. § 201, et seq.,

by greatly expanding the coverage of state

employees. P.L, 93-259. The constitutionality

of these recent amendments cannot be deemed to be

a certainty on the basis of Maryland v. Wirtz, since

Wirtz dealt only with a narrow set of amendments

applicable in limited circumstances.

A) Seb 8 rp adap ses meses Sa Teo EAS PEN tort yee

OF eee tis re

similar institutions and hoth establish and operate

schools. The High Court did’ not, as both the

Temporary Emergency Court of Appeals and ‘the

Respondent United States seem to lose sight of,

hold that those activities which are engaged in

only by States’in the exercise of their sovereign

governmental duties may be reaciied by the

federal Commerce power.

One limitation that this Court has consistently

held to apply to the exercise of congressional

power vis a vis States is that such regulations may

not reach those activities which are unique to

State governments. .

There are, of course, State activities and:

State-owned property that partake of

uniqueness from the point of view of inter-

governmental relations. These inherently

constitute a class by themselves. Only a

; State can own a Statehouse; only a State

can get/income by taxing. These could

not be in udéd for purposes of federal _

taxation in any abstract category of tax-

payers without taxing the State as a State.

New York v. United States, 326 U.S.572,

582 (1946) (Opinion of Mr. Justice

Frankfurter) .

per distinction +o be drawniis between "the State

s 8] government and the State as §] trader."

ae York v. United States, supra, ‘at 579.

Although the New York case concerned the ,

taxing power rather than the Commerce power, it

is submitted that the reasoning remains the same

-and the example serves,as an appropriate analogy.

to the instant situation. The Economic

Stabilization Act has been applied to all aspects

of State activities, including those which are |

only engaged in’by a State. Just as only a State

can own a Statehouse, only a State employs \

‘ 11

Governor, members of the Legislature, Judges,

Highway Patrol officers, Department of Motor

Vehicle employees, Unemployment Insurance

employees; and generally operates a State govern-

ment. Since the United States Congress cannot

unduly interfere with a State's discharge of its

sovereign governmental functions by levying a

property tax on a Statehouse, the Congress cannot

constitutionally impose limitations on the salaries

a State can pay its officers and employees.

Such regulations adversely affect a State in

-discharging its governmental obligations and

duties to her citizens. Because of salary limita-

tions imposed, Judges may very well decide to

enter the private practice of law, where limitations

on income are not imposed. Highway Patrolmen

and State Troopers may leave their positions for

more lucrative positions in the private sector. 3

Application of such a regulation to the States

adversely affects a State's ability to recruit and

retain key employees. Hence, the impact of a

"wage ceiling" is quite different from the

problems dealt with in Wirtz. The Economic

Stabilization Act affects virtually every employee

and officer of the State, while the Wirtz case

concerns only those employed in schools and

hospitals, and even then did not cover those

employed, in executive, professional, supervisorial

or administrative capacities. It is difficult to

follow the reasoning of the Temporary Emergency

Court of Appeals in determining that the "impact

of the extension of the Fair Labor Standards Act to

the States appears to be greater than the impact of

3/ "If State salaries are significantly below

prevailing rates, the State cannot recruit and

retain a competent work force.™,California State

_ Personnel Board, Standards and Survey Division,

(1969), page 5.

the [Economic Stabilization] Act. .°. ."

(487 F.2d at 942.) The Court apparently reached

this conclusion persuaded by the fact that the pro-

visions of the Act are temporary.4/ Such an

observation is, of course, clearly irrelevant. The

fact that action taken by the United States Congress

is temporary in character does not change an other-

wise unconstitutional statute into a constitutional

one. Furthermore, "[e]xtraordinary conditions do

not create or enlarge constitutional power. ..."

A,L,A, Schechter Poul Corp. v. United States,

295 U.S. 495, 528 (1935).

A State's sovereignty essential ‘to its proper

functioning under the United States Constitution

cannot be taken away by any form of legislation.

Ashton v. Cameron County District, 298 U. a oR

531 (1936).

If obligations of States or their political

subdivisions may be subjected to inter-

ference here attempted, they are no longer

free to manage their own affairs; the will

of Congress prevails over them; although

inhibited, the right to tax might be less

Sinister. And really the sovereignty of the

State, so often declared necessary tothe ~*

federal system, does not exist. McCulloch

. Maryland, 4 Wheat. 316, 430. Farmers

& Mechanics Bank v. Minnesota, 232 U.S.

516, 526.

Ashton v. Cameron County District, supra,

at 531.

4/ As they indeed were. The Economic Stabili-

zation Act, and its attendant regulations, expired

on April 30, 1974. Economic Stabilization Act

Amendments of 1973, P.L. 93-28, § 8; 87 Stat.

27, 29 (1973).

If the imposition of wage ceilings imposed upon

state governments by Congress under the guise of

its power to regulate commerce is upheld, the

death knell of States as viable political sovereigns

will be sounded.

. . . [Uf all employees of the state -

including those occupying purely govern-

mental positions created by the state,

paid with funds raised by the state,

performing services entirely intrastate in

character - are subject to whimsical control

of the Congress and federal administrative

agencies, “then the National Government

. could devour the essentials of state

sovereignty, though that sovereignty is

Perret by the Tenth Amendment. "

Douglas, J., dissenting in Maryland v.

