This morning the Supreme Court decided Halliburton v. Erica P. John Fund, Inc. (The SCOTUSblog page for the case is here.) In short, the Court reaffirmed the so-called fraud-on-the-market presumption in securities fraud cases. I’ll give a brief summary of the law, but I’d like to make a small point about conservative hypocrisy on the usefulness of markets. Halliburton presents an interesting about-face for many conservatives. To protect business interests, the usually pro-market voices on the right argued that we should not trust markets to accurately and efficiently allocate resources. That’s not the tune those voices normally sing. Continue reading
Earlier today, the International Franchise Association filed a lawsuit against Seattle’s $15 minimum wage, claiming that the ordinance unfairly discriminated against franchisees as a class. Part of the claim (perhaps the strongest part) is based on Article I, Section 12 of the Washington State Constitution, which reads in its entirety:
No law shall be passed granting to any citizen, class of citizens, or corporation other than municipal, privileges or immunities which upon the same terms shall not equally belong to all citizens, or corporations.
The IFA claims that the minimum wage ordinance violates Art. I, Sec. 12 because it treats one class of corporations (franchisees) differently than other corporations.
But why do “classes” of corporations receive any protection under the Washington Constitution? The text of the provision specifically talks about granting privileges to “any citizen” (the singular), any “class of citizens” (the plural), or any “corporation” (the singular). There is no language regarding “classes” of corporations.
Under the usual rules regarding the interpretation of constitutional texts, the singular “corporation” next to the specific inclusion of classes of non-corporate citizens would compel the conclusion that classes of corporations are not protected by the provision.
I did a bit of quick research this afternoon through Washington Supreme Court cases, and none of them seem to directly address this question—though they do apply the provision to classes of corporations. It seems like IFA’s complaint has some basis in Washington’s case law, but I wonder if it has any basis in Washington’s Constitution?
Just this afternoon the International Franchise Association filed a complaint in federal court challenging Seattle City Ordinance No. 124490—the $15 minimum wage ordinance. Because the plaintiffs are seeking a preliminary injunction, and because the claims are not fact-based and are therefore ripe for resolution on a motion to dismiss, I imagine the court will have the opportunity to resolve the legal challenges relatively quickly. But that’s no reason not to start speculating now!
IFA’s claim is relatively simple: The Ordinance sets up two separate timelines—one for “big” businesses and one for “small” businesses. The big businesses have to ramp up to $15 more quickly than do the the small businesses. So far, so good. The problem, from IFA’s point of view, is that in determining whether a franchisee’s business is small or big, the Ordinance counts not only the employees of the franchisee, but all the employees of all franchisees in the entire national network. IFA thinks that is unfair for a variety of reasons.
And on some level, perhaps the distinction is “unfair” in some sense of the word. If I’m a franchisee who owns a Subway sandwich shop with ten employees, why should I have to pay my workers more than Biff’s sandwich shop next door (with 100 employees!) just because I’ve opted for a franchise business model and Biff has opted for a more independent model? That’s not fair!
But generalized grievances about unfairness don’t sustain lawsuits. So how does IFA make this a federal case? It asserts eight (eight!) separate violations, some more interesting than others. At first glance, I don’t think any of the claims are likely to survive a motion to dismiss. I’ll take a quick crack at each cause of action after the jump: Continue reading