Wirtz, 392 U.S, at 205).

Coan v. California, Cai.3d

(California Supreme Court, No. SAG 7987,

decided April 19, 1974)(Mosk, J., "=

Concurring, page 2 of Justice Mosk's

opinion) 5/

If this regulation is a constitutional exercise of

congressional power under the Commerce Clause,

then the Federal Government can impose limita-

tions on the amount of revenue which can be

raised by the States through their taxing power,

can limit the amount of money spent on Statehouse

S/ The slip opinion of this case, in which

Amicus Curiae California State Employees'

Association obtained a writ of mandamus ordering

the State of California and its officials to pay the

salary increases for state employees as provided

by state law, is attached as an appendix to the

brief of Amicus Curiae State of California.

ETO LI RT aE PEAS Ag ORIN

grounds, can limit the number of employees hired

by a State, can limit the total amount of money

appropriated and spent by the State, and can

“virtually draw up each State's budget. " The

Commerce power simply does not go this far.

This case presents the situation where the limits

of the Commerce power have finally been reached

and exceeded.

If we examine application of this federal

act in the light of the commerce clause,

we would at once experience the utter

futility of trying to detect activity in inter-

state commerce by a janitor in the State

Capitol, a stenographer in the Governor's

office, an administrative assistant: to a

state legislator, a law clerk in this court,

or, for that matter, by every state employee

who is hired by the state, paid by the state

and whose sphere of service is jurisdiction-

ally circumscribed by the borders of the

state. Thus this could be a classic case

in which to take a firm constitutional

stand for state independence in its govern-

mental function, however anachronistic such

action may seem to those who over the

years have bent constitutional principles

to fleeting expediency.’

Coan v. California, supra, Cal.3d

_____ (Mosk, J., Concurring, page 5 of

Justice Mosk's opinion). ™

The cases establishing State immunity from

federal taxation decided by this Court are an

important reservoir of legal principles applicable

to federal-state relations and hence should be

examined in reaching a decision in the instant

proceeding. The "State taxing" cases nearly

uniformly hold that the federal taxing power

_ extends to the States so long as the Congress does

not discriminate by the imposition of taxes upon

state property or activities while not taxing

similar private* property and activities. However,

an elementary constitutional principle, repeated

in each of the "State taxing" cases, is that

Congress cannot tax state property or activities

which are unique to State government and essential

to its preservation. E.g., Wilmette Park

District.v. Campbell, 338 U.S, 411 (1949); New

York v. United States, supra, 326 U.S. 572;

Allen v. Regents of the University System, 304

U.S, 439 (1938); Helvering v. Gerhardt, 304 U.S.

405 (1938); South Carolina v. United States, supra,

199 U.S. 437, 461 (1905).

A leading constitutional law scholar, Bernard

Schwartz, has observed that the doctrines of the

"State taxing" cases apply to other fields of

congressional regulation as well.

What is true of the state immunity from

federal taxation is also true of state

immunity from federal regulation. A

federal regulatory law presumably could

not operate to curtail the exercise by a

State of its essential government functions.

On the other hand, where a state engages

an activity not uniquely governmental,

it can be subjected to any federal law that

controls such activity.

I Schwartz, A Commentary on the

Constitution of the United States, § 22

at page 70 (1963).

The activity of compensating its officers,

employees and other public officials is certainly

unique to a State government. No private business

Pays the salary of public officials. There are no

Governors, Legislators, Legislative Aides,

Highway Patrolmen or State Troopers, Judges,

Hearing Officers, Administrative Boards or

Commissioners, Driver's License Examiners,

Deputy Attorneys General, Tax Collectors, or

Court Clerks in the private sector of the economy.

RETAILER SORT NET YM FE TSE ORE RARE CHR NSS

The ability to recruit and retain such employees

and pay them what it deems to be a fair wage is

an activity essential to a State's preservation.

Such a regulation as the wage ceiling imposed by

the Economic Stabilization Act of 1970, as amended

is certainly a measure which unduly interferes

with and substantially burdens State activities.

The running of a State and paying fair salaries to

its officials and employees are activities quite

different from operating a railroad (United States

v. California, 297 U.S. 175 (1936)), selling

timber on school lands (Case v. Bowles, 327 U.S,

92 (1946)), or operating schools and hospitals

(Maryland v. Wirtz, supra, 392 U.S. 183). These

cases simply do not, and can not, stand for the

proposition that unique governmental activities of

States, essential to their preservation, can be

regulated and controlled by the Federal Govern-

ment. The constitutional principle of Federalism

inherent in the Tenth Amendment must be

reaffirmed and the inherent sovereignty of the

fifty States acknowledged.

‘

B. CONGRESS DID NOT INTEND SALARIES OF

STATE EMPLOYEES TO BE SUBJECT TO THE

The Congress of the United States did not grant

to the President or to any federal administrative

body the authority to regulate or control the internal

affairs of the sovereign States, especially in the

area of setting salaries for the employees of a

State. Nothing contained in the Economic

Stabilization Act indicates an intent on the part

of the Congress to confer such a power on the

Executive Branch.

Section 203(a)(1) of the Act delegates certain

powers to the President, including the authority

to "stabilize prices, rents, wages, and salaries

." However, no mention is made of the

SL Pe EG BLINN FR PN ae EOL ROPES TIA BIR EE a et oP ei EO SY 5 eI gD

—

States of the Union in this grant of authority, nor

can their inclusion be readily implied. Such an

omission is quite significant for subsection (h)

of that section provides as follows:

No state or portion thereof shall be

exempted from any application of this

title with respect to rents solely by

virtue of the fact that it regulates

rents by State or local law, regulation

or policy.

Congress apparently felt that explicit mention of

States was necessary to make clear the coverage

of the Act with respect to rent stabilization;

however, no such clear expression is included

with respect to the control of wages. Hence, if

Congress had intended to include salaries paid

employees by the sovereign States, it would

have explicitly mentioned or clearly referred to

the States in section 203(a)(1).

The settled, long established rule is that an

unexpressed purpose of Congress to set aside

State regulation of its internal affairs is not

lightly to be inferred. E.g., California v. Zook,

336 U.S. 725, 733 (1949); Penn Dairies v. Milk

Control Commission, 318 U.S, 261, 275-76

(1943); Parker v. Brown, 317 U.S. 341, 351 (1943);

Coan v. California, supra, Cal.3d__ + (1974).

See also United States v. Mine Workers, 330 U.S.

258, 272 (1947) ("[S]tatutes which in general terms

divest pre-existing rights or privileges will not be

applied to the sovereign without express words to

that effect."). This principle was reaffirmed just

last term in Employees of Dept. of Public Health

and Welfare v. Missouri, 411 U.S. 279, 284-85

(1973). This rule applies "with even greater

force when an administrative tribunal is claiming

a state is subject to its jurisdiction so that it may

totally or partially invalidate state laws."

ERR SKE NN APN SLM Shera tea Zt EN:

. 18

Coan v. California, supra, Cal.3d (1974)

(Slip opinion, page 11).

This Court has long recognized the need to

exercise the greatest restraint in construing con-

gressional statutes which undertake to exercise

powers traditionally exercised by the States.

An unexpressed purpose of Congress to set

aside statutes of the states regulating their

internal affairs is not lightly to be inferred

and ought not to be implied where the legis-

_ lative command, read in the light of its

history, remains ambiguous. Considera-

tions which lead us not to favor repeal of

statutes by implication,[ citations] should

be at least as persuasive when the

question is one of the nullification of state

power by Congressional legislation. ...

Courts should guard against resolving

these competing considerations of policy

by imputing to Congress a decision which

quite clearly it has not undertaken to make.

Penn Dairies v. Milk Control Commission,

supra, 318 U.S, at 275.

The principle which emerges is that "Con-

gressional purposes to displace local laws must

. be clearly manifested." California v. Zook,

Supra, 336 U.S, at 733. See also Conn. Light

and Power Co. v. Power Commission, 324 U.S.

515, 532 (1945); Maurer v. Hamilton, 309 U.S.

598, 614 (1940); Kelly v. Washington, 302 U.S.

1, 11, 14 (1937); Mintz v. Baldwin, 289 U.S,

346 (1933); Coan v. California, supra, Cal.3d

____ (1974). The need for such restraint has been

particularly apparent when the activity sought to

be regulated by the federal authorities is an

activity of the State itself. As this. Court has

noted, "an unexpressed purpose to nullify a

state's control over its officers and agents is

- PEER ER ET.

not lightly to be attributed to Congress. . , ,"

Parker v. Brown, Supra, 317 U.S, at 351.

The above rules have two general exceptions

which permit resort to rules of construction or

extrinsic matters such as legislative history.

However, these exceptions are inapplicable to

the instant matter. The first covers regulation of

the proprietary activities of the States. See

United States v. California, 297 U.S, 175, 186

(1936); 3 Sutherland, Statutory Construction (3rd

ed., Horock ed. 1943) § 6302, page 193. As

noted in Argument I A, supra, the regulation in

question concerns a strictly governmental

function -- the compensation of employees

engaged in purely governmental activities, Coan

Vv. California, supra, wan WEE.en-. Gln

opinion, page 11).

The second exception concerns those regula-

tions the objectives of which could not be

accomplished without including State governments.

See California v. United States, 320 U.S. 577, 585-

986 (1944): 3 Sutherland, Statutory Construction,

Supra, § 6302, page 193. The control of state

employee salaries is not essential to the statute's

purpose of controlling inflation since such

salaries are based on Prevailing rates in other

sectors of the economy and control of these other

sectors automatically limits state ga Coan

Vv. California, supra, me, VOL.3G .. Chip

opinion, pages 11-12); See Argument I D, infra .6/

&/ Since neither of the foregoing two excep-

tions is applicable to the instant case, the

Temporary Emergency Court's reliance on United

States v. California, Supra, 297 U.S, 175, is mis-

Placed. Also, since the Act is clear on its face,

the Court's heavy reliance on legislative history

is improper. See Coan v, California, Supra,

—— Cal.3d___ (Slip opinion, page 13).

The Temporary Emergency Court of Appeals

purported to dispose of the statutory interpretation

question by asserting that such an argument was

rejected in Case v. Bowles, Supra, 327 U.S, 92;

United States v. Ohio, supra, 487 F.2d at 939.

Such an assertion is incorrect. Bowles held that

explicit mention of "states" need not be included

in a congressional enactment before that act can

be applied to the States. However, in Bowles,

this Court made it clear that before an act can be

applied to the internal affairs of sovereign States,

there must be some reference in the act from which

the alleged congressional intent can be inferred.

The Temporary Emergency Court of Appeals found

and discussed no such reference in the Economic

Stabilization Act of 1970, as amended. In Bowles

the act in question (Emergency Price Control Act of

1942) contained language making the act applic-

able to "the United States or any agency thereof,

or any other government, or any of its political

subdivisions or any agency of any of the foregoing."

327 U.S. at 99. No similar language is contained

in the Economic Stabilization Act of 1970, as

amended. Case v. Bowles, supra, actually

supports the argument of defendants. clear quite

clearly holds that in the absence of a ‘Gar expres-

sion of intent on the part of Congress, federal

legislation will not be deemed to have intended to

set aside statutes of the States regulating their

internal affairs. Furthermore, the Court below

failed to recognize and-deal with the latest expres-

sion of this Court on this subject. Employees of

the Dept. of Public Health and Welfare v. Missouri,

411 U.S, 279.

It follows that since Congress did not clearly

manifest its intent to apply the Economic Stabiliza-

tion Act of 1970, as amended, to the several States,

the Act should be held to be inapplicable to the

_ State of Ohio.

a ae ee a Re ke LN ee ee ed Co a OE Lae Sg

C. EVEN IF CONGRESS DID INTEND THAT

STATE EMPLOYEES’ SALARIES SHOULD BE

REGULATED, THE DELEGATION OF THIS

POWER TO THE PRESIDENT UNDER THE

VAGUE STANDARDS OF THE ECONOMIC

QTABILIZATION ACT WAS IMPROPER

The concern over excessive delegation of legis-

lative functions to the Executive Branch stems

from the doctrine of Separation of Powers.

The Constitution, in distributing the

powers of government, creates three

distinct and separate departments - the

legislative, the executive and the judicial.

This separation is not merely a matter of

convenience or of governmental mechanism.

Its object is basic and vital [citation

omitted] , namely, to preclude a commingling

of these essentially different powers of

government in the same hands.

O'Donoghue v. United States, 289 U.S.

516, 530 (1933).

The aim of our theory of government is "to

preserve the liberties of the people from excessive

concentration of authority." United Public Workers

v. Mitchell, 330 U.S. 75, 91 (1947).

It is not asserted that the Congress may never

delegate its power to the Executive Branch. The

practicalities of government demand that many

vital powers of Congress be entrusted to the

_ Executive under extremely broad grants of legis-

lative power. See, e.g., Lichter v. United States,

334 U.S. 742 (1948); National Broadcasting

Company v. United States, 319 U.S. 190 (1943);

Federal Radio Commission v. Nelson Brothers,

289 U.S. 266 (1933). Such broad delegations

will normally be upheld so long as Congress pro-

vides some reasonable standards to guide the

Executive in his exercise of the granted powers.

PAIR NPES RT : te i a ltd ee i ee Bones Ce

See United States v. Rock Royal Co-op, 307 U.S,

533: (1930); Hampton v. United States, 276 U.S.

394 (1928).

This Court has upheld broad grants of powers

to the Executive with respect to economic

controls on the private sector. The proper

standard for delegation is whether the legislation

". . . Sufficiently marks the field within which

the Administrator is to act so that it may be known

whether he has kept within it in compliance with

the legislative will." Yakus v. United States,

321 U.S. 414, 425 (1944). See also Amalgamated

Meat Cutters and Butcher Workmen v. Connally,

337 F.Supp. 737 0c. 1971).

The instant case does not concern the standards

to be applied in the economic regulation of the

private sector. It may very well be that the broad

standards of delegation allowed in Yakus and

Amalgamated Meat Cutters may be wholly

appropriate for the private sector, yet be wholly

inappropriate when applied to the States,

especially where, as here, the boundaries of the

field have not been clearly marked.

The Congress does not have unlimited powers

of delegation. This Court has recognized that

there are’ some circumstances under which a con-

gressional delegation may be too broad, A,L,A,

Schechter Poultry Corp. v. United States, supra,

295 U.S, 495 (igaey. Panama Ref. Co. v. Ryan,

293 U.S. 388 (1935). Ina subsequent opinion,

this Court noted that these two cases "dealt with

delegation of power . . . to devise novel rules of

law in a field in which there had been no settled

law or custom," Fahey v. Mallonee, 332 U.S.

245, 249 (1947). It is submitted that for much

the same reason, the delegation involved in this

case should be found invalid.

PPR PIA LLNS POIROT EEE NE NOE ON SRE CIID NEY siete COR pony

To leave the decision of whether or not to

regulate State government pay practices wholly in

the hands of federal administrators acting under

an extremely general grant of congressional power

comes dangerously close to the runaway executive

power involved in Youngstown Sheet & Tube Co. v.

Sawyer, 343 U.S. 579 (1952). To allow an admin-

istrative agency to take over such important fiscal

control of the States ‘under a general grant of

regulatory power is to rob the States of the

sovereignty guaranteed them by the Tenth Amend-

ment to the United States Constitution.

D. THERE IS NO RATIONAL BASIS FOR THE

REGULATION OF STATE EMPLOYEES’

SALARIES BY DIRECT FEDERAL CONTROL

WHICH WOULD PERMIT SUCH ACTION IN

MENT

1. Exercises of Power Under the

Commerce Clause Must Meet

the Standards of Due Process

Assuming, arguendo, that the regulation of

state employees’ salaries is a valid exercise of

congressional authority under the Commerce

Clause, the limitations on federal power inherent

in the Tenth Amendment demand that such exercise

be subject to the requirements of Due Process.

Since federal action which fails to comply with

the requirements of Due Process is not a power

"delegated to the United States by the Constitu-

tion," such action vis a vis a State and its

citizens not only violates Due Process of law

guaranteed by the Fifth Amendment, but also

contravenes the Tenth Amendment to the United

States Constitution.

In speaking of the power of Congress under the

Commerce Clause, this Court has stated the

following: "All agree, . . that this power must :

TN Laie Te see eee , © ACBL RG DRESS PANE EL AIEEE § PAS ERNE eee Me

be exercised in subjection to the guaranty of

due process of law found in the Fifth Amendment

[citations omitted]." Railroad Retirement Board |

v. Alton R. Company , 295 U.S. 330, 347 1935).

More recently, this Court, speaking through Mr.

Justice Frankfurter, reaffirmed this principle when

it said, " . . . not even resort to the Commerce

Clause can defy the standards of due process,"

Secretary of Agriculture v. Central Roig Refining |

Co., 338 U.S, 604, 616 (1950). :

Ordinarily, cue process is satisfied if there is

some rational basis for the legislation, United

States v. Carolene Products Co., 304 U.S. 144,

152 (1938), or if "the means selected shall have

a real and substantial relation to the object

sought to be attained." Nebbia v. New York//,

291 U.S, 502, 525 (1934). Beyond this, the Court

has indicated that in proper cases "the existence

of facts supporting: the legislative judgment is to 7

be presumed," United States v. Carolene

Products Co., supra, at 152, or that it is enough

that the "legislature might have concluded" that

such facts existed, Williamson v. Lee Optical of

Oklahoma, 348 U.S, 483,'487 (1955).

However, such presumptions operate only when

other important constitutional interests are not .

involved. For example, in United States v.

_Carolene Products Co., supra, this Court

cautioned:

a 1

7/ /The Nebbia case involved a state statute

under/the Due Procéss Clause of the Fourteenth

' Amexidment. However, this Court has stated:

"Je restraint imposed upon legislation by the due

rocess clauses of the two amendments is the

same." Heiner v. Donnan, 285 U.S, 312, 326

(1932).

There may be _ narrower scope for

operation of the presumption of con-

stitutionality when legisletion appears

on its face to be within a specific

prohibition of the Constitution, such

as those of the first ten amendments

United States v. Carolene Products Co.,

supra, at 152, fn. 4.

While the examples cited by the Court in that case

generally involved First Amendment guarantees,

there is no less a need for protection of Petitioners’

fundamental right to be free of unconstitutional

exercises of power by the Congress as guaranteed

by the Tenth Amendment.

It is crucial to Petitioners that this Court decide

whether Due’ Process has been satisfied in this

case. Amicus Curiae is mindful of the Court's

admonition that it does not "sit as a superlegis-

lature to weigh the.wisdom of legislation nor to

decide whether the policy which it expresses

offends the public welfare." Day-Brite Lighting v.

Missouri, 342 U.S, 421, 423 (1952). However,

where, as in this case, the federal government has

attempted to usurp the role as arbiter of a sovereign

State's relations with its employees, it is well to

remember the admonition of an earlier court that

the Due Process Clause "is a restraint on the

judicial powers of the government, and cannot be

so construed as to leave Congress free to make

- any process ‘due process of law', by its mere

will." Murray's Lessee v. Hoboken Land and

Improvement Co., 18 How. 272, 276 (1855).

With regard to the proper scope of review which

should be afforded, this Court has recognized that

in appropriate cases it may take judicial notice of

external facts by which it may better test the

“‘

constitutionality of a statute. Muller v. Oregon,

208 U.S, 412 (1908); Mugler v. Kansas, 123 U.S,

623 (1887). In United States v. Carolene Products

Co., supra, 304 U.S. at 153-54, this Court noted

the following: :

+ »« « we recognize that the constitution-

ality of a statute, valid on its face, may

be assailed by proof of facts tending.to

show that the statute as applied td a

particular article is without support in

reason because the article, although within

the prohibited class, is so different from

others of the class as to be without reason

for the prohibition. ...

The regulation of state employees' salaries is

wholly without rational support in fact, and is of

that class of legislation which should be barred

by the Due Process Clause of the Fifth Amendment ©

and the Tenth Amendment.

2. There is No Rational Basis for the

Inclusion of State Employees in the

: Wage Controls of the Economic

Stabilization Act of 1970

There is little question that salary setting in.

the public sector is guided by principles different

from those of the private sector.

Public employment may or may not be

different from private employment in

some respects, but formal pay deter-

mination systems tend to reflect recog-

nition of some special characteristics of

public sector employment. Several of

the factors which are widely cited as

responsible for the difference in approach

to pay setting are: (1) Government is a

monopolist in many of its functions, but

this is so because the activities are so

~ Fame

unprofitable that they do not attract

private entrepreneurs; (2) Consumers

are required to pay for most government

services, but the price (taxes) is

subject to political acceptability; (3) In

spite of the constraints of the revenue

system, the government employer

normally must compete with private

employers for labor; (4) Because of the

nature of public service, the right of

government employees to exert power

in their own economic self interest has

been restricted; (5) As public employees

are denied the rights granted private

sector employees under-the National

Labor Relations Act, it is the govern-

ment's (public's) moral responsibility

to guarantee that its employees are

treated no less fairly than they would

be in alternative employment; (6) Many

jobs are so special to government that

conditions in the competitive labor

market need not be considered in pay

setting past the entry grade; on the

other hand, people do not enter such

occupations solely on the basis of

beginning pay, but on their assess-

ment of the job's rewards over a work

lifetime.

An effort has been made by govern-

ments to compromise the conflicts

apparent in these factors and to

produce a system which is both equit-

able and acceptable. The result has

been that unlike the situation in private

industry, pay determination in most-*

public agencies has ‘involved adoption

of a formal pay policy or principle and

establishedment of a set of procedures

for attaining the stated pay goal. One

or both is usually embodied in law.

kkk

. « . by far the most common principle,

calls for pay set by "fair comparison"

with the private sector (or other public

agencies, or both) on a job-by-job

basis. It envisages payment of neither

too much nor too little, with the result

that the government can attract and

retain qualified employees without

excessively burdening the taxpayer or

competing unfairly with private business.

The concept embodies what might be

termed the maximization of equity. In

fact, the standard of fairness involved

had proven widely acceptable to all ;

affected groups -- taxpayers, public

employees and their organizations,

public administrators, and private

industry.

B. V. H. Schneider, "Prevailing Rates

in California; A Symposium," California

Public Employee Relations, Institute of

Industrial Relations, University of

California, Berkeley, CPER Series No. 9

(June 1971), pages 6-7. [Hereinafter :

cited as "Schneider, 'Prevailing Rates.'"]

The State of Ohio utilizes a formalized statutory

method for arriving at equitable salary rates for

its employees. e responsibility for setting

state salaries is delegated to the State Employee

Compensation Board. Page's Ohio Revised Code

Annotated, section 143.101 (Anderson 1972) sets

forth the standards to be used in setting public

employee salaries: |

In making its decisions, the [State

Employee Compensation] board shall

be guided by comparative salary data,

recruitment problems, separation rates,

@hhd other conditions affecting

€Inployment in the positions under

°Gnsideration.

Califia law is substantially the same.

t i.nder the California system, which is similar

a ‘at of Ohio, the California State Personnel

poe begins collecting salary information from

Pp ite industry and governmental agencies through

agit 2ys conducted in the fall. The information from

aniaree surveys serves as a basis for the Board's

miene fund recommendations which are trans- °

Dece@ to the Governor and the Legislature in

whi ‘mber. While an attempt is made to forecast

of th the status of state salaries will be by July

durind®9 anywhere from three to fifteen months

of thi? the course of the fiscal year. As a result

dts salary setting method, state salaries

inion set the pace for salary standards in the

empl my as a whole. The conclusion that public

orted in theory as well as practice.

ihe "model employer" le, popu

nie "model employer” principle, popular

en the 19th century, but rarely supported

— w, holds that pay should exceed the

ae 8, California Government Code § 18850 provides,

adjustt: as follows: "The board shall establish and

the stt salary ranges for each class of position in

basedate civil service. The salary range shall be

paid j on the principle that like salaries shall be

In estior comparable duties and responsibilities.

tion gtablishing or. changing such ranges considera-

compehall be given to the prevailing rates for

and irable service in other public employment

n private business.

market rate by whatever is necessary to

attract the elite of the group, on the

theory that a civil service should

employ the most efficient and gifted

workforce possible. The argument

against this position is that the govern-

ment should not use its monopoly

position in unfair competition with

private business. [Emphasis added.]

Schneider, "Prevailing Rates," page 7.

Not only does the salary setting method

employed by States prevent state salaries from

becoming salary trend setters, it automatically

reflects controls placed on the private sector.

For example, at one time California took the cost

of living directly into account in its salary setting

practices. From 1945 to 1949, California

Government Code section 18850 provided that:

- consideration shall be given to the

prevailing rate for comparable service in

other public employment and in private

business, improvement of living standards,

the current costs of living, and the State's

financial condition. [Emphasis added.]

It was soon noted that such a procedure was not

necessary under a system based on prevailing

rates, and the cost of living was dropped from

section 18850. As a special legislative

committee found:

In discussing such factors as cost of

living and the improvement of standards

of living, we suggested that there were

\-other-ways of taking them into account

‘than by establishing them directly as

factors to be observed by the Personnel

Board. By this we meant simply that if

the state salaries are based on a considera-

tion of outside rates, then all of these other

factors will automatically be taken into

account, since it must be assumed that

the salaries in private enterprise in the

State will generally be kept abreast of

changing costs in living and will represent

the degree of advancement in living standards

which the tax payers of the State can afford

to provide for their public servants.

"State Salary Policies and Practices,"

Report of the Assembly Interim Committee

on Governmental Efficiency and Economy

(Sacramento: February 1953), page 11.

The current policy of California regarding the

cost of living has been stated by the California

State Personnel Board as follows:

Such factors as "cost of-living" and

"standard of living" are not among the

specific standards applied directly in

setting State salaries. However, the

effect of these factors is present in

State salaries because State salaries are

based on prevailing rates. Changes in

the cost of living, for example, often

influence salaries paid in private industry.

Consequently, the prevailing rate data

used by the State indirectly reflects the

cost-of-living factor. To attempt to

consider cost of living directly in setting

State salaries might result in paying twice

for the same factor. [Emphasis added.]

California State Personnel Board, Standards

and Survey Division, Salary Setting in

California State Civil Service (1969),

supra, page 14.

State employees' salaries should not be subject

to wage controls for the same reason. State

employees’ salaries are already controlled

ee ee NS eee ee

OE Te en Ome

ve ee ee

indirectly by their being tied to the prevailing

rate for the private sector. To impose additional

direct controls would result in forcing state

employees to “pay twice for the same factor" by

having them bear a disproportionate burden of the

government's attempt to fight inflation. State

employees already bear a heavier burden during

inflationary times.

Inflation by its nature strikes different

individuals and groups with highly dis-

criminatory effect. The most nearly

unrelieved victims, apart from those living

on pensions or other fixed provision for

personal security, are those who work

for the state. In the private economy the

firm which sells goods has, in general,

an immediate accOmmodation to the

inflationary movement. Its price increases

are the inflation, The incomes of its

owners and proprietors are automatically

accommodated to the upward movement.

To the extent that wage increases are

part of the inflationary process, this is

also true of organized industrial workers.

Even unorganized white collar workers

are in a milieu where prices and incomes

are moving up. The adaption of their

incomes, if less rapid than that of

industrial workers, is still reasonably

prompt.

The position of the public employee is

at the other extremé. His pay scales

are highly formalized, and traditionally

they have been subject to revision only

at lengthy intervals. In states and

localities inflation does not automatically

bring added revenues to pay higher

salaries and incomes. Pay revision for

all public workers is subject to the

tempiation to wait 4nd see if the

RES TEESE. a SS aS ae

inflation isn't coming to an end. There

will be some fear -- this seems to have

been more of a factor in England than in

the United States -- that advances in

public wages will set a bad example for

private employers and unions.

Inflation means that employment is pressing

on the labor supply and that private wage

and salary incomes are’rising. Thus the

opportunities for moving from public to

private employment are especially favor-

able. Public employment, moreover,

once had as a principal attraction a high

measure of social security. Industrial

workers were subject to the formidable

threat of unemployment during depression.

Public employees were comparatively

secure, and this security was worth an

adverse salary differential. But with

improving economic security this

advantage has diminished. Private

employment thus has come to provide

better protection against inflation and

little worse protection against other

hazards. Though the dedicated may stay

in public posts, the alert go.

John Kenneth Galbraith, The Affluent

Society (Houghton Mifflin Co:, 1960),

pages 264-66. [Emphasis added.]

The practical effect of Professor Galbraith's

thesis can best be seen by comparing the recent

history of State salary rates in comparison to those

of comparable employers in the private sector.

Using the State of California as an example,

Table 1 demonstrates how public employees have

in recent years found their salary increases to be

less than the amounts agreed to in collective

bargaining settlements.

*10q

*sjyuswdoTereq abe WweUNyD ‘sopiseig Joqey jo nesing

eT JO JuowyIeded *g*p ‘eoueuTy Jo yew zIedeq OFULOFITED JO a3e}G ‘eOdINOS

O€ eun{ Bufpue spoyied tenuue ‘seiow 10 SI9¥%IOM 0

SJUSWIST}JOS SIBYM UOTIONIYSUOD Jo saTsntoxe AljsnpuT o3eayid

5uyinjoejnuewuou uy sebueyo 93e1 o6em JORLTJUOSD JO SFT BY} IBAO (T)

*re9A yorsa jo

00‘T pease

ae 4 o°te 1 a4°é it's Go 12'S 29°3 5 -2°S seseaiouy Arepes

PFUIOFFTED JO 93035

$°82 T°T9 | 2°9 |O°TT {2°€T{6°pT] €’6 $°9 (I) sjzUeWeT}eg

Hujuryebieg SateTIOD

° Aqsnpu] SyeATId

ebeisay "AOD | E261 | ZZ6T |TZET | OZ6T| 696T| 896T

punodwog etdwys ‘ :

SOTFILTES EFUIOJTIeEO jo 93e1¢9 UT SOSesIOU] YUM SosuUETWeS

Huyuyebieg sat eT[OD Aq paoerjoy SopieTes UT seseaioU] Jo uostieduoo

I FTavL

Given these figures, to ask State employees to

shoulder the burden of economic controls to

fight inflation when they are already the ones

who suffer the most in inflationary times is

patently unfair.

In summary, State employees' salaries are often

already regulated by.a complex statutory scheme

which automatically reflects conditions in the

economy. This means that both inflation and wage

controls to combat inflation are already parts of

the salary setting mechanism. As can be seen

by the statistical figures above, State employees'

salaries have, if anything, lagged behind the rest

of the economy and should be the last to be con-

trolled. The imposition of wage controls in the

context of this formalized system of salary

setting is wholly without rational basis and

should be struck down as a violation of Due

Process. Since the federal regulatory scheme as

applied to the States violates the principles of

Due Process, the Tenth Amendment precludes its

application to the States in general and the State

of Ohio in particular.

-CONCLUSION

For the foregoing reasons, the decision of the

Temporary Emergency Court of Appeals should be

reversed.

Respectfully submitted,

Loren E. McMaster

Attorney for Amicus Curiae

California State Employees'

Association

PD AAR LER SIN AP AE UBS ee ee ee een

36 ;

APPENDIX A Me 4

Economic Stabilization Act of 1970, as amended,

12 U.S.C. § 1904 (Supp. II, 1972) ett

§ 202. Findings

It is hereby determined that in order to stabilize

the economy, reduce inflation, minimize unemploy-

ment, improve the Nation's competitive position in

world trade, and protect the purchasing power of

the dollar, it is necessary to stabilize prices,

rents, wages, salaries, dividends, and interest.

The adjustments necessary to carry out this pro-

gram require prompt judgments and actions by the

executive branch of the Government. The

President is in a position to implement promptly

and effectively the program authorized by this

title.

§ 203. Presidential authority

(a) The President is authorized to issue such

orders and regulations as he deems appropriate,

accompanied by a statement of reasons for such

orders and regulations, to--

(1) stabilize prices, rents, wages, and

salaries at levels not less than those prevailing

on May 25, 1970, except that prices may be

stabilized at levels below those prevailing on

such date if it is necessary to eliminate windfall

profits or if it is otherwise nece ary to carry out

the purposes of this title; oe

(b) In carrying out the authority vested in him

by subsection (a), the President shall issue

standards to serve as a guide for determining

levels of wages, salaries, prices, rents,

interest rates, corporate dividends, and similar

transfers which are consistent with the purposes

of this title and orderly economic growth. Such

standards shall--

(h) No State or portion thereof shall be

exempted from any application of this title with

respect to rents solely by virtue of the fact that

it regulates rents by State or local law, regula-

tion or policy.

Ottice of the Holicitor General

Washington, B.C. 20530

March 6, 1974 ad

Loren E. McMaster ,~ Esq.

California State Employees’ Association

1108 "0" Street

Sacramento, Calif. 95814

Re: Fry v. United States (No. 73-822)

Dear Mr. McMaster:

As requested in your letter of February 20, 1974,

I consent to the filing in the above case of a brief

amicus curiae by the California State Employees’

Association.

In your letter you also request consent to the filing

of such a brief/in the companion case of Ohio v. United

States (No. 73-839). The Court, however, has not acted upon

the petition in this case, but granted only the petition in

Fry. I accordingly assume that you wish to file an amicus“

brief only in the Fry case.

Sincerely, ©

Robert H. Bork

Solicitor General

cc: John A. Brown, Esq. we

Lucas, Prendergast, Albright,

Gibson, Brown & Newnan

42 East Gay Street

Columbus, Ohio 43215

ORI! CHO DAE NIL EDT l Mor p id tin ey

—

SUPREME COURT OF THE UNITED STATES

October Term, 1973

3 No, 73-822

4 Ernest Fry and Thelma Boehm,

5 Petitioners,

6 ‘ vs,

q United States of America,

8: Respondent.

9 : ‘

10 CONSENT TO FILE AMICUS CURIAE BRIEF

ll Ernest Fry 6 Thelma Boehm, the petitioners in the above-entitled

12 case, having been yequeeted by Loren E. McMaster, Senior ‘aii:

13 ' — California State Employees’ Association, to consent for the said Loren E.

14 McMaster, Senior Attorney, California State Employees’ Association, to file

15 @ brief amicus curiae, hereby consents to the filing of said brief.

16° DATED: 2/4 Bay

a7 ! hoot P=

dee Lucas, heamupiet, Albright, Gibson,

19 Brown and Newman

Attorney for Petitioners

n 4 ‘

ef ¢

25:

6 /

27 :

29 F

30 aliioeccatl s

3i “<

8 OM ANALY LON "

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.